The banking giants Wells Fargo, a leading American financial services organization, and HSBC, a major British monetary institution, have confirmed plans to start utilizing blockchain technology to settle FX (Forex Exchanges) transactions.
In a December 14 press release, the two banking affiliates confirmed that they would employ a blockchain-based technology to settle matched foreign exchange (Forex) transactions.
The new renewed partnership will now allow the two banking entities to use a shared ledger to process operations, using U.S dollars, Canadian dollars, British pounds, and Euros.
This newly adopted blockchain technology will also provide the two banking giants with transparency of settlement status for matched Forex transactions.
The two entities will now utilize Payments-vs-Payment (PvP) operations, which will reduce the risks and costs of processing foreign exchange settlements.
While commenting about the new development, Mark Jones, Co-Head of Macro at Wells Fargo, confirmed that this is the first time the banking firm has employed blockchain in such a manner:
“We are pleased to announce that we will be utilizing blockchain technology for the first time in the settlement process of cross-border payments. We are extremely excited to be collaborating with HSBC on a project which places both organizations at the forefront of blockchain innovation. We believe this will be the first step of many utilizing transformative technology across our industry in the years ahead.”
According to the press release, blockchain adoption will enhance settlement speed and efficiency. In this case, Wells Fargo and HSBC will efficiently accumulate more bilateral payments obligations.
Interestingly, the recent crypto development will make HSBC, which has transacted over 3 million interbank trades worth $2.5tn since 2018, an FX Everywhere exchange platform.
The British institution also vowed to expand its system to add more participants. Notably, HSBC will introduce a central Financial Market Infrastructure (FMI) provider to manage its standards.
Mark Williamson, the Global Head of FX Partnership & Proposition at HSBC, said:
“As financial services continue to digitize the store of payment and value on a 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.”
Other Wells Fargo’s Crypto Advancements
Earlier this year, the Wall Street behemoth applied for a designated Bitcoin Fund with the United States Securities and Exchange Commission (SEC). At the time, it partnered with FS Investments, including Wells Fargo and New York Digital Investment Group (NYDIG).
In October, Elliptic, a London-based blockchain analytic firm, successfully raised $60 million in a Series C funding. The funding initiative saw the participation of Wells Fargo and Japanese investment manager SoftBank. The analytic firm said that it would use the funds to accelerate crypto adoption by global financial markets.