HSBC taps Ripple’s Metaco to launch security token custody

November 8, 2023 Coin Telegraph

HSBC and Ant Group test tokenized deposits under HKMA sandbox

November 1, 2023 Coin Telegraph

Banks

During the test, HSBC was connected to the blockchain platform developed by Ant Group and supported by Ant Group’s banking partners.

Banking giant Hong Kong and Shanghai Banking Corporation (HSBC) have tested the use of tokenized deposits – from issuance to transfer to redemption – with major Chinese banker Ant Group, founded by Jack Ma, in a sandbox arranged by the Hong Kong Monetary Authority.

The initiative led by the banking institutions aimed to explore the potential of deposit tokenization in enabling always-on, real-time treasury fund movement between accounts held by a corporation within the HSBC network.

During the test, HSBC was connected to the blockchain platform developed by Ant Group and supported by Ant Group’s banking partners. In an official communication shared with Cointelegraph, HSBC revealed that the test encompassed the issuance, transfer, and redemption of deposit tokens, adding:

“It will pave the way for future research on how blockchain and tokenization can drive efficiencies and foster innovations in corporate treasury management.”

The involvement of Ant Group’s banking partners enhances treasury fund transfer with improved turnaround time, cost efficiency and visibility. Vincent Lau, Global Head of Emerging Payments, Global Payments Solutions, HSBC, confirmed the bank’s interest in continuing to leverage tokenized deposits and other financial innovations to streamline and optimize treasury management for clients.

HSBC has also been an active participant in various central bank digital currency (CBDC) initiatives, including Swift cross-border CBDC initiative Project mBridge.

HSBC reportedly introduced its first local cryptocurrency services in June 2023.

SCOOP: HSBC, the largest bank in Hong Kong, today allows its customers to buy and sell Bitcoin and Ethereum ETFs listed on the Hong Kong exchange, and is also the first bank in Hong Kong to allow it. The move will expand local users’ exposure to cryptocurrencies in Hong Kong. pic.twitter.com/vH0LieSVGw
— Wu Blockchain (@WuBlockchain) June 26, 2023

According to the report, HSBC would offer cryptocurrency ETFs listed on the Stock Exchange of Hong Kong, which include CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF and Samsung Bitcoin Futures Active ETF.

HSBC did not immediately respond to Cointelegraph’s request for comment.

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HSBC trialing quantum-safe financial transaction network in the UK

July 5, 2023 Coin Telegraph

Coin Telegraph

The venerable British bank became the first to join BT (formerly British Telecom) and Toshiba’s secure quantum “metro” network in the United Kingdom.

London–based HSBC, the eighth-largest bank in the world, will conduct a series of trials and experiments utitlizing quantum encryption technology in collaboration with Amazon Web Services, BT and Toshiba.

HSBC is the first bank to commit to trials on the new quantum “metro” network, a secure transaction system that utilizes unbreakable encryption to secure transactions via quantum cryptography.

Developed by Toshiba in partnership with telecom giant BT, the quantum metro network is designed to allow unconditionally secure transactions between institutions. HSBC will trial several use cases on the network, including financial transactions, video calls and edge computing.

One of the key quantum tech uses HSBC will experiment with is called “quantum key distribution” (QKD). This is essentially the secret sauce that allows two parties separated by distance to send information to one another in a secure manner.

QKDs are one-off encryption keys generated for both parties at the same time. Thanks to what Albert Einstein deemed “spooky action at a distance,” quantum states tend to collapse when measured. Thus, quantum data is deemed impenetrable.

For the purposes of QKD, this means any attempt by an external party to view, eavesdrop, intercept or modify an equipped transaction would be instantly detectable by both parties.

Currently, there are technological limitations on the distance QKDs can be sent. When people send classical data — information meant for use by a traditional, non-quantum computer — over long distances through fiber optics, people can boost the signal strength of the photons carrying the data.

However, photons carrying quantum data cannot be boosted, and they suffer from exponential loss due to the "noisy” nature of quantum information. This means that the longer the fiber optic network is, the less likely quantum data will survive transmission. Theoretically, the current limits can be overcome using higher-intensity photons, but scientists are just beginning to develop these solutions.

Scientists in China, for example, published research in May 2023 indicating they’d successfully sent QKDs across 1,000 kilometers (621 miles) of fiber optic cable, a new world record for non-relay QKD.

