Yasuda on Tokenization

The UK government has reaffirmed its commitment to becoming a global hub for securities tokenization, as outlined in the Labour Party’s ‘Financing Growth’ paper from January 2024. Economic Secretary to the Treasury, Tulip Siddiq MP, highlighted key initiatives in a speech delivered at the Tokenisation Summit on November 21, 2024. These include the launch of the Digital Securities Sandbox (DSS) on September 30, 2024, a collaborative effort between the Bank of England and the Financial Conduct Authority. The DSS aims to facilitate the adoption of distributed ledger technology (DLT) across UK capital markets. Additionally, the government announced plans for a Digital Gilt Instrument (DIGIT) pilot issuance within the DSS, exploring the potential of UK sovereign debt issuance using DLT.

To support this digital asset ecosystem, the government has introduced the Digital Assets Bill to Parliament, which clarifies the law surrounding digital asset property rights. The Technology Working Group, established by the Asset Management Taskforce, is also exploring innovation in areas such as funds. These initiatives demonstrate the UK’s proactive approach to embracing DLT and tokenization while balancing regulatory certainty with the flexibility needed for sector development. The government’s strategy aims to position the UK at the forefront of digital asset adoption and innovation in financial markets.

Goldman Sachs is set to launch three tokenization projects by the end of 2024, marking a significant step into the blockchain and digital asset space. These initiatives aim to address growing interest among institutional clients and differentiate the bank’s offerings from market rivals. The projects will initially focus on the US market, particularly targeting the US fund complex and European debt issuance, while leveraging private or permissioned blockchains to ensure regulatory compliance. Notably, Goldman Sachs has already played a crucial role in the broader cryptocurrency ecosystem, serving as an authorized participant in the creation and redemption mechanisms for Bitcoin ETFs launched by other asset managers, including BlackRock’s IBIT ETF.

The banking giant’s move into tokenization follows the success of Bitcoin ETFs and reflects a broader trend of traditional finance players entering the blockchain space. Goldman Sachs’ global head of digital assets, Mathew McDermott, emphasized that these projects are driven by client demand and feedback, with the potential to fundamentally change how investors can participate in the market. While specific details of the projects remain undisclosed, they are expected to involve the issuance of ‘real world assets’ on blockchains, such as money market funds and real estate holdings, creating new investment opportunities for institutional clients. This expansion into tokenization, combined with its involvement in Bitcoin ETFs, demonstrates Goldman Sachs’ commitment to embracing and shaping the evolving landscape of digital assets and blockchain technology.

SBI Digital Markets (SBIDM), a Singapore-based subsidiary of Japanese financial giant SBI, is spearheading the development of a blockchain-agnostic hub to revolutionize the tokenized asset landscape. As part of Singapore’s Project Guardian initiative, SBIDM aims to connect exchanges, security platforms, and brokerages across multiple jurisdictions, facilitating the distribution and origination of tokenized products. This ambitious project seeks to create a comprehensive framework for both primary and secondary market distribution of tokenized assets, enhancing operational efficiency and reducing costs in the process.

The company’s vision extends beyond mere connectivity, as SBIDM is actively building an end-to-end framework for tokenized securities. This includes workflows covering the entire lifecycle from token issuance and digital custody to secondary trading and cross-border distribution. SBIDM’s approach allows for dual issuance in both traditional and tokenized formats, catering to institutional investors at various stages of digital readiness. In the coming months, SBIDM plans to launch its regulated framework, starting with a structured note backed by luxury wines and expanding into intellectual property and commodities. This initiative, coupled with SBIDM’s collaboration with UBS on tokenized money market funds, demonstrates the company’s commitment to driving commercial applications of tokenized securities and fostering a more interconnected global financial system

Copper, a leading digital asset custody and collateral management firm, has announced significant initiatives to advance the adoption of tokenized money-market funds. The company now offers institutional-grade custody services for these digital assets, allowing clients to securely hold and trade tokenized money-market fund tokens using its multi-party computation (MPC) technology. This move is part of Copper’s broader strategy to expand its role in digital finance and regulated financial markets.

To support this initiative, Copper has formed strategic partnerships with key players in the tokenization space, including Securitize, Franklin Templeton, Ondo, and Hashnote. These partnerships collectively represent approximately $1.7 billion in tokenized assets under management. Notably, Copper’s clients can now use tokenized money-market funds as collateral in derivatives trades, following regulatory approvals from the Financial Services Regulatory Authority (FSRA) in Abu Dhabi. This development is particularly significant as the tokenized Treasury market has grown substantially, nearly tripling in size from $780 million in January to around $2.3 billion. Copper’s initiatives aim to enhance the infrastructure supporting tokenized money-market funds, which currently account for over $2 billion in assets across more than 30 products globally