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- 🌏 Ethereum ETF! But… Not Stateside?
🌏 Ethereum ETF! But… Not Stateside?
RWA World Newsletter - Apr 12, 2024
Ray Buckton
April 19, 2024
It’s official: a top global financial hub has approved limited spot Bitcoin and Ether ETFs trading. 🎉
Asia’s World City has again proven its sincerity in taking the top spot for tokenization. 🏆
🎯🔥 Rapid Fire Takeaways:
And they’re going beyond simple ETF approval – they’re configuring their entire financial system to run on tokenized rails. 🚂
If Fink is right, and all the world’s assets end up tokenized, then Hong Kong is emerging as a strong contender for where those assets will live. 🏦
🏙️ HK SAR Sets The Stage
Three pillars emerged this week to support Hong Kong's continued rise to tokenization dominance. 🏛️
1️⃣ Approval of the first Bitcoin ETF in Asia and the first Ether ETF in the world. What’s more, this Bitcoin ETF can be settled in fiat, BTC, or stablecoins and includes a subscription option, as reported by Livio Weng of Haskey Group. 🥇
But Bloomberg’s Eric Balchunas points out that mainland China is likely excluded due to their ongoing digital asset ban for retail investors. Eric predicts Bitcoin ETF inflows of only around $1 billion over two years. 🤏
2️⃣ Meanwhile, HSBC CEO Noel Quinn is quoted praising tokens backed by real assets but eschewing cryptocurrencies for their speculative and volatile properties. A promising yet cautious move by one of the world’s leading global banks. ⚖️
3️⃣ Finally, the Hong Kong Monetary Authority (HKMA) offered new guidance to banks regarding DLT usage, permitting them to use public permissionless ledgers so long as they take necessary precautions. 💽
Recall the significant opposition we covered last week to the Basel Committee on Banking Supervision’s attempt to prevent European banks from using permissionless blockchains.
Public permissionless blockchains are emerging as a clear winner for asset tokenization. 🏁
Which helps to explain this week’s boom in… 👇
♟️ Tokenization Initiatives and Strategies
Everyone is setting up their pieces for the ongoing gambit of tokenization! 🎯
On-Chain ⛓️
Contemporary on-chain lending giant Centrifuge announced plans for institutional RWA lending on Coinbase this week after closing its $15 million round, with the aim of expanding its already $270 million active loans. 🌐
Even ancient blockchains are getting involved with RWA. EOS raised over $4 billion in 2017, the largest ever at the time, before investing in… Now, it's tokenizing the random access memory (RAM) available on the network in an effort to reinvigorate the platform. 🤠
Regulators ⚖️
Private entities aren’t the only ones forming strategies. The International Organization of Securities Commissions (IOSCO) updated its work plan to include AI and DLTs. At the same time, the BIS shared a concept they’re calling “ The Finternet” – a Unified Ledger for global blockchain-based settlement. 🐟
Head of DTCC Digital Assets, Nadine Chakar, has a splendid write-up in Coindesk calling for collaboration between the traditional financial industry and tokenization initiatives. To paraphrase: Collaboration leads to experimental sandboxes that make sense for all stakeholders and fosters scalable networks that work for all counterparties. 🤝
Very much worth the read – beautifully written, Nadine! 👏
Banks 🏦
Of course, banks wouldn’t let themselves sit on the sidelines. German-owned LBBW is partnering with Bitpanda to provide corporate client crypto services. Across the pond, the UK’s Regulated Liability Network (RLN), which aims to create uniform tokenized deposits, has selected R3 and Quant as technology partners to lead system integration. 🏛️
While strategies are essential, let’s see some… 👇
📸 Tokenization in Action
While many are preparing, Circle has just debuted a way to use its USDC stablecoin to trade shares of Blackrock’s new BUIDL fund. This move is the latest in the ongoing bifurcation in the stablecoin market between US-regulated players like Circle and off-shore entities like Tether. ✂️
Regulated entities have a much easier time raising and scaling, which likely motivates Homium’s $10 million raise to use the Avalanche blockchain to tokenize home equity loans. Already online in Colorado, the platform joins Citi, which uses the same blockchain to tokenize private equity. 🔺
Taking a slightly different approach is PV01, which seeks to tokenize corporate debt. It just concluded tokenizing $5 million of US Treasury Bills as a proof of concept and aims to have tokenized debt on the platform within a few months. 📜
Those Treasury Bills have to come from somewhere… 👇
🏛️ Central Bank Wrap Up
It's a busy week for central banks! The European Central Bank updated the world about its offline digital Euro – a privacy-preserving, AML-exempt version of digital cash intended for P2P and retail transactions. 🙈
Meanwhile, the World Economic Forum heralded a wholesale CBDC as a potential solution to long-standing industry challenges, and central banks took note with seemingly coordinated action:
Germany’s Bundesbank revealed a partnership with MIT, focusing on CBDC privacy research.
The Bank of England clarified its stance in support of tokenization, outlining specifics.
The Bank of Israel created a CBDC sandbox intending to make its banking sector more competitive.
That’s a lot of central bank action in seven days! 📅
🥱 Winding Down a Wonderful Week
It’s so much fun watching the future of finance bloom! 🌼
Day to day, it may look the same, but the more time passes, the more different those days look. 😯
RWA World’s Ray Buckton recently co-authored an article with Superstate, one of the premier asset tokenization entities in the industry. ✍️
Find the article here to learn how tokenization is taking shape on the ground - you’ll be glad you did. 😉