The HSBC trials being conducted on the BT-Toshiba metro network won’t need that much runway, though. Per the announcement, the tests will occur over 62 kilometers (38 miles) of fiber optic cables in England, connecting the bank’s global headquarters in Canary Wharf to a data center in Berkshire.

Largest Bank in Hong Kong HSBC Launches Bitcoin and Ethereum ETF Trading Services for Clients: Report

June 26, 2023 The Daily Hodl

Google Launches ‘Anti Money Laundering AI’ in Collaboration With Banking Giant HSBC

June 26, 2023 The Daily Hodl

HSBC rolls out cryptocurrency services in Hong Kong: Report

June 26, 2023 Coin Telegraph

Banks

Three crypto ETFs listed on the Stock Exchange of Hong Kong are now reportedly available for trading at Hong Kong’s largest bank.

Hong Kong and Shanghai Banking Corporation (HSBC) — the biggest bank in Hong Kong — has reportedly introduced its first local cryptocurrency services.

HSBC has enabled its customers to buy and sell Bitcoin (BTC) and Ether (ETH)-based exchange-traded funds (ETFs), local journalist Colin Wu reported in a tweet on June 26.

According to the report, HSBC will specifically offer cryptocurrency ETFs listed on the Stock Exchange of Hong Kong. At the time of writing, the exchange lists three crypto ETFs, including CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF and Samsung Bitcoin Futures Active ETF.

SCOOP: HSBC, the largest bank in Hong Kong, today allows its customers to buy and sell Bitcoin and Ethereum ETFs listed on the Hong Kong exchange, and is also the first bank in Hong Kong to allow it. The move will expand local users’ exposure to cryptocurrencies in Hong Kong. pic.twitter.com/vH0LieSVGw
— Wu Blockchain (@WuBlockchain) June 26, 2023

The move aims to expand local users’ exposure to cryptocurrencies in Hong Kong. According to online reports, HSBC Hong Kong had 1.7 million active mobile customers as of March 2022. About 95% of all retail transactions of HSBC in Hong Kong are reportedly processed online.

HSBC did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.

The new services come alongside HSBC reportedly launching the Virtual Asset Investor Education Center. The initiative is designed to protect investors from cryptocurrency-related risks, requiring them to read and confirm educational materials and risk disclosures before investing.

The education center is reportedly available on HSBC’s virtual asset-related products like the HSBC HK Easy Invest app, HSB CHK Mobile Banking app and online banking.

The news comes soon after some media reports suggested in mid-June that the Hong Kong Monetary Authority pressured major banks to accept crypto exchanges as clients. The region’s central bank and regulator specifically questioned companies like HSBC and Standard Chartered on why they were not taking any crypto exchanges as clients.

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Banking is ‘slowly dying’ — Former TradFi execs on reasons for joining crypto

June 22, 2023 Coin Telegraph

BetaCarbon

Cointelegraph spoke to former senior executives in traditional finance who've made the move to crypto. Would they ever go back?

Despite plenty of regulatory action in the United States and an ongoing crypto winter, former TradFi executives, now in crypto, said there’s no desire to return to their old banking lives.

Instead, several former traditional bankers told Cointelegraph they remain bullish about the industry's future and love the fact they can actualize real innovation.

Lisa Wade, CEO of DigitalX, is one such executive, having pivoted to crypto in December 2021. She was once the head of innovation and sustainability at National Australia Bank (NAB), one of Australia’s Big Four banks.

DigitalX Funds Limited (ASX:DCC) announced that it has recruited Lisa Wade (she/her) Wade as its new Chief Executive Officer.#executiveleadership #citi #natwest #nab https://t.co/lxORT3KDJp
— Finance Magnates (@financemagnates) December 23, 2021

Wade told Cointelegraph that the crypto industry provides her with greater freedom to take innovative risks compared to the banking sector.

“It is becoming very obvious Web3 financial rails are the future — it is hard to innovate internally so those of us with a fire in our bellies are jumping ship.”

Wade holds the belief that crypto will witness widespread adoption in the coming years, stating that “like ESG, this will be mainstream in 10 years or sooner.”

She added that she moved over to the crypto industry to “build something great […] in a way that a bank couldn’t.”

Similarly, Guy Dickinson, the CEO of carbon trading platform BetaCarbon, moved away from a lucrative executive banking role in 2022 as the former treasurer of HSBC Australia.

