A version of this story was first published by sister publication, FinanceAsia.
HSBC bank has acquired a plot of digital land, in the latest sign that financial entities are betting on the potential of metaverse investments.
HSBC bought the virtual real estate in The Sandbox metaverse, a decentralised virtual gaming world created by ASX-listed software company and crypto venture investor, Animoca Brands.
Having recently shared the firm’s investment strategy in an exclusive interview with FinanceAsia, Animoca Brands has been expanding its portfolio of Web3.0 holdings rapidly, most recently leading a $5.25 million Series A round in stablecoin trading platform, Wombat Exchange.
“There are 166,464 pieces of “LAND” – digital portions of the game’s map, that take the form of non-fungible tokens (NFTs) – in The Sandbox, and we’re gradually selling them to users,” Sebastien Borget, COO of The Sandbox, told FA.
“When the LAND is sold, we take 100% of the purchase price. We’ve sold roughly more than $80 million worth of LAND to date. That represents 70% of the map, leaving 30% of the map remaining for sale,” he explained.
The Sandbox collects 5% royalties on any secondary sale of LAND or NFT assets created in the game, Borget added, making the model scalable.
LAND in the metaverse derives its value not so much from scarcity (although the amount available is finite), but rather from becoming a virtual place to visit, where people can spend time “to work, create, play, learn and engage with many of the same activities as in the real world.”
Borget describes The Sandbox as a “virtual Manhattan: a place that's boiling with culture, entertainment, and brands where anyone who wants to, can come to work or play and meet new people.”
On how exactly The Sandbox differentiates itself from other metaverses, he stressed its “gaming-first” nature.
Sandbox’s native cryptocurrency, SAND, jumped more than 11% following the HSBC announcement on Wednesday (March 16). Borget declined to comment on how much HSBC paid for the acquisition, with such details also remaining undisclosed in the release.
Brands such as Gucci, Warner Music Group and Adidas own digital property in The Sandbox, but HSBC is the first global financial service provider to do so.
The move indicates the beginning of a broader adoption of the metaverse by large institutions, Borget suggested.
According to Reuters, the sale of NFTs – used to prove ownership of digital assets in the metaverse – hit $25 billion in 2021, equivalent to the amount committed at COP26 to help countries phase out coal, or by World Bank for COVID-19 vaccine deployment.
The global metaverse market is estimated to be worth $1.5 trillion by 2030, up from $45.4 billion in 2019, according to PwC. A report by JP Morgan found that the average price of a parcel of land across four main metaverses doubled from $6,000 to $12,000 between June and December 2021. The Sandbox, Decentraland, Somnium Space and Cryptovoxels are considered to be among the leading metaverse platforms. All are built on the Ethereum blockchain.
In February this year, JP Morgan opened a virtual space in Decentraland. The “Onyx lounge” comprises two floors, furniture, and a portrait of JP Morgan CEO, Jamie Dimon. A tiger avatar roams the lounge.