Katherine Ross

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“I think all of the traditional equities markets are now looking at crypto over the weekends because it’s the only market that’s open,” Empire’s Jason Yanowitz <a href="https://blockworks.co/podcast/empire/e27aee20-df36-11ef-82c1-033ecb7498ff">said</a> on the Round Up this week.



And you know what? I agree.&nbsp;



Crypto markets, especially now that they’re trading more in line with traditional equities data, are a good tell for traders who are trying to gauge market moves before Monday’s opening bell.&nbsp;



For anyone who hasn’t been active in equities — either watching, reporting or trading — you might not know that, at least in the past, folks would eagerly wait to see how premarkets for major indices (which opened late on Sundays) handled weekend events. Just a few years ago, it was one of the only strong tells in how to prepare yourself for Monday morning outside of staying awake for the European markets.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The funniest part of all this is that Crypto and Bitcoin were meant to be anti-establishment and now we’re literally trading FOMC, cpi, looking at institutional flows and words from the president and all the other whack shit that tradfi guys focus on.&mdash; Mayne (@Tradermayne) <a href="https://twitter.com/Tradermayne/status/1884701212575952993?ref_src=twsrc%5Etfw">January 29, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



So the change to crypto is, subtly, a big deal and shows just another layer of adoption.&nbsp;



Specifically, Santos and Yanowitz were talking about the crypto market’s reaction to DeepSeek, which started well before the open this past Monday.&nbsp;



Analysts told us earlier this week that much of the crypto-related selling pressure really bubbled down to “<a href="https://blockworks.co/news/ai-selloff-too-much-excitement">too much excitement</a>.” But it’s not hard to make the connection that crypto getting caught up in an AI-related selloff could be bad for a company like Nvidia without putting all of the context clues together.&nbsp;



Yet I’m curious to get your take: Is this another crypto use case or just a sign of the times? I’m personally torn.



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Why DeepSeek Disrupted Markets &amp; How Tokens Are The New GTM | Roundup" width="1024" height="576" src="https://www.youtube.com/embed/QHwIqwvKoII?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div><figcaption class="wp-element-caption">And now you know.</figcaption></figure>



Speaking of adoption, I have an <a href="https://www.prnewswire.com/news-releases/apollo-and-securitize-announce-partnership-and-launch-tokenized-access-to-credit-fund-on-aptos-avalanche-ethereum-ink-polygon-and-solana-networks-302364212.html">announcement</a> to bring up. ICYMI Thursday, Securitize and Apollo Global announced Apollo Diversified Credit Securitize Fund (ACRED), which essentially gives a “tokenized access point” to Apollo Diversified Credit Fund, as Apollo partner Christine Moy told me.  “It&#8217;s a multi-asset approach that leverages Apollo&#8217;s expertise across corporate direct lending, asset-backed finance, performing credit, dislocated credit and structured credit, with the ability to scale allocations up and down based on the market environment for the best risk-reward,” she explained.



Basically, it’s opening a door for the more crypto-native institutional base. And they’re doing it with Securitize, who helped bring BUIDL to life alongside BlackRock. Apollo, which has <a href="https://blockworks.co/news/apollo-global-management-hires-its-first-head-of-digital-assets-strategy">plenty of experience</a> dipping its toes in crypto, is looking to take advantage of the changing environment to team up with crypto talent. 



For Securitize’s Michael Sonnenshein, it’s showing that the bigger institutions are getting pretty comfortable with RWA tokenization.&nbsp;



At this point, Sonnenshein said, it’s becoming clear to asset managers that “crypto as an asset class is not going away” and it’s starting to evolve toward previously existing asset classes instead of crypto just hanging out in its own little bubble.&nbsp;



Moy noted that there’s been “market demand” and “strong interest” in tokenizing private credit, which then democratizes said market.&nbsp;



“It&#8217;s a higher yielding complement to the stablecoins, tokenized treasuries markets, but it&#8217;s also a diversifier for the higher, more volatile crypto-native yield products,” she said.



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Why Apollo and Securitize’s new partnership is a win for institutional adoption

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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It’s honestly difficult to recap the biggest narratives of 2024 simply because there were so many, but if I were to engage in that exercise then I’d have to say that tokenization — and BlackRock’s grand entrance into crypto — would high be on the list.&nbsp;



Tokenized treasurys currently sit around $4 billion, according to RWA.xyz, making up a small portion of the RWA pie. Currently, total RWA onchain (excluding stablecoins) tops $15.2 billion. 



However, Carlos Domingo, CEO of Securitize, thinks that you could realistically cut out some of the tokenization efforts that took place on private chains that no one’s using, which might drop the total value to around $5 billion.



Both VanEck and Bitwise think that the RWA space could grow to $50 billion — a number Domingo believes is within reach.&nbsp;



“If you look at the pace that we&#8217;re gonna grow, the Treasury space, that, by itself, should grow to several billion dollars next year, because stablecoins are at $200 billion now. So that should be $10 to $20 billion in treasuries. And then you start adding some of the new products we&#8217;re gonna roll out … rolling integrations with DeFi, etc. I think aggregating the industry … should get to $50 billion within the next 12 to 18 months, and hopefully, we will maintain our 20% [to] 25% market share as the leader of the industry,” Domingo said.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXepKyoorljBwzuB2DVXM_LCmYEPe3lhGDxbz5Aa9VCpOcc8aTh37PyHTB3Gc76npRpJq-4gDDCZGeYkzkberySrK8DFO7DFTNOjrygA56_RAgOpil6dTTmD6G8436Xw0ab2VR9yfw?key=GWxgBr4s90_BqfzY10_jT82j" alt=""/><figcaption class="wp-element-caption">A look at the biggest tokenized treasurys</figcaption></figure>



As for the success this year, Domingo thinks that tokenization hit the mainstream not only because of bigwigs entering the space, but also because there was “utility of the tokens.”



