Banks Backing RWAs - Has Blockchain Found Its Footing?

Welcome again to your finger on the pulse of tokenization and all things real-world assets, arriving comfortably in your inbox each Friday.

This week is all about banks and funding as tokenization starts to heat up in the mainstream! 

🎯🔥 Rapid Fire Takeaways:

📜 Philippines to Sell Tokenized Treasury Bond Next Week

🌐 Singapore’s MAS to explore “global layer 1” blockchain tokenization with BNY, DBS, JPM, MUFG

💸 Tokenization Firm Superstate Gets $14M Investment to Bring Traditional Funds On-Chain

🏆 JPMorgan adds ‘holy grail’ payments feature as part of blockchain push

💰 Fnality adds Goldman, BNP Paribas, DTCC in $95m funding round

😶 Tokenizing T-Bills is a 'giant misnomer,' says Hashnote CEO 

Big banks, big cheques, big moves. 

Let’s dive right in and put the pieces together! 

🌅 Asia Leading Tokenization Charge 

Governments worldwide are paying attention to tokenization, but only a few have taken the proactive measures necessary to embrace its benefits fully. Singapore tops that list. This week, the Malaccan economic giant approved three stablecoins, all of which must settle on the Monetary Authority of Singapore’s (MAS) Project Orchard ledger. Issuing giant Paxos, the entity being PayPal’s PYUSD stablecoin, and StratisX are tasked with issuing these three tokens.

While governments are interested in decentralized finance (DeFi), they aren’t going to let financial markets turn into an unchecked playground. That partially explains MAS’ recent push to expand Project Guardian into a global layer 1 blockchain with BNY, DBS, JPM, and MUFG. With the IMF’s XC Platform and the BIS’s Unified Ledger working towards the same goal, the competitive landscape emerging in the realm of globally compliant settlement infrastructure is worth noting. 

Just next door, the Philippines is making waves with a 10 billion peso, or $180 million tokenized treasury auction on November 20th. A jurisdiction that isn’t generally associated with fintech-forward policy, this move signals how your neighborhood matters – Hong Kong recently tokenized $100 million in green bonds. 

💸 Fundraising Trending Up Again

▶️ A green light from the government means funds are clear to invest, and innovators are clear to build. That’s precisely what we’re seeing in tokenization, with blockchain startup Kinto raising $5 million to build the “First KYC’d Ethereum Layer-2 solution that builds anti-money laundering and know-you-customer safeguards right into the protocol. 

◀️ While Kinto seeks to deliver blockchain to traditional finance, asset management firm Superstate has raised $14 million to approach this challenge from the other side. They’re building regulatory-compliant, on-chain funds for the DeFi ecosystem, bringing traditional finance to blockchain. 

🤝 Kinto and Superstate are complimentary, indicating a strong trend toward asset tokenization on multiple fronts.

• Banks want tokenization for greater capital efficiency

• Web3 wants tokenization for greater access to more assets

• Governments want tokenization for greater transparency

How we get there is still debatable, but tokenization is a force that can’t be undone. 

🏛️ Banks Betting Big on Tokenization 

Banks are making huge bets on where tokenization will go over the next decade, and they’re doing it in slightly different ways:

💲 Funding the Infrastructure 

Fnality’s $95 million round includes big names like Goldman, BNP, Paribas, and DTCC. As a leader in the institutional digital asset ecosystem and payment innovation, its Series B is the tokenization funding round equivalent of the shot heard around the world.

🐣 Incubating the Infrastructure

Standard Charter’s venture capital arm, SC Ventures, took a slightly different approach to direct investment, having recently incubated Libeara, a protocol undertaking the first tokenization of a Singapore Dollar Government Bond Fund. 

📊 Leading the Standards

Some financial entities are instead throwing their weight behind the emerging tokenization standards. HSBS recently announced their support for Broadridge’s Distributed Ledger Sponsored Repo, allowing clients to centrally clear via the FICC. 

⚒️ Building the Infrastructure In House

The biggest names in the game are betting the house on the future of tokenization and technology in general. JP Morgan has been testing tokenized portfolios using the Avalanche blockchain and recently revealed they’ve added a “holy grail” of payment features to their blockchain initiative. 

Take this taxonomy with a grain of salt - most banks mix and match these approaches to the tune of millions of dollars per quarter. The big takeaway is that banks are moving into tokenization in droves. 

❓ Tokenized Treasuries or Something Else? 

Another tokenized treasury stablecoin is in town – Midas seeks to buy Treasuries from BlackRock using USDC and offer the yield to investors. Advertised as 100% backed by U.S. Treasuries and compliant with European Securities Regulation, they join companies like Ondo Finance that offer similar products.

But.. is a tokenized Treasury still a Treasury? Hashnote CEO Leo Mizuhara doesn’t think so – he argues that while these companies are tokenizing ETFs, funds, and SPVs, nobody has actually tokenized the Treasuries themselves. 

What do you think – is Mizuhara just splitting hairs or offering an important reality check? 

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