- RWA World
- Posts
- 💱 Fink Thinks Bitcoin ETF “First Step in Tokenization Revolution”
💱 Fink Thinks Bitcoin ETF “First Step in Tokenization Revolution”
RWA World Newsletter - Jan 26, 2024
Ray Buckton
January 26, 2024
The tokenization race is heating up on- and off-chain. 🌡️
BlackRock is bullish, the ETF is approved, and new tech standards are here. 💥
🎯🔥 Rapid Fire Takeaways:
The track is clear, the drivers are primed, and the flag is waved. 🏁
Let’s ride! 🏎️👇
⛰️ Not Big Enough!
Boston Consulting Group released its first estimates of the market size for asset tokenization in September 2023: $16 trillion. This projection kicked off a social frenzy, catapulting teams and organizations working on real-world asset tokenization into the limelight. 💡
Shortly after, more conservative projections from entities like 21.co dropped these estimates to around $10 trillion. 📉
Outlier Ventures is pushing back with a report projecting a $10-15 trillion valuation by 2030. 📈
👀 The Takeaway
These numbers are massive.
For context, the entire crypto market barely touched $3 trillion in 2021, at the last cycle's peak. 📊
$10 trillion is a mind-bogglingly large number.
If split between NYC's 8.5 million people, everyone would still get over $1 million. 🤯
$16 trillion is equally mind-bogglingly large. Few people handle that type of money.
Thankfully, some of the few that do are betting big on tokenization. 🚀
🧠🌌 Fink’s Big Think
Whether you call it “The Fourth Turning” or “The Fourth Industrial Revolution,” if your goal is to make the most of these uncertain times, candid, forward-thinking analysis beats emotionally driven pearl-clutching.
Level heads make level strategies. 🤹
As CEO of the world’s largest asset manager, BlackRock, Larry Fink is a more-than-qualified analyst. His mental game has to remain in the top 0.01% of the top 0.01% of managers to play at this level. 🧘
And the financial paragon said on CNBC’s Squawk Box last week, “ETFs are step one in the technological revolution in the financial markets. Step two is going to be the tokenization of every financial asset.”
Fink didn’t stop there, adding, “I see value in having an ETH ETF. As I said, these are just start stepping stones toward tokenization.” That sounds significant. 😶
💅 Mood(y’s) Setter
This support is a massive indicator of the immense moves, news, and grooves to come, but don’t worry, you’re still early in tokenization, according to Moody’s.🚀
The Big Three agency had a lot to say about tokenization this week. Refreshingly, it was as candid as Fink’s statements, avoiding attitudes and platitudes about highly nuanced and complicated new technologies.
Well done and very thoughtful, Moody’s! 💟
The limited track record of tokenized investment funds resulted in a good-faith reminder of the risks of new technology. Specifically, Moody’s highlighted the additional technological expertise required for the benefits of tokenization to outweigh the risks.
We’re assuming that Moody’s isn’t using the SEC as a basis for best cybersecurity practices, given the easy breach of their unsecured X account, resulting in the spread of misinformation resulting in market manipulation just before ETF approval… just saying, Gensler. 😏
Moody’s also stifled some Bitcoin ETF expectations while appreciating the celebration, citing volumes too small to be meaningful for the broader financial landscape. Nevertheless, the firm sees the ongoing divorce between crypto and tokenization as fundamentally positive for everyone.
⛓️ Who Let the RWAs Out?
Tokenization happens in our physical world and on the blockchain, and we have lots of positive news on both fronts. ✅
🌐 On-Chain Expansions
On the digital side, Binance has officially launched a perpetual contract for Ondo Finance’s native $ONDO asset, offering up to 50x leverage. Recall the recent unlock of $ONDO tokens occurred just last week, highlighting the speed at which Binance released this feature. ⚡
Meanwhile, Synthetix, the most popular decentralized derivatives protocol, deployed its latest perpetual contract, Perps V3, on the Base blockchain. The Coinbase-backed layer 2 has been enjoying fanfare recently, with ChainLink recently announcing the deployment of Automation on Base, a feature that can save developers up to 90% on gas fees. 💰
Solana is entering the tokenization race with token extensions, their answer to developers seeking permissioned tokens in permisionless environments. There are five extensions in the flagship offering:
Transfer hooks to check if a token transfer is permissible.
Transfer fees that automatically pay a fee when a token is transferred.
Confidential transfers that use zero-knowledge proofs to obscure payment amounts.
Non-transferability, which disallows a wallet from sending tokens at all.
Permanent delegate authority allows users to delegate control of their wallet to another entity.
📜 THE Tokenization Smart Contract - ERC-3643
Solana’s new features are similar, albeit less technically sophisticated, than the blockbuster ERC-3643, which is bringing some serious compliance and functionality to Ethereum and beyond.
The Token for Regulated Exchanges, shortened to T-REX, has several components that show how it’s purpose-built for tokenized real-world assets. Such as:
Owner Role that can assign and revoke administrators (Agents).
Agent Role that can conduct administrative functionality for the token.
Token Interface that allows Owner and Agents to mint, burn, and freeze tokens.
Identity Registry Interface that enforces regulatory-compliant KYC/AML.
Identity Registry Storage Interface that retains the identities of all KYC’d users in an encrypted manner.
Compliance Interface that sets the rules and guidelines for the token lifecycle.
The Ethereum community has officially approved this contract format, with ERC-3643 achieving “Final” status in its Ethereum Improvement Proposal (EIP) listing. 💯
The approval represents a significant step in the modularization of asset tokenization standards and procedures, offering a technically sound, legally compliant way to tokenize across asset classes scalably.
⚙️ Off-Chain Preparations
In the physical world, Thailand passed legislation granting retail investors access to more real-world asset-backed tokens. The nation’s Security and Exchange Commission’s (SEC) new rules removed investment limits for real estate-backed tokens and outlined criteria for businesses seeking to issue digital assets. 💻
Deutsche Bank-backed Taurus has opened its doors to retail investors following last year’s $65 million Series B. Previously only accessible to retain investors, Swiss regulatory authorities have granted permission to open Taurus’ tokenization and blockchain services to the wider world. 🌐
According to recent reports, SoFi CEO Mike Cagney’s company, Figure Technologies, is planning to launch a US-regulated stablecoin. The company has faced significant regulatory hurdles, seeing its banking license application shot down by regulators before pivoting to tokenized deposits. Given Figure’s over $8 billion in secured funding for its members, the organization has the runway to experiment with tokenization. 🔬
…
With projections in the tens of trillions and the most significant asset managers fully out in support of tokenization, the future seems like a foregone conclusion. 😄
But… isn’t that when things tend to go sideways? 😅
What’s your take? 👉
Is tokenization clear for takeoff to $10 trillion, or are we hitting turbulence after gaining altitude? ✈️
Let us know on X, and follow us for upcoming conversations with RWA projects and tokenizers to learn more about how they’re participating in the future of financial markets!