HSBC launches tokenised gold for retail customers in Hong Kong as government pushes for publicly accessible digital assets
Wed Mar 27 2024
HSBC has launched tokenised gold to its retail customers in Hong Kong as part of a push by the bank and the government to make real-world assets available in digital form.
HSBC Gold Token, which will become available today on the lender’s online banking and mobile app, is the first such retail product to be issued by a bank, according to HSBC, as the government pushes for more digital assets to be rolled out for public use. Tokenised gold refers to physical gold whose ownership rights are stored digitally on a blockchain.
“We acknowledge the rising demand for digital assets and the existing familiarity of our customers with gold investment,” said Maggie Ng, general manager and head of wealth and personal banking Hong Kong at HSBC.
Tokenised gold assets are not a new concept – they surpassed US$1 billion in value globally in 2023, according to CoinGecko, a platform that tracks the industry.
“We are proud that HSBC Gold Token, powered by HSBC Orion, is the first retail product in Hong Kong that is based on distributed ledger technology, as authorised by the Securities and Futures Commission (SFC),” said Ng.
HSBC Orion is the bank’s digital assets platform.
The new product comes after Hong Kong’s markets regulator, the Securities and Futures Commission (SFC), released two circulars in November outlining requirements for tokenised products and assets to be offered to the public. Tokenised products can be recorded digitally on the blockchain, offered directly to end-investors, distributed by intermediaries, or traded. They have the potential to reduce operational costs and promote efficiency and transparency, according to the SFC.
“Asset tokenisation can enable convenient, affordable and broad access to real-world and financial assets, in this case, the HSBC Gold Token,” said Sami Abouzahr, Hong Kong head of investments and wealth solutions at HSBC. HSBC Gold Token is the first of a series of planned retail products that will use HSBC Orion.
Previously, the platform helped to tokenise physical gold in London for institutional investors and launch digital green bonds in Hong Kong.
Last month, the Hong Kong government completed the world’s first multicurrency digital bond offering worth around US$750 million. The bonds were directly issued onto HSBC Orion’s private blockchain as part of the Hong Kong Monetary Authority’s Central Moneymarkets Unit (CMU).
The blockchain-powered platform reduced the issuance settlement time from five days to one day and made secondary market trade settlements and coupon payments easier, according to HSBC.
“Investors had the option to follow largely business-as-usual processes through traditional market infrastructure, i.e. the CMU in Hong Kong and its external linkages with [clearing houses],” Darryl Chan, deputy chief executive of the HKMA, said at an event staged by the International Capital Market Association in Hong Kong on Tuesday.
“This has significantly broadened the bond’s investor base and enhanced its liquidity. It is fair to say that the issuance brought tokenised bonds further beyond proof-of-concept, towards achieving more common applications.”
At Tuesday’s Milken Institute Global Investors’ Symposium, HSBC Hong Kong’s chief digital officer Bojan Obradović said the blockchain ledger has “strong potential to be a mainstream component of future financial markets”.
HSBC is focusing on investing in distributed ledger technology, identifying which assets to develop as digital products, be it funds and bonds, tokens representing real-world assets or digital money, according to Obradović.
As well as working with the HKMA on its proposed central bank digital currency at the retail and wholesale levels, the lender is creating its own tokenised deposits and researching stablecoins.
The Hong Kong government is formulating a regulatory regime to sell stablecoins to retail investors. Stablecoins are cryptocurrency assets issued by private entities against a portfolio of traditional financial assets.
Obradović praised the government’s efforts to develop the sector.
“Hong Kong has got a real opportunity to become the world’s leading digital asset hub,” he said.
“How we get the buy and sell-side to come to Hong Kong and get real transactions to take place and have real economic value will be key.”
Source: https://www.scmp.com