🤝 Security Token Prime Insights: 11/04/2024

Exclusive Intelligence for Security Token Prime Members

November 04, 2024

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Summary and Key Takeaways

1. UBS Enters Race to Tokenize US Treasuries with uMINT

UBS Asset Management closed the week on a high note, announcing their new UBS USD Money Market Investment Fund Token (uMINT) out of Singapore. Launched on their UBS Tokenize platform, the Ethereum-based token will be available via authorized distribution partners. uMINT is following the footsteps of BlackRock, Franklin Templeton, and WisdomTree by issuing on a public blockchain and although it’s only available through those permissioned parties, it’s in a position to expand to other EVM-compatible ecosystems and dApps in the future.

This brings another layer of efficiency for cash management as the bank’s clients start parking it on-chain, earning yield, and eventually using it with additional features. Although UBS is based out of Switzerland, issuing uMINT in Singapore could be an indicator of future plans for the liquidity product, especially if they’re more fitting for that legal framework. This choice doesn’t come at too big a surprise as UBS has previously participated in Project Guardian initiatives, which is led by the Monetary Authority of Singapore. Another trillion dollar asset manager has launched a money market fund before the year is up, as we predicted last week when Lazard announced theirs. This won’t be the last one we see this year either.

2. Wellington, Ondo, and Libeara Introduce Risk-On, Potential Risk-On Pair for Liquidity

Standard Chartered introduced their Libeara tokenization platform a year ago and we’ve seen it put to good use. FundBridge Capital tokenized their SGD Delta Fund which received the first Moody’s Aa rating for a digital fund. They’ve come back to the Singapore-based platform with a new fund to tokenize, the Delta Wellington Ultra Short Treasury On-Chain Fund (“ULTRA Fund”). The Ultra fund will be sub-managed by Wellington Management and first issued on Ethereum, with plans to expand to Arbitrum, Avalanche, and Solana. Will this fund be rated soon too? If you missed our webinar on risk management with Moody’s and Particula, click here for the recording.

The more interesting part of this announcement is Ondo’s involvement. The Ultra Fund will be using their intraday redemption mechanism, the idea is that with 24/7 redemptions this treasury fund will be able to be used as collateral and for cross-border settlement. Considering Ondo’s position, it’s not out of the question that they could be creating a pair between ULTRA and presumably OUSG or USDY - a risk-on/ risk-on pair that could open additional functionality for DeFi protocols.

3. NAV Pricing by the Second? Superstate Introduces Continuous Pricing

Herwig’s Company of the Week winner was Superstate for their novel new innovation to the fund industry. The notion that Net Asset Value reporting shouldn’t be real-time in a tokenized world makes no sense when you consider the applications of by-the-second NAV reporting. Superstate touts you’ll be priced into subscriptions and redemptions using this continuous pricing.

Speed can be an incredible advantage and value add to investors. Tokenization brings us real-time capabilities that would benefit from this potentially new industry standard. DeFi markets and crypto natives in general may choose USTB for this new capability.

4. Securitize Crosses $1 Billion in Tokenization; Launches Fund Admin

Securitize is well known for hosting the half-billion dollar fund product BUIDL which is managed by BlackRock. They’ve also powered issuances on behalf of KKR, Hamilton lane, and many other fund managers. Crossing the billion dollar threshold for tokenization is remarkable and a sign of where we are headed but also how early we still are. These numbers will soon be dwarfed next year, especially with more traditional finance infrastructure going on chain, such as Securitize’s new Fund Services to offer an end-to-end solution for a manager to launch a tokenized fund. 

This will be a big statement for all fund admin providers and further accelerate interest in providing support for blockchain technology. Figure has already crossed the multiple billions in loans (specifically HELOCs) issued on chain, and multiple asset managers like Ondo or Franklin Templeton and tokenization platforms like Tokeny or Aktionariat are not far behind that mark either. 

5. US Treasury Endorses Tokenization.. If It’s On Private, Permissioned Ledgers That Is

A majority of all stablecoins and the largest are all denominated and tied to the US dollar. We’re seeing a trend towards stablecoins using on chain treasury reserves powered by money market funds and treasury products and Circle and presumably other stablecoins tie back to US treasuries. Therefore, demand for stablecoins means demand for US treasuries. Glad to see the US treasury embraces this concept and benefits in a recently released report featuring tokenization. 

What’s also not surprising is that they are not so much a fan of public, permissionless blockchains. They prefer private, permissioned for the controlled environment and enhanced data security. How else can you have direct oversight and intervention? This completely misses the mark of the benefits of public blockchains which currently dominate the market for tokenized treasuries almost in its entirety.

