Main topic: An investment firm is attempting to turn equities into crypto tokens that comply with securities laws, with the backing of a well-known trading firm.
Key points:
1. Susquehanna International Group is supporting a project called Dinari, which aims to tokenize stocks in a compliant manner.
2. Dinari has acquired a broker-dealer and registered with the Securities and Exchange Commission, allowing it to distribute dividends and maintain records of securities ownership.
3. The company's flagship product, dShares, enables investors outside the US to use cryptocurrencies to purchase shares of major US companies and exchange-traded funds.
Main topic: Liquid staking as a cornerstone of the future crypto economy.
Key points:
1. Liquid staking allows asset holders to stake their assets while still retaining the flexibility to trade or use them.
2. The market for liquid staking derivative tokens is growing, with a market cap of $18 billion and a total value locked of $21 billion.
3. Several projects, such as Lido, Liquid Collective, Kiln, and StakeWise, are driving the development of liquid staking tools to make staking more user-friendly and inclusive.
Cryptocurrencies like Bitcoin have not reduced financial risks in emerging economies, but instead, have amplified them, according to a study conducted by central banks and published by The Bank for International Settlements (BIS).
Tokenization of real-world assets on the blockchain is rapidly gaining momentum, offering benefits such as transaction speed, liquidity, cost-savings, and round-the-clock access, with experts predicting it to become a $16 trillion industry by 2030. Over 70% of financial leaders expect to use tokenization in their businesses, with potential impacts on asset trading, real estate transactions, derivatives, and carbon markets. Tokenization unlocks liquidity, enhances security and data protection, reduces transaction costs, and enables programmability and automation, making it a key driver of digital asset adoption and a fundamental shift in business operations.
Tokenization has the potential to improve efficiency, liquidity, and transparency in bond markets, according to a report by the Hong Kong Monetary Authority (HKMA), following a successful $100 million tokenized green bond issuance in collaboration with the local government.
Main topic: The capital crunch in the crypto industry and its impact on Bitcoin-focused companies, using Blockstream as an example.
Key points:
1. The crypto industry has experienced a significant decrease in capital deployment due to regulatory scrutiny and skeptical investors.
2. Bitcoin-focused companies, including Blockstream, are struggling to raise funds as fewer checks are being written.
3. Blockstream, which relies on traditional VC investment rather than issuing its own token, has faced challenges amid the funding crunch and the turbulence in the crypto market.
The demand for illiquid assets is increasing as investors seek higher returns, with tokenization playing a role in enabling this shift, according to experts at a recent event, while surveys indicate that younger generations have a desire for more investment choices. Tokenization is seen as a way to democratize access to investment opportunities by lowering costs and allowing for fractional ownership, which can expand the investor base and generate greater liquidity. Additionally, Generation Z is driving the demand for tokenization and expects more personalized investment options.
Crypto-related stocks soar as the chances of fund companies offering Bitcoin ETFs increase, though Coinbase Global faces obstacles.
Swift and Chainlink have successfully transferred tokenized value across multiple private and public blockchains, which has the potential to remove barriers and enable the global scaling of tokenized asset markets, according to a press release.
Seasonal Tokens offer a non-speculative and ethical approach to cryptocurrency trading by leveraging price seasonality and decentralization, providing an alternative to the volatile and speculative nature of the crypto market.
The London Stock Exchange Group plans to offer blockchain-based trading of traditional financial assets in order to make the buying, selling, and holding of these assets more efficient and transparent, without involving cryptocurrencies.
Market makers in the crypto sector are facing increased costs and lower profitability as investors shy away from the industry following a $2 trillion market crash, leading them to diversify their activities, store digital assets away from trading venues, and use them as collateral to borrow tokens for deployment on crypto platforms.
Staking in the crypto market is rebounding, with proof-of-stake revenue generation reaching almost all-time highs, driven by the surge in total value locked for liquid staking protocols and the appeal of staking as a safer investment option in a year of liquidity challenges and DeFi hacks.
The lack of a fully regulated financial market in the US contradicts global economic interdependence, and as a result, the crypto industry is moving offshore rapidly; however, the US government is likely to eventually establish a clear regulatory framework and invest in blockchain R&D, thus strengthening the industry.
Applying blockchain technology to financial markets could help reduce costs for issuers of financial instruments like bonds, but it also poses risks such as challenging sovereign authority and fueling tax evasion, according to a report by Moody's Investors Service.
