Bitcoin Crosses $50k - Public Blockchains Win? 📈

An exciting week as the original cryptocurrency regains an important milestone. 

The concept of tokenization keeps driving interest in digital assets! 

🎯🔥 Rapid Fire Takeaways:

🔎 Ethereum spot ETFs are next

💡 JP Morgan pitches deposit tokens for ECB DLT central bank money trials

🔺 Citibank Tests Tokenization of Private Equity Funds on Avalanche

🔵 BitGo looks to jumpstart RWA tokenization segment via acquisition

💻 DTCC says blockchain isn’t the answer to T1. Discusses tokenization potential

🕵️ White House tech policy unit deems DLT, digital assets vital for national security

Blockchains are now of national interest – let’s unlock some insights into the future of finance. 🔐👁️👇

🏛️ Banks Getting Busy 

Citibank bites on blockchain and is working with Avalanche to explore the tokenization of private equity funds. They collaborated with WisdomTree (whose CEO loves tokenization) on the proof of concept and are exploring how smart contracts can help pull the legacy banking system into the 21st century and beyond. 🧑‍🚀

💡 Out-of-the-box solutions like the Tokeny T-REX (using ERC3643) for on-chain fund compliance present a significant opportunity. 

Across Wall Street, JP Morgan is singing a similar tune to the ECB, pitching their Onyx platform as the solution to tokenized deposits for the central bank. Recall the ECB actively wants to prevent retail deposit involvement to avoid any potential negative impacts on GDP. 📊

JP Morgan also found that 78% of institutional traders don’t plan to trade crypto this year. That tracks – institutions trade massive volumes, and the Bitcoin ETF is brand new. 👶

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How times have changed – back in 2017, CEO Jamie Dimon said he’d fire a trader “in a second” for trading Bitcoin! 😵‍💫

💸 Corporates Dial in on Tokenization

Corporations are staking their claims in tokenization, with different entities focusing on different aspects of this dynamic landscape. 🧩

Scalability ⚖️

BitGo recently acquired infrastructure provider Brassica with an aim to tokenize alternative assets at scale. BitGo CEO Mike Belshe spoke with Blockworks about the move: 

“The key difference here is every alternative asset is different. Bitcoin is very different from real estate, which is very different from company equity, which is very different from wine. But the world wants diversity of assets and diversity of asset types and categories.”

Security 🔑

Institutional wallet provider Fordefi is deep in the weeds on that topic, using multi-party computation (MPC) to maximize private key security. They recently raised $10 million to expand their institutional offerings to retail platforms. Now, anyone can enjoy institutional-grade security when interacting with digital assets. 

💡 How does the use of more technically secure wallets impact premiums on digital asset insurance policies? 

Speed ⚡

The Depository Trust and Clearing Corporation’s (DTCC) Global Head of Strategy & Innovation, Jennifer Peve, thinks blockchain isn’t the right solution for T1 settlement. The nuance comes in the delivery versus payment, which can happen sometime after the trade. Given the DTCC processed $2.5 quadrillion in securities volume in 2022, they have a pretty good handle on what technology works best at what scale. 

This nuance is probably why the DTCC has been talking with Chainlink about how to best apply distributed ledger technology at scale. We recently wrote about how Chainlink’s Cross Chain Interoperability Protocol (CCIP) is a golden ticket for DLTs making their way into TradFi. 

Discussions make sense – a quadrillion-dollar volume business isn’t going to drop what it’s doing because the tech is interesting. These early days of tokenization will continue to be fraught with trials and testing for more entrenched asset classes, while more traditionally illiquid asset classes with less entrenched interest and volumes act as first movers. 

🌐 Nations Embrace Public Blockchains

A 2022 survey by EY revealed that 60% of institutions prefer public blockchains. Two years later, with Citi joining the party and JP Morgan courting the ECB, that figure is likely higher. 

This preference makes sense. Public blockchains are more transparent and immutable than their private counterparts. If you’re going to tokenize an asset, why would you not choose the most credibly decentralized, compliant environment? 🤔

...because it’s expensive, and we don’t want to go to jail.😬

While institutions may prefer public blockchains, they have a fiduciary responsibility to their clients. Private tokenization is more easily “unwound,” and reclaiming funds is much simpler. 

Compare that to Ethereum, where your funds are likely gone forever if misattributed. These trade-offs help explain the rise of public permissioned solutions like ERC-3643, as institutions slowly get the best of both worlds.  

And encouragingly, updated digital euro legislation recently revealed support for permissionless blockchains. Concerns over holding limits and interplay between banks and payment providers remain, but the move is a significant win for banks and the public. 🎉

Permissionless blockchain ledgers are orders of magnitude more transparent than permissioned ledgers. This early move sets a precedent in the unfolding history of tokenization and the relationship between governments and stakeholders. 📜

Across the pond, the White House Office of Science and Technology Policy (OSTP) released a report stating that distributed ledger technology (DLT) is important to national security, along with AI. At least part of the US government is coming around to blockchain, after all. 🦅

…

But when do national Bitcoin reserves start showing up? 🤔

El Salvador has their Bitcoin-printing volcano bonds. 🌋

Are Western nations behind the curve? 🔬

Or does this spell blast off for 2024? 🧑‍🚀

Let us know your thoughts on Twitter! 💻