Yasuda on Tokenization

Bitcoin's Path to Global Medium of Exchange: From Dollar Dominance to Digital Currency Transition

• US Dollars have long been recognized and used as the global medium of exchange, hoarded by countries such as China and Japan as foreign reserves. In nations where local currencies suffer from instability, the US dollar serves as the foundation for long-term contracts, with merchants preferring to price their goods and services in dollars rather than volatile home currencies. This preference stems from the widespread assumption that the US dollar's value would remain stable or strengthen over time. Indeed, over the past 30 years, the dollar has strengthened against most global currencies, with notable exceptions being the Chinese Yuan, Singapore Dollar, and Swiss Franc.

• However, the US government appears to be abandoning its traditional role of maintaining the dollar's global medium of exchange status. More significantly, the current administration seems intent on accumulating Bitcoin as a strategic reserve asset, with several other nations following this precedent. Beyond government initiatives, substantial private sector momentum is building, with prominent investors expressing bullish sentiment on Bitcoin's future value. Companies like MicroStrategy in the US and Metaplanet in Japan have tied their business valuations almost entirely to Bitcoin holdings. Metaplanet's stock price surge following announcements of additional Bitcoin purchases, backed by respected institutional investors, demonstrates the growing confidence in Bitcoin's long-term prospects.

• Bitcoin's $2.093 trillion market capitalization, representing 11-17% of major economies' M1 money supplies, demonstrates it has achieved the scale necessary to potentially function as a medium of exchange, moving beyond speculative asset status to become economically significant on a global level. However, despite this impressive size, Bitcoin faces critical hurdles that must be overcome: its value remains too volatile for everyday transactions requiring predictable purchasing power, merchant acceptance infrastructure is still limited outside niche applications, and much of Bitcoin's supply is held as a store of value rather than actively circulating for commerce. While Bitcoin shows promise for specific use cases like international remittances and cross-border payments where its borderless nature provides advantages, becoming a widespread medium of exchange will require substantial additional steps including reduced price volatility, ubiquitous merchant acceptance, regulatory clarity, and improved transaction infrastructure through solutions like the Lightning Network
• Therefore, while Bitcoin's evolution into a medium of exchange is possible given its substantial scale and growing institutional backing, it remains a multi-step process requiring significant technological, regulatory, and market maturation beyond simply achieving large market capitalization. The convergence of declining dollar hegemony and rising Bitcoin adoption suggests we may be witnessing the early stages of a historic monetary transition, though the path forward requires overcoming substantial practical and technical challenges.

Blockchain Revolution: Automating and Scaling Specialty Finance Operations

• Specialty finance is a lucrative but labor-intensive sector that provides credit to underserved markets typically avoided by traditional banks - including subprime borrowers, small businesses with limited credit history, and specialized industries requiring non-standard financing. These companies generate substantial profits through premium interest rates (often 15-50% annually) and multiple fee streams, but success requires extensive manual processes including individualized underwriting, relationship-based customer service, hands-on loan servicing, and intensive collection efforts. The sector's high profitability stems from serving market inefficiencies and limited competition, yet operational costs remain elevated due to the need for specialized human expertise in risk assessment, regulatory compliance, and borrower management.
• Blockchain technology can fundamentally transform this industry by addressing its most significant operational challenges through automation and enhanced data management. Smart contracts can automate the labor-intensive underwriting process by encoding complex risk assessment rules and executing lending decisions based on real-time data feeds, while blockchain's immutable ledger can aggregate alternative data sources like utility payments and peer-to-peer transactions to create comprehensive credit profiles for borrowers who lack traditional credit histories. This automation could dramatically reduce the manual processes that currently make specialty finance operations expensive and slow, while potentially improving risk assessment accuracy through better data integration and reducing operational costs that typically consume 8-15% of revenue.
• The technology's ability to create transparent, tamper-proof records can streamline loan servicing, collections, and regulatory compliance while enabling new revenue opportunities through loan tokenization and secondary market creation. Smart contracts can automatically process payments, assess late fees, trigger collection workflows, and ensure compliance with state-specific lending regulations, reducing the need for extensive human intervention. However, successful blockchain implementation will likely require hybrid approaches that balance automation with the relationship-intensive nature of specialty finance, where human expertise remains crucial for complex customer relationships and personalized service delivery. Companies that effectively integrate blockchain's efficiency gains while maintaining customer service excellence may reduce operational costs by 30-50% while expanding market reach and preserving the sector's attractive profit margins.

UK Moves to Allow Retail Investors Access to Crypto ETNs

• The UK Financial Conduct Authority (FCA) announced on 6 June 2025 a proposal to lift its ban on crypto exchange-traded notes (ETNs) for retail investors, marking a significant shift in the country’s approach to digital assets. Under the new rules, crypto ETNs—debt securities tracking assets like Bitcoin and Ethereum—could be sold to individual consumers if traded on FCA-approved exchanges. Retail buyers would receive mandatory risk disclosures and protections under financial promotion rules, including prohibitions on misleading incentives. The FCA framed the move as balancing innovation with investor choice, stating it aims to “rebalance our approach to risk” while supporting the UK’s competitiveness in crypto markets. A consultation on the proposal runs until 7 July 2025.
• This decision aligns with broader regulatory efforts to establish the UK as a hub for crypto innovation. It follows the April 2025 publication of draft legislation expanding oversight of crypto exchanges and dealers, alongside progress on the Digital Gilt Instrument (DIGIT), a blockchain-based government debt pilot. While the ban on crypto derivatives for retail investors remains, the FCA emphasized ongoing monitoring of market risks. Industry leaders, including ETN issuer 21Shares, welcomed the move as a step toward aligning the UK with global standards, though critics highlight persistent volatility and investor protection concerns in crypto markets.

Switzerland Advances Crypto Transparency and Digital Franc Initiatives

• Switzerland has taken significant regulatory and technological strides in its blockchain and crypto sector since June 2025. On June 6, the Federal Council approved legislation to expand the Automatic Exchange of Information (AEOI) framework to include crypto assets, aligning with the OECD’s Crypto-Asset Reporting Framework (CARF). Starting in 2027, Switzerland will share crypto transaction data with 74 partner nations, including EU members and the UK, but excluding the U.S. and Saudi Arabia. This move aims to enhance tax transparency, combat illicit finance, and bolster Switzerland’s credibility as a global financial hub. The AEOI requirements will impose stricter compliance on Swiss crypto service providers, ensuring alignment with international anti-money laundering (AML) and counter-terrorism financing (CTF) standards.
• Concurrently, Swiss banks are pioneering blockchain-based financial infrastructure. UBS, PostFinance, and Sygnum signed a memorandum of understanding to test a digital Swiss franc deposit token in 2025. The proof of concept focuses on peer-to-peer payments and delivery-versus-payment transactions using distributed ledger technology (DLT) and smart contracts. Supported by the Swiss Bankers Association, this initiative aims to modernize the financial system, enabling faster settlements, reduced costs, and programmable financial products. If successful, it could lay the groundwork for a nationwide rollout, reinforcing Switzerland’s position as a leader in digital asset innovation and interoperability.