HSBC Introduces Blockchain for London's Gold Market Modernization

HSBC is introducing blockchain technology to transform the outdated London gold market. The bank's platform tokenizes ownership of physical gold stored in its London vault using distributed ledger technology. Clients can track their gold, even down to each bar's serial number, making the process quicker and more efficient. HSBC plans to add more precious metals to the system in the future.

HSBC's unique position as a major custodian of precious metals in the London gold market, where over $30 billion in gold trades occur daily, sets it apart. The London Bullion Market Association estimates there are over 698,000 gold bars worth approximately $525 billion in Greater London vaults.

One token on HSBC's system represents 0.001 troy ounce of gold, enabling potential use by ordinary investors if local laws permit. Initial emphasis will be on institutional investors. HSBC's gold system is part of its broader blockchain initiative, including the HSBC Orion platform for digital bonds issuance and storage.

Major financial firms like JPMorgan Chase, Euroclear, and Goldman Sachs have recently launched blockchain-based solutions, pushing the adoption of distributed ledgers in the mainstream financial industry. The success and adoption of these platforms on a large scale remain to be seen.