Between industry events, news from Singapore’s Fintech Festival (SFF to friends), Deutsche Boerse’s recent Investor Day calling out crypto and digital assets, CME Group regaining the bitcoin futures crown and a slew of other news (I’m looking at you Standard Chartered), proponents of blockchain, tokenization and dare I say it, cryptocurrency, must be feeling some early holiday cheer.
This may come as something of a surprise to those not following this area closely given high profile negative news over the last year. Even a few Celent research clients expressed surprise to see DLT and Digital Assets featuring as a key driver in our our 2024 Tech Trends Previsory. It’s early days but the news since then looks supportive – of course these views are not guesses, they are formed by analysing the many sources of primary research we collect all year, including privileged conversations with clients. We’ll continue to follow this space with deeper research pieces, but for now, here’s a whistle stop tour of recent developments.
Focus on Use Case
The difference with recent developments as compared to past hype is the focus on specific use cases.And that was exactly the topic of a panel I moderated at the Women in Digital Assets Forum in London last week. My panellists, Anoosh Arevshatian Chief Risk Officer Zodia Custody, Tania Reif Founder and Chief Investment Officer, Senda Digital Assets, Maredith Sapp Director of Business Development, Digital Assets, WisdomTree Asset Management and Sandra Mostacci, Global Head of Delivery Lab49, were all from real companies, offering real DLT or digital assets products or services to real clients.The event was under Chatham House Rules so “you had to be there” as they say, but I can share the discussion was informed, lively and overwhelmingly positive. Please reach out directly to me or these amazing women if you want to know more.
The panelists identified a number of use cases for blockchain including investment, money, workflow and collateral, but agreed there is likely more to come. They also noted three areas of focus required to achieve a “Minimum Viable Ecosystem” around digital assets:
- Standardization
- Liquidity
- Transparency
We all agreed that cracking Interoperability plays a key part in many of those.
The conference series has more events planned and was created by Lynne Marlor, an ambassador for the Global Blockchain Business Council, ex-Chair of Boston Blockchain Association, ex-MD BNY Mellon and general industry powerhouse. She’s well worth connecting with.
Infrastructures, financial or other, in the news
While there is simply too much news to go through in detail, here are some highlights.
Deutsche Boerse, says “finance is going digital” and is creating a new digital asset platform to serve institutional clients.Digital assets, tokenization and crypto currencies all featured in Deutsche Boerse’s recent Investor Day presentation. The market infrastructure and investment management solutions provider are leveraging their partnership with Google Cloud in “creating a digital asset platform to serve institutional customers”. There are already live offerings around crypto currency and tokenized securities, and plans include a crypto Multilateral Trading Facility (MTF).
Source: Deutsche Borse Group Investor Day Presentation 2023
Meanwhile regulated tokenization platform ADDX announced plans to expand to the Middle East and North Africa (MENA).The entity has raised $140 million in venture capital from backers including the Singapore Exchange and Stock Exchange of Thailand and has been a prolific tokenizer, listing more than 80 deals so far, including a $100 million bond issuance for SingTel.
Crypto trading seems to be making a comeback, not only being mentioned by Deutsche Boerse, but a collaboration across OKX, a cryptocurrency exchange and Web3 company, digital asset custody provider Komainu and alternative manager CoinShares, will “empower” CoinShares to conduct 24/7 trading through the OKX platform while assets are held in segregated custody with Komainu. It’s billed as a “trustworthy and transparent trading environment for institutional traders”.
Andin what some say is a sign that traditional institutions are returning to crypto, CME Group recently took the top spot on the list of the world’s biggest bitcoin futures exchanges, replacing Binance for the first time in two years.This prompted Bloomberg Intelligence ETF research analyst James Seyffart to ask, “Does this constitute market of significant size now?” referring to SEC’s historical concerns over depth of Bitcoin markets when deciding whether to approve spot bitcoin ETFs.
Banks also have news
HSBC follows UBS in going live on Broadridge’s new sponsored repo solution built on its DLT Repo platform - with repo being an area we have flagged before here and here.
There has been a flurry of news related toStandard Chartered. Standard Chartered’s Venture arm recently launched a new blockchain unit, announced a digital asset joint venture in the UAE with Japan’s SBI Holdings, with $100 million to invest in ventures, and Zodia Custody, a Standard Chartered subsidiary, launched a joint venture with SBI Digital Asset Holdings to provide digital asset custody in Japan (subject to regulatory approval). This followed closely behind an announcement that it plans to launch in Hong Kong, a country which has gone public about its intention to become a global crypto hub. Zodialaunched in Singapore in early September. Standard Chartered also announced plans to use fintech FundsDLT’s blockchain software to offer fund transfer agency services, initially targeting asset managers in the Middle East and North Africa (MENA).
In additional bank-related news, Goldman Sachs and BNP Paribas led a recent Series B funding round for Fnality, the blockchain payments and settlements platform. The banks join DTCC, 13 global banks, Euroclear, Nasdaq and WisdomTree as backers.
MAS Project Guardian “Mega Update” and Expansion of Asset Tokenization Initiatives
Singapore’s finance regulatory MAS’ Project Guardian was formed to facilitate responsible digital asset innovation while managing risk to financial stability and integrity.The initiative comprises an Industry and Policymaker Group, with the former including UBS, Standard Chartered, Citi, BNY Mellon, Onyx by J.P. Morgan, HSBC, Schroders, DBS, Franklin Templeton and more. There was a session at Fintech Festival offering what was billed as a “mega update” on pilots across fixed income and asset management and foreign exchange.Examples of updates include:
- Citi, T. Rowe Price and Fidelity International testing institutional-grade mechanisms to price and execute bilateral digital asset trades
- BNY Mellon and OCBC are trialling a cross-border FX payment solution
- Franklin Templeton is exploring the issuance of a tokenized money market fund through a Variable Capital Company (VCC) structure which utilises digital asset networks to maintain the record of fund shares
- J.P. Morgan and Apollo are collaborating on the use of digital assets to enable more seamless investment management of discretionary portfolios and alternative assets
- J.P. Morgan’s Onyx Digital Assets has collaborated with Provence Blockchain and others to tokenize funds and move assets across different blockchains.A demonstration at Sinapore Fintech Festival enabled wealth managers to purchase and rebalance positions in tokenized assets across multiple chains
- MAS is collaborating with international policymakers and financial institutions including BNY Mellon, J.P. Morgan and MUFG to create an open digital infrastructure called Global Layer One (GL1) to facilitate seamless cross-border transactions and enable trading of tokenized assets across global liquidity pools while adhering to regulatory requirements.
More examples and details on MAS’s efforts to expand tokenization initiatives and launch digital infrastructure to scale tokenized markets can be found here.