🤝 Security Token Prime Insights: 5/20/2024

Exclusive Intelligence for Security Token Prime Members

May 20, 2024

Summary and Key Takeaways

1. Broadridge Begins JPM Coin Support for Distributed Ledger Repo (DLR)

Broadridge and its Distributed Ledger Repo (DLR) system will begin supporting JP Morgan’s JPM Coin to settle and transact blockchain repos. DLR currently runs over $1 trillion in annual repo and sponsored repo volume across clients like HSBC, SocGen, and UBS, while JPM Coin has facilitated $1 trillion in transactions through the investment bank’s Onyx Digital Assets itself. This signifies a bit more “openness” associated with these private ledge concepts on both the JPM and Broadridge side. It’s also stated that Broadridge is working to pump its repo offering through the institutional Canton Network. 

2. Chainlink Standardizes Smart NAV with DTCC and Institutions

Chainlink continues dominating cases for tokenization alongside the DTCC and major investment banks, this time developing a solution to publish Smart NAV for funds across multiple issuance platforms and blockchains. The purpose of this project was to “establish a standardized process to bring and disseminate net asset value (NAV) data of funds across virtually any private or public blockchains using Chainlink's interoperability protocol CCIP. Market participants included American Century Investments, BNY Mellon, Edward Jones, Franklin Templeton, Invesco, JPMorgan, MFS Investment Management, Mid Atlantic Trust, State Street and U.S. Bank.” Effectively, the Smart NAV system enables a world of opportunities that stem from the DTCC’s existing service offerings, except focusing on an open-source tokenization realm that doesn’t necessarily NEED the DTCC to operate. This is all about enriching things and providing the brand name connections that go along with them.

3. Mastercard Executes First Tokenized Deposit Transactions with StanChart

Mastecard’s Multi-Token Network (MTN) initiated its first live transactions with Standard Chartered subsidiaries last week. Working within the Hong Kong Fintech Supervisory Sandbox, the transactions included a client purchasing a carbon credit (tokenized by SC Ventures’ portfolio company Libeara) and MTN atomic swapping tokenized deposit value for that carbon credit amount. Beyond this, Mastercard is already exploring use cases and setups in the real estate industry with Inveniam.

4. Re Launches Reinsurance Fund on Avalanche with $15 million Nexus Mutual Commitment

Avalanche landed another very interesting client in Re, a reinsurance fund focused on low-volatility insurances on properties, trucking, aviation and workers compensation. The Cayman-based fund aims to act as a decentralized Lloyd’s of London and has a $15 million commitment from Nexus Mutual and a smaller commitment from the Avalanche Vista investment fund. The firm aims to back $200 million in insurance premiums by the end of 2024.

Notable Market Headlines

Institutional Activity

STM Data

This week the Security Token Market data team would like to highlight a couple sections from our STM Insights session at TokenizeThis 2024. Starting with trending tokens in non-US markets for Q1 2024, for the first time we’re seeing a security token experience more secondary trading volume than Enegra and that’s Vidby, the Swiss company using AI-powered software for rapid and accurate video and document translation, subtitling, and dubbing. This was majorly led by a $5.6M day on March 27th, 2024. 

Separately, we also pointed out market movements across asset classes throughout the past year with some notable ones displayed in the slide below. On the debt side Deutsche Börse issued a significant $3B bond that put Germany on the STM tokenized debt map while in funds we saw Blockchain Capital’s market cap grow by almost 3x due to a price increase before trading came to a halt. Asset Backed Securities (ABS) are interesting to look at and we decided to cover a few of them at TokenzeThis 2024. One of the movements being Redwood Trust having 2 securitizations in one month versus the usual one.

Want to watch the full STM Insights session? Click below for the recording!

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Hello members,

We’re starting to see the effects of a successful BlackRock launch and overall healthy liquidity funds demand with the continuous launch of more funds and similar new products. Being able to see the effects of fund management transparently on the blockchain is the simplest and best way to experience and understand onchain benefits and how tokenization works. Now we will see more asset managers announce projects with select platforms and blockchains of choice. More use cases will launch in a race to be the first to tokenize a specific instrument or asset. The size of the offerings will start to grow as institutions start to participate more in the industry. JPM’s Onyx preparing to “open” itself up for business is the perfect sign to validate this.

With everything on chain, it will be impossible for the rest of the financial sector to not take notice of what’s happening with this technology and how it will impact the entire industry, top-to-bottom. 

Happy tokenizing,
Herwig
CEO, Security Token Group 
@tokenwig

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