Within the last few days HSBC has announced it will attend a blockchain-based trade finance platform in Hong Kong. It’s just the latest example of a heavyweight financial institution showing somewhat grudging respect for a technological sea-change it feels it can no longer ignore.
153-year-old HSBC is carefully studying cryptocurrency and the blockchain. Could a deal similar to Bitcoin’s with Goldman & Sachs be imminent, or are their intentions more technologically based?
Back in August 2017, HSBC joined a project called Utilities Billing Coin (USC), whose aim was to use blockchain technology to facilitate global central banks issuing currency. The co-founder of the project, Hyder Jaffrey said at the time that the program would be a springboard for central banks to issue cryptocurrencies.
Jaffrey’s comments were supported by Kaushalya Somasundaram, head of the Financial Technology Cooperation and Strategy Department at HSBC’s head office, who claimed that USC could act as the central bank, and issue cryptocurrency accordingly.
Since then, HSBC’s interest in cryptocurrency and the blockchain failed to make any headlines, until now.
HSBC Still Studying Crypto – Deal Could Be Imminent
According to Forbes magazine’s July 19 report, Josh Bottomley (pictured), global head of HSBC’s holding digital division, said the bank is carefully studying the application of cryptocurrency. Earlier this year, one of HSBC’s contemporaries, Goldman & Sachs struck up a deal with Bitcoin, where clients of theirs could purchase BTC from their New York branch, just as they would a “futures stock.”
When asked about the bank’s overall position on cryptocurrency, Bottomley said HSBC is carefully studying the situation, although the bank generally does not believe that cryptocurrency is a real investment asset, but this situation may change.
As Bottomley said:
“One of the criteria we use is whether an asset has an incredible ups and downs. For most of our customers, it is not appropriate to call it savings or investment tools in this case.”
A spokesperson for HSBC told Forbes that the bank will not trade cryptocurrencies or deal with cryptographic currency-denominated payments.
“Although HSBC is still cautious about cryptocurrencies, like many other major financial institutions, it has been testing the potential of blockchain technology in a variety of applications.”
Bank groups including HSBC earlier this month announced that they have completed the first cross-border financial transactions based on blockchain technology through a jointly developed blockchain platform named “We.Trade.”
Based on IBM’s blockchain platform and Hyperledger Fabric technology, We.Trade is designed to improve the efficiency of cross-border financial transactions.