“We started with simple features like peer-to-peer transferability, so faster transferability that makes the asset more useful onchain, like the use cases we&#8217;ve been working on — using BUIDL as collateral — et cetera. That is all predicated on being able to move the security onchain efficiently [and] the liquidity through some redemptions with stablecoins, etc,” he explained.



Obviously, Domingo doesn’t think that tokenization’s moment in the spotlight is a one-and-done affair. He’s a pretty firm believer that we’ll continue to see the RWA space adapt and evolve throughout the next year.&nbsp;



For Domingo, the big catch is the aforementioned integration with DeFi, which is what Securitize is exploring as its next venture.&nbsp;



“That’s going to make the industry grow 10x. That’s my personal view,” he told me. But it’ll be good for both RWA and DeFi, which will be able to feed off of each other’s success.



When it comes to the challenges of the next year, it’s going to be two-fold for Securitize.



First, Domingo semi-jokingly told me he has to stop being a bottleneck (which, he added, was why Securitize was <a href="https://blockworks.co/news/ex-grayscale-ceo-tokenization-shift">thrilled to bring on</a> Michael Sonnenshein late last year) and then it’s all about talent acquisition.&nbsp;



Domingo said that hiring in a bull market is very “challenging” because of the amount of competition in the space but it’s not a bad problem to have, given that the regulatory overhang is no longer a big concern once we transition to this next administration.&nbsp;



Forget the year of the snake — this is the year of tokenization.



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RWA integration with DeFi could grow the market ‘10x,’ Securitize CEO says

Ben Strack

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Grayscale-related headlines have been aplenty this year, from GBTC’s <a href="https://blockworks.co/news/grayscale-fee-higher-bitcoin-etf">conversion</a> to an ETF, its <a href="https://blockworks.co/news/gbtc-outflows-curb-asset-advantage">outflows</a>, the product’s <a href="https://blockworks.co/news/grayscales-spin-off-etf-launches-crypto-outlook">spin-off</a>, more <a href="https://blockworks.co/news/grayscale-sol-etf-filing">filings</a> and <a href="https://x.com/Grayscale/status/1867214822066332108">trust launches</a>, yada yada.&nbsp;&nbsp;



A tangential update (also surfacing today) is that <a href="https://blockworks.co/news/grayscale-michael-sonnenshein-stepping-down">Grayscale’s former CEO</a>, Michael Sonnenshein, joined Securitize as its chief operating officer.&nbsp;



So the ex-leader of one of the largest crypto asset managers shifts his focus to bringing real-world assets (RWA) onchain — “which candidly I think is one of the most exciting frontiers in the broader blockchain and digital assets space,” Sonnenshein told me this morning.  



While at Grayscale, Sonnenshein worked on bringing digital assets into more traditional wrappers. At Securitize, he acknowledged, it’ll pretty much be the other way around.&nbsp;&nbsp;&nbsp;



The tokenized RWA market has lots of room to run before some <a href="https://www.sc.com/en/press-release/trade-finance-to-play-substantial-role-in-usd-30-1-trillion-tokenised-real-world-assets-market-by-2034/">lofty projections</a> are met. One point of agreement at <a href="https://blockworks.co/news/tokenization-updates-rwa-summit">Brooklyn’s RWA Summit</a> I attended in October was that the specific <a href="https://blockworks.co/news/tokenization-depends-on-use-cases-benefits">utility and benefits</a> (and the economics behind that) will be what drives tokenization forward.&nbsp;



Tokenized fiat currencies (aka stablecoins, a roughly $200 billion market) are well-established. Securitize helped BlackRock tokenize its USD Institutional Digital Liquidity Fund (BUIDL) in March, which has helped spotlight <a href="https://blockworks.co/news/securitize-ceo-on-tokenized-treasurys-growth">another use case</a>.&nbsp;&nbsp;&nbsp;



After all, US Treasurys (which BUIDL is backed by) are the collateral serving as the “substrate” for many capital markets transactions, Sonnenshein said.&nbsp;



He added: “Continuing to build products that can address some of the inefficiencies and … move into offerings where the underlying assets are not dollars, but instead yield-bearing assets, I think is a very, very attractive value proposition.”



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Ex-Grayscale CEO shifts focus to tokenization

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Crypto is “really exciting,” former SEC Commissioner Paul Atkins said in a <a href="https://www.youtube.com/watch?v=eLNFa14msRc">podcast interview</a> last year.&nbsp;



In that same interview, he noted that the FTX collapse just happened to occur in crypto but essentially, fraud is fraud. He compared Sam Bankman-Fried’s actions to Bernie Madoff’s.&nbsp;



Aside from public appearances, it’s clear that Atkins — who, in case you somehow missed it, is <a href="https://blockworks.co/news/trump-nominates-new-sec-chair">officially President-elect Donald Trump’s pick</a> to take over the SEC — is not only knowledgeable about crypto but has been active in the space for years.



