Bitcoin and Financial Systems

This is big news. Tokenization is fast becoming the next battleground for financial infrastructure. Goldman Sachs and BNY Mellon just made one of the boldest moves yet. Tokenization transforms real-world assets into digital tokens - unique, programmable representations of value that can be transferred, tracked, and embedded into automated financial workflows. Goldman Sachs and BNY Mellon are turning traditional money-market funds (MMF) into digital tokens. These funds - a $7.1 trillion global market managed by firms like BlackRock, Fidelity, and Federated Hermes - are commonly used by companies and asset managers to hold short-term cash in safe, interest-earning instruments like Treasury bills and commercial paper. But behind the scenes, they still run on decades-old infrastructure, full of manual steps, cut-off times, and delayed settlements. Tokenization changes that. 𝗛𝗼𝘄? By bringing the same speed, transparency, and automation we expect from modern payments and applying it to financial instruments that haven’t evolved in decades. ·      Instant settlement: Instead of waiting hours (or days) for trades to clear, tokenized assets can settle almost instantly - 24/7, without cut-off times. ·      Programmability: Rules and logic (e.g., eligibility checks, compliance constraints) can be embedded directly into the token - reducing manual oversight. ·      Fractional ownership: Investors can hold smaller, more flexible portions of a fund, which is hard to do in traditional structures. ·      Real-time tracking: Every transfer or ownership change is recorded transparently on a blockchain, improving auditability and risk management. ·      Easier collateralization: Tokenized fund shares can be pledged as collateral or moved between counterparties far more efficiently - a big advantage in treasury and liquidity management. 𝗛𝗼𝘄 𝘁𝗵𝗲 𝗽𝗮𝗿𝘁𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝘄𝗶𝗹𝗹 𝘄𝗼𝗿𝗸: ·      BNY Mellon will distribute tokenized money-market funds to institutional clients via LiquidityDirect - its cash management platform that helps treasurers and asset managers invest short-term liquidity. ·      Goldman Sachs will record and track ownership of the fund tokens on its private blockchain, providing speed, traceability, and operational efficiency. ·      The offering will support tokenized versions of funds managed by major players like BlackRock, Fidelity, and Federated Hermes. 𝗪𝗵𝘆 𝗻𝗼𝘄? The new U.S. Genius Act gives legal clarity for stablecoins and tokenized assets -removing regulatory uncertainty and unlocking tokenization across mainstream finance. 𝗪𝗵𝗮𝘁’𝘀 𝗻𝗲𝘅𝘁? This could reshape expectations around liquidity, treasury operations, and how financial assets are managed and settled. Custodians and asset managers will need to adapt. Tokenized Treasuries, equities, and real estate are already being tested. Opinions: my own, Graphic source: CNBC 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐭𝐨 𝐦𝐲 𝐧𝐞𝐰𝐬𝐥𝐞𝐭𝐭𝐞𝐫: https://lnkd.in/dkqhnxdg

#Blockchain in finance: The solution to many problems.. except the ones it was supposed to address. Remember the 2017–2021 thesis? The technology would be #Decentralised, #Trustless and #Disintermediated. It would remove the middlemen – banks, custodians, central banks, clearing houses, payment networks. It would replace trust in institutions with cryptographic proof. Eight years on, the technology is genuinely in production at scale in financial services – but in a form that inverts the original argument almost completely. #Stablecoins: over $307bn market cap, with real settlement volume. Issued almost entirely by regulated entities holding traditional reserve assets in regulated deposit accounts. "Trustless money" became regulated e-money under #MiCAR in Europe and the #GENIUS Act in the US. Tokenised money market funds: BlackRock 's BUIDL well over $2bn, Franklin Templeton's BENJI, Ondo Finance OUSG, Hashnote and others. Trustless intermediation? Not really. Tokenised T-bills: roughly $7–8bn across the major issuers, doubling every six months or so. The underlying instrument is the most centrally-issued asset on earth. Intraday repo on DLT: J.P. Morgan's Kinexys (formerly Onyx) handling $1bn+ per day in tokenised intraday repo. Broadridge's DLR processes around $1tn monthly notional. The intermediaries that were supposed to be removed are running the networks. Tokenised deposits: J.P. Morgan Coin, Citi Token Services, HSBC Orion, Deutsche Bank's Dama 2. Banks tokenising their own liabilities, on permissioned blockchains, for their own institutional clients. Plus there’s #CBDC in various test stages. Meanwhile the projects that tried to deliver what the original thesis actually demanded have mostly folded. Trade finance consortia (Contour, we.trade, Marco Polo): wound down between 2022 and 2023. Shared #KYC and identity at scale: still nothing. Insurance #SmartContracts: Niche only. Retail DeFi as a bank-replacement thesis: effectively dead for regulated finance. Permissionless settlement for institutional flows: replaced by permissioned bank-controlled networks. Looks like every successful blockchain use case in finance has a regulated balance sheet sitting behind it. The technology that was supposed to obsolete trusted intermediaries succeeded because trusted intermediaries adopted it for specific use cases that benefit from instant settlement, programmability and 24/7 operation. In the end, the technology found a real place in finance.. precisely by abandoning its thesis. Worth holding that contrast in mind when the next "this will disintermediate banks" cycle arrives.

