The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended or with any other regulatory authority of any State or other jurisdiction of the United States or Canada and (i) may not be offered, sold or delivered within the United States or Canada, or to, or for the account or benefit of any U.S. Person or Canadian, and (ii) may be offered, sold or otherwise delivered at any time only to transferees that are Non-United States Persons and Non-Canadians.

May 15, 2024

EU UCITS and bitcoin; Franklin Templeton blockchain testing; SMT lists on Uphold

Welcome to Swarm Markets’ media memo. This weekly update provides comments from Swarm Markets’ co-founders, Philipp Pieper and Timo Lehes, on key industry news that has caught our eye, plus our own developments. 

 

Comments available on the following news items:

 

  • Bitcoin in UCITS
  • Franklin Templeton blockchain experiment
  • SMT launches on Uphold

 

EU could soon allow bitcoin into UCITS products 

 

Going beyond the ETF/ETC boom for bitcoin this year, EU regulators could be eyeing up more mainstream products for the cryptoasset.

 

How would bitcoin in UCITS work in practice? The product wrapper is different from an ETF/ETC in that it is typically used by fund managers to build wider portfolios of assets. With that in mind we’re unlikely to see 100% bitcoin UCITS – after all, why would an investor be interested in a bitcoin asset that was not instantly redeemable.

 

Instead we’re likely to see bitcoin used in wider strategies, used as a diversifier or alternative asset within a bigger portfolio. It raises tantalizing possibilities such as using the cryptoasset as a portion of a multi-asset portfolio alongside other TradFi assets such as bonds or commodities. 

 

That being said, UCITS have fairly strict rules on composition, meaning any bitcoin allocation to them is likely to be minority stakes – in the same way that even big tech funds will only hold less than 5-10% in their largest stake. UCITS are designed as thematic, risk-adjusted investment vehicles, used by everyone from major pension providers to private investors. 

 

Regardless, if approved, this will be good for bitcoin as it continues to find new markets and opens itself to new investors. 

 

Franklin Templeton blockchain experiment cheaper than traditional infrastructure 

 

Comments from Franklin Templeton CEO Jenny Johnson have been widely reported around the successful testing of blockchain at the firm. 

 

There’s a few notable things happening here. Obviously it is notable to see major investment institutions such as Franklin Templeton engaging in blockchain activities, although by now this is not perhaps that remarkable, seeing as many others are openly dabbling.

 

But the firm does have the resources and wherewithal to commit to a significant experiment in blockchain tech, and its findings are extremely interesting. The firm has found over a period of 6-8 months that running functions via both TradFi and blockchain methods – blockchain was the cheaper, and more accurate, of the two.

 

The findings are extremely important because they underpin the ultimate arbiter of adoption as driven by commercial considerations – cost. Technology can be whizzy, exciting and innovative, but if it isn’t cheaper, then what is the point? This is why many major technological innovations haven’t reached some sort of critical mass. 

 

Think VR versus television or electric cars versus fossil fuel vehicles. Both are steps up in technological terms but the mass adoption isn’t there because they’re not better value (yet!) This makes Franklin’s findings all the more exciting – if blockchain isn’t just better tech, but it’s also cheaper, then it is game over for the old way of doing things. 

 

It isn’t the only firm coming to this conclusion. JPMorgan and WisdomTree look set to spin out commercially viable projects from Project Guardian, the Monetary Authority of Singapore’s (MAS) blockchain sandbox. Critical mass is not far for blockchain on this evidence. 

 

SMT lists on fourth exchange, Uphold –

 

We’re very pleased to announce that SMT will shortly launch on its fourth exchange, Uphold, a regulated multi-asset digital money platform offering financial services to a global market, with over 10 million users globally.

 

The listing is significant because it moves $SMT into the realm of trading apps like eToro and Robinhood who help make investing in crypto easy.

Uphold is regulated in the U.S. by FinCen and state regulators, and by the FCA in the U.K. It is registered in Canada with FINTRAC and in Europe with the Financial Crime Investigation Service under The Ministry of the Interior of the Republic of Lithuania.

From 16:00 UTC on 16 May 2024, Uphold users will be able to trade Swarm Markets’ token, $SMT.

The token listing on Uphold follows $SMT’s listings on BingX in April 2024, Gate.io in February 2024 (under the ticker $SMTX) and MEXC in December 2023. 

 

The Swarm Markets team hopes to announce more centralized exchange listings in the pipeline. A roadmap of what the Swarm team set out to achieve in 2023, what they delivered and what to expect in 2024 can be found here.

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