HSBC, the British banking giant, plans to move $20 billion worth of assets to Digital Vault, a new blockchain-based custody platform, by March 2020.
On November 27, it has been reported by Reuters that the global investment bank aims to digitize paper-based records of private placements in order to increase standardization and speed up processes in the growing industry.
However, HSBC reportedly expects the global volumes of private placements to surge 60% from 2017 to hit $7.7 trillion by 2022. Reuters states that the bank could not estimate how much the platform will save for the company or its clients.
Specifically, the Digital Vault platform will purportedly allow investors to track securities bought on private markets in real-time.
As private placements are usually conducted on paper, its processes are often associated with a lack of standardization, while access to documentation can be complicated and time-consuming.
By deploying blockchain, the company hopes to reduce the time needed to make queries on holdings by investors.
While HSBC has not provided any estimation for the potential outcomes of adopting the platform, an independent blockchain expert suggested major savings would be unlikely during the first stages of the project.
Likewise, Windsor Holden, an independent consultant, who tracks blockchain and cryptocurrencies, told that he does not expect to see savings from increased efficiency in the first year to 18 months.
It has been analyzed that private placements are funding rounds of securities which are sold not through a public offering, but through a private offering. However, the private placement is considered to be an option to an initial public offering for a company looking to raise capital for expansion.
In July 2019, Grayscale Investments, an American digital asset management fund, resumed private placement of Grayscale Bitcoin Trust shares, allowing investors to put money in Bitcoin (BTC) using a traditional investment structure.
Thus, previously, Kakao Corp., the messaging app operator of South Korea, revealed its plans to offer a private placement to attract investors to develop their blockchain subsidiary.
Source: reuters.com | cointelegraph.com