🤝 Security Token Prime Insights: 5/6/2024

Exclusive Intelligence for Security Token Prime Members

May 06, 2024

Summary and Key Takeaways

1. JP Morgan’s Onyx Issues Muni Bond for the City of Quincy (Massachusetts)

Roughly a half-hour outside of Boston, the City of Quincy has contracted JP Morgan as the sole underwriter for its $10 million tax-exempt seven year municipal bonds issued on the bank’s Onyx blockchain. This marks the official launch of JP Morgan Digital Debt Service - another division within Onyx Digital Assets (ODA) alongside JPM Coin (JPMC), Tokenized Collateral Network (TCN), and intraday repo. Quincy’s lead asset manager noted “Over time, we should see blockchain technology usher in lower issuance costs, enhanced liquidity, and reduced settlement times,” which of course has been the holy grail for operational efficiencies. We are still in the process of realizing these efficiencies as the industry moves from proof-of-concept and pilot phases into active, working cases. There is motivation behind enabling residents to purchase fractional muni bonds in their own townships and cities, although it may not be a reality just yet with Quincy’s example.

2. Anchorage Begins Custody Support for Arca’s US Treasury Fund (ArCoin)

Arca, as the first US Treasury product issuer in our tokenization world, has found partnership in Anchorage Digital for the custodian support of its US Treasury Fund (ArCoin). ArCoin is the first blockchain-transferred fund (BTF) structured as a 1940 At Fund - one that took 24 months for SEC approval and one that paved the foundation for other issuers like WisdomTree to follow suit with. Anchorage Digital is also a crypto-focused bank chartered by the US Office of the Comptroller of the Currency (OCC). It is a qualified custodian, which many custody providers in the digital asset space are not. Arca Labs President Jerald David noted, “Now that institutions have validated the benefits of blockchain technology, companies are seeking the most secure and seamless digital assets solutions that meet US regulatory standards,” with regards to Anchorage Digital custodying client and investment assets associated with ArCoin, which will ideally put the tokenized fund in front of Anchorage’s institutional clients as a preferred option for on-chain treasury exposure within the $1+ billion market cohort.

3. Tokyo Metropolitan Government Subsidizes Security Token Issuers

The Tokyo Metropolitan Government is looking to bolster Japan’s footprint in the tokenization space, offering certain subsidies for security token issuers according to the Financial Instruments and Exchange Act. While a common question is “where are the token buyers?,” another common question is how regulators and government entities are supporting the facilitation of on-chain securities and offerings. Tangible subsidies like the ones described in this piece may very well be enough to sway some on-the-fence issuers to Tokyo over competing jurisdictions and regions.

4. PwC China partners with Xalts for Tokenized Assets

PricewaterhouseCoopers (PwC), one of the leading Big 4 audit and assurance firms globally, has selected Xalts as a tokenization partner and platform for its China practice. Xalts is carrying momentum from its acquisition of Contour blockchain, who was already responsible for Citi India’s trade finance initiatives, while already being designed for trade credit, loyalty, and lending solutions. Xalts currently supports EVM-compatible solutions including Hyperledger Besu, Avalanche, Polygon and Optimism and is likely focused on the vast trade finance opportunities throughout China and the Asian markets as we have seen precedent cases in Hong Kong, Singapore, and India.

Notable Market Headlines

Institutional Activity

STM Data

This week the Security Token Market data team would like to highlight activity on the RealT Raise token as it’s starting to stabilize from launch. As a refresher, this token represents equity into the company and leveraged the Swiss DLT Act for its issuance back in late March 2024. To no surprise, they raised $5M in less than 1 hour, $3M of which filled in the first 10 minutes! The next day (3/22/2024) they offered a second round of 10 % which also filled in less than 5 minutes.

Since launch we’ve seen this token reach a market cap high of ~$8M and low of ~$5M, now starting to settle around $6M. With all that said, because this is equity into the company rather than a piece of real estate, it will be interesting to see if this token starts seeing fluctuations again with new announcements coming soon and as the $REG token continues to roll out following the genesis drop last week.

What’s the $REG token? Catch this morning’s Security Token Show starting at 10am EST for an interview with their co-CEO, Remy Jacobson, breaking it down.

Want to see Co-CEOs Remy and Jean-Marc Jacobson share the stage for the first time? This is the week! They’ll be giving a special keynote and potentially even announcement at TokenizeThis 2024. Make sure to RSVP at summit.stm.co!

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Hello members,

Many many big announcements will drop at TokenizeThis on Thursday and Friday. The one I’m most excited about features STM itself! We’ve got hundreds of people descending on Miami this week to talk exclusively about tokenization. It has to be the biggest dedicated RWA event in the industry! Come hear from the most popular issuers in the space like BUIDL, BENJI, RealT while also hearing updates on banking infrastructure, new platforms, a former SEC commissioner’s thoughts on the topic and so much more. 

So what are you waiting for? Come join us next week on May 9th and 10th. Summit.STM.co and use code PRIME for 50% off at checkout. 

Happy tokenizing,
Herwig
CEO, Security Token Group 
@tokenwig

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