🤝 Security Token Prime Mid-Week Insights: 4/11/2024

Exclusive Intelligence for Security Token Prime Members

April 11, 2024

Summary and Key Takeaways

1. SEC to Sue Uniswap

News shocked the crypto industry as Fortune and Bloomberg confirmed from the founder of Uniswap that they have received the SEC’s warning letter for its plans to sue Uniswap. This is a similar Wells Notice to the one that Coinbase received several years ago and is now moving to trial for. As to be expected, the SEC believes Uniswap violates numerous securities laws due to unregistered securities being listed on the Uniswap DEX and even going after the UNI token itself. As the bull run opens up the market again, it seems that the SEC Chairman Gensler’s bell chimes and a poster child of the crypto industry is selected to be made an example of. We’ve long speculated that the SEC would go after DeFi companies for some time now so this seems like business-as-usual when you zoom out.

2. Clearstream Joins ECB CBDC Trials

The German exchange Deutsche Boerse’s central depository system called Clearstream has announced they will be supporting the European Central Bank’s trials for a central bank digital currency and tokenization efforts. Clearstream’s head of issuer services stated that they are proud to expand their D7 DLT powered platform by connecting into “the main digital payment solutions across the Eurosystem.” And it’s a big deal indeed as the CSD aims to create a new technical infrastructure for digital capital markets and potentially being the first provider of the ECBs tokenized euro will be a powerful settlement tool for their ecosystem and, surely, attract traditional markets in Europe to start leveraging the financial rails of tomorrow.

3. Bitfinex Tokenizing Debt for Hilton Hotel in El Salvador

El Salvador not only embraces Bitcoin but the concept of tokenization too. They’ve planned to issue municipal bonds to power geothermal mining efforts around Bitcoin itself. And given the focus on the OG blockchain protocol, it’s no surprise that this offering and the latest one is on Liquid Network, an L2 on Bitcoin and being issued by Bitfinex, marking their first issuance in the country and LATAM. Raising a little over $6M with a 5 year, 10% coupon - the token will be issued under the ticket HILSV and will be traded against the U.S. dollar and tether (USDT) on Bitfinex. In the future, if you stay at the Hampton by Hilton at the international airport in El Salvador, just know the debt’s been tokenized. Of course, Hilton did not endorse this offering as it's being done by a franchisee.

Notable Mid-Week Market Headlines

Security Token Prime Member Spotlight

Congratulations to STP members Scott and Courtney Brown for launching their Tuscany National Real Estate Token offering! Issued by Park Street Development & Buena Vista Hospitality Group on tZERO, this token secures a stake in the Tuscany National Resort & Club — an exciting property in Cortona, Italy set to open Fall 2024.

Others involved in this offering include law firm Winston & Strawn LLP. and placement agent Castle Placement. This property boasts a 47 room boutique hotel, 24 VIP Villas, an 18-hole Gary Player – designed golf course, a full-service restaurant & luxurious spa.

We held a webinar on March 27th via Security Token Prime with the Tuscany National team. Watch to learn more and explore the offering here.

Security Token Prime is Made Possible Thanks to Our Enterprise Partners

News that BlackRock and Securitize are linking up to create a digital assets fund has major implications on regulated, compliant tokenization markets within the United States.

BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) is not the first of its kind to list on Securitize’s platform, but it’s likely the product that will catalyze institutional capital and serious money managers to the Securitize ecosystem.

(BUIDL) will hold 100% of its assets in cash, U.S. Treasury bills, and repurchase agreements (repos), categorizing it as a digital money market product. Securitize previously and currently acts as the transfer agent and issuance platform for Arca’s US Treasury Fund (RCOIN). While Arca mapped out the vision and pioneered the blockchain-based structure for a traditionally ultra-liquid fund in 2020, BlackRock’s positioning here may provide the real spark this vision was aimed at.

Per Security Token Market (STM.co) data, lifetime Alternative Trading System (ATS) volumes for tokenized assets reached $110+ million through March 2024. BlackRock’s $100 million BUIDL seed funding makes it the largest asset on Securitize, and Week 1 inflows of roughly $175 million already position BUIDL as the second-largest product in the money market cohort with $275 million in AUM behind Franklin Templeton’s $360+ million money market fund.

While limited to Qualified Purchasers (QPs) in the primary markets (defined as an estimated 2.7 million households with $5 million or more in investable assets or investment managers & corporations with $25 million in investable assets), eventual spillover to a secondary market listing will enable more desirable trading conditions to incentivize investors. BUIDL will prove itself to be a sticky asset enabling investors to collect yield while evaluating other listed alternative investments like Securitize’s listed KKR and Hamilton Lane funds and composing portfolios without ever leaving the platform once.

Find more of our insights in CoinDesk’s Crypto Long & Short Newsletter.

Peter Gaffney, Head of Research, Security Token Advisors

Security Token Advisors Client Highlights:

STA has elected to spotlight a couple of our advisory & consulting clients here.

Blue Water FinTech - STA is working with Blue Water, an SEC-registered investment adviser and FinTech platform dedicated to Mortgage Servicing Rights (MSRs) and loan servicing with 500+ originators onboarded. STA has been evaluating the tokenization ecosystem on behalf of Blue Water, who is seeking to distribute MSR and associated cash flows to investors as compliant tokens. Blue Water is one of the (if not the) leaders in MSR secondary trades by volume which could contribute to a very notable listing on tokenized secondary marketplaces when the time is right.

Arctic Digital Mining - STA is working with Arctic Digital Mining (ADM) to develop a tokenization platform geared towards Alaskan gold miners under the mission of unlocking the value of in-ground gold deposits via digital securities, and thus bringing utility to unmined gold and precious metals. Targeting a range up to 100 million gold ounces, ADM seeks to bridge the gap between in-ground gold valuations and mined & listed gold (i.e. ETFs and gold-backed stablecoins) through the GiG token. Eventually, we may see price convergence as miners, investors, and users along the value-chain elect to tap into this market directly at the source through the miners on Arctic Digital Mining’s platform.

For Consulting Inquiries or Client Details: please email [email protected]

Use code PRIME for 10% off at checkout!

Herwig’s Pick: tZERO

Kyle’s Pick: Tuscany National Token

Find out why and more every Friday live at 1pm EST on LinkedIn or X/ Twitter. Past episodes available on Youtube or your favorite podcast platform! 

Helpful Resources

Was this email helpful? What else would you like to see?

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.