HSBC has taken a historic leap in the financial industry by introducing a cutting-edge platform that employs distributed ledger technology to tokenize the ownership of institutional clients’ physical gold held in the bank’s prestigious London vault.
The process involves HSBC creating a “digital twin” of the existing physical asset, focusing on the loco London gold securely housed within its vaults. This tokenized version of physical gold can then be traded seamlessly between HSBC and institutional investors through the bank’s Evolve single dealer platform or via an API.
What is HSBC’s Gold Tokenization Platform?
Tokenization offers a secure and permissioned digital representation of clients’ physical gold holdings, integrating this digital overlay into HSBC’s operational infrastructure, including the Evolve platform. This innovation provides clients with a transparent view of their tokenized gold trades and positions, closely mirroring their physical holdings.
This breakthrough not only enhances transparency and efficiency but also introduces a cost-effective way for investors to monitor both their allocated and unallocated gold, significantly streamlining the process.
Remarkably, while traditional loco London gold bars are sizable, weighing 400 troy ounces, HSBC’s gold tokenization platform makes one token equivalent to just 0.001 troy ounce. In the future, this pioneering approach could potentially open the door to fractionalizing loco London gold bars, making direct investment in this precious metal more accessible to retail investors.
HSBC’s venture into gold tokenization marks a significant step in the digitization of tangible assets, offering enhanced liquidity, transparency, and accessibility to the world of gold ownership.
John O’Neill, global head, digital assets strategy, markets and securities services, HSBC, says: “In addition to demand for native digital assets, we are seeing appetite for tokenisation solutions that can maintain a link to specific real-world use cases, such as gold.”
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