By Staff Writer
HSBC is planning to shift $20bn worth of assets — or nearly 40% of all of its assets — to a new blockchain-based custody platform by March.
Banks and other financial firms have invested billions of dollars into finding uses for blockchain, though not many have come up with practical or widely used applications.
The reports have now emerged that HSBC is planning to digitize its paper-based records of private placements, Reuters reported.
Currently, most private placements are held on paper and a lack of standardization makes accessing them difficult and inefficient.
Using blockchain will reduce the time it takes investors to make checks or queries on holdings. The new platform, known as Digital Vault, will give investors real-time access to records of securities bought on private markets.
Currently, the bank holds up to $50bn worth of assets, so that the latest move would imply that it would put nearly 40% of the total assets onto the blockchain platform.
Demand for private placements of both debt and equity has grown significantly in recent years, and investors are seeking higher returns amid low-interest rates worldwide.
HSBC expects the global value of private placements to hit $7.7 trillion by 2022, a jump of 60% from five years earlier.
Over the same period, it thinks allocations by asset manager clients will grow to 20% from 9%.