On paper, Atkins looks pretty pro-crypto, but I was curious to get some idea of who Atkins is and what he’s like. Which, of course, could give some readthrough on how he’d lead the SEC if he were to take the helm — which, as my colleague Casey Wagner <a href="https://blockworks.co/news/trump-nominates-new-sec-chair">pointed out</a> — won’t be for a while because he has to get through the nomination process. The deal’s not done yet, so temper your expectations.&nbsp;



He’s been a part of Securitize’s advisory board since 2019, Securitize CEO Carlos Domingo told me.&nbsp;



“He&#8217;s definitely going to bring a different attitude toward the space that is less about enforcement actions and litigation and more about figuring out what&#8217;s the right regulation for letting this industry flourish,” he continued. Domingo knew of Atkins from his SEC days and from his work as co-chair for the Token Alliance which was <a href="https://digitalchamber.336.thegrove.co/initiatives/token-alliance/">launched</a> by the Chamber of Digital Commerce.&nbsp;



Atkins, Domingo said, is likely going to be “less controversial” and he’s more likely to have “a dialog with the industry participants to figure things out … Not having this animosity toward the industry, but somebody can sit with people and understand, you know, what needs to be done, so that there is investor protection and there is a certain type of regulation, but at the same time, the industry can actually grow.”



In the Free the People podcast episode I mentioned above, Atkins said it was “too bad” that a lot of crypto companies “couldn’t comply” with the current rules “the way they’re written.” He also praised Hester Peirce, who he previously worked with.&nbsp;



“If the SEC were more accommodating and would deal straightforwardly with these various firms, I think it would be a lot better” for crypto companies to work directly in the US instead of going overseas, Atkins said.



While Domingo’s sad to be losing Atkins as an adviser, the US is gaining a “really good” potential leader of the SEC, he said.



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What SEC chair nominee Paul Atkins has previously said about crypto

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Franklin Templeton is launching its Benji tokenization platform on the Ethereum network, marking its fifth launch this year after Aptos, Avalanche, Arbitrum and Base. It was previously only available on Stellar and Polygon.



“The launch of our Benji platform on the Ethereum network represents an important milestone in our ongoing efforts to develop new and innovative blockchain solutions for our clients,” Franklin Templeton’s Sandy Kaul exclusively told us.&nbsp;



“We look forward to further exploring ways in which we can utilize the network’s Ethereum Virtual Machine and smart contract functionality to unlock new capabilities for our tokenized funds.”



According to rwa.xyz data, tokenized treasuries have jumped nearly 2% in the last seven days, boosting their total market cap to over $2.37 billion. Franklin’s onchain market fund sits at $409 million.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1246" height="678" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png" alt="" class="wp-image-94432" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=1246 1246w, https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/11/image-9.png?w=80 80w" sizes="auto, (max-width: 1246px) 100vw, 1246px" /><figcaption class="wp-element-caption">Source: rwa.xyz</figcaption></figure>



Franklin’s is the third largest fund after BlackRock’s BUIDL and Ondo’s USDY.&nbsp;



And perhaps there’s something in the water, because BUIDL is also expanding to different chains, now available on Aptos, Optimism’s OP Mainnet, Polygon, Arbitrum and Avalanche.&nbsp;



I asked Securitize CEO Carlos Domingo if the expansion is a sign of maturity, given that BUIDL is one of the newest funds in the space. Franklin’s, for example, has been around since 2021 and was the first registered money market fund to use blockchain technology to record transactions.&nbsp;



BlackRock’s bullish stride into crypto otherwise really started this year, with the launch of the bitcoin ETFs in January and then BUIDL shortly after.&nbsp;



Domingo said that this is “just the beginning” for the fund and that it plans to roll out more features. He told me that this is also the first time that Securitize has issued the same asset on multiple chains versus picking one chain and issuing the asset there.&nbsp;



“So for us, there&#8217;s been a major change in the way we run our infrastructure on top of the different blockchains, so it&#8217;s encouraging,” he said.



No question about it, the tokenized fund space is heating up.



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Franklin Templeton launches Benji on Ethereum in ‘milestone’ move

Earlier this week, BlackRock’s BUIDL crossed $500 million — a milestone never before reached by a tokenized money market fund.



Tokenized funds have really taken off in the last few years, Securitize CEO Carlos Domingo told Blockworks. BlackRock and Securitize launched BUIDL earlier this year.&nbsp;



However, only some investors can access the fund. Qualified investors with more than $5 million in assets can subscribe through Securitize.&nbsp;



So what has led to this growth?



The rise of <a href="https://blockworks.co/tag/stablecoins">stablecoins</a> is definitely a factor, because it made folks think about what else could be tokenized, Domingo said.&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-tokenized-fund-trading-circle-usdc">Circle debuts way to trade BlackRock tokenized fund shares for USDC</a>



Right now the total value of the tokenized treasurys market, which includes BUIDL, sits at $1.8 billion. Domingo wouldn’t be surprised to see that market cap top $2 billion soon.



While the market is obviously far smaller than the $160 billion stablecoin market, “it’s definitely growing way faster than stablecoins.”



“Keep in mind, stablecoins are easier to purchase and use because they’re permissionless, while tokenized treasurys are securities. So they have some restrictions in terms of who can purchase them, how you can transfer them, etc. So they&#8217;re never going to be — in my opinion — as big as stablecoins…but I think they can easily become 10% to 20% of the market of stablecoins,” he said.



