The CANTON & HSBC Partnership Goes Deep

Added: 2026-05-05

[00:00:00]Welcome to another edition of DHN Crypto. I'm Wade Teamer.

[00:00:05]I have to talk about the relationship between HSBC and Canton, ladies and gentlemen, because it goes much deeper than tokenized deposits. Couple days ago, HSBC announced that they have completed a tokenized deposits pilot on Canton. This is only months after JP Morgan announced plans to essentially do the same thing for Canton as well.

[00:00:30]But it's the relationship between HSBC and Canton's parent company, Digital Asset, that I want to share with you, because I believe this magnifies the plans that HSBC has.

[00:00:46]A lot of people also don't know HSBC has been involved with blockchain for nearly a decade now.

[00:00:54]And in this video, what I'm going to share with you are interesting connections that I have found between HSBC and Digital Asset, and their particular plans for bank-to-bank payments using blockchain technology.

[00:01:09]And by the end of it, I think you will agree with me in thinking that Canton has been chosen, ladies and gentlemen.

[00:01:18]And then there's also the ISO 20022 element. We'll touch on that at the end.

[00:01:22]But HSBC completes tokenized deposit pilot on Canton amid JP Morgan's integration plans. We're reading from coindesk.com, one of my favorite publications, ladies and gentlemen, in the space. But we're going to go to the juiciest portion of the deal. HSBC, as I mentioned, one of the oldest banks in the world, they have successfully competed completed a pilot simulating the issuance, transfer, and settlement of its tokenized deposit service on the Canton network. Three keywords there: issuance, transfer, and settlement.

[00:01:58]I'll highlight why they are important in just a moment, but let's finish this up.

[00:02:03]This marks the first time HSBC has issued and used tokenized deposits on a public blockchain. In the past, they have experimented with Ethereum in a private setting and other private DLT environments. This is the first time, though, HSBC has gone public with this move.

[00:02:26]This models their track record, and when we get to that portion, you'll see what I'm talking about. When HSBC first got into blockchain, this was the same method that they took. They spent months testing in a private environment, then took that information, that private pilot, and made it commercial, which was again, back then, a first of its time.

[00:02:51]Now, this particular pilot, the firm simulated tokenized deposit transfers and atomic settlement against other digital assets. There is one thing about Canton that does concern me.

[00:03:06]It is this number here.

[00:03:09]When you go over to rwa.xyz, you see the beautiful 330.43 billion in represented asset value, courtesy of Broadbridge, but it's the distributed asset value number that's flat zero that's a bit concerning, because we know of other networks. Stellar is the best example here, sitting on roughly what, 1 and 1/2 billion in distributed asset value. They just peaked at 2 billion this week. The majority of that is sitting in distributed asset value, and that means the tokenized assets on Stellar are moving around from one wallet to the other.

[00:03:54]As we can see here, that isn't happening on Canton.

[00:03:58]But I think HSBC specifically wants to fix that.

[00:04:04]So, let's go back over here to the second piece, ladies and gentlemen.

[00:04:08]And again, I remind you of the keywords: issuance, transfer, settlement.

[00:04:14]It also highlights interoperability as a key to scaling digital financial markets and supporting institutional adoption.

[00:04:22]The TDS supports major fiat currencies, including the US dollar, the Great British pound, the euro, the Hong Kong dollar, and the Singaporean dollar, enhancing liquidity management through 24/7 real-time settlement and programmable payments. I haven't had the chance to dig into Canton's white paper fully.

[00:04:43]If there is a payment side to Canton, consider the market screwed.

[00:04:50]>> [laughter] >> Okay? I literally read an opinion article before I present record here, um comparing Canton to XRP. And the author says, "Why are people still following XRP if Canton does everything XRP said it would do in half the time?"

[00:05:14]Hey, he has a point.

[00:05:18]Can't argue that. What Canton has pulled off, more importantly, what Canton has pulled off with who it has pulled off, is impressive.

[00:05:29]These are These were These types of relationships were theories and speculation before Canton hit the market.

[00:05:38]But Canton somehow is figuring this out. But like I mentioned in the beginning, it's their parent company, Digital Asset.

[00:05:48]They are the ones that have been around since the early 2000s, ladies and gentlemen.

[00:05:55]You can't go up against that type of experience.

[00:05:59]It's hard to.

[00:06:01]But as we can see here, the name of the game for HSBC and Canton is the issuance, transfer, and settlement of tokenized deposits supported by major fiat currencies with a level of interoperability in order to get some of this value distributed around the world.

[00:06:23]And if anybody could do it, it's definitely HSBC.

[00:06:26]Now, like I've been mentioning, HSBC, their track record in blockchain is deep. This is the article about JP Morgan, though. Clearly, I hit the wrong button. But September of last year, BNP Paribas, alongside HSBC, joined the Canton Foundation.

