• RWA World
  • Posts
  • 🚀 Governments Prepare Following Bitcoin ETF – What Do They Know?

🚀 Governments Prepare Following Bitcoin ETF – What Do They Know?

RWA World Newsletter - Jan 12, 2024

Author

Ray Buckton
January 12, 2024

It finally happened – we have a Bitcoin ETF. 🙌

When one of your team members’ grandparents texts them about the news, you know it's serious business. 🧓

Governments weren’t caught off guard. Big moves are happening in the halls of power…

🎯🔥 Rapid Fire Takeaways:

Jurisdictions are now moving in tandem. Something is cooking. 🍳

Let’s check the kitchen. 👇

💹 Bitcoin ETF – Better Late Than Never

This week's big news is the approval of 11 spot Bitcoin ETFs in the United States. Gary and Friends at the SEC have finally done their job, albeit begrudgingly. 👏

If the U.S. wants to retain its position as the dominant global financial power throughout the 21st century, it needs to clean up its act. Bain and JP Morgan see a $400bn opportunity in alternative funds, with tokenization being a major supporting factor in greater sector exposure. 

Currently, high net worth individuals (HNWI) have a 5% exposure to alternatives. Tokenization affords greater market homogeneity, liquidity, and accessibility, helping to lay the rails for greater proportional investment into this sector. 📈

With Bitcoin ETFs now on the table and interest in alternatives rising, it’s an excellent time for HNWIs in the market. They can now select from the following approved Bitcoin ETFs:

The fight club for liquidity is on… who do you think will be THE Bitcoin ETF by year's end? 🥊

😣 Markets Manipulated By… The SEC’s X Account? 

The winner is anyone’s guess, but entities like the SEC might want to take basic precautions to protect their social media accounts if they want faith in U.S. markets to stay strong… 😬

Ironically, the agency did not have 2-factor authentication enabled for its X account (which is illegal for agencies, by the way) before it was hacked this week. The hacker posted false information regarding ETF approval, significantly moving markets before clarity regarding the hack sent prices tumbling. 🤦

The fake announcement on X

That’s right. 

The government agency responsible for regulating the largest financial markets in the world had zero protections on its social media accounts. This flagrant failure of elementary operational security practices allowed a malicious actor to leverage the account to materially manipulate financial markets. 😑


We can’t stress enough that Gary and friends know better – they publicly stated so in Q4 last year! 

Who needs TV in this day and age? 🍿

⚙️ Global Government Gear Up

The United States may be the most watched jurisdiction for financial matters, but the rest of the world isn’t resting on its laurels waiting for an ETF! 🏃

We touched on CBDCs last time, so check that out for a deeper dive into the difference between wholesale and retail CBDCs – it’s a crucial distinction! ❗

Turkey has started the second phase of its CBDC program, heralding the digital lira as a step towards the future of finance in Anatolia. The nation prefers a hybrid solution for maximum flexibility, and the second phase will focus firmly on interoperability with existing structures and standalone performance. 🦃

Meanwhile, Indonesia is starting the first stage of its CBDC trial, with the ultimate goal of launching a retail rupiah. The island nation is poised to benefit significantly from global supply chain reshuffling and friendshoring. A CBDC that facilitates more efficient commerce could supercharge this trend. 🤝

Speaking of islands, the Eastern Caribbean Central Bank (ECCB) is exploring a collaboration with Bitt for the next iteration of its CBDC, called DCash. Bitt has previously worked on Nigeria’s eNaira, so it brings real-world experience to underbanked regions – a rare pedigree in these early days of CBDCs.  🏝️

India’s approach is fascinating – it's already enjoying 1 million daily transactions! But how it got there is odd – bank employees are heavily compelled (i.e. forced) to use the digital rupee for daily payments. While morally questionable, the initiative can certainly claim to be well-tested. 👁️

Finally, the land down under has been in the limelight lately for its cozy stance towards digital currencies. Australia has already been running CBDC pilots and is now exploring tokenized money market and debt capital market solutions. They’ll use R3’s Corda blockchain solution, a la Imperium Markets, to make it happen. 🦘

So between Turkey, Indonesia, the Caribbean, India, and Australia… there’s a lot of movement by governments towards tokenization. But wait, there’s more!

The Atlantic Council has the best CBDC tracker we’ve seen so far. ⭐

Now, you’ll always be up to date on CBDC data thanks to this one handy tool! ⚒️

When we say we have your back, we mean it. 😘

💔 Stablecoins Causing Big Rifts? 

A big point of interest is how public and private entities differ in their views of tokenization. Governments and central banks have firmly warned against stablecoins while praising tokenized deposits. However, private companies like Visa and Mastercard are proving increasingly willing to push the envelope on how they’ll use new technology. 👀

The latest chapter in this public-versus-private interpretation of technology comes in the form of Visa publicly lauding stablecoins as necessary for the future of finance. Cuy Sheffield, Visa’s head of crypto, “loves this prediction,” initially floated by Frank Rotman, CIO of QED Investors. 

While not a formal statement by Visa itself, it signals how the head of the organization’s crypto arm thinks about stablecoins and private payment rails. Companies are just people plus paperwork, so we fully expect the conflicting sentiments of public and private entities to flare up with increasing intensity throughout 2024. 💥

Actions speak louder than words. Paxos isn’t mincing any words with the launch of its USDP stablecoin on the Solana blockchain. Quickly becoming a fan-favorite, Solana’s retail appeal and fast processing times show that stablecoins have outsized utility for fast and efficient payments.

Circle recently gained approval from France to launch its USDC and EURC stablecoins in the jurisdiction, another win for digital fiat. With EURC toting a market cap less than 1% the size of USDC, Euro stablecoins are still anyone’s game. 👶

…

It’s a drag-out, knock-down fight over who controls what in this wild west of tokenization! Public entities have been playing the long game, but private companies have the talent and wherewithal to push boundaries.

Are we entering into an age of unfettered freedom or the next era of robber barons? 

Tell the world your thoughts via the RWA World X account, and make sure to check out the recent Annual Report – it’s filled with fresh insights on tokenization in 2024.