🤝 Security Token Prime Insights: 6/3/2024

Exclusive Intelligence for Security Token Prime Members

June 03, 2024

Summary and Key Takeaways

1. JP Morgan Sees $10+ Billion in Daily JPM Coin Transactions

Most of the industry is already aware that JP Morgan’s Onyx division has surpassed $1 trillion in tokenized repo transactions to date. It was announced this past week that Onyx is actually topping $10 billion in daily JPM Coin transactions, which could include bank-to-bank transfers, repo, collateral swaps & settlements, and other use-cases. This explosion in volume is due largely to JPMC’s upgrade and inclusion of programmability - taking it from a 24/7 payments token to a smarter and more robust mechanism that abides by and works within programmed rules. At the end of the day, this enables JPMC to cross asset classes, banks, parties, and even currencies fluidly and hands-off, which is the end goal of programmable payments as a whole.

2. SEC Commissioner Hester Peirce Proposes Joint US<>UK Sandbox

Popularly known as “Crypto Mom,” SEC Commissioner Hester Peirce formally proposed a joint sandbox between the United States and United Kingdom for digital securities and associated blockchain work. Working with Bank of England and the Financial Conduct Authority (FCA), the Digital Securities Sandbox (DSS) would strengthen cross-border capital markets relations and provide utility to clients that have a foot in each nation - which is certainly many - while offering a safe space for these market participants to learn and iterate on the technology without fear of opposition from the major regulators.

3. Marketnode Secures Series A from HSBC and Temasek

Marketnode is an institutionally favored startup and infrastructure provider in the tokenization space, having worked with JP Morgan and participants in Singapore’s Project Guardian for quite some time now. The firm closed its undisclosed Series A funding from HSBC and Temasek to further build out its vision beyond simple tokenization, and rather include blockchain workflows, standardizing data, managing documents and automating asset servicing. Given the focus and relationships here, it is likely Marketnode will have involvement in banking platform bond issuances moving forward, such as HSBC’s Orion. 

Notable Market Headlines

Institutional Activity

STM Data

This week the Security Token Market data team would like to highlight the Debt section from the STM Monthly Report - April 2024. 

  • Debt Market Cap: $7,525,631,926 (0.26% MoM)

  • Debt Volume: Currently Not Available

Insights: Debt saw a new bond issued towards the end of April, increasing the market cap by $9,615,000. This is the municipal bond from the City of Quincy, Massachusetts using JPMorgan’s Onyx Digital Assets (ODA) on the Onyx private permissioned blockchain.

The 7-year, zero-coupon bond received a AA rating from S&P and marked the official launch of ODA’s Onyx Digital Debt Service — the 3rd live application for ODA, joining Digital Financing and Tokenized Collateral Network. Digital Debt Service is meant to facilitate the issuance, transfer, settlement, and automated servicing of debt securities.

This is one of the first tokenized municipal bonds we’ve seen in the United States and hope to see more, keeping in mind we’re aware of another to launch on Goldman Sachs’ GS DAP. Muni bonds would be a great way to connect communities to infrastructure being built while enjoying tax-free interest payments (this is not tax, financial, or legal advice).

Most bonds STM has seen thus far are issued from institution to institution, sometimes even between separate arms within the same institution. That said, we’re starting to see more retail-friendly bond issuances. Although still in the primary issuance stage, we’d like to highlight the $6.25M bond meant to build a Hilton Hotel at El Salvador’s international airport. This 5-year bond is available to non-US investors via Bitfinex Securities, offers a 10% coupon, and even free night stays once the hotel is built. Learn more directly from Bitfinex Securities’ Jesse Knutson on the Security Token Show (1:34).

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Hello members,

This week our industry will finally get a voice in Washington DC! On Wednesday, numerous representatives including Carlos Domingo as CEO of Securitize will make statements at a hearing called “Next Generation Infrastructure: How Tokenization of Real World Assets Will Facilitate Efficient Markets” by the Digital Assets, Financial Technology, and Inclusion Subcommittee from the Committee of Financial Services in the House of Representatives of the United States Congress. 

Essentially, the US Legislative Branch will (for the first time) directly hear on and learn about tokenization as THE dedicated topic because they also recognize the critical role this technology will play in the future. As someone who has known Carlos a long time, I can tell you that he is one of the best people to speak for the industry because this requires the ability to speak in DC’s language which Carlos has already been doing over several trips there. Having major Wall Street asset managers as investors and clients will also immediately command their attention and validate that this technology is here now and it will change market efficiency for the better. So kudos and thank you Carlos and all the other representatives for your very necessary support.

This could help push FIT21 through somehow by giving talking points to pass to the Senate (where the bill is now) or even lead to better legislative action in the form of new bills or as a part of others that relate to it. It all starts with subcommittee hearings like this one, I saw it happen before with the JOBS Act of 2012 for equity crowdfunding. Change may be slow but it can only happen if we have voices in DC to push our message: tokenization will improve capital market efficiency and lead to a better financial economy for all people.

Happy tokenizing,
Herwig
CEO, Security Token Group 
@tokenwig

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