Author: Tokenized Toast Club

Yesterday the Securities and Exchange Commission took a big step in starting to provide regulatory clarity around cryptocurrencies, by issuing a note saying that solo and pooled mining for proof of work blockchains will generally not be considered to involve securities. The crux of the argument is that in both cases the expectation of profit is based on the efforts of the miner, not of others. The Howey securities test requires the expectation of profit based on the efforts of third parties. Acting SEC Chair Uyeda and Commissioner Peirce complained that the SEC under the previous administration failed to provide clarity around…

Australia’s Treasury published high level plans for the regulation of the digital assets sector. It’s less concerned about the issuance of cryptocurrencies and more focused on platforms that have custody of client assets. That includes crypto exchanges, custody providers, some brokers and stablecoin issuers. Decentralized Finance or DeFi is sidestepped while the situation is clarified around the world. Notably, a significant proportion of DeFi does not involve custody, a key area where the Treasury wants to protect consumers. It’s not just digital asset providers (DAPs) that will be covered, but also those “providing specified services, such as operating and dealing in DAPs”.…

On Friday the Federal Deposit Insurance Corporation (FDIC) said that banks no longer have to request permission to engage in digital assets, rescinding a 2022 notification that was used to block bank crypto activities, as well as using blockchain for payments. However, another document rescinded by the Commodity Futures Trading Commission (CFTC) suggests that there’s a risk regulators go too far in trying to appease the crypto community. Highlighting risks and suggestions on how to handle them should be a positive, provided regulators don’t attempt to block activities when the risks are adequately addressed. Stepping back, the recent release of FDIC documents under a freedom…

Republican members of the U.S. House Financial Services Committee have sent a letter to federal banking regulators requesting the reversal of policies they claim have impeded financial innovation in digital assets. The letter, addressed to the Chairs or Acting Chairs of the Federal Reserve, FDIC Chairman and OCC, comes after both the OCC and FDIC have already rescinded interpretive letters. The FDIC’s withdrawal was days before the Congressional letter was sent. The digital assets letter was one of several sent to regulators, including the SEC, asking them to rollback moves under the Biden administration. The digital assets letter specifically calls on the Federal Reserve to rescind…

During today’s markup hearing on the STABLE Act, instead of focusing on the substance of the stablecoin bill, most Democrats highlighted the conflicts of interest created by the Trump family controlled stablecoin. Last week World Liberty Financial, an entity 60% owned by the Trump family, announced plans to issue a stablecoin, USD1. Update: Ultimately several Democrats supported the bill which was passed by the Committee with a 32-17 vote. Earlier this week, House Financial Services Committee Chair French Hill mentioned that the recent announcement of the Trump family’s stablecoin had complicated legislative efforts. Committee Ranking Member Waters said this was the understatement of the year. “If…

Flowdesk, a cryptocurrency market maker, has become the latest participant in the Canton Network’s initiative to create an advanced on chain solution for collateral and margin management in bilateral crypto derivatives. Working alongside Digital Asset, QCP, and various trading counterparties, Flowdesk will contribute to building an innovative infrastructure that utilizes the Canton Network’s privacy features. This collaboration aims to tackle persistent challenges in cryptocurrency derivatives trading, especially the high capital requirements for collateralization. Flowdesk’s involvement will strengthen efforts to develop an economical and regulatory compliant framework for managing margin using blockchain technology. The Canton Global Collateral Network founded by Digital…

WisdomTree was one of the earlier asset managers to embrace tokenization, launching a solution in 2023. Today it announced that its 13 tokenized funds are now available on five blockchains, Ethereum, Arbitrum, Avalanche, Base and Optimism. The asset manager has $116 billion in (conventional) assets under management (AUM). “With access to our comprehensive suite of tokenized funds and the ability to interact with them directly across these newly supported blockchains, our tokens are able to be held in third-party and self-custodial wallets, providing users with greater choice in how they access tokenized RWA,” said Maredith Hannon, Head of Business Development, Digital Assets at…

VARA licensed tokenization marketplace Tokinvest announced a deal to tokenize financial interests in thoroughbred race horses. It was appointed as the tokenization partner by Evolution Stables, a New Zealand startup that is structuring syndicated leases based on New Zealand horses. Tokenivest was keen to emphasize these are not NFTs, they involve real world asset (RWA) tokenization of financial securities. Often investment in horse races is as much about fans engaging with a sport that they love as it is about the possibility of making money. Tokenization disrupting the ownership model Typically a syndicate of people will get together and buy a young…

The Bank of New York Mellon Corporation (BNY) has launched a Digital Asset Data Insights product that publishes on- and off-chain data to blockchains. This innocuous sounding product is rather important. And while not rocket science, it is groundbreaking. The world’s largest global custodian will be feeding data about the assets it is administrating directly to public blockchains. In some ways, that’s better than an audit, because it’s up to date and directly from source. In the recent past there has been a lot of debate about so-called ‘proof of reserves’, which in some cases are prone to manipulation. Proof…

ClearToken is a London-based startup that originally aimed to become a central counterparty (CCP) for institutional digital asset trading. Its backers include Nomura’s Laser Digital, Zodia Custody, Flow Traders, LMAX Digital and GSR. It recently published the first chapter of its whitepaper, which highlights an evolution in its thinking. ClearToken’s ambition has expanded from being a CCP to becoming a central securities depository (CSD). We suspect that’s a lot to do with achieving legal finality of settlement. The alternatives are to settle via a centralized exchange or prime broker, to settle directly on chain, or to use a single venue clearinghouse, such as Citadel…