HSBC Holdings Plc, a British universal bank and financial services group is making moves to revamp the London Gold Market infrastructure which has become quite outdated. The bank is aiming to digitize the gold assets.
As per the reports from the London Bullion Market Association, it is estimated that approximately 698,000 gold bars are in storage in vaults in the Greater London area. The value of this can be estimated as having a value of 525 billion US dollars.
The Head of Global FX and Commodities Partnerships and Propositions at HSBC, Mark Williamson, talked about this in an interview with Bloomberg, recently. The bank as a first step is planning to digitize the gold assets that are stored in its vault in London. As of now, the bank plans to issue digital assets equivalent to the golden bars and then exchange them via the trading platform of HSBC.
He added that this would develop as a system in which retail investors can make direct investments in gold in physical forms. The primary target of HSBC lies in institutional investors, now. He also said that all these will be in adherence to the regulations of the territory that they belong to.
Has London Attempted Blockchain-Based Gold Trading Before?
This is the second time that an attempt at blockchain-based gold trading. Is happening in the industry. earlier in 2016, Paxos, a cryptocurrency startup in a collab with Euroclear introduced a blockchain platform targeting the trades in the London bullion market.
However, it was a futile attempt as it collapsed the next year. It is worth mentioning that Paxos, in the middle of all these, was able to maintain Pax Gold, its digital asset which managed to make 479 million US dollars as its total market cap. Although, the attempt that HSBC is now making is, different from the one made by Paxos.
HSBC focuses on the precious metals that are present in the market and digitize these metals. HSBC holds the largest amongst these emails in the market and is also one of the top four prominent clearing entities now present in the gold market of London. This can also be linked to the gold that is currently traded in the market which corresponds to up to 30 billion US dollars.
As of now, the London gold market follows an operating method that keeps all the trades only in the over-the-counter method. It also uses manual record keeping, a method that is rarely followed now and is considered outdated.
What Is The Blockchain System Of HSBC?
The digital tpen sof HSBC is equiavelnt to 0.001 troy ounces of gold.This is in contrast to the gold bar in London which is equivalent to 400 troy ounces, generally.
- The system will create tokens for the gold in the London vault
- It will enable the investors to easily track down the gold that they own
Previously, HSBC launched a platform exclusively for issuing and managing digital bond-like assets.