Where is crypto going next? Analysis of 1,000+ job postings from 17 crypto unicorns signal evolution from a retail playground and monkey jpegs into institutional-grade financial infrastructure. Here's what the industry is hiring for: 🏦Enterprise roles underscore paths to becoming B2B infrastructure ↳Enterprise product teams: CoinTracker building "0-1 initiative" for enterprise with dedicated engineering teams ↳ProServ channels: Multiple companies targeting CPAs, law firms, and financial advisors ↳Sales armies: Hiring of institutional sales managers across major markets ↳Self-custody infrastructure: Anchorage is developing solutions that let institutions maintain control while using crypto rails 🤝Partnerships become the new moat ↳Banking relationship managers at Bitpanda and Gemini to "manage relationships with global institutions" ↳Partnership roles at CoinDCX focus on "sourcing, acquiring, and onboarding business partners" ↳White-label infra teams at Paxos are building systems to power enterprise stablecoins 🌎Geographic expansion and cross-border frontiers building payment corridors via stablecoins ↳Regional stablecoin teams: Bitso is building dedicated teams for peso (MXNB) and real (BRL1) backed tokens ↳APAC expansion: Nearly every unicorn is establishing Singapore/Hong Kong presence ↳Regulatory navigation: Country-specific compliance roles (Bulgaria for Bitpanda, Australia for KuCoin) enable market entry ↕️Vertical specialization signals maturation as horizontal platforms move into offering tailored, industry-specific solutions ↳Institutional trading: Fireblocks and Matrixport are building specialized prime brokerage capabilities ↳Government services: Chainalysis is creating teams with security clearances for law enforcement ↳Real estate: Multiple companies hiring for tokenized property initiatives 🔒Security & compliance underpin adoption ↳Regulatory strategy roles: Ledger's "Head of Regulatory Affairs Americas" tasked with "influencing favorable digital asset regulation" ↳Fraud prevention infra: Trust & Safety teams at Gemini focused on APP fraud and UK banking requirements ↳Compliance automation: Multiple companies hiring for AI-powered AML and KYC systems The most interesting signal? Most of these roles don't even mention "crypto" in their titles or descriptions anymore. They're hiring for "payment specialists," "institutional sales," and "banking relationships." Crypto is moving from trying to replace the financial system to becoming the upgrade path for it. P.S. CB Insights August launch just 10x'd our hiring insights coverage. Uncover insights about companies’ strategy and product investments based on their job openings. Check it out.

Bank for International Settlements – BIS - "DeFiying Borders: What Cross-Border Crypto Flows Reveal About Global Finance" 1. Cross-Border Crypto Is Big and Growing - Crypto transactions across borders peaked at $2.6 trillion in 2021, equal to 12% of global trade in goods, with stablecoins accounting for nearly half of the volume. - Despite market downturns, flows rebounded to $600 billion in Q2 2024. 2. Stablecoins Are the Real Movers - While Bitcoin once dominated, by mid-2024 stablecoins (Tether and USDC) overtook, especially in low-value transfers. - This aligns with their increasing role as transactional tools—not just speculative assets. 3. Traditional Frictions Don’t Apply - Unlike traditional finance, crypto flows are less affected by distance, borders, or language. - This means DeFi “defies” gravity—digital assets move freely regardless of geographic or political barriers. 4. Crypto as Remittance Rail - High traditional remittance fees correlate with higher stablecoin and low-value BTC flows, especially from advanced to emerging markets. - This signals crypto’s growing use as a cheaper, faster alternative to move money abroad. 5. Capital Controls? Crypto Doesn’t Care - Capital Flow Management measures (CFMs) aimed at curbing outflows or inflows appear largely ineffective. - In some cases, CFMs are even associated with increased crypto flows, suggesting crypto is being used to bypass restrictions. So What? - This BIS paper underscores that crypto isn’t just speculation—it’s infrastructure. - Whether for remittances, trading, or hedging, cryptoassets—especially stablecoins—are reshaping how money moves globally, outside traditional financial controls. - For regulators and policymakers, ignoring crypto’s cross-border role is no longer an option. Great work Raphael Auer, Ulf Lewrick and Jan Paulick

