Uber Technologies Inc. used a public blockchain to invest its corporate funds in a way that let the company capture higher returns by trading over a weekend, a setup expected to be adopted by a growing number of companies in the coming months.
Using HSBC tokenized deposits, essentially bank funds represented by digital tokens on a blockchain, Uber recently purchased a Franklin Templeton tokenized money market fund on a Thursday and sold it on Sunday as part of a pilot program with the financial institutions. That allowed it to capture an extra 1.5 days of yield instead of selling on Friday, before traditional banks and markets closed, as companies typically do today.
HSBC Holdings Plc, the London-based bank, collaborated on the project with Franklin Templeton, Tradeweb Markets and Fireblocks. The Canton Network was used for liquidity and settlement. Many corporations are seeking new ways to increase treasury yields on their holdings while reducing reliance on expensive overdraft facilities and credit lines.
"Corporate treasurers hold enormous amounts of cash that sits idle between payments, and until now there hasn't been a good way to put it to work without giving up access to it," said Michael Shaulov, chief executive officer of Fireblocks. He expects hundreds of companies to begin using the model within 18 months. The pilot is one of many as Wall Street firms experiment with digital securities, cash and bonds. Nearly $40 billion in assets has been tokenized to date, according to RWA.xyz. Uber was also part of the ill-fated Diem stablecoin initiative and has mulled using stablecoins for payments. "With the pilot we were able to demonstrate technical readiness," said Manish Kohli, global head of payments at HSBC. "That is now available for deployment and expansion with other customers today."
Source: Bloomberg Markets · Summarized by HeadlinesBriefing