With the rise of digital asset tokenization, HSBC has reportedly made great strides in digital finance by developing its’ banks’ Tokenised Deposit Service (TDS) for cross-border payments.
The service, based on blockchain technology, enables corporate clients to transfer money safely and securely in real-time, with settlement available 24/7, in response to the increasing global demand for instant payments.
According to reports, HSBC has now completed its first-ever USD cross-border transaction between Hong Kong and Singapore, with Ant International being the first customer to utilize the service.
This success shows HSBC’s ambition to continue innovating in the Treasury management space and support corporations with fast and efficient payments.
Also Read: Visa Unveils Tokenized Asset Platform To Aid Banks Issue Fiat-Backed Tokens
From Domestic Rollouts to Global Expansion
The TDS was first rolled out earlier this year to facilitate domestic payments in Hong Kong and Singapore, where it was successful in enhancing local payments.
On the heels of that, HSBC added more currencies, GBP, EUR, and USD, to the TDS, and the bank has expanded to key financial services markets like the UK and Luxembourg.
The bank plans to introduce the service to other financial markets, emphasizing its long-term strategy to create an end-to-end digital payment infrastructure that utilizes blockchain technology.
Speaking on the announcement, Manish Kohli, Head of Global Payments Solutions at HSBC, stated that “tokenized deposits represent a major leap forward to transaction banking, a combination of programmability, secure settlement, and real-time liquidity.”
He noted that the solution will provide customers with an opportunity to better manage liquidity, improve operational efficiency, and adjust to the increasing adoption of digital money.
Kelvin Li, General Manager of Platform Tech at Ant International, stated that “tokenization would be crucial in enabling more efficient and trusted global transactions, and confirmed Ant’s collaboration with HSBC to provide a seamless experience for cross-border payments, regardless of business size.”
Also Read: Hong Kong SFC CEO Clarifies Crypto Regulation Focus, Plans Tokenized Bond Pilot
Leveraging Distributed Ledger Technology for Efficiency
At the core of HSBC’s TDS is Distributed Ledger Technology (DLT), which effectively digitizes a traditional fiat deposit into a digital token.
These digital tokens also enable real-time and programmable cash movement from your clients’ existing systems, avoiding a lot of the same time zones and banking cut-off limitations that they often face in real-time cash activity with draft checks and transfers.
The TDS is also a basis of conditional payment functions through programmability, and atomic settlement of tokenized assets to enable quicker and easier clearing of transactions that often have multiple parties and accounts involved.
This improvement makes it easier for clients’ treasury teams to incorporate payment capability into their existing systems and improve their cash flow management, not to mention going forward into the future of digital cash.
Also Read: Ripple and BCG Forecast $18.9 Trillion Market for Crypto & Tokenized Assets by 2033
Broader Industry Momentum Around Tokenized Deposits
The expansion of HSBC comes on the heels of the growing adoption of tokenized deposits across the global financial sector.
Archax acquired FINRA-regulated Globacap Private Markets on March 31st to establish Archax Markets US, which includes a tokenized treasury bond fund on the XRP Ledger, facilitating $45 million in deposits, according to UnoCrypto.
On July 19th, we reported that JPMorgan highlighted that regulators are becoming more favorable to tokenized bank deposits over stablecoins because they can settle at their face value via central bank money.
HSBC’s launch of cross-border TDS, along with Archax and JPMorgan’s moves, herald an evolution in institutional finance as tokenization is being embraced as a proven, scalable option for the future of payments and asset servicing.