Coinbase released its 2025 Crypto Market Outlook report. It's 87 pages long, so here are the 10 key takeaways: 1/ Institutional Adoption Growth • Institutional players like BlackRock and Fidelity entered crypto • Approval of spot Bitcoin and Ether ETFs brought $30.7B in net inflows within 11 months 2/ Stablecoins Expansion • Stablecoin market cap rose 48% in 2024, reaching $193B • Expected to hit $3T in five years, driven by increased adoption for payments and remittances 3/ Tokenization Revolution • Tokenized real-world assets (excluding stablecoins) grew by 60%, reaching $13.5B in 2024 • Projected to potentially hit $2T-$30T over the next five years, transforming financial markets 4/ DeFi Resurgence • Regulatory clarity and integration with TradFi are key growth drivers • Decentralized exchanges now account for 14% of centralized exchange volumes 5/ Regulatory Clarity • 2024 set the stage for U.S. regulatory advancements with bipartisan support for pro-crypto measures • Europe’s MiCA regulation and frameworks in the UAE, Hong Kong, and Singapore are enhancing global competitiveness 6/ Layer-2 Scaling Success • Ethereum’s rollups reduced costs by 90%, boosting activity 10x across Layer-2s • Challenges like fragmented liquidity and user onboarding persist but are actively being addressed 7/ Multichain Future • New L1s like Sui, Aptos, and Sei compete with Ethereum for differentiation • A multichain ecosystem is emerging, allowing specialization for different use cases 8/ Bitcoin Ecosystem Expansion • Institutional investment in Bitcoin ETFs continues to grow • Bitcoin dominance rose to over 60%, with infrastructure innovations like L2s and staking protocols gaining traction 9/ User Experience Improvements • Integrated wallets and paymasters reduce complexity for end-users • Focus on simplifying wallets and onboarding with technologies like account abstraction 10/ AI and Crypto Synergies • AI agents with crypto wallets are gaining attention • Long-term value accrual mechanisms for AI-crypto integration remain unclear P.S. What do you think will be the top narratives of 2025? Follow 👉 Aram Mughalyan & share ♻️ this post if you like it.

The Functional Evolution of Digital Assets — Key Insights Ripple Ripple’s paper outlines a structural shift in digital assets, moving from standalone instruments to embedded components of financial infrastructure. Shift from asset definition to functional utility Digital assets are increasingly defined by their role within financial systems rather than their classification as instruments. The paper highlights four primary functional categories: ▪️Store of value (e.g., Bitcoin) ▪️Medium of exchange (e.g., stablecoins) ▪️Settlement instruments (tokenised fiat, CBDCs) ▪️Programmable financial assets (smart-contract enabled instruments) The emphasis is shifting from “what the asset is” to “what the asset enables.” ------------ Three-stage evolution framework The report identifies a progression in market maturity: Stage 1: Digitisation ▪️Representation of value on blockchain rails ▪️Early experimentation with digital-native money Stage 2: Financialisation ▪️Development of liquid markets and derivatives ▪️Growth of stablecoins as transactional instruments ▪️Institutional participation increases Stage 3: Functional integration (emerging) ▪️Digital assets embedded within core financial workflows ▪️Use in settlement, liquidity management, FX, and treasury operations ▪️Infrastructure convergence with traditional financial systems --------- 3. Convergence of TradFi and digital asset infrastructure A central theme is the gradual convergence between traditional financial systems and blockchain-based infrastructure: ▪️Financial institutions increasingly explore tokenised settlement layers ▪️Stablecoins are being evaluated as operational liquidity tools rather than speculative instruments ▪️Tokenisation enables real-time transfer of value across systems This reflects a transition from siloed systems to interoperable financial networks. 4. Role of stablecoins in system transformation Stablecoins are positioned as a key transitional mechanism in the evolution of digital finance: ▪️Reduction of friction in cross-border payments ▪️24/7 settlement capability ▪️Enhanced liquidity efficiency for institutions ▪️Programmable use in automated financial workflows They function as a bridge between fiat systems and tokenised infrastructure. 5. Infrastructure layer as the primary value driver The report emphasises that value creation is shifting toward underlying infrastructure: ▪️Compliance-enabled transaction rails ▪️Cross-border interoperability ▪️Institutional-grade settlement systems ▪️Integration with regulatory frameworks and CBDC ecosystems The competitive focus is increasingly on infrastructure capability rather than asset performance. #Payments #Stablecoins #DigitaAssets #CBDC