While the rest of the industry was no doubt buoyed by the <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">launch of the bitcoin ETFs</a> earlier this year, Domingo thinks the two have operated in “parallel paths.”



“The way I see it is: You&#8217;re taking a Web3 asset, which is bitcoin, and you put it on the [traditional finance] world through an ETF. Rather, I think <a href="https://blockworks.co/tag/tokenization">tokenization</a> is the opposite. You&#8217;re taking a [traditional finance] asset and you put it on the crypto — on the Web3 space — through tokenization. So they are like two distinct things that are very valuable but have nothing to do with each other,” he said.



Domingo discussed the conversations he’s been having with others in the space, noting that they’ve intensified since the launch of BUIDL.



“Every single asset manager out there is thinking about how they can participate,” he told me. Which is perhaps not surprising, given the appetite for BUIDL.&nbsp;



But that success isn’t only reserved for <a href="https://blockworks.co/tag/blackrock">BlackRock</a>.&nbsp;



According to rwa.xyz, Franklin Templeton’s fund, FOBXX, which was launched in April of last year, has topped $400 million — a 16% increase over the past 30 days. BUIDL, to put it in perspective, saw a nearly 9% jump in the same time period.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXcDFMqRZORBtRX5BAqPx1XvfcDYwp21c5aYZy8eLDrCkjJ9Pz263sYscy39NBXo2x2Q5VnGy7yvV7SG56uIYQT7XzQW4wh7miTyPjm-IYkBnFEPp51a2U2WfV0bgXxidX5YWq0TP4fdDAg8ZMfpSYCsIW27?key=tklvqD1YyF_5iEbarPfU4A" alt=""/><figcaption class="wp-element-caption">A look at the biggest funds in the space. Credit: Securitize.</figcaption></figure>



But Domingo thinks that BUIDL’s next $500 million could come even quicker — the fund just launched four months ago. Part of that may be because of some “new features,” he teased. Some will be unveiled in just a few weeks.&nbsp;



There’s also the fact that, because of the nature of the fund, there can be a bit of a delay when trying to subscribe to it.&nbsp;



He added, “In terms of onboarding entities, which — because these are institutions — takes time…for them to be able to invest in BUIDL. But we have a very big pipeline of entities being onboarded [so] that once they&#8217;re on board, they will invest, right?”



The success of BUIDL has led to discussions between BlackRock and Securitize about future projects. Domingo said that both firms are very aware that they’re only four months into BUIDL, so nothing else is coming at this point.&nbsp;



Read more: <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">How the latest TradFi blockchain trial could mark the ‘five-yard-line’ for mass adoption</a>



“So things take a longer time than [it would] take if we were working with a startup, which is fine because also you get the credibility of BlackRock…I think that in the next few months, we&#8217;re going to focus more on growing BUIDL in terms of the utility of the token, the functionality and the integration with all the parts of the ecosystem, rather than launching a new project,” he said.&nbsp;



But despite the desire to grow while working with a “small company” (Domingo says Securitize has 150 employees currently), he said that his firm isn’t looking to raise further funds any time soon. In May, ICYMI, BlackRock led a <a href="https://blockworks.co/news/blackrock-tokenization-investment">nearly $50 million round</a> for the firm.&nbsp;



“We need to execute on what we have. We have plenty of money. We were not raising money when BlackRock came. We already had money in the bank. So it&#8217;s not that we needed the money…I think that raising money [has] been a massive distraction to me, particularly, because you talk to a lot of people, and at this point in time, I don&#8217;t want to raise more money,” Domingo said.



A shorter version of this article first appeared in <a href="https://blockworks.co/news/empire-newsletter-blackrock-buidl-milestone">Thursday’s Empire Newsletter</a>. Sign up <a href="https://blockworks.co/newsletter/empire">here</a> to never miss an issue.



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Tokenized treasurys are ‘growing way faster than stablecoins:’ Securitize CEO

A deal by Securitize to tap into the registered investment adviser (RIA) community reflects a potential significant new step for tokenization market growth, industry watchers told Blockworks — a theme viewed as one of the crypto segment’s most promising developments.&nbsp;&nbsp;



Securitize revealed Thursday that it would buy Onramp Invest — a digital asset wealth platform working with US RIAs with combined assets under management of $40 billion.



The purchase allows the company to offer tokenized alternatives — like private equity, private credit and secondaries — through systems RIAs are accustomed to using for reporting to clients.



Tokenization is the process of digitizing real-world assets, such as equities or real estate, onto a blockchain — and backing those digitized versions by real-world assets. Settlement can be conducted in real time, and investors can see where their assets are stored on-chain.&nbsp;



Securitize President Jamie Finn said for the further adoption of tokenized alternatives, it was “crucial” to make them accessible to the RIA market — a community he said manages <a href="https://www.nrs-inc.com/resources/whitepapers/investment-adviser-industry-snapshot-2021-evolution-revolution-reimagined">$110 trillion</a> in assets in the US.&nbsp;



Read more: <a href="https://blockworks.co/news/eaglebrook-ceo-advisors-the-lowest-hanging-fruit-for-crypto-market">Eaglebrook CEO: Advisors the ‘Lowest-Hanging Fruit’ for Crypto Market</a>



“I think you will continue to see two things: first, expanded investor access to digitized financial products through expanded distribution — that is, meeting investors where they already are,” Finn told Blockworks. “And, second, continued digitization and improvement of other traditional asset classes.”



