HSBC Holdings PLC, one of the world’s leading bullion banks, has launched a blockchain-based platform to modernize traditional and manual processes in the London gold market. The new platform tokenizes ownership of physical gold held in HSBC’s London vaults, providing a digital representation of gold bars for trading.
A modern shift in gold trading: HSBC tokenizes physical gold
Mark Williamson, global head of FX and commodities partnerships and advice at HSBC, revealed in an interview that their innovative system uses distributed ledger technology. This “cutting-edge” system uses digital tokens to represent gold bars, facilitating seamless trading through HSBC’s single-dealer platform.
However, HSBC is not the first bank to try to use blockchain to simplify gold investing. In 2016, crypto startup Paxos partnered with Euroclear to create a blockchain-based settlement service for London bullion market trading. Although their partnership dissolved after a year, Paxos continues to offer Pax Gold, a digital token backed by physical gold that currently has a market capitalization of $479 million, according to the latest data.
HSBC stands out in this space due to its large footprint and influence on the bullion market. As one of the largest precious metals custodians and one of four clearing members of the London gold market, HSBC plays a vital role in an industry that trades more than $30 billion in gold every day.
Bringing blockchain to gold: a step towards modernization
Despite the size of the London gold market, with some 698,000 gold bars worth $525 billion stored in Greater London, it still relies heavily on outdated manual record-keeping and operates entirely over the counter. HSBC’s blockchain platform aims to streamline this process, giving customers an easier way to track their gold ownership right down to the serial number of each gold bar.
HSBC’s tokenized system is designed to increase accessibility and efficiency, with one token equivalent to 0.001 troy ounces, compared to 400 troy ounces for a standard London gold bar. While the initial focus is on institutional investors, the platform may be adapted in the future to allow retail investors to invest directly in physical gold, subject to approval by local regulators.
The move is part of HSBC’s wider efforts to integrate blockchain technology across its operations, which includes HSBC Orion, its existing platform for issuing and storing digital bonds. With the financial industry witnessing an increase in blockchain-based applications from major institutions such as JP Morgan, Euroclear Bank and Goldman Sachs, the market is poised to see if these innovations will be accepted at scale and deliver the promised enhancements to traditional financial infrastructure.
HSBC has integrated blockchain technology into gold trading, tapping into the emerging tokenized asset industry, which is expected to reach a staggering $16 trillion by 2030, Bitcoinist reported. The rapid development and prospects of the industry give certain cryptocurrencies the potential for astronomical growth.
The XRP Ledger ecosystem is a pioneer in the field of tokenized assets, aiming to transform real-world assets, including real estate, into digital form. Ripple’s continued collaboration with global banks to explore practical applications for central bank digital currencies (CBDC) further solidifies XRP’s position in this space.
On the other hand, TrueFi and Pendle Finance are becoming important players, connecting traditional finance and blockchain in innovative ways. TrueFi is changing the lending industry with its TRU token, offering collateral-free cryptocurrency loans instead of relying on users’ creditworthiness.
With a current market cap of $65 million, Pendle Finance has made great strides in not only real-world assets, but also inviting institutional investors to the blockchain with a suite of financial products. As the tokenized asset industry grows, these cryptocurrencies are well-positioned to benefit from it. #汇丰银行 #区块链平台
