Smell the Tokenisation Roses

These first couple of weeks of the new Trump Presidency have been a rollercoaster ride. The crypto market has had highs, corrections and everything in between, but what hasn’t changed is its growth and the customised landscaping efforts of the new financial system. Let’s have a look around the grounds to see what interesting news is sprouting from the crypto flower beds.

On the theme of “Tokenisation” Larry Fink, CEO of BlackRock, the multi-trillion-dollar asset manager came out stating that the SEC should “rapidly approve” asset tokenisation. It appears Fink has seen the light, stating that he is a “huge believer in crypto”.

Fink goes on to say that “if we can tokenise bonds and stocks … it will democratise investing in a way we can’t imagine.” Is it surprising that BlackRock is part of an investor pool called TXSE, planning to start its stock exchange in the State of Texas? News of this broke in mid-2024 as a potential competitor to the duopoly of the NYSE and NASDAQ.

If BlackRock is bullish on using blockchain to tokenise bonds and stocks, one could easily see them lean in heavily with blockchain solutions for their new Texas Exchange offerings.

It would appear as though BlackRock has been busy fertilising its futuristic tokenised investment garden beds. In late 2024, Securitize became BlackRock’s tokenisation partner. They tokenised BlackRock’s money market, called BUIDL (BlackRock USD Institutional Digital Liquidity Fund) on the Ethereum blockchain. It quickly became the largest tokenised money market fund, capitalised with over half a trillion USD. BUIDL has since expanded to be available on other blockchains such as Aptos, Optimism, Polygon (Matic), Arbitrum and Avalanche.

BlackRock is known for high minimum requirements for investment … we’re talking in the millions, which paved the way for another blockchain-based finance group called Ondo Finance, and their tokenised short-term treasuries (OUSG). With only a US$5000 minimum, they have created their own tokenised money market backed by BlackRock’s BUIDL. This exciting project has its own token, the ONDO token, which finds itself inside the top 40 by market cap on CoinMarketCap. One to watch perhaps.

This brings us to breaking news, ONDO has partnered with Ripple to bring its institutional grade tokenised short-term treasuries OUSG, backed by BlackRock's BUIDL, to the XRP Ledger! This represents a huge leap in compliant, yield-bearing investment products with cash management, settlement, liquidity and collateral capabilities. OUSG can be minted and redeemed using RLUSD, an ISO20022 compliant tokenised USD on the XRPL.

Value moving in from around the world to invest in tokenised short-term U.S. Treasury Bonds money markets would be streamlined by an ISO20022 compliant messaging and XRPL transactionally secure and cost-effective value transfer blockchain-based system. Let that sink in… the system is evolving before our eyes.

The dots are lining up. The landscape is indeed changing. Soon these products will be in full bloom, with many blockchain projects capitalising from an institutional grade, multi-chain, interoperable future, where technology stacks are the norm… where the democratisation of finance can benefit all, not just the big players.

We all know Ripple and XRP focussed on payments. With the tokenisation of U.S. dollars (RLUSD), testing of tokenisation of real estate in Hong Kong, and now partnering with ONDO Finance, it is apparent Ripple has pivoted in their focus. It wouldn’t be a shock to learn that Ripple recently announced that it had been granted a monetary transmitter license in Texas … That would now be over 55 licenses within the USA, and 60 worldwide. That’s very helpful for settling trades on a tokenised Texan stock exchange now, isn’t it?

This brings us to the lingering problem plant that is Tether (USDT). Just announced, Crypto.com will be delisting USDT offerings on its exchange effective 31 January 2025. This growing trend started with European Authorities deeming it non-compliant via new Mica laws. Even though Tether has tried to increase its transparency, other significant U.S.-based Exchanges such as Coinbase have stated that they would delist if demanded to do so by US Authorities. Such a tidal shift could see increased flows from USDT to other stablecoins such as USDC and RLUSD.

Of note, USDC is natively supported by many public blockchains such as Algorand, Arbitrum, Avalanche, Ethereum, HBAR, Near, Polygon (Matic), Polkadot, Solana, and SUI. All could benefit from increased traffic.

Perhaps it is time for investors to stop and assess their investment strategies and allocations. This garden is being built out at a record pace. The quickening is upon us. The largest players of finance are getting positioned to transform our financial landscape. Opportunities will be plentiful; one just has to stop and smell the roses.