Big Banks Banking on Blockchain

27 May 2019

Each week we share the latest news in blockchain and finance. This is newsletter #37— subscribe here to get it in your inbox every Thursday.


If you’re familiar with Christensen’s The Innovator’s Dilemma, you know that innovating can prove difficult for large companies.

This is also the case when it comes to blockchain. In this week’s news, we show that big banks are banking on blockchain; UBS, Barclays, HSBC and the Commonwealth Bank of Australia are trying to stay ahead of the curve by actively working on new propositions using blockchain technology.

But will this be enough? As Christensen indicates, in order for such projects to succeed, they should not necessarily create value for their currentcustomers, but for the right customers. And this may well be an entirely different type of customer that newer companies (like Coinbase or Stripe) will find much easier to serve.

 

QUOTE

Securities will be registered on the blockchain, which is already happening in some jurisdictions. Central bank money will be issued in token form, and then we will have DVP [delivery versus payment]. OK, so that might seem far off, but what are you doing now to not be disintermediated?

— ConsenSys’ Ajit Tripathi at last week’s Consensus 2019

 

NEWS

💰 A group of large banks (which may include UBS, Barclays, HSBC) are banking (or betting?) on blockchain by investing $50m in Fnality, to create a blockchain-based ‘utility settlement coin’ backed by cash assets to settle financial transactions

💸 Coinbase is expected to acquire crypto custody provider Xapo for $50m‘winning’ the acquisition race versus Fidelity Digital Assets.

💱 Tokenized securities BCAP and SPiCE can now be traded by US investors on security token exchange OpenFinanceconsidering their holding periods have expired.

🚿 Ethereum-based stock exchange SprinkleXchange from Bahrain is expecting to list its first company next monthaiming to attract companies with a market cap of $20-$200m.

🔻 Tokenization platform Neufund has lowered its ticket size for equity offerings — to €10

🙁 The Security Token Offering from social crypto exchange Blockport failed to reach its soft cap of €1mThe Blockport website will go offline later this month, while the team plans a potential restart.

🏦 The World Bank and Commonwealth Bank of Australia launched an AUD-denominated blockchain bond back in August 2018The organizations have now completed a secondary transaction of the bond.

🖇️ Russia’s National Settlement Depository is launching the Decentralized Digital Depository (D3Ledger) next month in Switzerlandtracking ownership of depositary notes of bitcoin and ether, along a few other specific tokens.

 

LONGER READS

🎤 Why securitization should be on a distributed ledgerby Cadence CEO Nelson Chu.

👎 A more negative look at tokenized securities offerings, with this article from Forbes staff: “So Far, They’ve Flopped”.

 

NEW DEALS

💱 Cryptocurrency exchange Kraken is issuing preferred shares to accredited investors on BnkToTheFutureThe round has raised over €8m so far, with around €5m to go before their hardcap is reached.

🏘️ Tokenization platform Smartland’s first deal is now live: a tokenized real estate project in Nottingham, UK. The deal represents 30% of a block of 124 student studios offering a dividend income of around 6% per year.

POSTSCRIPT

It’s always interesting to see the massive contrast between optimistic and pessimistic news items.

On the one hand, as we wrote above, the Blockport STO didn’t quite make it. On the other, Facebook is moving ahead with its stablecoin project (more in this previous issue), as it registers a new company in Switzerland.

And on the one hand, apparently, STOs have flopped. And on the other, payment processing giant Square is making its first hire to work on a (secretive) crypto project.

So what to make of all this? Well, let’s just say there’s an interesting analogy to make here with crypto markets’ volatility. And that after all has been said and done; this new ‘industry’ is still moving forward.

See you next week! 👋

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