Last year HSBC set out to explore permissioned protocols for public blockchain payments while addressing privacy, as part of Hong Kong’s expanded e-HKD+ trials. While the initial work covered retail central bank digital currency (CBDC) the second phase was expanded to tokenized deposits. HSBC’s work is now complete.
The bank said it explored e-HKD payments on various public blockchains including Arbitrum, Ethereum, Linea and Polygon. Additionally, within the bank it developed a private DLT solution using Hyperledger Besu, presumably to act as a tokenization platform prior to public issuance. All the blockchains are Ethereum compatible. HSBC has been one of the more cautious banks when it comes to public blockchains and crypto, so this is a notable move. HSBC Orion, the bank’s main permissioned digital asset platform, uses a combination of Digital Asset’s Canton and Hyperledger Fabric.
One of the key objectives of the bank’s e-HKD work was to investigate how to make private payments in a public environment, so it explored private enhancing technologies (PETs) as well as decentralized identity. While the bank will share further details later in the year, we’d observe this is an area attracting significant efforts, as many want to use public blockchains without the transactions being visible. Brazil’s central bank delayed the rollout of its wholesale CBDC and tokenized deposit project DREX, because it is waiting for these blockchain PETs to reach sufficient maturity. Additionally, HSBC explored the ability to make payments at scale using either a public or private DLT.
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