<h2 class="wp-block-heading">Tokenization takes another step</h2>



<a href="https://blockworks.co/tag/securitize">Securitize</a>’s acquisition is the latest signal that tokenization — an idea that has gained considerable steam over the past year or so — is not going away, industry watchers said. 



Ric Edelman, founder of Edelman Financial Engines and the Digital Assets Council of Financial Professionals, said there is no question tokenization is “the next big thing in crypto.”



“Some could argue that it will dominate the crypto world in the next decade,” he told Blockworks. “Getting advisers engaged is essential for the growth of the tokenization market.”



BlackRock CEO Larry Fink said in a March <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-annual-chairmans-letter">letter</a> to investors that <a href="https://blockworks.co/news/blackrock-ceo-us-lagging-innovation-tokenization">the tokenization of assets</a> could help in “driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”



Executives at WisdomTree, a fund group with $97 billion in assets under management, said last month the firm is looking to take advantage of its <a href="https://blockworks.co/news/wisdomtree-blockchain-native-app">“early mover status in tokenization”</a> after the launch of its blockchain-enabled consumer app.



More recently, Adapt3r Digital <a href="https://blockworks.co/news/on-chain-investors-us-treasury">launched a tokenized fund on decentralized marketplace Archblock</a> that allows access to short-term US Treasury yields.&nbsp;



Read more: <a href="https://blockworks.co/news/2023-year-of-asset-tokenization">Asset tokenization is shaping up to be crypto’s theme of the year</a>



<a href="https://blockworks.co/news/morgan-stanley-blockchain-capital-lead-48m-funding-for-securitize">Morgan Stanley-backed</a> Securitize, specifically, launched a fund tokenizing an interest in asset manager KKR’s Health Care Strategic Growth Fund II on the Avalanche blockchain in September 2022.&nbsp;



“When we announced our partnership with KKR, we were already having many, many conversations with other major institutions,” Finn told Blockworks. “KKR was just the first to move, and many conversations accelerated after they did.”



Private markets investment firm <a href="https://blockworks.co/news/private-markets-investment-firm-hamilton-lane-to-tokenize-3-funds">Hamilton Lane partnered with Securitize</a> that October to tokenize funds offering exposure to equities, private credit and secondary transactions.&nbsp;



“Over the coming months, you will continue to see big institutions announce the digitization of their products,” Finn said.



<h2 class="wp-block-heading">Significance of the deal?</h2>



Todd White, partner at crypto advisory firm Architect Partners, said that while various players in the tokenization sector have focused on different asset classes, they have struggled to connect with investor appetite.&nbsp;



“Matching Securitize&#8217;s recent headway tokenizing private funds with the distribution capability of OnRamp&#8217;s RIA network makes a lot of sense,” White said. “The deal structure is also sensible, with initial collaboration as predicate to full acquisition, and their collective success could bring validation and momentum to the tokenization space as a whole.”



Colin Butler, global head of institutional capital at Polygon Labs, noted that the Securitize deal gives “mass affluent” investors — those with a net worth of between $1 million and $3 million — the ability to invest in private equity and hedge fund instruments for which, prior to tokenization, they didn&#8217;t have access.



Declines of new issuances in public markets suggest that asset managers are running out of assets to distribute in the form of investment products, added Ralf Kubli, board member at the Casper Association.



“Accessing private markets for instruments offered to a broader public, will require more efficiency overall and higher transparency down to the individual asset level,” Kubli said. “It appears that a number of players are seriously looking at [distributed ledger technology]-based infrastructure, due to the unique capabilities of blockchains.”



Digital Asset Research CEO Doug Schwenk said that while the deal represents just one step in the evolving tokenization space, it opens up an important path for better distribution. Still, the RIA segment likely needs more education around such products, he added.



“Many RIAs have been slower to embrace the cryptocurrency investment narrative and thesis, while it&#8217;s much easier for them to bring forward traditional assets in a new mechanism or wrapper,” Schwenk said. “The RIA market is sizeable and could bring significant demand should the right tokenized products be on offer.”



Edelman argued that Onramp’s penetration into the RIA community has been limited.&nbsp;



“Still, the transaction demonstrates that Securitize recognizes the importance of connecting with the advisory community,” Edelman said. “And that puts them ahead of many others in the tokenization business.”



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Securitize deal to access RIA market latest step of tokenization growth journey

<div id="highlights-block_633d87ebfea2e" class="highlights">
 <ul>
 <li>Hamilton Lane funds to be available on a yet-to-be-determined “reputable” blockchain, spokesperson says</li>
 <li>Securitize revealed tokenized version of a KKR health care fund on the Avalanche blockchain last month</li>
 </ul>
 
</div>



Private markets investment firm Hamilton Lane is making three of its funds available via tokenized feeder funds as it expands access to the vehicles beyond just institutions.&nbsp;



The firm, which managed or supervised $832 billion in assets as of June 30, has partnered with digital asset securities firm Securitize to tokenize funds offering exposure to equities, private credit and secondary transactions.&nbsp;



Securitize CEO Carlos Domingo said in a statement that Hamilton Lane’s products, historically only available to institutions, will now be available to qualified US-based investors.



