HSBC Launches Blockchain-Based Tokenised Deposit Service in Hong Kong

HSBC Holdings on Thursday announced a blockchain-backed banking initiative in Hong Kong. The bank said its tokenised deposit service is now available to Hong Kong-based corporate clients. This is the first bank-led blockchain payment system to be introduced in the region. HSBC clients who hold corporate wallets will be able to process instant USD to HKD transactions with this "always on" service, according to the bank. The initiative aligns with Project Ensemble, a roadmap to explore the tokenisation market being monitored by the Hong Kong Monetary Authority (HKMA).

The tokenised deposit service was built on HSBC's proprietary network and technologies, the bank said on Thursday. While the initiative will introduce Hong Kong's financial ecosystem to blockchain technology, HSBC expects to improve its own digital money abilities with this project.

"Tokenised deposits, when supported by regulated financial institutions, can offer a safe and fully compliant approach to improving payments and cash management for corporates," said Lewis Sun, HSBC's Global Head of Domestic and Emerging Payments and Global Payments Solutions. "This service sets a new benchmark for efficiency and innovation in digital money solutions for corporates."

Singapore-based fintech firm Ant International was the first corporate to use this Tokenised Deposit Service, the announcement noted. Using the service, Ant International completed an instant deposit of tokenised assets between its clients using HSBC's service.

"The transaction, initiated by Ant International through its internal global treasury management platform — Whale platform — brings improved transparency, flexibility and efficiency to its liquidity management," the bank said.

This is the first live pilot initiative being supported and overseen by HKMA's Supervisory Incubator for Distributed Ledger Technology (DLT). Through this service, HSBC expects to prove the potential improvements that the blockchain technology can bring to the traditional financial infrastructure.

HSBC says it completed multiple proof-of-concept (PoC) use cases under Project Ensemble before the project went live.

Hong Kong is also encouraging banks to experiment with blockchain technology. In order to supervise these trials, the HKMA established the Supervisory Incubator in January.

Last November, Hong Kong's largest digital Bank, ZA, also announced direct crypto services for its retail clients.

Hong Kong has established a subcommittee dedicated to tailoring comprehensive crypto rules to govern the growth.