🤝 Security Token Prime Insights: 12/9/2024

Exclusive Intelligence for Security Token Prime Members

December 09, 2024

If this email was forwarded to you, sign up here to receive it directly in your inbox every Monday morning!

Summary and Key Takeaways

1. An SEC Chair, CFTC Chair, and Crypto Czar Walk Into a Bar…

The latest cabinet positions appointed by incoming President Trump seem like the butt end of a joke to someone (whoever they might be) who agrees with Gary Gensler’s way of handling things these last 4 years. For everyone else, it’s no laughing matter and being considered the most crypto-friendly appointments in crypto's entire history. Frankly, there has never been a time in the US where crypto entrepreneurs and participants have found hope that the original promise of this technology and sector can flourish without needing to break the system. Finally, the system might be on their side… 

The crypto markets have already reflected this optimism but something else fascinating is happening over on Wall Street. Instead of excitement, fear has struck. Now their timeline for a new capital markets operating system has been significantly accelerated. Suddenly the advantages that JPM, BlackRock, Franklin Templeton and almost every other top 10 bank or asset manager have built are now very real, as opposed to the common previous interpretations - typically as a PR stunt. With blockchain technology proving to be the next major fee compression driver and the regulatory market now almost guaranteed to be opening up in a friendly way, every mid-market firm is now revisiting what strategy needs to be employed around this. Buckle up for 2025!

2. Welcome 21X to the Tokenization Club; Announces Licensing Approvals in EU

The US may be finding its footing soon but some argue that the EU is a step ahead thanks to the clarity the MiCa classifications have created for the crypto industry. Despite seeing an active tokenization industry already flourish, the EU has struggled from its split geography. For example, Archax dominates the UK for being the only one licensed in the region. Similarly, one or two companies have all made a land grab out of other countries across the European continent. Now, 21X has entered the picture with a potential new edge as they claim the first DLT pilot license from the regulator BaFin in Germany.

After over a year of trials that included the German Federal Bank (Deutsche Bundesbank), the European Securities and Markets Authority and the European Central Bank, 21X is positioned to be a strong alternative to the TradFi CSD replacement solutions that the likes of Deutsche Borse (via Clearstream/ D7) in Germany and SIX (via SDX) in Switzerland currently offer. 

3. BUIDL is Dethroned by Hashnote’s USYC Thanks to Collateralization; Marks the Race for Yield Infrastructure

Hashnote’s US Yield Coin has quickly grown, especially with new utility added to it. With $693 million in assets under management at the time of writing, this token is the new leader in the liquidity product space, surpassing BlackRock’s $BUIDL ($525M in AUM). A likely catalyst to USYC’s growth? Derivatives exchange Deribit offers it as yield-bearing cross-margin collateral. 

This is where infrastructure starts to play a role in adoption. Tokenizing an asset is a good first step but what you can do with it takes tokenized RWAs to a new level. The bigger catalyst for USYC is Hashnote Harbor which allows you to earn yield-generating strategies without your assets leaving the custodian, Anchorage Digital in this case. Derivatives like covered call spreads, covered calls, or custom strategies in the crypto market could result in high yields which Hashnote Harbor offers up to 40% on - an attractive return to generate investor participation. Hashnote announced Hashnote Harbor back in July, with Anchorage beginning support for USYC 3 months ago. This blends traditional, institutional use cases with web3 technology and speaks the language of those with heavy resources hence why we’re seeing USYC continue to grow at rapid rates.

4. A Look at Tokenized Money Market Funds and Its Future

Franklin Templeton’s BENJI woke up TradFi in 2021. BlackRock’s BUIDL made them cool this year. And now here is what you can expect in 2025 (based on public info, includes Treasury, Cash and Cash Equivalent Liquidity products): 

  • Issuers Entering the Market in 2025: Coinbase Asset Management, Glasstower, Legal & General, Neovision Wealth Management, Ripple

  • Issuers Already in the Market: Abrdn, Adapt3r, Allianz, Anemoy/ Janus Henderson, Arca, Backed, Bankhaus Scheich, BlackRock, DBS, DigiFT, Etherfuse, Fidelity International, FortunaFi, Franklin Templeton, FundBridge Capital, Guggenheim, Hashnote, Maple, NexBridge, Moreliquid, Ondo, OpenEden, Philippines Bureau of the Treasury, PV01, Societe Generale, Spiko, Superstate, Swarm, UBS, Velo Labs, Wellington, WisdomTree, Woo X

We might have even missed a few and we are already aware of more that can’t be disclosed. The yieldcoin era has arrived. 

