Circle Says “See Ya!” - Tron Gone? 👋

The split between the Wild West of crypto and the regulated rails of tokenization continues to compound!

This week, Circle said “sayonara” to Tron – a HUGE blow to their stablecoin volumes.

🎯🔥 Rapid Fire Takeaways:

👋 Stablecoin issuer Circle drops TRON blockchain

💹 After record crypto product inflow week, bitcoin ETF volumes spike

📜 HKMA provides guidance to Hong Kong banks on tokenization

🚫 US sanctions the developer of Iran’s CBDC

💰 Hack VC closes ‘oversubscribed’ $150M fund for crypto startups

💻 IMF outlines its Digital Asset Platform model

Funds oversubscribed, ETF inflows on fire, and Hong Kong hustling – buckle up, we’re tokenizing. 😎👇💎

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💡 Knowing the risks of decentralized finance is essential for understanding asset tokenization. 

Get the full picture from industry leaders from Consensys, Hacken, DTCC, QualitaX, and more as we cover the Enterprise Ethereum Alliance’s DeFi Risk Assessment Guidelines – happening Thursday, March 28th, 1-4 pm GMT. 

Use promo code “RWAWorld” at checkout for a 10% discount! 

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📈 Trends Tick Taller 

A few weeks ago, our friends at Santiment shared social sentiment towards RWA skyrocketing on social media. We said this was only the beginning. 🌱

Now, record Bitcoin ETF inflows have proven this assertion correct – VanEck’s HODL saw volume increases of 1400%. 😮

Do you want to hear something amazing? 👀

This is still only the beginning. 🚀

Hack VC recently closed the latest round of its $150 million Web3 fund, citing oversubscription and burgeoning interest. Investors are clamoring for exposure to tokenized assets everywhere you turn. 🏃

And… it actually feels different this time.™️

Sure, there are still memes and drama on Web3 Twitter, but when Larry Fink says tokenization is an inevitability, you know that the tide has started to shift in seriously significant ways. 🌊

⭐ Innovation Abound, Standards Emerge 

Alles gut in Deutschland as 360T, the digital asset-focused arm of German giant Deutsche Börse, has announced support for crypto derivatives, widening the compliant digital asset universe in Europe. 🌌

The derivatives in question are non-deliverable futures (NDFs), meaning that the owner does not maintain the right nor obligation to take custody of the asset upon expiry. That conveniently entails the underlying issuer doesn’t need to custody the underlying assets – all the volume, none of the custody work. 💅

Over 9000 kilometers away, Hong Kong continues to build on its foundation for tokenized real-world assets, setting precedents for global markets with a clarifying announcement this week. 💥

The Hong Kong Monetary Authority (HKMA) emphasized that when it comes to tokenized non-securities, following existing regulations is key. Thorough due diligence, disclosure standards, and asset custody frameworks must be in place to adhere to existing guidelines. 🔍

It’s important to note that this clarification doesn’t establish any new standards but rather reinforces existing procedures for non-securities. Note that securities in Hong Kong are the Securities and Futures Commission’s (SFC) jurisdiction, so the HKMA is making a preemptive move in warning about the potential pitfalls of largely unregulated tokenization activity. 📣

⚖️ Regulations Run Risks 

It’s not just Hong Kong setting a precedent – a recent Deloitte survey revealed that over 50% of surveyed C-suites cite the increasingly complex regulatory landscape as the greatest challenge to compliance and risk management. 🕴️

A lack of organizational support and concerns over ledger transparency were much further down on the list, indicating that the pervading sense of uncertainty is uniform across C-suite teams. 😬

And for good reason – playing nicely with one entity may draw the ire of another. The U.S. recently sanctioned two UAE-based companies working on the Iranian CBDC, continuing its now half-a-century-old fight in the region. 

Other jurisdictions are still unsure how to approach central bank currencies. The ongoing EU CBDC conversation has evolved yet again, this time with three senior ECB executives asserting that a retail CBDC won’t disrupt traditional banks. Recall the recent Danish study showing that tokenized retail deposits could ding EU GDP by as much as 0.34%, and we’re seeing the Tale of Two Futures emerge. 📚

Extragovernmental bodies have their opinions, too – the IMF released a model for their digital platform called “ASAP.” Out of all the government-level happenings this week, the IMF’s powerfully lucid take on digital asset infrastructure strongly stood out with a great thesis question: “What is the TCP/IP equivalent for digital assets?” 🧠

🐴 Tale of Two Stables

Stablecoins are the ongoing golden child of tokenization. They’ve been cited as the basis for tokenized deposits and heralded as the next big thing in the global remittance market. 🥇

Nuance is key, but in general there are two stablecoin camps: TradFi-Leaning or DeFi-Leaning. ☯️

TradFi-Leaning stablecoins include regulated stablecoin issuers like Circle, responsible for the world’s second largest stablecoin USDC. This dollar-equivalent instrument is the preferred means of payment for compliant tokenizers. 🏛️

DeFi-Leaning stablecoins include less regulated issuers with more opaque histories, like Tether. While Tether has significantly cleaned up its act in recent years, its checkered past dissuades Western financial institutions from holding the asset on their books. 💻

In terms of proportional stablecoin volumes, no blockchain is more prominent than Tron. Despite having significantly less organic volume when compared to blockchains like Ethereum, Avalanche, or Solana, Tron still regularly snags the top spot for stablecoin volumes. 📊

But… Tron commands around 1% of USDC volumes. It commands nearly 61% of USDT’s volume, according to a recent study. 😲

And now, Circle is pulling the plug on Tron completely, citing potential money laundering concerns. 🔌

This move is just the latest in the ongoing bifurcation of largely unregulated, global DeFi markets and the incoming institutional wave of tokenization. As DLT becomes more widely accepted and integrated into the global financial plumbing, this trend will continue to accelerate. ⚡

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What does that mean for existing decentralized financial infrastructure?

How will traditional financial institutions grapple with these existing decentralized financial organizations?

What disintermediation might existing stakeholders seek to use to amplify their competitive advantage over incumbents? 

Get the answers to all these questions and more on Thursday, March 28th, 1-4 pm GMT. 

And don’t forget to use promo code “RWAWorld” at checkout for a 10% discount!