Notable Market Headlines

Institutional Activity

NEW STM REPORT AVAILABLE - PRESENTED BY INX!

Security Token Market is proud to release September 2024’s market report, analyzing secondary market activity and benchmarking against the CoinDesk 20 Index (CD20).

In this month’s market report, we have meticulously tracked 649 security tokens spanning across 35 marketplaces and 10 blockchains.

Sections include:

  • Key Takeaways

  • CoinDesk 20 Index Benchmark

  • Quantitative Highlights

  • Asset Class Breakdown

  • On-Chain Liquidity Products

  • Platform Spotlight: INX

  • New Tokens and Announcements

We’d like to extend a special thank you to our sponsor, INX, for making this possible! INX One is the company’s marketplace. INX Securities, LLC is an SEC-registered ATS and Broker-Dealer and member of FINRA. Through these registrations and licenses INX can facilitate primary capital raises (RegD, RegS, RegA, F1/S1 and others) and those security tokens trading on a secondary market. Learn more about them and how their assets performed in the report!

STM Data

Look out for STM’s RWA Securities Market Update: October 2024 report late this week!

This week the STM Data Team was looking at WisdomTree’s tokenized funds, specifically at their money market fund, WTGXX. As you can see, on September 18th, 2024 the AUM nearly doubled, rising from $6.02M to $11.99M in AUM. This was the day the company announced their institutional/ business version of WisdomTree Prime which they’re calling WisdomTree Connect. 

Because the new platform is on Ethereum rather than Stellar, we saw around $5.2M worth of WTGXX burned from Stellar and minted on Ethereum, likely for an institutional holder. That day also saw a separate $4M mint on WisdomTree Connect which signals how fast AUM can grow once institutional rails are in place. Learn more directly from Maredith Hannon at 38:51.

WisdomTree is one of the players in a good position to cater to both retail and institutional investors, while others are doubling down on one or the other. Follow trading activity on STM.Co and interact with different graphics on STM Charts for further insights!

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Events

Recent Recordings

  • (NEW) Navigating PR Between TradFi and Web3 Media with Amsterdam Group (Recording Link)

  • Beyond the Hype: Cracking the Code of Successful Asset Tokenization with BlockInvest and Polygon (Recording Link)

  • Risk Management in Tokenized Assets with Moody's and Particula (Recording Link)

  • Blockchain Meets Construction with Inveniam & LV8R Labs (Recording Link)

  • Non-Performing Loans with BlockInvest and Davis & Morgan (Recording Link)

  • Issuer Spotlight: Tuscany National Token (Recording Link)

  • Platform Spotlight: Block Time Financial (Recording Link)

  • The TradFi/DeFi Hybrid with Maple, Centrifuge and Swarm (Recording Link)

  • Platform Spotlight: REtokens' New Platform with Tyler Vinson and David Kirschbaum (Recording Link)

  • Powers Hour: New SEC “Dealer” Rule Expansion and DeFi Impacts (Recording Link)

TokenizeThis Workshop Tour Around the US

Get your tickets today for a full day masterclass around tokenization from A to Z. There continues to be a massive education gap in the industry and off the success of the original workshop in Miami last May, we’ve decided to go nationwide. We’ll be visiting NYC, Houston, Boston, LA, SF, Atlanta, and Chicago, check out workshop.stm.co for more information. Use code PRIME for 15% off.

Hello readers,

Another week means another major asset manager launches a tokenized money market fund. No one can argue that 2024 was the year of validation for tokenization. Special credit to Larry Fink and the BlackRock digital assets team for sparking the ignition. OGs like Franklin Templeton and JPM Onyx were the outliers for years, but it went full swing this year with HSBC, Citi, Goldman Sachs, NorthernTrust, JanusHenderson, Lazard, Legal & General, now UBS, and a plethora of others joining into the foray, even Visa got into the mix. Finally, a product library of products is starting to develop all around the world, the precursor needed for active markets to form for RWAs. Next year we’ll see a lot more issuances and more interoperability with DeFi and between RWA infrastructure to help further improve the utility of tokenization. 

If you’re going to be at Propy’s Web3 and AI summit in Miami at the end of this week or at Benzinga’s Future of Digital Assets conference in NYC on the 19th, then give me a shout at [email protected] so we can link up! 

Happy tokenizing,
Herwig “Happy” Konings
CEO, Security Token Group 
Follow me on X / LinkedIn

Herwig’s Pick: Superstate

Kyle’s Pick: Libeara

Find out why and more every Friday live at 2pm EST on LinkedIn or X/ Twitter. Past episodes available on Youtube or your favorite podcast platform! 

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