HSBC Advances CBDC Innovation with e-HKD Trials on Public Blockchains
HSBC Completes Exploration of Permissioned Protocols for e-HKD Payments
HSBC’s Innovative Approach to blockchain Payments
Last year, HSBC embarked on a significant initiative to investigate permissioned protocols for public blockchain payments, focusing on privacy concerns as part of Hong Kong’s expanded e-HKD+ trials. Initially centered on retail central bank digital currency (CBDC), the project has now evolved to include tokenized deposits, marking the completion of HSBC’s extensive research.
Diverse blockchain Platforms Explored
The bank examined e-HKD transactions across multiple public blockchain platforms, including Arbitrum, Ethereum, Linea, and Polygon. In addition, HSBC developed a private distributed ledger technology (DLT) solution utilizing Hyperledger Besu, likely intended to serve as a tokenization platform before any public issuance. Notably, all the explored blockchains are compatible with Ethereum. This cautious approach to public blockchains and cryptocurrencies distinguishes HSBC in the financial sector, making this development particularly noteworthy. The bank’s primary permissioned digital asset platform, HSBC Orion, integrates both Digital Asset’s Canton and Hyperledger Fabric.
Focus on Privacy in Public Transactions
A central aim of HSBC’s e-HKD initiative was to investigate the feasibility of conducting private transactions within a public blockchain framework. The bank delved into private enhancing technologies (PETs) and decentralized identity solutions. While HSBC plans to release more detailed findings later this year, it is evident that there is a growing interest in utilizing public blockchains while maintaining transaction confidentiality. For instance, Brazil’s central bank has postponed the launch of its wholesale CBDC and tokenized deposit initiative, DREX, as it awaits the maturation of these blockchain privacy technologies. Furthermore, HSBC assessed the capability to facilitate large-scale payments using either public or private DLT systems.
Insights from the e-HKD CBDC Survey
In addition to showcasing its e-HKD efforts, HSBC conducted a survey involving 700 participants regarding CBDC perceptions. The results revealed that a remarkable 90% of respondents recognized the significance of privacy in financial transactions. Awareness of e-HKD was notably higher among professional investors, with one-third of participants expressing a willingness to use e-HKD for cryptocurrency transactions, viewing it as a secure form of currency.
Launch of Tokenized Deposit Service
Recently, HSBC introduced its tokenized deposit service in Hong Kong, with Ant International being the inaugural client. This move underscores the bank’s commitment to innovation in the digital asset space and its proactive approach to meeting the evolving needs of its clients.
