🤝 Security Token Prime Insights: 6/10/2024

Exclusive Intelligence for Security Token Prime Members

Summary and Key Takeaways

1. Tokenization Has Its Moment in Congress

For the first time in the industry’s history, US legislators have heard from leading experts to get a better understanding of how tokenization works and what it means for capital markets. A strict emphasis was laid on the fact that tokenized assets don’t fall under the same category as cryptocurrencies. Furthermore, specifically that public blockchains today are completely sufficient in supporting KYC checks and other regulatory requirements. Finally, it was made clear this technology is so impactful and that it's being adopted globally so the US has little choice but to embrace or lose to foreign competition. These are indeed all the key points Congress needed to hear to 1) distinguish between crypto and RWAs, 2) clarify that regulators are completely capable of enforcing RWAs, and 3) that our great American capital markets are under threat if we don’t act. Well done to Carlos Domingo (Securitize), Nadine Chakar (DTCC), Robert Morgan (USDF), and Hilary Allen (American University, School of Law)!

2. Franklin Templeton Follows BUIDL’s Footsteps by Integrating USDC Offramp

For many, liquidity is the sole purpose of leveraging tokenization. However, it’s been well known to most that there is actually very little liquidity for tokenized assets. Therefore, having the ability to cash out like a regular stock is not commonly seen. What Herwig has coined as 100% liquidity, BUIDL by BlackRock and now BENJI have achieved this true benefit at last. Using USDC to allow for both subscribing and redeeming means you won’t need to worry about using a broker or DeFi solution to get your liquidity. This is a major accomplishment and a big deal given that BENJI is a product open to all retail investors, so this capability is no longer unique to BUIDL which is currently focused on institutions.

3. An English Football Club Is Tokenizing Itself on Republic

For many, owning a sports team is a dream that will never be realized. At least not without the trend of tokenization to help. If you happen to be a fan of the soccer team Watford FC, then you are in luck! For just as little as $120, this club decided to open a US entity to issue tokens via Reg D and Reg S on Republic. This means you’ll need to be accredited in the US to participate, not that these American Football fans cared anyway! Soccer is a sport that has a sensational thirst for capital given the lack of salary caps and size of the viewership. Watford’s success will inspire other teams to explore this avenue of capital raising and could quickly lead to becoming a market norm that is copied by other leagues and sports franchises altogether. 

Notable Market Headlines

Institutional Activity

STM Data

As Q2 2024 approaches an end in a few weeks, this week the Security Token Market data team would like to take a preliminary look at who the top tokens are based on trading activity so far this quarter.

As it relates to volume, only 3 tokens made it to the millions so far. Those in order include:

The next three tokens reached mid to high 100,000s in volume: 

While this time last quarter we would have anticipated some tokens from the next batch by volume to have a chance at surpassing the current one, this quarter it’s been clear that we’re experiencing a decrease in trading activity. Due to this trend we’re fairly confident that the current list of top trading tokens may not change by much in the coming weeks to close out the quarter. That said, despite the decrease in trading volume we do see an increase in market cap and healthy primary market!

Feel differently? Let us know in the chats and let’s discuss!

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Hello members,

We are just weeks away from what Coinbase calls Onchain Summer, encouraging new token issuances on BASE, their own blockchain. Wow, has that chain exploded in popularity too! Its growth puts a spotlight on the importance of community. You’d be mistaken if you believed everyone solely chose a blockchain to use purely for the technology. Hardly, in fact it seems the crypto industry is more than comfortable with imperfect technology knowing the trade off in utility is well worth it. That utility comes from the ecosystem and community.

When thinking about what chain to issue your Real-World Asset on, it’s more important to look at what types of grants and marketing promotion you will receive for bringing an asset to that ecosystem. More importantly, consider the community demographics, the popular use cases, and market trends as it all has an impact on your ability to properly tap into that specific ecosystem and audience. You’re not choosing between Amazon Web Services or Microsoft Azure. Most people don’t care where your website hosts data, only the engineers. 

Instead, blockchains are more like sports with fans picking a team to support considering factors like how well do they play but also where are they located? What colors do they wear? Who are the players? Are tickets expensive? What league are they in? Blockchains have a similar reality. You may have one good player (some strong tech) but that’s not enough without the right teammates, strong management, and the fan base behind it. 

Happy tokenizing,
CEO, Security Token Group 

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