HSBC Holdings is set to transform the London gold market through the introduction of blockchain technology.
The bank has launched a cutting-edge platform that employs distributed ledger technology to digitise ownership of physical gold stored in its London vault.
This innovation, as reported by Bloomberg on November 1, introduces digital tokens representing gold bars, simplifying trade on HSBC’s single-dealer platform.
HSBC’s significance in the bullion market sets it apart from others exploring blockchain’s potential in gold investment simplification.
The bank is one of the world’s leading custodians of precious metals and one of London gold market’s four clearers.
The current London gold market operates with manual record-keeping and over-the-counter transactions, leading to a cumbersome process.
Leveraging blockchain technology, HSBC aims to expedite and streamline these operations, allowing clients to effortlessly track their gold ownership through the platform.
Although the utilisation of blockchain in the gold market has attracted attention recently, this isn’t a new concept.
The market is already saturated with gold-backed token providers, such as Paxos, and Perth Mint.
In 2020, stablecoin giant Tether launched its gold-backed stablecoin.
As of publication, Tether Gold has a USD market cap of more than $487 million.
HSBC’s foray into the blockchain gold system is part of a broader blockchain initiative.
In September this year, the Singapore branch of the bank launched its own blockchain-based payment platform.
The bank already operates HSBC Orion, a platform that facilitates the issuance and storage of assets like digital bonds.