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Today in crypto, BlackRock is allegedly examining tokenized ETFs, Chinese authorities aim to limit crypto operations of state-owned enterprises in Hong Kong, and Goldman Sachs’ CEO asserts that the Fed is improbable to lower rates by 50 basis points.
BlackRock evaluates ETF tokenization as JPMorgan highlights industry evolution: Report
BlackRock, the globe’s foremost asset manager, is reportedly investigating methods to tokenize exchange-traded funds (ETFs) utilizing blockchain technology, following the robust results of its spot Bitcoin ETFs.
Citing insiders acquainted with the conversations, Bloomberg reported Thursday that the firm is contemplating tokenizing funds tied to real-world assets (RWA). However, any such endeavor would need to overcome regulatory challenges.
ETFs have emerged as one of the most preferred investment instruments — so prevalent that they now surpass publicly listed equities, as indicated by Morningstar.
Tokenizing ETFs could conceivably enable them to trade outside typical market hours and be utilized as collateral in decentralized finance (DeFi) platforms.
BlackRock’s fascination with tokenization is not recent. It currently administers the globe’s largest tokenized money market fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), which contains $2.2 billion in assets distributed across Ethereum, Avalanche, Aptos, Polygon, and other blockchains.
JPMorgan has described tokenization as a “major advancement” for the $7 trillion money market fund sector, highlighting the initiative started by Goldman Sachs and Bank of New York Mellon, which BlackRock will join at the outset.
Under this initiative, BNY clients will gain access to money market funds with ownership of shares recorded directly on Goldman Sachs’ private blockchain.
Chinese businesses may encounter restrictions on stablecoin operations in Hong Kong: Report
Chinese tech giants, state-owned entities, and financial institutions functioning in Hong Kong may face limitations on stablecoin and crypto operations.
According to a Thursday report from local news outlet Caixin, mainland Chinese firms functioning in Hong Kong may be compelled to withdraw from cryptocurrency-associated activities. The Hong Kong branches of several state-owned firms and Chinese banks are also anticipated to refrain from competing for a Hong Kong stablecoin license.
The information follows revelations that HSBC and the Industrial and Commercial Bank of China (ICBC), the largest bank globally by total assets, intend to seek stablecoin licenses in Hong Kong. Hong Kong’s fresh stablecoin regulatory framework commenced on Aug. 1 with a six-month transition phase. Regulators noted that 77 institutions had shown interest in applying.
According to Caixin, recent policy changes indicate that Chinese banks and other entities pursuing a Hong Kong stablecoin license will likely withdraw from the competition. An anonymous senior player in the financial sector reportedly informed the outlet that those entities may delay their stablecoin license applications.
The report comes in the wake of another Caixin article suggesting that the Hong Kong Monetary Authority (HKMA) may relax capital requirements for banks managing crypto.
According to a Thursday Caixin article, the HKMA is reportedly contemplating easing capital guidelines for banks custodying crypto by reducing their capital expectations.
Goldman Sachs CEO skeptical Fed will reduce by 50 basis points
Goldman Sachs CEO David Solomon stated on Wednesday that it’s improbable the Federal Reserve will lower interest rates by 50 basis points next week, only days after Standard Chartered Bank expressed its expectation for a more significant reduction owing to August’s lackluster job report.
“Whether we see a 50 basis cut or not, I don’t think that’s likely,” he shared with CNBC. “I’m quite certain we’ll experience a 25 basis rate cut.”
His perspective aligns with the general market sentiment, as CME FedWatch indicates that 92.2% foresee a smaller cut, while 7.8% anticipate a 0.5% cut at the Fed’s upcoming Sept. 17 assembly.
Solomon remarked he “could envision one or two additional cuts, dependent on how economic conditions evolve from this point forward.”
This month’s Fed rate cut meeting holds significant importance not only for the broader market but also for crypto, as reduced interest rates enhance the appeal of riskier assets like crypto to investors.
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