“Tokenization now makes it possible for individual investors to participate in private equity value creation for the first time in a digitally native way,” Domingo said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We are at the beginning of a process through which individual investors can access the same kinds of opportunities as university endowments or sovereign wealth funds, and that is very exciting,” he said.</blockquote>



The Hamilton Lane funds are set to be tokenized by Securitize’s digital transfer agency and managed by its digital asset management arm. The crypto firm intends to make them available for investment via its brokerage platform, Securitize Markets, this quarter.



The investment firm teamed up with ADDX earlier this year to tokenize a class of shares issued by the Hamilton Lane Global Private Assets Fund for investors in Asia.



The news comes a few weeks after Securitize revealed the launch of a fund tokenizing an interest in <a href="https://www.kkr.com/" target="_blank" rel="noreferrer noopener">KKR</a>’s Health Care Strategic Growth Fund II on the Avalanche public blockchain. KKR, which offers alternative asset management, as well as capital markets and insurance solutions, had $491 million as of June 30.&nbsp;



Securitize also made available <a href="https://www.youtube.com/watch?v=KXtC1KdYJjg" target="_blank" rel="noreferrer noopener">a tokenized art fund</a> from Artory and Winston Art Group on its platform last month. The $25 million closed-end fund is actively managed and is on the Polygon blockchain.



The Hamilton Lane funds will be on “a similarly reputable” public blockchain, a spokesperson told Blockworks, though the companies have not yet determined which one.



“This collaboration with Securitize is our latest step toward enabling access to the strong returns and performance opportunities generated within the private markets space for a newer set of investors, while increasing usability and transparency through the use of blockchain technology,&#8221; Victor Jung, Hamilton Lane’s head of digital assets, said in a statement.



Though the funds are not available to the broader retail investor segment, DQYDJ reported that 10.6% of American households were accredited in 2020. Those households controlled roughly $73 trillion of wealth.&nbsp;



“We are looking into how this market may evolve and be more inclusive of retail investors in the future, but we are not there yet,” a Hamilton Lane spokesperson told Blockworks.



<a href="https://cms.blockworks.co/arca-labs-and-securitize-partner-on-tokenized-us-treasury-fund/" target="_blank" rel="noreferrer noopener">Arca Labs partnered with Securitize</a> last year to bring a tokenized United States Treasury fund to market. The companies revealed at the time that shares would be issued through ArCoin digital asset security tokens, and that records of token ownership would be maintained off-chain.&nbsp;



A few months prior, <a href="https://cms.blockworks.co/morgan-stanley-blockchain-capital-lead-48m-funding-for-securitize/" target="_blank" rel="noreferrer noopener">Securitize raised $48 million in a funding round</a> co-led by Morgan Stanley and Blockchain Capital.



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Private Markets Investment Firm Hamilton Lane To Tokenize 3 Funds

Casey Wagner

<div id="highlights-block_627c1be7d35e7" class="highlights">
 <ul>
 <li>Algorithmic incentives for stablecoin pegs remain an unsolved problem, head of portfolio management at Securitize said</li>
 <li>Regulators have promised rules to protect investors, but lawmakers haven’t yet found a path forward</li>
 </ul>
 
</div>



As Terraform Labs and community members scramble to rescue stablecoin TerraUSD, regulatory experts say the collapse might be the end of algorithmic stablecoins as we know it. 



“It is a sad ending to this innovative algorithmic stablecoin experiment,&#8221; Adil Abdulali, head of portfolio management at Securitize, said. &#8220;Algorithmic incentives for stablecoin pegs remain an unsolved problem.”&nbsp;



UST collapsed dramatically this week, de-pegging its goal base-price of $1 and reaching a low of $0.298 earlier today, according to CoinGecko. The token’s adjacent cryptocurrency, LUNA, plummeted from $86 last week to around $1.27 at time of publication.



The situation is real-time proof that lawmakers’ concerns about the stablecoin industry are justified, according to <a href="https://cms.blockworks.co/secretary-yellen-stablecoins-pose-significant-risk-to-financial-stability/" target="_blank" rel="noreferrer noopener">US Treasury Secretary Janet Yellen</a>.



“It&#8217;s quite common that we wake up to regulation only when we have a crisis,” said Jonathan Dharmapalan, CEO of eCurrency, which provides technology for central banks to issue and distribute central bank digital currencies, or CBDCs. “A ‘call to action’ is probably what I would call this situation.” 



For months, regulators have promised that rules to protect investors are coming, but lawmakers across government agencies <a href="https://cms.blockworks.co/us-senator-proposes-looser-stablecoin-regulation/" target="_blank" rel="noreferrer noopener">cannot seem to agree</a> on a path forward. 



“Stablecoins are a form of private money,” Dharmapalan said. “The trouble with that is that stablecoin issuers make up their own rules, and nobody knows whether the rules are appropriate.”&nbsp;



Other stablecoin issuers should expect greater regulatory scrutiny, Abdulali agreed, but it is also important to consider the type of stablecoin. Reserve-backed tokens such as Circle and Tether have, at least <a href="https://cms.blockworks.co/coinbase-circle-to-move-usdc-reserves-out-of-high-risk-investments/" target="_blank" rel="noreferrer noopener">according to the teams behind the coins</a>, robust reserves of safe-haven assets, such as cash and cash equivalents. Algorithmic tokens, such as UST, rely on smart contacts that put incentives in place to maintain the price. 



