Digitizing private placement records, HSBC plans to transfer large-scale assets to blockchain custody platform

Cointelegraph reported on November 28 that British banking giant HSBC plans to transfer $ 20 billion worth of assets to the blockchain custody platform Digital Vault by March 2020.

OLYMPUS DIGITAL CAMERA (Image source: flickr )

Reuters reported on November 27 that the purpose of this global investment bank's deployment of a blockchain hosting platform is to digitize paper records of private placements in order to improve the standardization of this emerging industry and speed up the process.

HSBC predicts that by 2022, global private placements will surge by 60% from 2017 to a scale of US $ 7.7 trillion.

HSBC helps investors track securities purchased on the private market in real time

The Digital Vault platform is said to allow investors to track securities purchased on the private market in real time.

Because private placement is usually recorded on paper, the process is often lacking in standardization, and the process of obtaining documents is complex and time-consuming. By deploying the blockchain, the company hopes to reduce the time it takes for investors to check holdings.

Although HSBC has not yet estimated the possible results of using the platform, an independent blockchain expert believes that it is unlikely to save a lot of money in the first phase of the project.

Windsor Holden, an independent consultant who tracks blockchain and cryptocurrencies, told Reuters that he expects HSBC to use the platform for a significant period of time to improve efficiency in the first 18 to 18 months, but it will not save money.

Cryptocurrency and blockchain industries use private placements to raise funds

Private placement, that is, private investment funds, refers to investment funds that are raised from qualified investors through non-public offerings and invested in stocks, equity, bonds, futures, options, fund shares, and other investment targets agreed in the investment contract. Initial public offering companies typically use private placements to raise funds to expand.

In July 2019, US digital asset management fund Grayscale Investments resumed the private placement of Bitcoin Trust stocks, allowing investors to make purchases using traditional investment structures. Grayscale's trust private equity funds regularly provide daily subscriptions to qualified investors throughout the year.

Earlier, Kakao, a Korean instant messaging application operator, revealed its plan to attract investors to develop blockchain subsidiaries through private placements.