HSBC now offers tokenised gold to institutional clients, becoming the first bank in the world to do so. The tokenisation involves creating “digital twins” of loco London gold bullions that are custodied in HSBC’s vault. The tokenised physical gold can then be traded between HSBC and institutional investors through the HSBC Evolve platform, or through an application programming interface (API).
The tokenisation generates a permissioned digital representation of the client’s physical gold holdings. This is then integrated into HSBC’s operational infrastructure, including HSBC Evolve, providing a digital overlay that allows clients to see their tokenised gold trades and positions that correspond to their physical holdings. The automated process is expected to be a more efficient and cost effective way for investors to track their allocated and unallocated gold positions.
In comparison to loco London gold bars, which are 400 troy ounces, each token represents only 0.001 troy ounce. This opens the possibility of fractionalisation of loco London gold bars and the participation of retail investors.
For HSBC, the tokenisation of gold is seen as a complement to HSBC Orion, its platform for issuing and storing native digital assets. The bank is one of the world’s largest custodians of precious metals and is one of the four clearers of the loco London gold market.