While the cryptocurrency market is looking to find its footing, blockchain technology continues to show promise. UK bank HSBC has stated that it managed to settle over $250 billion worth of FX transactions using distributed ledger technology (DLT).
The announcement from the London-headquartered bank is a testament to the potential for reshaping traditional finance. Traditionally, banks have been relying on the services of CLS for settlement of foreign exchange transactions. HSBC stated that it processed over 3 million FX transactions via its DLT in 2018. This is only a fraction of the company’s massive FX business.
Proof of Concept
If anything, the successful experiment in which HSBC managed to demonstrate the applicability of blockchain technology in the settlement of FX transactions shows how the future looks.
The traditional go-to company for FX settlement services, CLS Group, deployed its own DLT platform in November last year. The company teamed up with major investment banks Goldman Sachs and Morgan Stanley.
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In contrast to a number of startups which are yet to come up with their own products, the capital-rich traditional financial industry is taking matters into its own hands. While maintaining the concept of decentralization, major banks are using blockchain technology to cement their dominance of traditional finance.
That said, the projects are not yet live and last year’s practical application phase has been largely a test before wider adoption of DLT-based technologies.
HSBC’s DLT News Causes Confusion
After the FT first published the news about HSBC adopting DLT (Distributed Ledger Technology) to use for FX settlement, a crypto token with the DLT acronym rallied over 120% over the past 24 hours.
Needless to say, the company behind the DLT token, called Agrello Delta has nothing to do with HSBC’s efforts in the blockchain space. The reminiscence of the incident to the golden days of crypto trading when Long Island Iced Tea renamed to Long Blockchain, certainly caused a laugh or two over the past 24 hours.