HSBC to Offer Custody Services for Digital Assets Through Partnership with Metaco

HSBC Holdings plans to offer institutional clients a custody service for digital assets such as tokenized securities in partnership with Metaco, a technology firm owned by Ripple Labs Inc. Bloomberg

The service is expected to go live in 2024 and will complement HSBC’s digital assets issuance platform called HSBC Orion and its system for issuing tokenized gold launched last week.

Custody has become a hotbed of activity in the blockchain industry, with large players investing in the space and creating opportunities for startups, while underscoring the challenges smaller firms face when partnering with big financial companies.

HSBC is all set to offer institutional clients a custody service for digital assets, including tokenized securities, in partnership with Ripple Labs-owned Metaco. The offering, expected to launch in 2024, will complement HSBC’s platform for digital asset issuance, HSBC Orion, and its system for issuing tokenized gold, launched last week. The move marks HSBC as the latest institution seeking to commercialize blockchain-based applications.

Blockchain in Banking Sector Yet to Deliver Large-Scale Benefits

Despite millions of dollars of investment, the banking and finance sector is yet to see sizable results from their adoption of blockchain technology. Banks, asset managers and market infrastructure providers have been investing in the technology for almost a decade, hoping to streamline complex processes and reduce costs.

However, the latest launches may prove to be the testing ground for establishing blockchain technology’s effectiveness. Custody services have become a major area of attraction for large corporations, which are creating opportunities for startups in the sector. Ripple estimated that the crypto custody market for institutions alone could reach nearly $10 trillion by 2030.

Citigroup to Review Partnership with Metaco

Citigroup, which was actively building its digital-assets custody offering with Metaco, has started informal negotiations with other providers earlier this year. The New York-based financial company is reviewing its partnership with Metaco after Ripple agreed to acquire it in May. Industry experts have speculated that Citigroup’s new talks may be due to potential conflicts of interest as Ripple is a significant investor in Metaco. Citigroup is also exploring partnerships with other custody providers for its digital-assets business.