HSBC World Bank Taps Blockchain to Transfer $20 billion in Digital Assets
The firm sees opportunity in blockchain for private placements
HSBC World Bank will track $20 billion in digital assets on a blockchain storage platform in 2020. The company plans to initiate the platform Digital Vault by March. According to Reuters, this platform will also allow investors to track recordings of the securities purchased on private markets in real-time.
This announcement represents one of the largest deployments of blockchain by a major financial institution. Although Blockchain has generated hype, it still remains largely unproven. However, HSBC says that it will deploy this platform to meet rising demand from yield-hungry customers.
“With some of the yields that are on offer, we are definitely seeing an increase in demand,” said Ciaran Roddy, the head of custody innovation at HSBC’s securities services arm. Roddy told Reuters that U.S. and British insurers for private placements and Asian and Middle Eastern sovereign wealth funds are driving demand.
HSBC World Bank and Blockchain
Meanwhile, the new platform would digitize paper-records for private placements. Blockchain – by definition – would also reduce the time required by investors to conduct queries on their holdings. Further, private placements typically lack standardization and are filed away on paper.
Finally, given the ongoing rise of demand for private placements of equity and debt, HSBC sees opportunity. HSBC says that private placements could hit $7.7 trillion by 2022. That would represent a 60% increase from 2017 figures.
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