Tokenization: U.S. for Capital, Europe for Custody? 🌐

Meme coins and tokenized T-bills live in different neighborhoods on the blockchain. 🏘️

Off-chain, new neighborhoods mean new rules, and issuers, managers, and retail investors have begun to tap European banks to custody their tokenized assets in big ways. 🌍

🎯🔥 Rapid Fire Takeaways:

🌐 Basel stats show American banks active in crypto for clients, European for custody

🧑‍⚖️ Congressional Committee rejects SEC rule blocking bank digital asset custody

💎 USDR Issuer Tangible Plans to Redeem Itself as a Layer-2 for Real-World Assets

📜 Securitize to launch lending service using tokenized assets as collateral

🤷 Bank of Japan reveals low recognition of CBDC by the public

💹 Hong Kong launches wholesale CBDC project to support tokenization, tokenized deposits

Find your footing and build your playbook – let’s peek at some pages for inspiration! 📚📊👇

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❗ Do you have a tokenization strategy ready for your client’s portfolios?

Start on the right foot with insights 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. 

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🛍️ Standards and Jurisdiction Shopping 

Standard Chartered’s VC arm is coming out swinging in support of public tokenization. SC Ventures CEO Aaron Gwak painted bank-issued private blockchains as self-aggrandizing, citing consumer preference to move capital in and out of regulated financial markets freely. 🚪

SC does a lot of work in Singapore, the same jurisdiction responsible for Project Guardian. This stance has some deep implications. ERC3643 is live, and compliant tokenization on public blockchains is possible and more turnkey than ever. 🔑

Why reinvent the wheel?

Don’t worry – private blockchains like JP Morgan’s Onyx still have their place in the industry. They’re light years ahead of the 220 million lines of 1960s Cobol that some banks still use.) ⚡

Most folks opt to work with a dedicated partner, whether tokenizing in private or public. Securitize is a major player that offers a full suite of tokenization services that now include asset-backed lending through its new subsidiary, Securitize Credit. 💱

Interestingly, this new subsidiary is based in the British Virgin Islands rather than the United States, like the parent company. Another telltale sign that U.S. regulators are strangling innovation? 🧐

🤠 Custody Corral

Perhaps, but the regulatory stranglehold is loosening. A congressional committee rejected the SEC’s Staff Accounting Bulletin 121 (SAB121), which previously removed banks' ability to interact with digital assets. 👛👈

Not limited – removed. No client custody, none on the balance sheet, nada. Only exceptional cases. ⛔

The result? 10/11 Bitcoin ETF holdings are custodied with CoinBase (Fidelity are crypto OGs.) 👀

Well, that’s poised to change. If this rejection passes the House and Senate, then US banks can finally pump their rookie numbers up… and wow, what rookie numbers they are. ⚾

Recent Basel III stats show that for every $1 in tokenized assets custodied by U.S banks, $350 are custodied by EU banks. 😳

That’s abysmal for the world’s financial superpower. If something doesn’t change in Washington, the U.S. financial regime might become akin to the largest stagecoach manufacturer:

Great position in 1890. 🏇

Terrible industry in 1930. 🚗

💿 See These CBDC CDs? 

Say that three times fast. 👅

Hong Kong will try if it helps tokenization. They just launched a CBDC program to help participating financial institutions integrate tokenized deposits. 🏛️

Earlier last year, Hong Kong tokenized $100 million worth of green bonds as a pilot before upping the ante to over $750 million in February. Now, they’re trialing tokenized CBDC settlement for carbon credits, aircraft parts, bills of lading, and more! 💽

And it’s hard to overstate how much the neighboring Japanese populace has no idea what that means. 😅

While 20% of respondents had heard the term, only 3.1% of surveyed Japanese consumers knew what CBDC meant. ❓

CBDCs are proving a surprisingly hard sell for Japan, where cash remains king despite being the land of neon lights and futuristic technology. 🤖

And while it’s no Gundam battle, the potential fight between stablecoins and tokenized deposits was recently touched on at the Digital Euro Conference. ⚔️

⭐ The Thesis: If banks are prone to failure and the global financial system seems more tenuous than ever… doesn’t it make more sense to use non-bank, dollar-denominated assets to hasten any potential flight to safety (a la Bitcoin or otherwise?) 🤔

🗣️ Real-World Actors for Real-World Assets

Remember: Different neighborhoods, different standards and rules. 🏘️

The global plumbing for asset tokenization is still being laid for institutional tokenization. SBI Digital Markets and CAT Financial Products have collaborated to build the piping for tokenized structured products. 🧑‍🔧

Their goal is less counterparty risk in deals that offer more options to more clients. Structured products are the legos of the financial world, so this move represents an encouraging maturation of tokenization system interoperability. ⚙️

Meanwhile, on the retail side, DWF Labs has pledged $10 million to the memecoin Floki ecosystem via TokenFi. Leveraging AI to create NFT collections, TokenFi checks all the hype boxes required to power the memecoin universe. 🌌

While institutional adoption and retail speculation are separate for a reason, they’re emerging as two sides of the same coin for blockchain ecosystems. Without users, a public chain isn’t attractive to institutional investors. Conversely, a well-funded chain isn’t enough to entice retail users to stick around. ☯️

In all things, balance… with a healthy dose of volatility that you’d expect from young and growing financial technology. 🌊

…

No matter your neighborhood, RWA World has your back. 🤝

We’re your one-stop-shop for all your tokenization insights and needs. 🛒

For example, check out our recent conversation with the Cicada Credit team to learn about how on-chain private credit risk analysis is shaping strategies and deal flow! 👂

Make sure to tokenize safely by learning from the best – join us on Thursday, March 28th, 1-4 pm GMT as we cover the Enterprise Ethereum Alliance’s DeFi Risk Assessment Guidelines. 📔✏️

10% off with promo code “RWAWorld”. 😉