Global megabank HSBC is intensifying its focus on tokenization, positioning it as a preferred solution over stablecoins as international financial institutions accelerate their efforts in the stablecoin arena.
HSBC Holdings is set to commence offering tokenized deposits to its corporate clientele in the United States and the United Arab Emirates during the initial half of 2026. This strategic move was reported by Bloomberg on Tuesday.
The Tokenized Deposit Service (TDS) introduced by HSBC is designed to empower clients to execute domestic and international money transfers instantaneously, operating 24 hours a day, seven days a week. This was stated by Manish Kohli, HSBC’s global head of payments solutions.
"The discussion around tokenization, stablecoins, digital money, and digital currencies has undeniably gained significant traction. We are making substantial investments in this sector," Kohli remarked.
Understanding Tokenized Deposits and Stablecoins
Tokenized deposits are essentially digital representations of funds held in bank accounts. These are issued on a blockchain by regulated financial institutions, thereby enabling immediate, round-the-clock transfers and facilitating programmable payments.
In contrast to stablecoins, which are typically pegged to fiat currencies like the U.S. dollar and are backed by assets such as government debt, deposit tokens are generated directly from the issuer's balance sheet.
A key distinction is that while issuers of stablecoins are generally prohibited from offering yields on user holdings, tokenized deposits are designed to include interest payouts as one of their primary features.
Manish Kohli elaborated that HSBC intends to broaden the application of tokenized deposits into areas such as programmable payments and autonomous treasuries. These systems leverage automation and artificial intelligence to autonomously manage cash and mitigate liquidity risks.
"We are observing a significant theme of treasury transformation in nearly every major corporation we engage with," the HSBC executive noted.
HSBC's Stance on Potential Stablecoin Issuance
The planned expansion of the tokenized deposit service in the U.S. and UAE follows HSBC's initial launch of the offering in Hong Kong in May. Ant International was the first client to leverage the TDS solution.
Since its debut, HSBC has extended the availability of this service to several other markets, including Singapore, the United Kingdom, and Luxembourg.
HSBC's strategic commitment to tokenized deposits emerges at a time when other prominent banks, such as JPMorgan, are also significantly investing in this technology.
JPMorgan introduced its JPM Coin on November 12th. This deposit token is designed to represent U.S. dollar deposits held at the bank. JPMorgan has positioned this token as an alternative to traditional stablecoins, with Naveen Mallela, JPMorgan's blockchain executive, emphasizing that deposit tokens operate within the established regulatory frameworks of traditional banking.
Despite its strong push for tokenized deposits, HSBC has not entirely ruled out the possibility of issuing its own stablecoin in the future.
"It is something we will continue to evaluate," Kohli stated. He further added, "Several conditions need to be met, primarily the clarification of the legal framework."