Bitcoin Market Dynamics: Understanding the Mt. Gox and Germany Factor 💹🚀 The crypto world is buzzing with the upcoming Bitcoin distributions from Mt. Gox and Germany's offloading plans. Let's break it down with some key facts and figures. Mt. Gox is set to distribute 141k Bitcoin back to creditors, with the first phase involving 71,403 BTC happening between July and October. To put this in perspective, all Bitcoin spot ETFs combined have purchased 867k bitcoins, with the BlackRock ETF holding around 304k bitcoins. When Mt. Gox was hacked, Bitcoin was priced at $600, meaning current holders are now seeing a 100x return. If 50% of these distributed BTC are sold, that's 35,700 BTC worth approximately $2.1 billion. Given the market's capacity to handle 6,000-10,000 BTC sell pressure daily, and up to 15,000-25,000 BTC during high ETF inflows, this sell-off might not impact prices as significantly as some fear. Meanwhile, Germany holds one-fourth of the amount that Mt. Gox is distributing. Even though the German government may not favor Bitcoin, they prefer cash and are likely to sell at higher prices, not lower ones. This suggests a more measured approach to offloading their holdings, reducing the immediate impact on the market. It's important to note that the fear and overestimation of the potential market impact might be driving prices down more than necessary. Similar to a token unlock, the distribution from Mt. Gox has been expected and partially priced into the market. The market has previously experienced anomalies, such as the COVID crash last cycle, and higher prices due to Bitcoin ETFs this cycle. Additionally, the upcoming election represents a political shift for crypto, and $16 billion of FTX repayments in cash are expected to be reinvested into the crypto market later this year. Large investors typically do not give market orders; instead, they use sophisticated trading algorithms and trade according to market liquidity. This ensures that their large transactions have minimal impact on market prices. These factors suggest that while there may be short-term selling pressure, the market has the capacity to absorb these sales without a dramatic impact on prices. 📊 #Bitcoin #MtGox MarketVector Indexes Steven Schoenfeld Raline Sexton Joy Yang

Asset tokenization is getting framed too often as a crypto story. This World Economic Forum report makes a different point. It argues that the real shift is market structure. Tokenization can give financial markets a shared system of record, flexible custody, programmability, fractional ownership, and composability. That means better visibility of ownership, faster settlement, lower admin friction, and easier collateral movement across products and venues. The part I found most useful is the report’s focus on where tokenization fits first. It points to issuance, securities financing, and asset management as the clearest use cases. Bonds stand out early. The report notes that 65% of financial institutions surveyed by OMFIF saw bonds as the most likely asset class to be tokenized, and it says DLT can automate up to 2,000 tasks in bond issuance, cut 800 to 1,000 person hours, and reduce book-closing periods by more than 50%. That matters for a simple reason. The first winners in tokenization may not be retail investing apps. They may be treasury desks, issuers, custodians, and collateral managers. Markets with high manual workload, slow reconciliation, and trapped liquidity have the strongest reason to change first. If a process already works well, the case for rebuilding it is weaker. If a process is costly and fragmented, the case becomes stronger. The report also highlights collateral as a major opportunity. It estimates programmable ledger-powered collateral management could unlock more than $100 billion annually in capital that can be redeployed. That shifts the conversation from tokenized assets as investment products to tokenized assets as balance sheet tools. For large institutions, that may be the bigger prize. Another strong point is regional adoption. Advanced markets may use tokenization to improve efficiency at the margin. Emerging markets may use it to leapfrog older infrastructure and widen access. That means adoption paths will not look the same everywhere. In some regions, tokenization is an upgrade. In others, it can be a shortcut. The report is just as clear on the hard part. Tokenization will not scale on tech alone. Legacy integration, weak global standards, limited interoperability, thin secondary markets, and privacy and compliance issues still stand in the way. It even makes a point that tokenization will change intermediary roles, not erase them. That is an important distinction. The next phase is less about replacing institutions and more about rebuilding coordination across them on better rails.  My main read: tokenization is not just about putting assets on-chain. It is about turning financial infrastructure from message passing into shared state. The upside is not only new products. It is cleaner issuance, better collateral mobility, stronger transparency, and a market structure that can work with more speed, clarity, and reach. Report by World Economic Forum

