HSBC Holdings Plc, one of the world’s top bullion banks, has announced the launch of a platform that utilizes distributed ledger technology (DLT) to tokenize the ownership of gold held in its London vault as it looks to help usher in the digital age for the London gold market.
According to a report from Bloomberg, the new system creates digital tokens representing gold bars, which can then be traded through the bank’s single-dealer platform. This approach “generates a permissioned digital representation of clients’ physical gold holdings,” said Mark Williamson, global head of FX and commodities partnerships and proposition at HSBC.
The system is also designed to make investing in gold more accessible, as each token issued by HSBC is equivalent to 0.001 troy ounces versus the standard 400 troy ounces for a London gold bar. While the service will initially focus on institutional investors, HSBC said in the future, the system will allow for direct investment in physical gold by retail investors as long as local regulations allow it.
While there have been previous efforts to offer tokenized gold, including the release of Pax Gold (PAXG) by stablecoin issuer Paxos and the launch of Kitco Gold by Kitco Metals, the entry of HSBC into the tokenized gold market is notable as the bank is one of the world’s largest custodians of precious metals and one of four clearers on the London gold market, which processes more than $30 billion in gold transactions every day.
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