Over these two years, we have noticed many technological and financial company giants are jumping into investing in cryptocurrency and its underlying blockchain technology. Its no wonder that we thought that the acceptance of cryptocurrency, indirectly meant replacement of cryptocurrency.
We know very well that the banking sector is pretty much afraid of the popularity of cryptocurrency. And this was quite evident when investment tycoons like Warren Buffet came forward to speak against cryptocurrency. Whereas other financial giants like Goldmann Sachs are active in guiding institutional investors in backing bitcoin.
Recently, HSBC has been added to this emerging list of banks who have started to support this new innovative technology. Moreover, the bank has decided to explore blockchain technology to fuel up its financial services.
At the same time, it has come up with ‘interest’ to cautiously invest in the cryptocurrency space.
Awaiting For Real-World Use Cases
Josh Bottomley, the Global Head of Digital at HSBC, told Forbes;
“We are cautious looking into this area …There’s a use case when you have a token or currency that’s actually useful for a particular purpose and it serves that need.”
Bottomley has mentioned that bank isn’t looking for any investment in the leading crytocurrency like Ethereum or Bitcoin so far. But he didn’t fail to state that bank is neither reluctant on its investment for virtual currency. If with time, cryptocurrency proves to be a valid asset with practical usage then the bank will look into its financing.
However, he highlighted that the bank considers an important criterion for investment – i.e major asset volatility – considerate bank’s customer would not find it appropriate to invest in assets that have aggressive ups and down.
HSBC – Blockchain relation so far
In May this year, HSBC carried out first trade finance transaction on the blockchain using R3 developed single and shared Corda blockchain. The UK based bank issued letter of credit to ING bank for Cargil, a agricultural giant company. The transaction was for the shipment of Soyabeans from Argentina to Malaysia. This paperless transaction took place in less than 24 hours in comparison to traditional transaction which used to take almost 5-10 days.
This month, European blockchain specializing trading platform, we.trade, of which HSBC is part of founding memeber. We.trade comprise of five major banks and 20 companies. It uses IBM blockchain platform and powered by Hyperledger Fabric.
Last year August, HSBC joined Utility Settlement Coin (USC) project which was intended to facilitate the issuance of currencies by central banks globally through blockchain technology. The project’s co-founder Hyder Jaffrey said then that this project will lay the foundation to future in which central banks will be using their own cryptocurrencies. HSBC’s head of Fintech Partnerships and Strategy, Kaushalya Somasundaram, joined in support of Jaffrey’s comment claiming the possibility of USC shaping a future for central bank with its own cryptocurrency.