LONDON (Reuters) - HSBC (HSBA.L) plans to launch in 2024 a custody service for storing blockchain-based assets excluding cryptocurrency, the bank said on Wednesday.
The service, which is a partnership with Swiss digital asset firm Metaco, will allow institutional clients to store blockchain-based tokens representing traditional financial assets, as opposed to crypto or stablecoins, HSBC said.
HSBC said last week it had made tokens representing physical gold held in its London vault. The bank last year launched a digital asset platform, HSBC Orion, which allows financial institutions to issue blockchain-based versions of financial assets, also known as tokenised securities.
"We’re seeing increasing demand for custody and fund administration of digital assets from asset managers and asset owners, as this market continues to evolve," said Zhu Kuang Lee, chief digital, data and innovation officer at HSBC.
Blockchain is a digital ledger that records ownership of tokens. It has not seen widespread adoption but proponents say it has the potential to make trading more efficient and transparent.
So far, its main use-case has been cryptocurrencies, which remain a relatively small part of the global financial system.
The value of all cryptocurrencies is around $1.4 trillion, down from a peak above $3 trillion in late 2021, according to CoinGecko data.
HSBC did not give a figure for the size of the market for blockchain-based assets excluding cryptocurrencies.
Banks and other financial firms have invested billions of dollars into finding uses for blockchain.
In 2019, HSBC announced a platform called Digital Vault, which allows investors to access digital records of securities bought on private markets.