Wells Fargo, a top American financial services company, and HSBC Bank, a major British monetary institution, will use a blockchain-based product for matching foreign exchange (Forex), transactions.
The partnership will allow the two entities to use a common ledger to perform operations using US dollars, Canadian dollars and British pounds. In the near future, plans are to expand to other currencies.
Blockchain in Forex Transactions
A recent press release stated that the application of blockchain technology will allow the two banks giants to see the status of their settlements for Forex transactions in the respective currencies. This solution will enable both entities to use Payment-vs.-Payment (PvP), and is expected reduce the risk and cost of foreign exchange settlements.
Mark Jones, Co-Head Macro at Wells Fargo, revealed that this is the first instance of blockchain technology being used in this way.
“We are proud to announce that blockchain technology will be used for the first time in cross-border payments settlements. We are thrilled to collaborate with HSBC in a project that places both organisations at the forefront blockchain innovation. This will be the first of many steps to utilizing transformative tech across our industry over the coming years.
Blockchain technology will allow for faster settlements and reduce risks. Wells Fargo will be able accumulate bilateral payments obligations. This opportunity is built on HSBC’s FX Everywhere platform which has processed over 3,000,000 intrabank trades valued at more than $2.5tn since its inception in 2018.
The British institution hoped to expand the system by adding participants and creating a central Financial Market Infrastructure provider (FMI) to manage the standards.
Mark Williamson, Global Head of FX Partnerships & Propositions for HSBS – stated:
“As financial services digitize the store and value of payments and on blockchain, we are thrilled to collaborate with Wells Fargo to adopt this critical cross-border digital backbone to confirm and settle Foreign Exchange trades.”
Wells Fargo’s Crypto Endeavors
The Wall Street giant filed paperwork with the US Securities and Exchange Commission (SEC), earlier this year to register a Bitcoin fund. It partnered with FS Investments (NYDIG) and New York Digital Investment Group to launch the initiative.
Later, Elliptic, a London-based blockchain analytics company, secured $60 million in Series C financing led by Wells Fargo. SoftBank, a Japanese investment manager, also participated in the funding. The company stated that it will use the funds in order to accelerate cryptocurrency adoption by global financial market.
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