Uber Sells Part of a Tokenized Fund Stake Over a Weekend in an HSBC Pilot
Uber used HSBC tokenized deposits to buy a Franklin Templeton money market fund on Tradeweb, then cashed out part of it on a weekend. The aim is to keep company cash earning yield for longer.
Uber has finished a pilot that let it pull cash out of a money market fund on a weekend, when banks and fund desks are normally closed. HSBC, Franklin Templeton, Tradeweb and Fireblocks ran the test on the Canton Network, a blockchain built for financial institutions. The group announced it in a joint press release on Oct. 30.
Here's the setup. Uber paid with HSBC Tokenized Deposits, which are regular HSBC bank deposits recorded on a blockchain. It used them to buy shares of a Franklin Templeton tokenized money market fund on Tradeweb's trading platform. Later, it sold part of that stake, including over a weekend, and kept earning the fund's yield until the sale.
.@Uber completed a first-ever pilot of an onchain liquidity and settlement solution on Canton, a public network.
Big companies keep large cash buffers to cover payments. Some of that cash sits idle because moving money out of a fund takes time. Fund sales usually settle in one business day or longer, and banks run on cutoff times. That is a problem for platform companies like Uber, which pay drivers and partners every day of the week.
The pilot tried to close that gap. Cash stayed invested in the fund until the moment Uber needed to pay someone. According to CantonNews, which cites an Oct. 30 Bloomberg report, Uber bought on a Thursday and sold on a Sunday. That gave it about 1.5 extra days invested compared with selling on Friday. The partners did not disclose how much money was involved or how much Uber earned.
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"This pilot is an important first step in our journey towards a more efficient, 24/7 model for managing our working capital," said Odette Rodrigues, a vice president in Uber's treasury team, in the release.
How the trade settled
Each trade settled as delivery-versus-payment. That means the cash and the fund shares moved together, in one step, so neither side could end up holding nothing. Fireblocks supplied the wallets and signing controls Uber's treasury team used.
Two safety features stand out in the release:
The cash is a bank deposit. HSBC says its tokenized deposits are deposit liabilities of HSBC Bank USA and are FDIC-insured up to the usual limits.
Cash only goes to verified accounts. Proceeds from fund sales can only land in KYC-verified corporate bank accounts at HSBC.
The fund itself is a different story. Franklin Templeton's disclosures in the release note that a money market fund is not a bank account and is not FDIC-insured. It aims to hold $1.00 per share but can't guarantee it. Tradeweb posted the same release on its own site.
What makes Uber's test different is the customer. Most tokenization news involves banks and asset managers trading with each other. This one put a big non-financial company at the end of the chain, using it for ordinary treasury work.
What's next
This was a pilot, not a product launch. CantonNews says Bloomberg reported that HSBC plans to open the service to more corporate clients. HSBC's release doesn't give a timeline, pricing or a list of eligible clients.
The new broker-dealer says its tokens will carry the same DTC-recorded claim investors hold in a brokerage account. Key pieces are still in development, and there's no launch date.
Twelve banks in Hong Kong's pilot can now settle tokenized-deposit trades around the clock. Standard Chartered launched a corporate product on it the same day.