The Tokenized Asset Coalition, consisting of industry leaders such as Coinbase and Circle, aims to promote the tokenization of traditional financial assets on a blockchain to bring the "next trillion dollars of assets" on-chain through education, advocacy, and fostering adoption of public blockchains and decentralized finance.
Mirae Asset Securities, South Korea's largest financial group, is partnering with Ethereum scaling platform Polygon Labs to promote tokenization in finance and drive the adoption of Web3 technologies. Through the collaboration, Mirae aims to establish itself as a global leader in tokenized securities, bringing real-world assets onto the blockchain. Tokenization projects have already been initiated by other financial giants, and the industry is projected to grow significantly, reaching $16.1 trillion by 2030. The partnership is expected to accelerate the adoption of Web3 technologies in the financial sector and enhance interoperability with foreign financial systems.
The United States Federal Reserve's financial woes and potential implications for cryptocurrency are discussed on the latest episode of "Macro Markets," highlighting challenges posed by inflation and the consequences of loose monetary policies during the pandemic.
Incoming deputy governor of the Bank of England, Sarah Breeden, stated that while crypto currently poses minimal risk to financial stability, it could present a greater danger in the future, emphasizing the lack of value in unbacked cryptocurrencies and the risks highlighted by recent events such as the collapse of Terra and U.S. banks Silvergate and Signature. She also expressed support for a central bank digital currency and the potential benefits of blockchain technology.
Cryptocurrency prices are less influenced by macroeconomic factors compared to traditional financial assets, with key drivers being market confidence, adoption, technology, and liquidity conditions, while traditional assets are more affected by macroeconomic drivers such as interest rates and inflation, as well as government regulations and transparency requirements.
Crypto's most important commercial highway, Ethereum, risks being overwhelmed by the surging demand for staking, which could lead to network strain and a shortage of Ether for transactions. Developers are working on short-term measures to slow down the influx and exploring longer-term solutions to manage staking more effectively.
Chainlink's LINK tokens have seen significant movements in the market, particularly with transfers from notable Chainlink wallets injecting a substantial number of tokens into various platforms, raising concerns about the asset's stability and future price trajectory.
Crypto analyst Will Clemente suggests that the US economy's need to issue more dollars to service its debt will inevitably lead to significant currency debasement, making Bitcoin the most promising asset for investors looking to protect their wealth. With the growing digital trend and a wave of Bitcoin adoption, Clemente believes that alternative monetary systems will become increasingly favorable.
Ark Invest's recent report highlights the recovery of Bitcoin's realized capitalization, the decline in liquidity and trading volumes, the recent increase in volatility, and the optimistic long-term outlook for the cryptocurrency.
The Federal Reserve's decision to maintain interest rates and raise its long-term forecast for the Federal Funds Rate surprised many market participants, causing a slight pullback in the stock and cryptocurrency markets while highlighting the need for investors to focus on the actual health and viability of companies and the utility of the crypto ecosystem. Additionally, the article speculates on the impact of the U.S. Securities and Exchange Commission's ruling on Bitcoin spot ETF applications and the potential for cryptocurrency to become a mainstream alternative investment.
The appetite for tokenizing real-world assets on blockchains is growing, with both financial incumbents and crypto native players getting involved, and smaller participants such as retail users and businesses are now able to access these assets for remittances, savings, and payments.
Cryptocurrency faces regulatory challenges that could shape its future, but despite these challenges, the industry holds promise with developments such as increased institutional adoption, central bank digital currencies (CBDCs), DeFi innovation, interoperability, and expected regulatory clarity.
The Federal Reserve has released a paper discussing the benefits of tokenizing real-world assets on blockchains, stating that it has the potential to provide access to otherwise inaccessible markets and improve liquidity.
The World Federation of Exchanges suggests that crypto-asset trading platforms should embrace regulation to enhance their market appeal, while also proposing six principles for regulating such platforms.
Despite the prevalence of private blockchains in the banking sector, the co-founder of Chainlink predicts that public blockchain protocols will ultimately become the biggest market for banks' tokenized real-world assets, as they offer diversified collateral and attractive yields. However, financial institutions in the US may proceed with caution due to regulatory uncertainty. On the other hand, European and Asian banks are progressing in this area, with companies such as Citi and JPMorgan exploring tokenization on public blockchains like Ethereum. Franklin Templeton has also embraced public blockchains, recognizing their cost efficiency and rate of innovation. Interoperability and cross-border liquidity are key considerations for banks as they adopt tokenization and explore ways to move assets across chains.
Crypto investment firm CoinShares is optimistic about cryptocurrency regulation in the United States as it enters the market and believes that the US is a global leader in digital asset development.
