Here is our pick of the 3 most important stablecoin stories during the week.
CBDC’s are still marching, but is it Tokenization that is playing the tune.
This week we saw a number of announcements on further progress being achieved with the many CBDC experiments taking place around the world. While Crypto burns in the dumpster fire, will it be tokenization of Trad Fi assets that pushes forward and with it a big use case for CBDC’s?
First, France and Luxembourg have used an experimental central bank digital currency (CBDC) to settle a bond worth 100 million euros (US$104 million), the latest in a series of trials in tokenized financial markets.
The Venus Initiative “shows how digital assets can be issued, distributed and settled within the eurozone, in a single day” and “confirms that a well-designed CBDC can play a critical role in the development of a safe tokenized financial asset space in Europe,” Nathalie Aufauvre, general director of financial stability and operations at Banc de France, the French central bank, said in a statement.
The initiative also involved Goldman Sachs, Santander and Societe Generale as well as the publicly funded European Investment Bank.
France, Luxembourg Test CBDC for 100M Euro Bond Issue (coindesk.com)
Even in war-torn Ukraine, the National Bank is considering an electronic version of the Ukrainian hryvnia that would be able to facilitate the exchange and issuance of virtual assets, among other uses.
The central bank has discussed its vision for an electronic iteration of the country’s sovereign currency, the hryvnia, with representatives of banks, non-banking financial institutions and the crypto market, according to an official press release on Monday. The bank is exploring retail non-cash payments, virtual asset circulation and cross-border transactions as possible applications for a CBDC.
“E-hryvnia can become one of the key elements of qualitative infrastructure development for the virtual-assets market in Ukraine,” the report said.
Ukraine Considering CBDC That Can Facilitate Crypto Trading (coindesk.com)
Meanwhile in London, TP ICAP, the world’s largest interdealer-broker, has registered as a digital-asset provider with the U.K.’s Financial Conduct Authority as it attempts to break into the crypto world with its Fusion Digital Assets marketplace.
The company, a giant in infrastructure for wholesale markets for traditional finance, is working with custodian Fidelity Digital Assets to offer a platform to match orders and execute spot crypto trades.
“Until now, the wholesale digital-assets market has lacked the credible infrastructure and assurance necessary for [financial market players] to allocate capital,” Duncan Trenholme, co-head of digital assets at TP ICAP Group, said in a statement. “Over time, we believe blockchain will lead to the tokenization of traditional asset classes.”
Interdealer Broker TP ICAP Gains UK Crypto License (coindesk.com)
So in summary, the tokenisation of traditional assets such as Bonds, Securities and even currencies (a stablecoin) by the Trad Fi market who use Central Banks as their regulator and risk management service provider will lead to a must have use case for CBDC’s.
This is a wholesale only market and as such the politically sensitive retail CBDC can be quietly forgotten.
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Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
Twitter @Alan_SmartMoney
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives.