HSBC Makes Big Bet on Digital Assets, Announces Crypto Custody Service

HSBC was fined Β£6.28m by the FCA over deficient policies that led to unfair treatment of 1.5m customers who fell behind on payments during 2017-2018.

Key Insights

  • HSBC is launching a cryptocurrency custody service for institutional investors in 2024 through a partnership with digital asset custodian Metaco.
  • The service will integrate with HSBC’s existing digital asset platforms as it expands its crypto offerings.
  • HSBC joins other major banks like JPMorgan and Deutsche Bank in rolling out crypto services amid surging institutional demand.

Banking titan HSBC is embracing the digital asset revolution, unveiling plans this week to offer cryptocurrency custody services for institutional investors starting in 2024.

In partnership with Swiss digital asset custodian Metaco, HSBC aims to capitalize on surging institutional demand for crypto by providing secure and regulated storage solutions.

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, HSBC’s Chief Digital Officer.

HSBC’s new crypto custody platform will integrate with the bank’s existing digital asset issuance system, HSBC Orion, launched last year. It complements HSBC’s recently revealed tokenized gold offering that digitizes gold ownership via blockchain.

The services form part of the bank’s expanding digital asset strategy as it targets new revenue streams from crypto’s growth.

These underscore HSBC’s commitment to the overall development of digital asset markets, said Markets Executive John O’Neill.

HSBC joins other major banks in commercializing blockchain applications

HSBC joins other major legacy banks like JPMorgan, Deutsche Bank, and UBS in rolling out crypto and blockchain services. Custody is seen as a huge growth area as institutional adoption accelerates. JPMorgan’s JPM Coin payment system, for instance, now handles $1 billion in daily transactions. Deutsche Bank partnered with Swiss fintech firm Taurus to develop digital asset custody and tokenization services for clients.

HSBC’s collaboration with Metaco signifies Ripple’s expansion into institutional custody services after acquiring Metaco for $250 million in May.

Ripple’s President, Monica Long, stated that Ripple is uniquely positioned to address the growing institutional crypto custody market, which is expected to reach nearly $10 trillion by 2030. However, Citigroup, which had been collaborating with Metaco on its own digital asset custody services, revealed it was reviewing its partnership with the firm in June.

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