HSBC has become the first bank to introduce a tokenized gold product

Banking giant HSBC has become the first bank to issue a blockchain-based real-world asset with the launch of its new tokenized gold investment product.

Targeting retail investors in Hong Kong, the bank’s Gold Token went live on March 28. The token will be available for HSBC customers on the bank’s online banking platform and its mobile application. 

According to the bank, this is the first retail product from the institution, launched in response to the Chinese regulator’s push for the introduction of digital assets for public use. 

The gold tokens, as the name suggests, are backed by physical gold. The proof of ownership for the tokens will be verified on the bank’s proprietary private blockchain dubbed Orion. The tokens will also be minted on this blockchain.

“We acknowledge the rising demand for digital assets and the existing familiarity of our customers with gold investment,” Maggie Ng, general manager and head of wealth and personal banking Hong Kong at HSBC, said in a statement.

Launched in 2022, the HSBC Orion is a DLT-based bond tokenization platform developed by HSBC. The platform was designed to enhance the efficiency, security, and flexibility of bond issuance and trading.

“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, as authorized by the Securities and Futures Commission (SFC),” Ng added.

Prior to this launch, HSBC had teased a tokenized gold offering in collaboration with Ripple owned crypto safe-keeping specialist Metaco. The move was part of the bank’s new digital asset custody plan.

The introduction of the tokenized gold product follows the Hong Kong Securities and Futures Commission’s (SFC) November circulars. The two circulars urged issuers to introduce tokenized SFC-authorized investment products.

“The SFC is of the view that it is appropriate to allow primary dealing of tokenized SFC-authorised investment products, as long as the underlying product can meet all the applicable product authorization requirements and the additional safeguards to address the new risks associated with the tokenization arrangement,” one of the circulars noted.

The regulator claims that tokenized products can help reduce operational costs while also enhancing efficiency and transparency.

As of late, several banks and traditional institutions have been eyeing entry into the asset tokenization sector to introduce real-world assets (RWA) onto blockchains. In the decentralized industry, BlackRock is the latest to tap into this trend with the launch of its its Institutional Digital Liquidity Fund for USD.