HSBC Tests Ethereum for Digital Hong Kong Dollar Privacy and Security

HSBC has been actively participating in the trials of Ethereum as part of the official digital currency pilot in the region. Under the Hong Kong Monetary Authority’s Project e-HKD+, HSBC has been exploring how public blockchain platforms, such as Ethereum, can support the region’s plans for a digital Hong Kong Dollar (e-HKD).

The bank conducted trials across several blockchain systems, including Ethereum, Arbitrum, Linea, and Polygon. Additionally, HSBC tested its private network built on Hyperledger Besu. Through these experiments, HSBC aimed to determine how digital money could move securely across public and private blockchain systems while protecting privacy and operating at scale.

The bank's experiments focused on three key areas. Firstly, they explored how e-HKD can be used to hold and move money on blockchain systems like Ethereum, and whether it can help settle payments for tokenized assets. Secondly, they investigated how to keep transactions private and secure, using technologies such as Privacy Enhancing Tools and Decentralised Identity. Lastly, they examined how e-HKD could work smoothly on both public blockchains like Ethereum and private networks.

In addition to these technical trials, HSBC conducted a survey involving over 700 individuals to gauge public perception of e-HKD. The survey revealed that privacy is a critical concern for users, with 90% of respondents stating that privacy is important in e-HKD transactions. Furthermore, 65% of professional investors indicated that they understand what e-HKD is, compared to 42% of the general public. Around one-third of all respondents expressed willingness to use e-HKD for digital asset trading, citing its official backing as a reason for its perceived safety.

Luanne Lim, Chief Executive Officer of HSBC Hong Kong, emphasized the bank's commitment to driving financial innovation. She stated, “As the region’s largest note-issuing bank, we will continue our efforts in driving financial innovation in the region and the world. Project e-HKD+ highlights our dedication to digital currencies.” John O’Neill, Group Head of Digital Assets and Currencies at HSBC, added that the experimental work on Project e-HKD+, combined with the survey of public perceptions, aims to support the HKMA in assessing different options for the real-world use of digital currencies.

HSBC’s involvement in Ethereum integration is part of its broader participation in the region’s fintech projects, including Project mBridge, Project Ensemble, and its recently launched blockchain-based Tokenised Deposit Service for corporate clients. These initiatives underscore HSBC’s proactive approach to leveraging blockchain technology to enhance financial services and digital currency solutions.

HSBC’s trials with Ethereum and other blockchain systems under Project e-HKD+ demonstrate the bank's commitment to exploring the potential of digital currencies. By focusing on privacy, security, and scalability, HSBC aims to support the HKMA in developing a robust digital currency framework. The bank's proactive approach to fintech innovation positions it as a leader in the region's digital currency landscape.