Crypto Adoption in Europe vs US, Tokenization Securities a $5T Market
By Terrence Hooi
Chief Investment Strategist
This Substack Post does not take into account nor does it provide any tax, legal or
investment advice or opinion regarding the specific investment objectives or
financial situation of any person.
The blockchain ecosystem is always buzzing with activity. Here's the latest update for this week:
1. Discovering Crypto's Rapid Growth: An In-Depth Exploration of Crypto Adoption Hotspots Across Asia and Africa.
2. Major Institutions Embrace "Tokenization": Unpacking the Concept and Exploring Why Global Corporations See It as a Game-Changer.
3. This Week's Highlights: BlackRock CEO estimates approximately $5 trillion worth of tangible financial assets will undergo tokenization on blockchain networks within the next five years.
1.) Chainlink Unlocks Cross-Blockchain Asset Transfers
A recent global successful experiment demonstrates the feasibility of transferring tokenized assets across numerous blockchain networks. Towards the end of August, Swift, the worldwide interbank messaging system, along with numerous prominent banks, concluded a successful trial utilizing Chainlink's innovative Cross-Chain Interoperability Protocol to shift tokenized assets across various public and private blockchain platforms.
Singular’s Action: We're currently collaborating with Chainlink on something exciting – though we'll keep the details under wraps for now! 🤫
2.) BlackRock CEO Bullish on Tokenization of Securities
The enthusiasm surrounding the tokenization of securities in the financial world is palpable, with industry leaders and experts echoing its transformative potential. BlackRock's CEO, Larry Fink, has boldly stated that the tokenization of securities represents the "next generation for markets." This sentiment is echoed by a compelling statistic from a BNY Mellon survey, revealing that a staggering 97% of institutional investors believe that tokenization will bring about a revolutionary shift in asset management practices.
The allure of digitizing real-world assets is undeniably vast. As articulated by a Bernstein analyst earlier this summer, "Tokenization, we believe, will transform financial markets over the next decade." This assertion underscores the profound impact that tokenization is expected to have on the financial landscape. In fact, experts are projecting that approximately $5 trillion worth of real-world financial assets will undergo tokenization on blockchain platforms within the ne five years.
SIngular’s Take: This impending transformation signifies a significant shift in how assets are managed, bought, and sold, promising increased accessibility, efficiency, and transparency within the financial markets. As institutions and investors increasingly recognize the potential of tokenization, the landscape of finance is poised for a profound and dynamic evolution in the years to come.
Singular’s Action: Our upcoming beta, is a web 3.0-enabled decentralized stock trading platform that will provide users with direct access to a wide range of esteemed assets, including renowned companies like AAPL and GOOGL, as well as U.S. bonds.
3.) Emerging Crypto Regulation Hubs as the U.S. Lags Behind
As crypto regulation in the United States lags, regions spanning from Asia to Europe are emerging as pivotal hubs in the industry.
Europe is outpacing the United States in crypto regulation, which is increasingly attractive to investors. With the impending implementation of the Markets in Crypto-Assets Regulation (MiCA) legislation next year, a recent report indicates that investors perceive Europe as a more crypto-friendly market compared to the U.S. According to CoinShares, regulatory disparities have led to divergent investor behavior. In a recent week, approximately $14 million was withdrawn from U.S. crypto investment products, while European counterparts saw roughly $16 million in inflows.
The maturing regulatory framework in Europe also facilitated the launch of the region's first "spot" bitcoin exchange-traded fund (ETF) in Amsterdam last month. In contrast, numerous major U.S.-based firms, including BlackRock, are still awaiting SEC approval for similar products.
Leaders in the crypto industry have expressed a keen interest in expanding their presence in Europe due to the favorable regulatory environment. Leon Marshall, the newly appointed head of Galaxy Digital's Europe division, emphasized the robust demand in the European market and the regulatory structure established by MiCA, making Europe an attractive destination for crypto firms to establish and thrive.
In Nigeria, where the government has attempted to restrict crypto activities, crypto transaction volume actually rose by 9% to $56.7 billion between July 2022 and June 2023. This growth places Nigeria among just six countries within the top 50 globally to experience increased crypto usage. Uganda has also witnessed substantial growth, with its transaction volume surging by 245% to reach $1.6 billion.
Singular’s Take: In a year marked by unusual calm in crypto markets, global crypto adoption has surged, extending beyond mere token trading. This trend owes its momentum to factors such as institutional adoption, rising inflation, peer-to-peer protocols, and business-friendly environments, culminating in the emergence of new crypto centers and use-cases worldwide.
Singular’s Action: Sub-Saharan Africa, while having the world's smallest crypto economy in terms of transaction volume, stands out as a region where cryptocurrency plays a pivotal role in daily life. Given the challenges of rising inflation and weakening local currencies in many countries, Bitcoin has become a vital economic tool. Impressively, nearly 10% of all crypto transactions in the region involve Bitcoin, the highest rate globally, and residents are increasingly turning to stablecoins.