HSBC has introduced a platform that leverages distributed ledger technology to tokenize the ownership of institutional clients’ physical gold stored in the bank’s London vault. The bank creates a “digital twin” of the existing physical asset, specifically, the loco London gold held in its vault. Institutional investors can trade this tokenized physical gold through HSBC’s Evolve single-dealer platform or via an API.
Tokenization generates a permission digital representation of clients’ physical gold holdings, integrated into HSBC’s operational infrastructure, including Evolve. This allows clients to track their tokenized gold trades and positions corresponding to their physical holdings in a more automated, efficient, and cost-effective manner.
While loco London gold bars are typically 400 troy ounces, one token on HSBC’s gold tokenization platform is equivalent to 0.001 troy ounces. This can potentially enable fractionalization of loco London gold bars and direct investment by retail investors.
“In addition to the demand for native digital assets, we are seeing an appetite for tokenization solutions that can maintain a link to specific real-world use cases, such as gold,” says John O’Neill, global head, of digital assets strategy, markets, and securities services, HSBC.
