Hanging light bulbs

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Keeping your head down and focusing on early growth and building production use cases was the guideline proposed by experienced practitioners in the digital asset development community at the end of 2023 for 2024, both in large institutions and fintech startups.

With jobs being lost at big tech firms on the West Coast and on Wall Street, and funding for fintech companies down more than 50% (and not thanks to the hype about GenAI funding), the architects and builders of the world’s new digital financial market infrastructure have continued to push for productive use cases, and they are succeeding big time.

The green shoots are blooming. Here are five things you need to know now about digital assets brought to you by global innovators as we head into 2025 and the next wave of financial market infrastructure innovation.

1. Crypto ETF Contagion

SEC approval expected Top Ten Bitcoin ETF Applications It arrived in early January 2024 and by March, Blackrock had the Best-selling ETF in history leaving everyone with the feeling: “We didn’t expect that.”

In the wake of January’s decision, several jurisdictions followed with securities launches, including Hong Kong’s approval of bitcoin and ether ETFs, Australia’s Monochrome Bitcoin ETF, Thailand’s ONE Bitcoin ETF, the UK FCA’s approval of bitcoin and ethereum ETPs for listing on the London Stock Exchange, and the Wisdom Trees Physical Bitcoin (BTCW) and Physical Ethereum (ETHW) ETPs.

Perhaps unintentionally, the SEC has provided the world with the largest global driver of consumer participation in the cryptocurrency market since the FTX reporting collapse. It’s safe to get back in the water: the gatekeepers are all regulated entities.

2. Buy and sell cryptocurrencies at your bank

Standard Chartered (StanChart), the multinational bank headquartered in the United Kingdom, announced in June that it is launching a cryptocurrency trading desk in London that will soon be open to clients looking to trade bitcoin and Ether. This herculean effort by the StanChart team to get to the launch is to be applauded, most banks shy away from anything to do with cryptocurrencies.

Several fintech neobanks such as Revolut, Monzo and Juno offer cryptocurrency trading via exchanges; however, StanChart’s launch is a milestone as it is the first major (regulated) financial institution to offer customers access to cryptocurrency spot markets.

Banks and financial institutions in the United States have the “sword of Damocles” hanging over their heads with the SEC staff accounting bulletin SAB121 which proposes that institutions conducting business in cryptocurrency should hold the assets on their balance sheets and pay a fee on them: a blockchain tax.

3. Debt Tokenization

HSBC problem of a $740 million green bond for the Hong Kong Monetary Authority, the first multi-currency digital bond issuance and the world’s largest digital bond issuance to date have captured the attention of many in the global fixed income community.

Smaller digital bond issuances over the past 18 months 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, seen by many in the industry as a major innovation.

Global Digital Finance (GDF) just released research indicating that private debt will be the first asset class to be tokenized and routinely traded. Global financial institutions with over $221.75 trillion in assets under management found that 70 percent selected private debt as the first asset to be tokenized and routinely traded, ahead of 62 percent who selected money market funds.

4. Stablecoin – Web3 Digital Currency

Tether, the world’s largest stablecoin issuer with 70 percent of the global market and with Q123 profits surpassing those of Goldman Sachs, announced the launch of a new gold-backed stablecoin in June. In a world of macroeconomic and political volatility, a gold-backed digital currency will be popular among many. The fact that it can be used as collateral for USDT will appeal to professional traders.

This week saw Circle as First MICA-compliant stablecoin issuer reports that Europe is preparing its digital payment rails for digital assets and Web3. Circle has been granted an Electronic Money Institution (EMI) by the Autorité de Contrôle Prudentiel et de Résolution (ACPR), the French banking regulator. USDC and EURC are now ready to be used and redeemed across the European market.

With PayPal and SocGen entering the stablecoin market, the pressure is on for banks and deposit coins have become a hot topic. A deposit coin is a transferable token issued on a blockchain by a licensed depository institution that certifies a deposit claim against the issuer, such as JPM Coin.

Bank for International Settlements (BIS) Innovation Hub announced Project Agora in May, a public-private initiative focused on tokenizing cross-border payments. The Hub announced the Free Internet at their annual conference, a bold vision for our digital financial future, at the heart of which is a unified ledger that connects all central bank ledgers. This is a breath of fresh air for technology innovators and the right direction for central banking 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 to enable a new initiative: 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 the FinP2P Tokenization Interoperability Protocol. FIX is the standard that connects exchanges and capital markets, a timely and necessary 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 the development of additional infrastructure across the network, DA has open-sourced the core technology for Canton’s decentralized synchronization domains, including a native utility token, 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.

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