Keep your head down and focus on the green shoots and delivering production use cases, was the guidance from seasoned pros in the digital asset development community mooted at the end of 2023 for 2024, whether in big institutions or fintech startups.
With job losses in West Coast big tech and Wall Street, and fintech venture funding down by estimates of more that 50 percent (and no thanks to the GenAI funding hype), the architects and builders of the world’s new digital financial market infrastructure have been persevering to deliver production use cases, and they are knocking it out of the park.
The green shoots are blossoming. Here are the five things you need to know now about digital assets being delivered to you by global innovators as we race towards 2025 and the next wave of financial market infrastructure innovation.
1. Crypto ETF Contagion
The long awaited SEC approval of the ten bitcoin ETF applications came in early January 2024 and by March, Blackrock’s had the fastest selling ETF in history leaving everyone saying, “we didn’t see that coming.”
In the wake of the January decision, a number of jurisdictions followed with launches including Hong Kong’s approval of bitcoin and Ether ETFs, the Monochrome Bitcoin
Bitcoin
ETF in Australia, ONE Bitcoin ETF in Thailand, the U.K. FCA’s approval of bitcoin and Ethereum
Ethereum
ETPs listings on the London Stock Exchange, and Wisdom Trees Physical Bitcoin (BTCW) and Physical Ethereum (ETHW) ETPs.
The SEC has, likely unintentionally, delivered to the world the single largest global driver for consumers to participate in the crypto market following the downfall of FTX signalling, it’s safe to go back into the water – the gatekeepers are all regulated entities.
2. Buy and Sell Crypto At Your Bank
Standard Chartered (StanChart), the U.K. based multinational bank, announced in June that it is launching a crypto trading desk in London which will be soon open to clients wishing to trade bitcoin and Ether. This Herculean effort by the StanChart team to get to launch must be applauded, most banks shun anything to do with crypto.
A number of fintech neobanks like Revolut, Monzo, and Juno offer crypto trading through exchanges, however, StanChart’s launch is a major milestone as it is the first large (regulated) financial institution to give clients access to clients seeking to trade crypto spot markets.
Banks and financial institutions in the U.S. have the “Sword of Damocles’” hanging over their heads with the SEC Staff Accounting Bulletin SAB121 which proposes that institutions conducting business in digital assets must hold the assets on the balance sheet and pay a charge on them – effectively a blockchain tax.
3.The Tokenization of Debt
HSBC’s issue of a $740 million green bond for the Hong Kong Monetary Authority, the first multi-currency digital bond issues, and the word’s largest digital bond issue to date, caught the attention of many in the global fixed income community.
Smaller digital bond issuances over the past 18 month by the European Investment Bank include Euroclear, Goldman Sachs, SocGen, Santander, and others. JP Morgan is using its Onyx platform to bring U.S. digital municipal bonds to investors, a move seen as an important innovation in the community by promoting greater financial participation.
Global Digital Finance (GDF) just released research indicating that private debt will be first asset class to be tokenized and routinely traded. Global financial institutions with over $221.75 billion assets under management found 70 percent selected private debt as the first asset to be tokenized and routinely traded ahead of 62 percent selecting Money Market Funds.
4. Stablecoins – Web3 Digital Money
Tether
Tether
, the world’s largest stablecoin issuer with 70 percent of the global market, and with Q123 profits beating those of Goldman’s Sachs, announced the launch of a new stablecoin backed by gold in June. In a world of macroeconomic and political volatility a gold reserved digital currency will be popular with many. That it can be used as collateral for USDT will attract the professional traders.
This week saw Circle as the first MICA compliant stablecoin issuer signalling Europe is readying its digital payment rails for digital assets and Web3. Circle attained an Electronic Money Institution (EMI) license from the Autorité de Contrôle Prudentiel et de Résolution (ACPR), the French banking regulatory authority. USDC and EURC are now ready to be used and redeemed throughout the European market.
With PayPal and SocGen getting into the stablecoin market, the pressure is on for banks and deposit coins which have become a water cooler topic. A deposit coin is a transferable token issued on a blockchain by a licensed depository institution which evidences a deposit claim against the issuer, like JPM Coin.
The Bank for International Settlements (BIS) Innovation Hub announced Project Agora in May, a public private initiative focused on the tokenization of cross border payments. The Hub announced the Finternet at their annual conference, a bold vision for the future of digital finance, at the heart of which is a unified ledger that connects up all of the central bank’s ledgers. This is a breath of fresh air for tech innovators, and the right direction of travel for central banks and technology interoperability.
5. Routing And Connecting Global Digital Markets
GDF announced a collaboration with the FIX Trading Community to launch a Joint Working Group enabling a new initiative: The FIX – FinP2P Protocol Interoperability Alliance. The Alliance is dedicated to enabling seamless messaging between traditional finance and digital securities, leveraging the strengths of the open-source FIX Protocol and FinP2P Tokenization interoperability protocol. FIX is the standard that connects exchanges and capital markets, a well timed and needed utility in the DLT space to rescue assets from Token Islands.
This week Digital Asset (DA) announced the Global Synchronizer for the Canton Network, a Network of over 80 institutions. Global Synchronizer is the first decentralized infrastructure for the Canton Network that encourages additional infrastructure development across the Network, DA has open-sourced the core technology for decentralized Canton synchronization domains, including a native utility token – the Canton Coin – to be used for network staking and incentives. Institutions can be a super validator and run a node, join the Global Synchronizer Foundation, or run an application on the Network.
