BlackRock Advocates For Tokenization, The Fed Is Talking About Crypto & More

Welcome back!

This is J264G and this week I’ve got these titbits for you:

• Tokenize Everything: Larry Fink advocates for tokenization.

• Crypto Rails: Stablecoin transfer volume hit $27.6 trillion in 2024.

• Coming Aboard: Are India and the Czech Republic crypto bulls?

The Fed is talking about crypto. What is your central bank doing?

Now, let’s jump right into this week’s newsletter!

Click on any underlined heading/hyperlink to learn more.

Spotlight

Tokenize Everything

Big finance is broken. 

For decades, financial markets have operated in a way that disproportionately benefits institutional and accredited investors, restricting enterprise flexibility and creating significant barriers for retail participants.

How so?

Well, public companies remain dependent on institutional and accredited investors, limiting opportunities for a more diverse shareholder base. At the same time, private companies also rely heavily on these investors to delay IPOs, further restricting access for retail investors. As a result, institutional and accredited investors continue to hold a dominant advantage, perpetuating wealth concentration and limiting financial empowerment.

This fundamental imbalance is why tokenization on public, open-source blockchains is gaining momentum.

Without delving into the technical intricacies, tokenization is the process of creating a digital representation — a token — of traditional assets such as stocks and bonds on blockchains such as Solana. 

This introduces several key advantages: 

• Fractional Ownership: High-value assets such as blue-chip stocks and bonds often remain out of reach for average investors due to prohibitive capital requirements. Tokenization brings about fractional ownership, enabling investors to purchase smaller asset portions — reducing wealth barriers and broadening access to high-growth assets.

• Shareholder Diversification: Tokenization also offers an alternative to the traditional IPO process. The tokenization of assets is both fast and cost-effective, enabling private companies to swiftly distribute their equity beyond institutional and accredited investors, potentially attracting (a) a more diverse range of investors and (b) more capital.

• Market Dynamism: Traditional financial markets operate within geographic and temporal restrictions, limiting trading to set hours and specific jurisdictions. Tokenized assets, however, can be traded globally and around the clock, increasing efficiency and liquidity — making markets more resilient.

• Improved Efficiency: Traditional asset transactions involve multiple intermediaries, each contributing to transaction costs and delays. Blockchain technology streamlines this process through smart contracts, which automatically execute transactions without the need for brokers, clearinghouses, or custodians — reducing fees and settlement times.

• Self Custody: As is the case with all assets on public, open-source blockchains, tokenized assets benefit from self custody, enabling investors to manage their holdings independently — without relying on third-party custodians such as banks, brokers, or exchanges; eliminating deplatforming, debanking, and counterparty risks. 

In essence, tokenization not only provides new avenues for companies seeking capital but also levels the playing field for retail investors. 

While the concept may seem ambitious, real-world implementations are already emerging. For instance, Exodus has successfully demonstrated the feasibility of equity tokenization. Its stock is listed on the New York Stock Exchange and can be held as EXOD tokens in Exodus wallets. EXOD shares represent Class A shares, while EXOD tokens serve as digital representations of these shares, showcasing the potential for blockchain-based equity trading.

As such, I'm confident that regulatory bodies, including the SEC, will move toward establishing legal frameworks for the tokenization of financial markets; ringing in a new era characterised by inclusivity, accessibility, efficiency. 

Crypto is the future of finance — the meme is becoming reality.

Number Of The Week

Solana outpaces Ethereum in 30-day revenue for the first time.

News Bites

Institutional Grade: A recent paper by former SEC and CFTC chief economists — Craig Lewis and Jim Overdahl — analyses the SOL market, concluding that it is large, liquid, and comparable to BTC and ETH markets in several key metrics.

Stablecoin Payments: Incumbents and startups are increasingly adopting stablecoins on Solana and Base — but which blockchain will emerge as the leader in stablecoin payments? Read the latest Squads research report to find out.

Crypto Rails: Speaking of stablecoins, their transfer volume hit $27.6 trillion in 2024, surpassing the combined annual transaction volume of Visa and Mastercard by over 7.68%. This milestone underscores the growing adoption of stablecoins as a preferred transaction medium, highlighting their increasing role in global finance and commerce. 

Changing Tides: SEC lawyers must now seek approval from the politically appointed leadership before launching probes, a major procedural shift that could slow investigations and “regulation by enforcement”.

Liquidity Layer: Ondo has unveiled Nexus, a new initiative aimed at enabling instant liquidity for third-party issuers of tokenized US Treasuries. With this, Ondo aims to become the de facto liquidity layer for the entire tokenized US Treasury market.

Coming Aboard: As global attitudes shift, India is reassessing its position on cryptocurrencies. Despite this, the country's central bank continues to warn that cryptocurrencies pose a macroeconomic risk.

Ahoj, Europe! Czech central bank governor Ales Michl is looking to diversify reserves, possibly by increasing gold holdings from 0% to 5% and equities to 30%. Another asset under consideration: Bitcoin.

Tracking Bitcoin: Keeping up with all the news surrounding Bitcoin can be overwhelming. This website provides real-time tracking of Bitcoin legislation and developments across the U.S., ensuring you stay informed at all times.

Caught In 4K

Weekly Take

Keks & Giggles

And that's a wrap!

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Talk soon!

J264G

_{DISCLAIMER
None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research. Lastly, please be advised that we discuss products and services from our partners from which our team members may hold tokens/equity.}