Wells Fargo – a leading US financial services organization – and HSBC Bank – a major UK monetary institution – will use a blockchain-based product to settle the corresponding foreign exchange (Forex) transactions.
Through the partnership, the two entities will use a shared ledger to process operations with US dollars, Canadian dollars, British pounds, and Euros. There are also plans to extend to additional currencies in the near future.
Blockchain in Forex Transactions
According to a recent press release, the application of blockchain technology will provide the two banking giants with transparency of settlement status for matched Forex transactions in the aforementioned currencies. The solution will enable both entities to use payment-for-payment (PvP) operations and is expected to reduce the risks and costs of processing foreign currency settlements.
Mark Jones – Co-Head of Macro at Wells Fargo – revealed this is the first time when blockchain technology has been employed in such a manner:
“We are happy to announce that we will be using blockchain technology for the first time in the process of settling cross-border payments. We are extremely excited to be working with HSBC on a project that puts both organizations at the forefront of blockchain innovation. We believe this will be the first step in the use of many processing technologies in our industry in the years to come. “
Apart from reducing the risks, the shared ledger should also enhance settlement speed and efficiency by using blockchain technology. Wells Fargo and HSBC will be able to accumulate bilateral payment obligations. The opportunity builds on HSBC’s FX Everywhere platform, which has transacted over three million intrabank trades worth over $2.5tn since its launch in 2018.
The UK institution has raised hopes of expanding the system by adding more participants and introducing a central financial market infrastructure provider (IMF) to manage the platform’s standards.
Mark Williamson – Global Head of FX Partnerships & Propositions at HSBS – said:
“As financial services continue to digitize the store of payment and value on blockchain, we are delighted to work with Wells Fargo in the adoption of this important cross-border digital backbone for the confirmation and settlement of Foreign Exchange trades.”
Wells Fargo and its crypto business
Earlier this year, the Wall Street giant filed an application with the United States Securities and Exchange Commission (SEC) to register a designated Bitcoin fund. To launch the initiative, he partnered with FS Investments and New York Digital Investment Group (NYDIG).
Later on, in October, Elliptic – a London-based blockchain analytics firm – secured $60 million in Series C funding led by Wells Fargo and the Japanese investment manager – SoftBank. The company announced it would use the funds to accelerate cryptocurrency adoption by global financial markets.
