In a significant step for institutional digital finance, HSBC has successfully completed a pilot of its Tokenized Deposit Service (TDS) on the Canton Network, a permissioned blockchain platform. The test simulated the issuance, transfer, and atomic settlement of tokenized deposits across five major fiat currencies: the US Dollar (USD), Euro (EUR), British Pound (GBP), Hong Kong Dollar (HKD), and Singapore Dollar (SGD).
The pilot marks the first time HSBC's deposit token infrastructure operated in a public blockchain environment, moving beyond internal ledgers. It focused on critical functionalities like 24/7 near-instant settlement and conditional payments, where transactions execute automatically upon meeting pre-defined conditions (e.g., upon receipt of a digital shipping document). This programmability aims to reduce operational risk and manual reconciliation in areas like trade finance.
A core achievement was testing interoperability and atomic settlement. HSBC connected its internal deposit ledger to the Canton Network, allowing its tokenized deposits to interact with external applications. Atomic settlement ensures both sides of a transaction complete simultaneously, reducing counterparty risk and eliminating post-trade reconciliation. The pilot explored a framework for delivery-versus-payment across both cash and asset legs within a shared infrastructure.
The Canton Network, designed by Digital Asset for regulated institutions, provides a permissioned environment with selective data sharing and privacy controls. This addresses a key constraint for banks, balancing blockchain transparency with confidentiality and regulatory requirements. "The work shows how tokenisation is evolving within the banking sector and the type of infrastructure required to support it at scale," said Manish Kohli, Head of Global Payments Solutions at HSBC.
Yuval Rooz, CEO of Digital Asset and co-founder of the Canton Network, noted tokenized deposits are gaining traction in capital markets and treasury functions, with Canton positioning itself as a network for cross-institutional movement while preserving privacy. The pilot reflects a broader industry shift from isolated tokenization experiments to systems supporting real transactions across institutions, assets, and jurisdictions. While still a simulation, it signals large banks are directing resources toward interoperable digital market infrastructure as a foundational layer for the future of institutional finance.