[00:06:44]Their participation built on recent momentum following additions of Goldman Sachs, Hong Kong FMI Services Limited, and Moody's rating in March, the stock rating company. That's Moody's there.

[00:06:58]But Hong Kong FMI Services Limited. When I read this article, it began to That was one of the clues.

[00:07:05]I'll say it like that. That was one of the clues. So, September of 2025, HSBC joined the foundation. They are now eligible to become a super validator, which as of this morning, I believe Canton just announced a new super validator, uh Figure Management. Figure Management, another fin- another fintech firm.

[00:07:28]But now, HSBC is eligible to become a validator, which Canton has a specific process for it. It's a performance-based criteria.

[00:07:39]Psh, I'm sure HSBC has no problem hitting that. And then after they hit those metrics, there's a vote that takes place, and I'm pretty sure everybody else in the foundation is waiting for that vote.

[00:07:51]But Hong Kong here. Let's Let's Let's maintain our focus on Hong Kong, because HSBC and these tokenized deposits, this is a trend here, and HSBC is at the lead.

[00:08:01]You can see here, 9 months ago, they began sending these tokenized deposit services out. They began deploying it.

[00:08:09]They launched after launching their tokenized deposit service in Hong Kong, they then offered the capability in Singapore. And their first customer was Ant Financial.

[00:08:22]This is the Visa of the East. I'll just put it that way. You look up Ant Financial, you'll see how big of a company that is. But they were the first client to adopt the solution locally, which primarily means within their ecosystem, to enable real-time 24/7 Singapore dollar and US dollar payments.

[00:08:45]So, it's important that you understand what a tokenized deposit is.

[00:08:51]The simplest way to describe it is a digitized version of a bank asset, where a stablecoin is a reference to the dollar, a digital reference to a US dollar or whichever national currency, tokenized deposits represent actual bank liabilities on blockchain.

[00:09:11]That is why banks want to get to it so fast.

[00:09:15]So, HSBC started in Singapore Well, they started in Hong Kong, naturally. Then they expanded to Singapore. Couple years go by, their reach expands, obviously.

[00:09:25]Now, the UK wants to get involved. The UK is tokenizing uh their sterling. This is part of the GBTD project being supported by UK Finance, an extension of the regulated liability network.

[00:09:43]And wouldn't you know, wouldn't you know it, guess who is a participating member?

[00:09:48]HSBC, alongside Quant Network. Just had to drop that in there. But HSBC is a major participant.

[00:09:58]Just recently, HSBC expanded this tokenized deposit service to the United States. And this is the confirmation of an announcement that they made back in November where they announced uh where they said that they would be expanding this service to the United States. So, now we have it positioned in the UK, Singapore, Hong Kong, the United States.

[00:10:25]Best believe it's happening in Europe, tokenized deposits.

[00:10:30]And with the proximity Canton has to HSBC now, with HSBC launching this same tokenized deposit service on Canton's public rails in the United States, well, this sets up something very massive, ladies and gentlemen.

[00:10:53]Very massive.

[00:10:55]But let me go a bit deeper. So, you head on over to Canton's ecosystem. You see HSBC, provider of Orion. HSBC is also connected to Canton native applications like HKEX Synapse.

[00:11:11]We'll touch on that one in just a second.

[00:11:14]But you see in the beginning, provider of HSBC Ora- Orion.

[00:11:18]This is another yet another example of how deeply embedded HSBC has been with blockchain.

[00:11:25]They have their own. It launched in 2023.

[00:11:29]However, it is missing one particular feature.

[00:11:35]Let's dig into this, right? So, Orion's DLT platform uh or HSBC's DLT platform Orion was built for digitally native bonds. The stated purpose is to let institutions invest or issue these instruments on a DLT platform while managing the full life cycle including issuance, holding, settlement, and redemption. Sounds simple enough.

[00:12:02]Down further they go into all the places where they've done work before.

[00:12:09]And will uh some names on that list will be familiar. You can see the UK digital gilt pilot, which is where the UK government appointed HSBC as the platform provider for the digital pilot, naming Orion specifically.

[00:12:25]And then we have this timeline here.

[00:12:30]Going all the way back to 2023, first digital sterling bond tokenized on Orion.

[00:12:36]Hong Kong's government multi-currency digital green bond in 2024, that made the news. A digital bond issued in Hong Kong under issue under English law in 2024, an EIB bond issued under the Eurosystem in 2024, Luxembourg digital uh digital treasury certificates in 25.

[00:12:59]Then they expanded into Abu Dhabi, Qatar, and then most recently, a multi-currency green bond issued by the Hong Kong government described as the world's largest digital bond to date at roughly 1.3 billion.

[00:13:16]So, this is what HSBC does with blockchain.

[00:13:21]And they have now chosen to bring this experience, this expertise to Canton.

