A Frictionless Year in Review
At Frictionless Markets we have made huge strides since our July operational launch of our tokenized collateral with Institutional Deposit Tokens and our Institutional Cash Funds.
Since July, we have executed over one thousand distributions to Investors in multiple currencies and opened our Bitcoin for Business & Frictionless Bitcoin Treasury Fund with one hundred daily interest swaps utilizing our DvD smart contracts. Our Institutional Deposit Tokens have been recognized as institutional-grade collateral under the Luxembourg and EU financial collateral laws, enabling cross-border instant collateralization of transactions, in both deliver versus Payment and Delivery versus Delivery contracts.
By leveraging Chainlink CCIP and PoR, our liquidity aggregation and cross-chain securities transfer solution is ready for launch. In early 2025 the Frictionless Private Markets platform will go live, enabling Managers to efficiently and seamlessly issue digital funds with incredibly low total expense ratios, ultra-low minimums and 365/24/7 distribution.
As 2024 draws to a close, at Frictionless Markets we wish all our clients, investors, partners, shareholders, team members and all the families and loved ones behind them a Merry Christmas and a prosperous New Year.
UK Advances Digital Asset Regulation and Digital Gilts Pilot
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The UK government has reaffirmed its commitment to implementing comprehensive cryptoasset regulation, as outlined in proposals from October 2023. Economic Secretary to the Treasury, Tulip Siddiq, announced that the government will introduce regulations for cryptoassets and stablecoins simultaneously, rather than in two phases as originally planned. The Financial Conduct Authority (FCA) has published a “Crypto Roadmap” detailing key dates for developing and introducing the UK’s cryptoasset regime, with consultations scheduled throughout 2025 and final rules expected in 2026.
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In a significant move towards modernizing the UK’s financial markets, Chancellor Rachel Reeves announced the launch of a pilot program for a Digital Gilt Instrument (DIGIT). This initiative will use distributed ledger technology (DLT) to issue tokenized government bonds on a blockchain. The pilot, expected to operate independently from regular gilt operations, aims to streamline the issuance process, improve liquidity management, and enhance transparency in the £2.5 trillion gilt market. Industry experts have welcomed this development, viewing it as crucial for maintaining the UK’s position as a global leader in digital finance and future-proofing its capital markets.
French Banking Giant BPCE Secures Crypto License for 2025 Launch
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Groupe BPCE, France’s second-largest banking group, has taken a significant step towards offering cryptocurrency services to its 35 million customers. The bank’s digital asset subsidiary, Hexarq, recently obtained PSAN (Prestataire de Services sur Actifs Numériques) authorization from France’s financial markets regulator, the Autorité des Marchés Financiers (AMF). This regulatory approval allows Hexarq to provide a comprehensive suite of crypto services, including custody, buying, selling, and trading cryptocurrencies against the euro.
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With this authorization, BPCE plans to launch Bitcoin and crypto investment services through Hexarq in 2025, integrating these offerings into its Banque Populaire and Caisse d’Épargne networks. The move positions BPCE as a major player in the European crypto market and marks a significant milestone in the convergence of traditional banking and digital assets. Hexarq becomes the fourth company and second bank in France to receive PSAN approval, following SG Forge, Deblock SAS, and GOin SAS. This development aligns with France’s proactive stance on cryptocurrency regulation, as the country prepares for the full implementation of the European Union’s Markets in Crypto-Assets (MiCA) framework on December 30, 2024
ECB Advances Digital Euro Preparations with Updated Rulebook and User Research
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The European Central Bank (ECB) has published its second progress report on the digital euro, marking significant advancements in the preparation phase that began in November 2023. The ECB has updated the draft digital euro scheme rulebook, incorporating feedback from consumers, retailers, and payment service providers to harmonize digital euro payments across the euro area. Seven new workstreams were launched in 2024 to refine key aspects such as user experience standards and risk management. Additionally, the ECB concluded a call for applications to select potential providers for digital euro components and issued invitations to tender, with final decisions expected in 2025. The report also highlights ongoing research into user preferences through surveys and interviews targeting groups like small merchants and vulnerable consumers, with findings set to be published in mid-2025.
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The ECB is collaborating with stakeholders, including merchants, fintech companies, and universities, to explore innovative use cases such as conditional payments. Work is also progressing on setting holding limits for the digital euro to balance usability with financial stability concerns. A “waterfall” functionality is being debated to manage balances exceeding limits by automatically transferring funds to linked bank accounts. Meanwhile, efforts are underway to develop offline payment solutions using secure elements on mobile devices. The ECB remains committed to engaging with stakeholders and communicating progress transparently as it prepares for a potential decision on issuing a digital euro by the end of 2025, pending legislative approval.