Blockchain yes, bitcoin no? HSBC and Wall Street bank Wells Fargo announce a blockchain solution for the foreign exchange (FX) settlement.
The two banks will use blockchain technology on U.S. dollars, sterling, euro and Canadian dollars transactions. This would be the first time blockchain technology had been used to settle live cross-border payments, according to Wells Fargo.
HSBC and Wells Fargo use HSBC’s FX Everywhere platform with blockchain technology. They will settle FX transactions with real currencies and real accounts in less than 3 minutes.
This improves real-time transparency, reducing FX settlement risks and costs. Moreover, this revolutionary adoption of blockchain technology means the two banks will bypass CLS – a two-decades-old FX settlement system under the US Federal Reserve.
Without mentioning Hong Kong dollar, HSBC plans to expand the blockchain technology to other currencies in the future. They are expanding the system to other banks and emerging market currencies. Also, more financial market infrastructure operators are interested in joining the system.
Blockchain: Next Battlefield For Wall Street Banks
Meanwhile, other banking giants, including Goldman Sachs, Citi and JPMorgan are seeking ways to integrate blockchain technology into their businesses.
For instance, JPMorgan is hiring software engineers to focus on its Onyx blockchain. It includes a blockchain payments network and JPM coin, the bank’s wholesale payments token.
Earlier, the Bank of France, the Swiss National Bank (SNB), and the Bank for International Settlements tested cross-border payment. This involves the wholesale central bank digital currency (CBDC) using distributed ledger technology.
Cross-border payments have been a major application of blockchain technology. Ripple (XRP), the 8th largest cryptocurrency by market cap, is a cryptocurrency money transfer network. It claims to facilitate cross-border transactions that are substantially faster and cheaper.
Interestingly, it’s not the first time HSBC invests in blockchain. This November, HSBC invested in MetaMask wallet developer ConsenSys. The Ethereum-focus developer provides blockchain R&D services for corporations and financial institutions.
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