[00:13:31]Canton, ladies and gentlemen. Little Canton.

[00:13:34]Okay? Now, there was a specific There was a point in here where they talked about yes, it's under where Orion fits into their broader digital strategy.

[00:13:49]I believe I I I went over it here. Yes.

[00:13:52]So, HSBC positions Orion as part of its broader digital assets and currencies capabilities. Within that framing, Orion is one of the key rails for tokenized securities. While broader initiatives explore how tokenized assets might settle against tokenized money. Orion's inclusion in the bank's tokenization narrative matters because a tokenized bond platform without a credible settlement asset often gets stuck at on-chain record keeping with off-chain payment.

[00:14:26]That is this right here, on-chain record keeping. That is what represented asset value means, the record of the value The record of the asset's value is on-chain, but not the value of the asset itself.

[00:14:42]What they plan to fix is that exact problem. HSBC is explicitly exploring tighter settlement integrations rather than leaving Orion as a purely issuance-focused ledger.

[00:15:00]Orion had an interoperability problem.

[00:15:04]They're going to Canton to fix it.

[00:15:07]How will they fix it? Well, this is where the connections really get strong, ladies and gentlemen.

[00:15:14]So, as I've been telling you, HSBC has been in the blockchain game for a minute. It goes all the way back to 2018 where they say they made the world's first trade finance transaction using blockchain. As a matter of fact, guys, the OGs in the audience, you're going to jump out of your seat when you hear this name cuz it's been a while.

[00:15:36]But they completed this using R3's Corda trade finance platform.

[00:15:45]Yeah.

[00:15:47]This is where they began.

[00:15:50]So, when I discovered that, I immediately knew HSBC was in about any games.

[00:15:56]So, the date though, 2018.

[00:16:00]All right, cool. Canton wasn't around in 2018. So, how could I possibly connect the two?

[00:16:07]Well, I'll tell you who was around in 2018.

[00:16:11]Digital Asset is the parent company for the Canton network. As you can see here, last November or last June, they raised 135 million to accelerate the adoption of Canton, and that's exactly what they ended up doing.

[00:16:25]That's exactly what they ended up doing, but I show you that so you understand who the parent company is for Canton.

[00:16:33]Then I discovered this here, customer story, HKEX.

[00:16:38]Sounds familiar, doesn't it?

[00:16:41]Well, this article here courtesy of Ledger Insights from October of 2018 ties it all together, folks. Hong Kong Exchange in blockchain partnership with Digital Asset.

[00:16:56]The very same Digital Asset. Now, here is where it all begins to tie together.

[00:17:02]Hong Kong Exchanges and Clearing Limited announced that it's partnering with Digital Asset to use blockchain for post-trade processing and reduce settlement risk.

[00:17:14]This follows the successful completion of a prototype.

[00:17:18]HKEX is trying to solve an issue that is very specific to Hong Kong. In most jurisdictions, settlement takes 2 days, whereas in mainland China, it takes 4 hours. HKEX Stock Connect system enables international investors to trade mainland China shares referred to as northbound trading.

[00:17:42]The problem is that settlement happens in the middle of the night for some of these international investors, and asset managers have to decide how to allocate the trade to particular funds. Based on that decision, the information needs to be synchronized with other participants such as brokers, custodians, and HKEX's clearing house. They all need a single source of truth. They all need a centralized ledger.

[00:18:11]The breadcrumbs have been in place for so long for them to ultimately choose Canton.

[00:18:21]And here is why I believe they ultimately did.

[00:18:25]First, we go back to the customer story, HKEX. Hong Kong Exchanges and Clearing is using DAML.

[00:18:34]DAML, that is the smart contract language that essentially is the heartbeat of Canton. We covered that when we went into our deep dive on the Canton network, which I'll connect to this video.

[00:18:50]But it's that DAML smart contract language that everybody wants, that everybody is using, that is so that makes Canton so attractive.

[00:19:01]And again, we have here HKEX Synapse.

[00:19:08]HKEX Synapse is a DLT settlement acceleration platform using Canton technology that standardizes and streamlines northbound Stock Connect post-trade workflows. Ladies and gentlemen, what is that What What What does it say? Was it the same thing?

[00:19:29]Yeah.

[00:19:30]Yeah, post-trade processing to reduce settlement risk.

[00:19:36]HKEX Synapse.

[00:19:39]Again, this is all using Canton built on the back end with HSBC's technology.

[00:19:47]How do I know this for sure? Well, HKEX, ladies and gentlemen, is the NASDAQ for Hong Kong. It's the It's their largest stock exchange, okay?

[00:19:59]The New York Stock Exchange of Hong Kong, essentially.