5. Chintai Gets Aggressive in End-of-Year Tokenization Deals

Winning Herwig’s Company of the Week, Singaporean-based Chintai is hot on the move! Since their last $100M real estate tokenization they announced in September, just over the last week they announced a $250M renewable energy deal and a $50M tokenized art fund. PowerDime is going after the $16B+ virtual power agreement market and Premiere Art Fund with the belief that fractionalization will democratize and open up the art world. 

Chintai also has their $CHEX governance token which has seen growth since the start of this year of 1080%.

Notable Market Headlines

Institutional Activity

NEW STM REPORT NOW AVAILABLE

Security Token Market is proud to release November 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 733 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: Hashnote

  • New Tokens and Announcements

STM Data

It’s a new month which means we have a new market update for you! We’ve crossed $49 billion in tracked assets on-chain from 733 security tokens, all covered in this report brought to you by the RWA Foundation. 

Market Highlights

In November, trading activity increased a significant amount, 47.50% at 280 tokens, compared to 147 tokens in October 2024. Additionally, the overall trading volume showed a slight increase of 1.25% from $3,047,125 in October to $3,085,608 in November.

On the other hand, the market cap increased by 0.96% over the month, rising from $48,602,706,163 on November 1st to $49,068,801,038 by the close of the month.

CoinDesk 20 Index Benchmark

A hypothetical, equally-weighted security token bundle of all STM-tracked RWAs showed minimal growth, up just under 1%. The CoinDesk 20 Index, however, grew a significant 74.66% which comes to no surprise given the revived market and sentiment around crypto. The presidential election in the United States had a meaningful effect on the future of digital assets given the expectations of clearer regulatory frameworks with a new administration and SEC Chair. 

For the same reasons above, the lack of return for tokenized real world assets (RWAs) can be confusing at first. However, it reflects the nature of these tokens and the underlying they represent such as real estate, funds, and asset-backed securities which have their own securities laws to follow and are less affected by the US regulatory climate compared to crypto. With that in mind, it’s worth noting the Quantitative Highlights section shows US-based security tokens had their market cap and volume grow at bigger rates than their non-US counterparts, potentially reflecting the effects of the election.

For more data insights and charts, visit STM.Co !

Security Token Prime is Made Possible Thanks to Our Enterprise Partners

Hello readers,

The reality is becoming ever-apparent for the entire banking sector. Meanwhile, RWAs are becoming a hot thing in crypto, with even the likes of Michael Saylor talking about it. I’ve been writing about the aligning of stars since early in the year. Now it’s clear that in 2025 we’re going to see exponential growth as we rebuild financial markets onchain.

We’re not quite yet at product-market-fit for both crypto natives and traditional finance but it’s nearly there with all eyes on yieldcoins taking over next year. I wouldn’t sleep on tokenized public equities, real estate, and commodities either. Heck… don’t sleep on bonds, lending markets, and private credit either! 

Stay tuned for some cool updates around TokenizeThis, STM and the RWA Foundation so be sure to make sure you sign up for our X and Telegram!

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

Events

Recent Recordings

  • (NEW) AI In Digital Assets Marketing and PR with Rob Gonda (Recording Link)

  • 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.

Company of the Week - Herwig: Chintai
Company of the Week - Kyle: Hashnote

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

Helpful Resources

We hope you enjoyed this week's Security Token Prime Insights email - if you have any feedback on either what you liked or what you’d like to see, please reply to this email with it.

This newsletter should be not be considered financial advice.
Security Token Prime Insights is for informational purposes only.