“I moved into the Web3 space as the carbon credit and environmental markets space was not easily accessible and Web3 provided access to the market,” he said.

I left my engineering job at a TradFi company in 2017 to professionally work in the crypto space. My colleague turned to me when I resigned and said “Remember, quitters never win and winners never quit.” No hard feelings, but I think about your stupid statement often, Steve
— Malcolm (@mxlcolm) February 3, 2022

For Dickinson, the motivation behind the move wasn’t driven by money, but rather by a quest for personal fulfillment.

“It is not more lucrative; it is however far more satisfying,” he said, adding that jobs in traditional finance are not as safe as they once were:

“The banking industry is slowly dying. Constant layoffs and technological efficiencies render many professional service roles at risk. A senior banking official always has a target on his back in the current landscape.”

Simon Dixon, CEO of investment platform BnkToTheFuture, told Cointelegraph he actually attempted to create a traditional bank in 2011 before building a “regulated crypto securities business.”

Dixon said when he did his research into creating a traditional bank, he found out it was actually a massive risk:

“When we applied for a license, the regulators told us we had to store our funds in another fractional reserve bank and that it’s only profitable if we leverage client funds like all banks.”

Later that year, Dixon discovered Bitcoin (BTC) and took an interest in the fact that “funds are owned in self-custody, spent peer to peer and backed by full reserve math and code.”

TradFi executives have been making their way over to crypto for years now.

According to a Fortune report published in July 2022, two JPMorgan executives, Eric Wragge and Puja Samuel, resigned to pursue a career in the crypto industry.

Wragge, previously a managing director at JPMorgan, made the decision to join Algorand (ALGO) as its head of business development and capital markets.

Samuel, who served as head of ideation and digitalization at JPMorgan, took on the position as head of corporate development at Digital Currency Group.

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SEC beyond crypto: HSBC and Scotia hit with fines over WhatsApp use

May 12, 2023 Coin Telegraph

Banks

Both HSBC and Scotiabank have not been very supportive of the cryptocurrency industry's adoption in recent years.

Amid the ongoing banking crisis in the United States, financial regulators continue scrutinizing major traditional finance companies like HSBC and Scotiabank.

The Securities and Exchange Commission (SEC) has charged HSBC’s securities arm HSBC Securities (HSI) and Scotiabank’s investment subsidiary Scotia Capital with penalties over recordkeeping violations.

HSI agreed to pay $15 million to settle with the SEC, while Scotia Capital agreed to pay $7.5 million. Additionally, Scotia paid $15 million to settle the U.S. Commodity Futures Trading Commission charges.

Announcing the news on May 11, the U.S. SEC said that the banks have failed to meet recordkeeping requirements for dealers registered with U.S. market regulators.

The authorities learned that HSBC and Scotiabank employees — including senior staff — were using unauthorized communication channels like text messages and WhatsApp. The SEC wrote:

“Managing directors and senior supervisors responsible for supervising junior employees themselves failed to comply with firm policies by communicating using non-firm approved methods on their personal devices about the firm’s broker-dealer business.”

According to the regulator, HSI’s failure to implement policies that prohibit such communications led to its failure to reasonably supervise its employees within the Section 15(b)(4)(E) of the Exchange Act.

“Neither firm maintained or preserved the substantial majority of these communications, in violation of the federal securities laws,” the SEC noted.

HSBC and Scotiabank are just the latest Wall Street firms to face fines due to their employees using personal devices and messaging apps. In September 2022, U.S. authorities reportedly bagged nearly $2 billion in fines in such cases, penalizing firms for talking deals and trades and personal apps. U.S. regulators launched a broad probe into use of personal messengers like WhatsApp by financial firms in 2021.

Both HSBC and Scotiabank are unlikely to be referred to as very cryptocurrency-friendly banks.

In March 2023, HSBC Holdings banned crypto purchases via credit cards for retail customers, joining a growing list of banks to tighten restrictions on digital assets. In 2021, HSBC Group CEO Noel Quinn penned an article opposing crypto and stablecoins, while supporting central bank digital currencies.

While Scotiabank reportedly allows transactions from crypto exchanges, the firm is also known for banning users from buying cryptocurrency. Some online users reported having issues with withdrawing or depositing Bitcoin (BTC) using their Scotia accounts in July 2022.

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