The brave, bold and tangled world of Web3, where the metaverse and NFTs are opening up new avenues of business and investment
- Banks and other financial institutions want a piece of the action in the new frontier, but issues like investor protection and security need to be addressed
- NFTs can open the door to creative business models, innovation and new opportunities for investment, although regulatory scrutiny is likely to be a hurdle in the future
In March 2022, HSBC became the first bank to enter The Sandbox, a digital world where users can buy land and build virtual experiences. The bank aims to engage and connect with sports, esports and gaming enthusiasts via the acquisition of its site in the metaverse, and while uncertainty remains as to how the platform will develop moving forward, the move is a sign of the financial industry’s growing interest in the Web3 universe.
“What is certain is that where there is an economy, there will be intermediaries providing services – and financial services are a necessity,” HSBC’s Securities Services Digital and Data (SSDD) team told South China Morning Post in an email. “There will be financial transactions, a universe that requires a registrar who can securely keep ownership records and preserve its integrity in an unbiased manner, a virtual land where financial institutions can sell financial products and provide advisory services virtually, and several other opportunities and roles for the financial services industry to tap into,” it added.
Just a few weeks after the acquisition, HSBC Global Private Banking launched a discretionary managed portfolio for metaverse opportunities catering to its private banking clients in Asia. It is open to professional investors in Hong Kong, while in Singapore it is available to accredited investors.
Managed by HSBC Asset Management, the Metaverse Discretionary Strategy is actively managed and focuses on investing in companies within the metaverse ecosystem. The portfolio has five key segments, which are infrastructure, computing, virtualisation, experience and discovery, and human interface.
[Banks] are not telling clients which cryptocurrencies to buy. Just entering Web3 is brave, particularly with all the regulatory hurdles
However, concerns about intellectual property protection, application of accounting standards, tax treatment of gains, antitrust violations, anti-money-laundering and know-your-customer data privacy risks also remain, as they do in many other areas of the Web3 world.
