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HSBC To Offer e-CNY Services; Is China’s Financial Market Evolving?

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On June 10, HSBC China became the first foreign bank to offer electronic Chinese Yuan (e-CNY) Services or digital Yuan services. This will help customers to avail services linked to the central bank digital currency (CBDC), which will replace a portion of the cash in circulation.

HSBC’s User Base For The e-CNY Services?

At a time when the financial ecosystem is evolving, HSBC China has begun offering e-CNY Services to corporate clients including retail and corporate customers. Issued by the People’s Bank of China, digital Yuan would be used for payments in different branches including Shanghai, Beijing, Guangzhou, Jiaxing, and Suzhou.

e-CNY is a digital form of China’s national currency Yuan (the Renminbi or RMB), it plays a vital role in preventing financial scams, and other illicit activities. It also improves the efficiency of the central bank payment system.

On June 7, the bank announced that clients could link their bank accounts with digital Yuan accounts for asset management. Moreover, HSBC’s expansion showcases that foreign banks are focusing on the digital renminbi (RMB). The personal digital RMB service was launched in China in Movember 2023 after which HSBC China deployed it.

HSBC’s Tokenized Securities Storage Service 

In November 2023, the bank announced the launching of custody services for tokenized securities and digital asset storage. After BNY Mellon, a US financial institution, HSBC is the biggest bank to adopt digital asset custody.

To make the services effective, the foreign bank used technology from Metaco, a Swiss cryptocurrency custody firm acquired by Ripple blockchain. Moreover, blockchain will be used as a shared ledger for digital asset documentation.

Further, the blockchain application by HSBC wasn’t the same as those of Bitcoin (BTC) and other cryptocurrencies. At press time, BTC was hovering at $69,413.21, after a 0.11% intraday surge.

The bank would use the blockchain for payments, trading, and other motives without any involvement of cryptocurrencies.

China’s Cryptocurrency Gains

Despite a ban on cryptocurrency payments and the blocking of initial coin offerings (ICOs), China is slowly shifting towards a fintech ecosystem.

Chinese media reported that a survey revealed that investors based in Mainland China minted more than $1 Billion in crypto investments in 2023 amid a strict ban on crypto payments imposed in 2021.

China Estimated Cryptocurrency Gains 2023 I Source: Chainalysis 

Between July 2022 and June 2023, traders and investors in China received a net $86 Billion in cash from digital asset activities, as per Chainalysis. The value is significantly higher than Hong Kong’s $64 Billion indicating the attraction of Chinese markets towards blockchain and cryptocurrencies.

Disclaimer

The analysis given above is for informational and educational purposes only. You should not take it as financial, investment, or other advice. Investing in or trading crypto assets is risky. Please consider your circumstances and risk profile before making any investment decisions.

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