“Algorithmic stablecoins still need work,” Abdulali said. “None have worked.”&nbsp;



A recent research <a href="http://www.wakeforestlawreview.com/2021/10/built-to-fail-the-inherent-fragility-of-algorithmic-stablecoins/" target="_blank" rel="noreferrer noopener">report</a> from Wake Forest Law Review went further, claiming algorithmic stablecoins are inherently designed to fail. These tokens require a support level of demand for operational stability and rely on independent actors with market incentives to perform price-stabilizing arbitrage, the report said.



“None of these factors are certain, and all of them have proven to be historically tenuous in the context of financial crises or periods of extreme volatility,” the report noted.&nbsp;



Other issuers should consider UST’s collapse as a warning, Dharmapalan said.&nbsp;



“One would assume, in good faith, that all stablecoin issuers have actually thought through what the risks are, and that managing those risks is an active part of what they are doing every day,” Dharmapalan said. “However, I&#8217;m going to guess that that is not really the case.”



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Terra Collapse Could Spell End for Algorithmic Stablecoins

Jacquelyn Melinek

<div id="highlights-block_6227ad008c97c" class="highlights">
 <ul>
 <li>Avalanche Multiverse’s program and investments will be divided into at least six phases to support new cohorts and projects</li>
 <li>Up to four million AVAX tokens will fund the program</li>
 </ul>
 
</div>



A non-profit fund for the Avalanche blockchain has rolled out an incentive program with millions of dollars earmarked for the proof-of-stake ecosystem.



Up to four million AVAX tokens, or about $290 million at the time of publication, will fund the program, also known as Avalanche Multiverse. 



The initiative will aim to grow its “subnet” functionality, which helps develop application-specific blockchains on Avalanche. Subnets are natively integrated with Avalanche’s broader ecosystem, available in an unlimited supply and allow for custom implementations — or the ability to tack on features from other chains.



Avalanche Multiverse’s program and investments will be divided into at least six phases to support new cohorts and projects but will not be constrained to a specific time period.&nbsp;It&#8217;s a non-profit organization that is run separately from Ava Labs. 



The first subnet to receive an investment from the program is DeFi Kingdoms, an NFT gaming project. It will get up to $15 million in incentives through AVAX tokens, as well as the game’s new Avalanche-native token CRYSTAL and existing token JEWEL.



Ava Labs, a core developer of Avalanche, will also partner with the Aave Companies, GoldenTree Asset Management, Wintermute, Jump Crypto, Valkyrie, Securitize and other organizations to build the subnet. This will allow regulated institutions that participate to leverage its subnets and access institutional DeFi (decentralized finance) after completing know-your-customer (KYC) checks.



“Avalanche Subnets enable us to create an ideal environment for institutions to migrate on-chain and experience the power of DeFi protocols first-hand as users rather than just as investors,” Stani Kulechov, founder and CEO of Aave, said in a statement. “This is a significant leap toward a future where the barriers between traditional and decentralized finance cease to exist.”



In November, Avalanche launched a <a href="https://cms.blockworks.co/avalanche-launches-200m-fund-to-support-ecosystem-growth/" target="_blank" rel="noreferrer noopener">$200 million fund</a> to support ecosystem growth on its blockchain. It also closed a <a href="https://cms.blockworks.co/?s=avalanche#:~:text=Avalanche%20Closes%20%24230M%20Token%20Sale%20Backed%20by%20Three%20Arrows%20Capital%2C%20Polychain" target="_blank" rel="noreferrer noopener">$230 million token sale</a>, backed by Three Arrows Capital and Polychain, a few months prior.&nbsp;



Avalanche’s native token, AVAX, had a price of $75.39 as of 1:30 pm ET on Tuesday, according to CoinMarketCap <a href="https://coinmarketcap.com/currencies/avalanche/" target="_blank" rel="noreferrer noopener">data</a>. The coin’s market capitalization is near $19.9 billion, which ranks the token as the 10th largest cryptocurrency, behind Solana (SOL) and ahead of Binance USD (BUSD), the data show.



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Avalanche Foundation’s ‘Multiverse’ Incentive Program To Invest up to $290M

<div id="highlights-block_621554cae25b9" class="highlights">
 <ul>
 <li>Securitize has acquired traditional transfer agent Pacific Stock Transfer</li>
 <li>The acquisition will help Pacific Stock Transfer clients raise capital and monitor trading activity through blockchain technology</li>
 </ul>
 
</div>



Crypto securities platform Securitize is out to bring blockchain technology to Wall Street.



In one of the first acquisitions of a traditional finance company by a digital asset firm, Securitize has acquired Pacific Stock Transfer, the companies announced Tuesday.



The acquisition of a transfer agent — which maintains shareholder records, compliance and corporate actions for companies — will help Securitize bring traditional companies into the blockchain ecosystem, the company said. Once the acquisition is finalized, Securitize will be among the top 10 transfer agents in the US, with over 1.2 million accounts.



Securitize currently offers solutions for private companies to raise capital and issue both traditional book entry and tokenized shares, among other services. The acquisition provides an opportunity for clients at Pacific Stock Transfer, which will continue to operate under its current name, and their shareholders to access new blockchain-based services, such as capital raising and secondary trading.