[00:20:03]But they have a number of services and products, obviously. Here's one of them, Orion Cash Platform. On this page here, there's no explicit connection to HSBC, but it's clear here, all right? As part of our technology advancement journey, Orion's Cash Platform, HKEX Cash Market Platform, is undergoing a series of enhancements released in phases that are aimed at providing more efficient, modernized, and seamless experiences for market participants.

[00:20:37]I wonder what that could be.

[00:20:40]Let's keep going.

[00:20:42]Then we have here OTC Clear.

[00:20:46]Last year, if I'm not mistaken, that's a that became or HSBC announced that as being one of their products.

[00:20:55]I can pull it up here, just so we can be 100% here.

[00:21:05]Yeah, you can see I have been uh digging around.

[00:21:11]It's a clearing and settlement.

[00:21:16]Clearing and settlement.

[00:21:25]Yeah.

[00:21:27]2025, ladies and gentlemen, they started rocking with this. You can see HSBC facilitates first trades under HKMA's offshore bond connect repo business.

[00:21:40]>> [snorts] >> And boom, we have it here. HSBC also facilitated the rehypothecation of bond collaterals for CITIC Securities and Capital Management, allowing the reuse of bonds gained from repo trades by effectively posting them as non-cash margin collateral for swap connect transactions through Clear through Hong Kong Exchanges and Clearing OTC Clear.

[00:22:09]So, here's the direct connection between HSBC and HKEX.

[00:22:15]But let's talk about the Synapse.

[00:22:20]Because as you can see here, this is the primary product using Canton technology.

[00:22:26]Why is that so important?

[00:22:29]Well, as you can see, ladies and gentlemen, the overview, Stock Connect Landmark Mutual Market Access Program linking Hong Kong and Mainland China equity markets has pioneered greater accessibility and investor choice, resulting in record trading volumes. In collaboration with the Depository Trust & Clearing Corporation, Hong Kong Exchanges and Clearing is launching HKEX Synapse, a new integrated settlement platform to complement to complement the existing post-trade infrastructure for northbound Stock Connect. We use with the use of DAML smart contract technology, i.e. Canton, this solution aims to standardize and streamline post-trade workflows, maximizing connectivity and efficiencies in a transparent and secure manner.

[00:23:18]Very eloquently written there.

[00:23:22]And you can see the introduction. This launched in 2023.

[00:23:27]Now, here's what I find to be so interesting. And again, they stated they're using the same DAML technology on Canton site.

[00:23:36]They're using Canton technology, just so we are clear.

[00:23:40]Because this next piece of the puzzle is the one that's going to rock your socks.

[00:23:45]HKEX Synapse value proposition, leveraging existing connectivity.

[00:23:51]>> [snorts] >> Here it is.

[00:23:53]Leverage open source. What they do to leverage existing connectivity is use open source DAML smart contract technology. Using APIs for flexible connectivity to Synapse ISO 20022 allows for efficient integration.

[00:24:13]And it doubles down again down here.

[00:24:15]Leveraging new technology and latest Swift standards, Synapse leverages open source DAML smart contract technology using APIs for flexible connectivity adhering to ISO 20022 standards.

[00:24:30]So, when people ask, why is ISO important to crypto?

[00:24:36]Tell them interoperability.

[00:24:39]They do not connect or communicate to each other without reading this language.

[00:24:45]Banks are using ISO for the exact same reason. It makes sense that these digital currencies would use it for the exact same reason.

[00:24:56]I don't fault anybody for not really understanding the ISO thing. It took us years to get to this point. I'm still understanding it myself. But this is as plain as it has ever been.

[00:25:10]And we already know China has been using ISO 20022 since 2015.

[00:25:19]Does this make Canton an ISO network?

[00:25:23]Technically, >> [laughter] >> it technically does.

[00:25:27]It technically does. So, when you pair all of this together, ladies and gentlemen, HSBC launching tokenized deposits on Canton is the culmination of almost a decade's worth of research into figuring out how they could take tokenized deposits, banks tokenized deposits, and put them into an interoperable system where they can reduce settlement times and increase efficiency all across the globe.

[00:26:05]And they tell us we're crazy.

[00:26:06]>> [laughter] >> They tell They tell us they were crazy for looking into this stuff.

[00:26:11]I'd rather be crazy than on the wrong side of history.

[00:26:17]I'll just leave it at that. So, if you're new and you found value, of course, you know what I need you to do.

[00:26:24]Hit that like, subscribe, leave a comment, of course, or press that hype button. It It lights up when you press it. It's kind of cool. You get little confetti or whatever.

[00:26:32]It's a great experience. On top of that, if you made it to the end, drop DHN down in the comments. Also, head on over to dhncrypto.com.

[00:26:41]Make use of the additional educational resources over there.

[00:26:45]And with that, that's all I got for this one. Let me know what you think down in the comments about the HSBC and Canton connections. And with that, y'all know what time it is. If that money is digital, so is the hustle.

[00:27:04]>> [music]