Stablecoin issuer Circle argued in a court filing that tokens pegged to a sovereign currency, like the US dollar, are not securities, amid the Securities and Exchange Commission's (SEC) lawsuit against Binance, highlighting the potential implications for stablecoins as a whole.
Tokenization, the process of converting asset ownership rights into digital tokens on a blockchain, is disrupting securitization and the financial markets, according to Jenny Johnson, CEO of Franklin Templeton. Johnson highlights the benefits of tokenization, such as enabling payment mechanisms and smart contracts, and cites examples of artists like Rihanna and athletes who can leverage tokenization to monetize their works and future revenue streams.
Blockchain technology is breathing new life into traditional assets as big finance firms invest in token trading and investment platforms, with more than a third of institutional investors in the U.S. and almost two-thirds of high-net-worth investors planning to invest in tokenized assets this year or next.
Banks will be required to disclose their cryptocurrency holdings as part of new regulations to cut contagion and prevent banking collapses partially caused by the sudden popularity of crypto, according to the Basel Committee on Banking Supervision.
The market capitalization of stablecoins has dropped by 35% in the past 18 months due to factors such as reduced retail participation, surging US treasury yield, and high opportunity cost, with only a few stablecoins like USDT remaining resilient and dominant in the market. The decline is attributed to traditional finance rates exceeding crypto-native yields, and the market share decline of US-native stablecoins is seen as a result of U.S. regulation hostility. Stablecoins are considered the "killer app" of the crypto industry, comprising a significant portion of settlement activity on public blockchains. The trend is expected to reverse when there is revived interest in crypto trading, steady interest rate cuts, and a pro-crypto regulatory environment.
Crypto exchange Bitstamp is in talks with several big European banks to offer cryptocurrency services, indicating that the European Union's regulatory framework is enabling traditional financial institutions to enter the digital asset space, in contrast to the US where regulators are cracking down on crypto.
Asset management giant BlackRock's entry into the Bitcoin space has the potential to fundamentally change the top crypto asset, according to BitMEX co-founder Arthur Hayes, who expresses concerns about the influence traditional finance could have on the underlying fundamentals of Bitcoin.
The chief content officer of CoinDesk, Michael Casey, discusses the future of cryptocurrency and the challenges facing the industry, including regulation and the need for decentralized systems to protect against fraud and manipulation by centralized entities. Despite recent setbacks, Casey remains optimistic about the potential of blockchain technology and the importance of creating a safer, more decentralized financial system.
Wary investors are more likely to be drawn to cryptocurrencies by market-based improvements to safety, such as insurance against theft and loss, than by enhanced government regulation, according to a recent survey.
Crypto finance, despite its claims of decentralization and independence from state-backed money, is heavily dependent on centralized platforms and is a vehicle for financial speculation rather than a means of escape from state control, according to Ramaa Vasudevan, professor of economics. Moreover, the growth of crypto will compound the volatility of global capitalism and its environmental impact is significant due to the energy-intensive process of mining and validating crypto tokens. The rise of stablecoins has been crucial in the development of crypto finance, but it is ultimately dependent on conventional currencies for stability. The recent crash of crypto finance has revealed its fragility and the absence of central banks as lenders of last resort exacerbates financial instability. Crypto finance fits into the wider picture of financialization and asset-price bubbles, promoting inequality and concentration of wealth. Ultimately, the politics of money and its relationship with the state are contested in the crypto sphere, as it neither depoliticizes nor democratizes money. Finally, crypto finance has become a battleground in the economic competition between the United States and China, with both countries striving for dominance in the digital currency space.
Australia's central bank is exploring the potential of tokenised money and the launch of a central bank digital currency, which could save billions of dollars in costs in domestic financial markets and bring increased liquidity and transaction savings to issuers in capital markets.
The Australian Treasury has proposed new regulations to regulate cryptocurrency exchanges under existing financial services rules, receiving praise from crypto exchanges for providing regulatory certainty and promoting industry growth and innovation. However, some express concerns about fitting the crypto industry into existing financial services regulation.
The market for tokenized assets, including crypto and traditional financial products, could reach $10 trillion by 2030, according to a report by digital asset manager 21.co, as crypto and traditional finance merge through tokenization.
Despite the potential of blockchain tokenization for financial services, it has failed to gain traction due to challenges in interoperability, liquidity, and trust in crypto markets.
Bitcoin's recent upward move confirms that it is now in a bull market cycle, with potential for significant growth due to stablecoin adoption, tokenization of real-world assets, and the changing stance of traditional financial institutions.