“This acquisition is a big step forward for Securitize in significantly increasing our ability to introduce new capabilities to more companies, as well as for the financial services industry in general with this major step in building and broadening a ‘blockchain bridge’ from a paper-based past to a digitally native future,” Securitize CEO Carlos Domingo said in a statement.



Bringing blockchain technology to the current securities market will bring security and transparency to the space, Domingo added.



“Public blockchains present a major opportunity to represent ownership of securities in a disruptive way, it is a public ledger that is immutable so you can have a irrevocable proof of ownership of the securities using tokens and wallets, no more issues tracking cap tables,” he said in a <a href="https://twitter.com/carlosdomingo/status/1496129044898889742?s=20&amp;t=0C1O84WI1Q3aoUSbDh-ZBA">Tweet</a> Tuesday.



Securitize, founded in 2017, creates shares as unique digital tokens and records them in a decentralized blockchain network, allowing businesses to know the ownership of each share and access all trading activity in real time. It is safer and more efficient than paper files or centralized databases, Domingo said.



“For over 38 years, Pacific Stock Transfer has been one of the most important companies most people have never heard of: from creating shares to tracking ownership to voting, tax, reporting and more, we do all the heavy lifting that enables businesses and shareholders to own and trade stocks,” Billy Miller, who is chief operating officer of Pacific Stock Transfer and will continue to lead the business at Securitize, said in a statement. 



“Integration with blockchain-based recordkeeping will enable us to provide significantly better and more efficient service to our clients and their shareholders in the future.”



The companies involved declined to disclose the terms of the deal.



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Crypto Goes After Wall Street: Securitize Acquires Traditional Transfer Agent

<div id="highlights-block_60d0edf77156c" class="highlights">
 <ul>
 <li>Securitize is adding Co-Head of Morgan Stanley Tactical Value Pedro Teixeira to its Board of Directors </li>
 <li>Participants in the investment round and existing investors will receive their shares in the form of security tokens, or digital asset securities, through Securitize’s platform</li>
 </ul>
 
</div>



Securitize, a digital assets securities firm, announced it has raised $48 million in a Series B fundraising round, co-led by Morgan Stanley and Blockchain Capital, the company said in a statement June 21.&nbsp;



The round marks the first time a blockchain technology company has received major institutional funding from <a href="https://cms.blockworks.co/?s=morgan+stanley" target="_blank" rel="noreferrer noopener">Morgan Stanley</a>, said Carlos Domingo, co-founder and CEO of Securitize, in a <a href="https://twitter.com/carlosdomingo/status/1406921691855458305" target="_blank" rel="noreferrer noopener">tweet</a>, “which is not only great for us but a great validation for the entire space that one of the largest US banks is placing this bet.”&nbsp;



Overall, it’s a good thing for everybody that large financial institutions are getting involved in crypto start ups like Securitize, and while they are the first investment in the space, hopefully they are not the last one, Domingo said to Blockworks.&nbsp;



In addition to Morgan Stanley&#8217;s funding, Securitize is adding Co-Head of Morgan Stanley Tactical Value Pedro Teixeira to its Board of Directors where Teixeira will join Domingo, Securitize co-founder and President Jamie Finn, SPiCE VC co-founder and Managing Partner Tal Elyashiv, and Blockchain Capital co-founder and Managing Partner Brad Stephens.



“We make long-term investments in businesses and asset classes that are ahead of the curve,” Teixeira said. “Our investment in Securitize is a sign that we believe in the growth and adoption of digital asset securities.”



The company was founded in 2017 and allows private companies to raise capital on its digital blockchain-based platform.&nbsp;



“Historically we’ve been viewed as a crypto and blockchain company because that’s the technology, but you’re going to see a shift to focusing less on technology and more on what we actually do,” said Evan Wagner, head of brand and communications at Securitize, in an interview with Blockworks. “Fundamentally, we help companies raise capital and we help investors participate in the private markets which have been closed off to them for the most part.” 



New <a href="https://www.securitize.io/about-us/investors" target="_blank" rel="noreferrer noopener">investors</a> include Ava Labs, IDC Ventures, Migration Capital, NTT Data and Sumitomo Mitsui Trust Bank and no valuation is currently being disclosed. The round also included existing investors including Blockchain Ventures, Borderless Capital, Global Brain, Mouro Capital, Ripio, Ripple and SPiCE VC.



The funding was oversubscribed for the Series B round as the initial target for funding was lower but demand was “quite high,” which resulted in the current funding, Wagner said.&nbsp;&nbsp;



Previously, Securitize raised over $2 million in a Series A round in October 2018, and more than $14 million in January 2020, Wagner said.



The company hopes to use the funds to continue expanding and scaling key existing areas for growth operations as well as launching Securitize Markets, which has no official release date, Wagner said.&nbsp;



Participants in the investment round and existing investors will receive their shares in the form of security tokens, or digital asset securities, through Securitize’s platform. The investors will join a group of over 300,000 verified investors and over 150 companies on the platform, according to the company.&nbsp;



“On the platform, you will be able to access a range of opportunities whether it’s crypto yield funds or startups or real estate developments, you&#8217;re going to see a broader universe of primary offerings as well as secondary offerings,” Wagner said. “Looking forward, that’s the evolution you&#8217;re going to see and as more people become comfortable with crypto, it&#8217;s going to become the means for providing services that is taken for granted in public markets.”&nbsp;