HSBC, one of the world’s largest banking services, plans to expand its range of tokenized assets. CEO Noel Quinn said the bank will ensure this offering is firmly anchored in reality, the South China Morning Post reported on Monday.
However, the bank plans to avoid volatile cryptocurrencies when tokenizing assets.
During a roundtable discussion last week in Hong Kong, Quinn reportedly said that tokenization has the potential to encompass a wide range of assets. But its primary focus remains safeguarding the underlying value of the token itself.
Tokenization of digital assets involves transforming the ownership rights of a real-world asset into a digital token. This token can then be owned, sold and traded on a blockchain. It involves converting property rights into digital tokens stored on a decentralized ledger system.
HSBC uses the Orion platform for secure retail gold tokenization
In an effort to explore the potential of digitized real-world assets, HSBC debuted a gold retail token in March. This initiative marked the first time that HSBC used its private blockchain technology for ordinary investors. The bank’s digital asset platform, Orion, serves as the basis for this gold token.
According to Quinn, tokenization offers significant advantages over traditional trading methods. He cited the efficiency, cost-effectiveness and overall improvement over the old ways.
He highlighted the bank’s commitment to exploring further applications of this technology, but with a focus on assets with inherent value, described as ‘backed by something real’. Quinn acknowledged that while cryptocurrencies use similar technology, they carry inherent volatility and are unpredictable in nature.
The Hong Kong government completes a $750 million digital bond offering
Hong Kong has positioned itself as a leader in adopting tokenization. The Securities and Futures Commission (SFC) said in November that this would be the case consider regulatory approval for the tokenization of securities and regulated funds. This framework enables the issuance of blockchain-based tokens that represent ownership interests in various investment products.
The Hong Kong government successfully passed one last month multi-currency digital bond offering, valued at approximately $750 million. This issuance used HSBC’s Orion platform, managed by the central bank’s Central Moneymarkets Unit (CMU).
HSBC has highlighted the efficiency gains achieved as a result, saying issuance settlement times have been reduced from five days to just one day, while secondary market trading and coupon payments have also been streamlined.