- Interaxis
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- Week of Sept 18, 2023
Week of Sept. 18, 2023
“The whole global financial system will run on blockchains, period. Everyone here is going to be in the blockchain industry eventually. There’s no decision really. It’s a matter of how far you want to be ahead, or behind.”
NEWS
Citi moves toward tokenization
Summary: In recent news, Deutsche Bank and Citigroup have joined the tokenization trend in the financial industry. Deutsche Bank has partnered with Taurus, a company they previously invested in, to explore the tokenization of various assets such as real estate and private investments. On the other hand, Citigroup is experimenting with digitizing cash on their private blockchain to enable faster and more transparent international transactions. These developments highlight the growing recognition among major banks that blockchain technology can revolutionize transaction processing and asset movement globally.
Impact on Financial Professionals: Financial professionals need to understand the potential of blockchain technology and its implications for their practice. As banks embrace tokenization and digital representations of assets, financial advisors must familiarize themselves with concepts like wallet-to-wallet transfers and tokenized versions of assets. Additionally, the transparency offered by blockchain technology allows professionals to track asset movements, view characteristics, and potentially participate in other on-chain protocols like lending and borrowing. This opens up new avenues for debt and credit financing for companies whose assets are tokenized. Financial advisors and CPAs should stay informed about these developments to effectively incorporate crypto and blockchain into client portfolios and engage in meaningful conversations with clients about this emerging asset class. By embracing the adoption of blockchain technology, financial professionals can enhance their efficiency and provide value-added services to their clients in the evolving digital landscape.
NEWS
Chainlink and Swift Partnering
Summary: In a significant move, Chainlink (a decentralized oracle) has introduced its Cross Chain Interoperability Protocol (CCIP), aiming to revolutionize the way assets are transferred across multiple blockchains. Collaborating with SWIFT, a centralized entity known for facilitating global money transfers, Chainlink is bridging the gap between centralized trust and decentralized efficiency. This partnership is not just about innovation; it's about reshaping the future of asset management.
Impact on Financial Professionals: As the financial world leans towards tokenization, this development could be a game-changer. With CCIP, we will likely see more tokenization of assets, including stablecoins. This means SWIFT will be bringing more blockchain adoption, and we will see many of the characteristics we love about the technology in the global financial system - instant settlement, transparency, self-custody. Global clients will need help with safety and security of their onchain assets. In addition, we may see the values of crypto assets representing those blockchain networks grow in value - ETH, SOL, LINK
DEEP DIVE
The Excitement of On-Chain Payments: Transforming Transactions with Crypto and Stablecoins
Summary: This video discusses the excitement surrounding on-chain payments, particularly the adoption of stablecoins like USDC by major companies such as Visa, PayPal, and Shopify. The traditional process of transactions involves multiple intermediaries, delays, and fees. However, with on-chain payments, transactions settle instantaneously, providing benefits for both consumers and businesses. Consumers can keep more of their assets in their crypto wallets, potentially earning interest or yield while still being able to make payments seamlessly. Businesses, on the other hand, receive immediate payment and can explore new possibilities such as paying suppliers and employees directly with stablecoins. This creates an ultimate on-ramp and off-ramp for both consumers and businesses, eliminating the need for traditional banking processes and offering more control and flexibility.
Impact on Financial Professionals: The adoption of on-chain payments and stablecoins has significant implications for financial professionals. Firstly, the growth of the ecosystem through increased adoption presents potential value accrual for crypto assets like ETH and SOL, which financial professionals can monitor and analyze for investment purposes. This is opening the door to more clients adopting stablecoins via work, and holding those tokens in self-custodied wallets. They will need help from their financial advisor with safety and security of their wallets. Additionally, financial professionals can explore opportunities for clients to earn interest or yield on their crypto assets, providing alternative investment options. Overall, understanding and embracing on-chain payments and stablecoins can enhance the services and offerings of financial professionals in the evolving crypto landscape.
WHERE ELSE TO FIND US
In this episode of YourFinanceTV's Crypto Revolution, Mehdi and Adam discuss the latest developments in institutional adoption of cryptocurrencies. They cover topics such as Citigroup's token service and its impact on FedNow, Deutsche Bank's entry into institutional crypto holding, Nomura's Bitcoin fund for institutional investors, and the rise in investment in crypto startups and funds. They also touch on the regulatory challenges faced by the crypto industry and the disappointing SEC action against the Stoner Cats project. The episode concludes with a discussion on ANZ leveraging Chainlink's cross-chain interoperability protocol for global financial transactions. Financial advisors and CPAs interested in institutional adoption of crypto will find this episode informative.