HSBC Launches Hong Kong’s First Blockchain-Based Settlement Service

HSBC Holdings has launched Hong Kong’s first blockchain-based settlement service. It has launched a tokenized deposit program that converts traditional bank deposits into digital tokens on a blockchain platform. The initiative marks a step forward for fintech development in the city.

Around-the-clock transfers between HSBC Hong Kong wallets and real-time payments in US dollars and are made possible by the tokenized deposit infrastructure for corporate clients. According to Lewis Sun, HSBC’s global head of domestic and emerging payments, the service has the potential to reduce costs and processing times compared to traditional banking systems.

“Tokenized deposits, when supported by regulated financial institutions, can offer a safe and fully compliant approach to improving payments and cash management for companies,” Sun . He added that Hong Kong’s position as an international financial center committed to digital money innovation makes this service a new benchmark for efficiency in corporate digital money solutions.

Ant International, an affiliate of Alibaba Group Holding, became the first client to complete an instant fund transfer using the deposit tokenization technology. The successful transaction followed a pilot test between HSBC and Ant International on Ant’s blockchain-based Whale platform.

Following the pilot program, HSBC adapted learnings from the joint innovation to develop its tokenized deposit service, according to Ant International’s separate announcement. Kelvin Li, Ant International’s general manager of platform technology, noted that tokenization serves as a link between blockchain technology and conventional banking.

“Through industry public-private collaborations and by working with leading partners, we aim to unlock more transparent, accessible, and efficient treasury management solutions for businesses worldwide,” Li explained.

HSBC’s tokenized deposit service operates as the first live initiative supported by the Hong Kong Monetary Authority’s (HKMA) Supervisory Incubator for Distributed Ledger Technology. The bank joined several financial institutions in completing proof-of-concept use cases under the HKMA’s program designed to foster tokenization market development.In August 2024, the HKMA unveiled a central bank digital currency testing regime. This permitted HSBC and five other participants to experiment with tokenized money for digital asset transactions.

This initiative brought closer to implementing interbank settlements through blockchain technology. The regulatory framework provides a foundation for financial institutions to explore blockchain applications and also maintain compliance and security standards needed for traditional banking operations.