(Kitco News) – HSBC Bank, one of the biggest financial institutions in the world, has announced the launch of tokenized gold for its retail customers in Hong Kong amid a push by the bank and the government to make real-world assets available in digital form.
The HSBC Gold Token officially launched for trading in the Hong Kong market on Wednesday, according to a report from South China Morning Post. This marks the first such retail product to be issued by a bank, HSBC said; customers can buy it through the lender’s online banking and mobile app.
“We acknowledge the rising demand for digital assets and the existing familiarity of our customers with gold investment,” said Maggie Ng, general manager and head of wealth and personal banking of HSBC’s Hong Kong office. “We are proud that HSBC Gold Token, powered by HSBC Orion, is the first retail product in Hong Kong that is based on distributed ledger technology (DLT), as authorized by the Securities and Futures Commission (SFC).”
HSBC said rolling out access to the Gold Token in Hong Kong is the first in a series of planned retail products that will use HSBC Orion, the bank’s digital assets platform. In December, the platform was used to tokenize physical gold in London for institutional investors, and it has also been used to launch digital green bonds in Hong Kong.
In response to the launch of tokenized gold in London, Joe Cavatoni, CEO of the World Gold Council (WGC) trade association, said adopting digitalization is another way to increase the use of technology to document and trade gold in a way that could increase transparency.
“What’s been disclosed about this in the public domain is encouraging,” he said. “An industry-adopted platform will be necessary to truly modernize the gold market. So, the most significant development will be an offering that provides clients with broad-based access to the gold market and the flexibility to trade with all players.”
The government of Hong Kong has been pushing for more digital assets to be rolled out for public use since June of 2023, and this development is one of the most notable to come out of that effort.
In November, the SFC, Hong Kong’s markets regulator, released two circulars that outlined the requirements for tokenized products and assets to be offered to the public. In the circulars, the SFC touted the benefits of tokenization, saying they have the potential to reduce operational costs and promote efficiency and transparency.
“Asset tokenization can enable convenient, affordable, and broad access to real-world and financial assets, in this case, the HSBC Gold Token,” said Sami Abouzahr, Hong Kong head of investments and wealth solutions at HSBC.
In February, the Hong Kong government completed the world’s first multicurrency digital bond offering worth approximately $750 million. The bonds were issued onto HSBC Orion’s private blockchain as part of the Hong Kong Monetary Authority’s Central Moneymarkets Unit (CMU).
Darryl Chan, deputy chief executive of the HKMA, said the digital bond “has significantly broadened the bond’s investor base and enhanced its liquidity. It is fair to say that the issuance brought tokenized bonds further beyond proof-of-concept towards achieving more common applications.”
HSBC said its blockchain-powered platform has reduced the issuance settlement time for new assets from five days to one day, and makes secondary market trade settlements and coupon payments easier.
The blockchain ledger has “strong potential to be a mainstream component of future financial markets,” said HSBC Hong Kong’s chief digital officer Bojan Obradović while speaking at Tuesday’s Milken Institute Global Investors’ Symposium.
He added that HSBC is focused on investing in DLT and identifying which assets to develop as digital products, including funds, bonds, tokens representing real-world assets, and digital money.
“Hong Kong has got a real opportunity to become the world’s leading digital asset hub,” Obradović said. “How we get the buy and sell-side to come to Hong Kong and get real transactions to take place and have real economic value will be key.”
According to data provided by CoinGecko, the value of the tokenized gold market currently stands at $1.09 billion, led by Tether Gold (XAUT) and Pax Gold (PAXG).