𝐁𝐢𝐭𝐜𝐨𝐢𝐧'𝐬 𝐒𝐞𝐜𝐫𝐞𝐭 𝐆𝐫𝐨𝐰𝐭𝐡 𝐃𝐫𝐢𝐯𝐞𝐫𝐬: 𝐓𝐡𝐞 𝐓𝐫𝐮𝐭𝐡 𝐁𝐞𝐡𝐢𝐧𝐝 𝐈𝐭𝐬 𝐄𝐱𝐩𝐥𝐨𝐬𝐢𝐯𝐞 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 In this post, I'm sharing an insightful analysis of the factors that drive Bitcoin's value. #Bitcoin, which started as a niche experiment in #digitalcurrency back in 2009, has now transformed into a global asset class that both investors and governments are taking seriously. 𝐓𝐡𝐞 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧 𝐢𝐬: 𝐰𝐡𝐚𝐭 𝐞𝐱𝐚𝐜𝐭𝐥𝐲 𝐦𝐚𝐤𝐞𝐬 𝐁𝐢𝐭𝐜𝐨𝐢𝐧 𝐯𝐚𝐥𝐮𝐚𝐛𝐥𝐞, 𝐚𝐧𝐝 𝐰𝐡𝐚𝐭 𝐚𝐫𝐞 𝐭𝐡𝐞 𝐤𝐞𝐲 𝐝𝐫𝐢𝐯𝐞𝐫𝐬 𝐭𝐡𝐚𝐭 𝐢𝐧𝐟𝐥𝐮𝐞𝐧𝐜𝐞 𝐢𝐭𝐬 𝐰𝐨𝐫𝐭𝐡? The main drivers of Bitcoin's value include institutional adoption, regulatory clarity, and market sentiment. Institutional adoption has played a pivotal role in legitimizing Bitcoin—when pension funds, corporate treasuries, and ETFs buy into Bitcoin, they add layers of trust and stability. This shows us that Bitcoin is not just a speculative asset but increasingly a reliable one in the financial portfolios of large institutions. Another critical aspect is the regulatory environment. Clear and supportive regulations make it easier for big investors to enter the market, reduce risk, and foster innovation. Countries like Germany and Singapore, where regulations are favorable, have seen much higher Bitcoin adoption rates. This indicates that clarity in policy directly translates to increased confidence among investors. One key takeaway from this analysis is the significant impact of taxation policies on Bitcoin's growth. Deferred tax strategies, in particular, are crucial because they provide liquidity and enable investors to reinvest their gains rather than paying taxes immediately. Empirical evidence shows that places with tax deferral options see 30% higher Bitcoin investment during bull markets. Why is this important? Understanding these factors can help governments create supportive policies that attract digital investment and help investors maximize their returns. For governments, it’s about encouraging innovation while maintaining stability. For investors, leveraging favorable tax strategies and staying updated on regulatory trends can make all the difference in capturing Bitcoin’s growth potential. If you want to dive deeper into these findings, read the full article below

Less than 1% of Bitcoin is used in decentralised applications. But some new technologies are set to change this in a big way. This report looks into how recent breakthroughs in composability and scalability are going to unlock new opportunities for founders and investors within the Bitcoin ecosystem. Here are the main takeaways: 🔶 Bitcoin’s composability has been limited historically, but innovations like Ordinals and recursive inscriptions are driving new ways to use the blockchain. 🔶 Despite Bitcoin’s $530B market cap, less than 1% of it is used across the top four BTC-based projects (Stacks, Lightning, RSK, Liquid). 🔶 Bitcoin’s security and decentralisation make it an attractive platform for developers, now able to build decentralised apps (dApps) with fewer limitations. 🔶 Layer 2 solutions like the Lightning Network and RSK are improving scalability and introducing smart contracts to the Bitcoin network. 🔶 More and more companies are adding Bitcoin to their balance sheets, with over $6B already stored, showing its value beyond a mere store of wealth. 🔶 Bitcoin is becoming more scalable through layers and sidechains, offering a way to ease high transaction fees and support more users. 🔶 Developers are using Bitcoin’s powerful network, to grow their dapps quickly without having to build everything from scratch. Bitcoin is no longer just for storing value—it’s becoming a platform for dApps and decentralised finance. - - - - - - - - - - - - - - - - - - - - - - - - - - - If you found the above post useful then please do the following: 👍 Like the post 🔁 Repost to your community 📢 Leave a comment 🎙️ Subscribe to my podcast Couchonomics with Arjun on YouTube and all the leading podcast platforms 📖 Subscribe to my weekly newsletter on LinkedIn: Couchonomics Crunch 🕺🏽💃 If you are in the MENA region, join our Fintech Community called Fintech Tuesdays 🤝 Connect or Follow me - - - - - - - - - - - - - - - - - - - - - - - - - - - #Fintech #dApps #Blockchain