✍️ Now Available: State of Security Tokens 2023 - Q4 Report

Brought to You by Blue Water Financial Technologies

Author

Security Token Advisors
March 06, 2024

Dear Security Token Prime Members,

We are very excited to publish our State of Security Tokens 2023 - Q4 report with Blue Water Financial Technologies as the sponsor. As many of you may be aware, our State of Security Tokens series has started out in early 2022 as an industry primer. It then escalated to include institutional updates in late 2022 as that side of the industry gained traction.

Now, it’s a quarterly series covering key themes on the retail and institutional sides, secondary trading activity, comprehensive service provider updates, blockchain developments and use-cases, and additional insights drawn from our advisory and data arms.

The State of Security Tokens 2023 - Q4 report largely covers:

  • Key retail & institutional themes in the tokenization and real world assets space like:

    • Treasury, private credit, and real estate growth

    • Asset-Backed Securities (ABS) originations and securitizations

    • Investment banking platforms and digital bond placements

    • Global distribution channels & preferential jurisdictions

    • M&A and Investment Activity

  • Secondary Trading Activity (40+ graphs)

  • M&A and Investments

  • 50+ Service Provider Updates

  • Public and Private Blockchain Developments

We hope you enjoy the read and many thanks again to our sponsor, Blue Water, a Security Token Advisors client leveraging its existing digital footprint in the residential mortgage-backed securities (RMBS) and Mortgage Servicing Rights (MSR) space to bring quality and high barrier-to-entry mortgage assets to global investors on-chain To learn more about Blue Water, check out Pages 18 and 100 in the report. For more details email Peter Gaffney at [email protected].

A Word from Author Peter Gaffney

The tokenization of real-world assets (RWAs) solidified itself as a digital asset vertical that’s here to stay in Q4 2023. There have been an unprecedented number of new ‘real-world asset protocols’ crossing into the decentralized finance (DeFi) ecosystem and garnering the attention of native crypto investors. Simultaneously, institutional and heavily-compliant platforms became arguably more active than ever with more and more respected deals.

On-chain asset-backed securities marched to over $12 billion to close the year on the backs of infrastructure vehicles like Provenance Blockchain and Figure achieving $7 billion, with Stellar and Liquid Mortgage tallying their own $5+ billion of assets serviced and reported. Money markets and treasuries peaked around $850 million collectively - an extremely impressive number considering capital flows into these products are pretty organic from Web 3.0 firms and funds, exploratory money managers, and individual investors alike. Even closer to that coveted $1 billion mark that very well may be breached in Q1 2024 with the addition of institutional-grade offerings like Hashnote’s US Yield Coin (USYC) and Ondo US Dollar Yield (USDY).

As projects move out of proof-of-concept and pilot stages, we’re starting to see some quantifiable savings, benefits, and externalities with regards to digital systems. As you’ll read in the Key Takeaways, this tokenization technology is already offering raw cost savings and meaningful labor savings, reducing time spent on redundant tasks and therefore reducing the need for some of this excess labor. This shouldn’t shock anyone; after all, that’s what new technology overlays do. The important takeaway is that the industry is actually nearing the point of seeing these savings, and now focusing on where the commercialization will begin.

Lastly, it’s exciting to see the breadth of projects being actively explored and the recurring names in the tokenization space. Citi. UBS. JP Morgan. Apollo. WisdomTree. Wellington. HSBC. Goldman Sachs. Coinbase. Regulatory organizations and spearheads like the Monetary Authority of Singapore (MAS) and Hong Kong Monetary Authority (HKMA) are also involved to equivalent extents as the service providers. All in all, this quarter established an even more robust ecosystem to power the next leg of capital markets, and we seek to cover as much of that as possible within this publication.

Peter Gaffney, Head of Research, Security Token Advisors

Be sure to also register for our TokenizeThis Conference May 9-11, 2024 in Miami! The conference will cover a plethora of topics throughout its panels, fireside chats, and keynotes, carefully curated by the STM team designed to educate attendees about the benefits of tokenization and the varying use cases across capital markets being adopted by financial institutions and private markets alike.