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.

October 31, 2023

UK Crypto; Bitcoin ETF; Worldbank

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:

 

  • UK crypto regulation takes one step closer
  • Bitcoin ETF will be a game changer 
  • World Bank’s €100bn blockchain bond paves the way for RWA asset tokenization to become mainstream 

 

UK crypto regulation takes one step closer

The UK has moved one step closer towards crypto regulation, a welcome move that will vastly improve trust, transparency and accountability within the sector.

Under the proposed rules, crypto firms and exchanges will have to abide by the same authorisation regime as banks, asset managers, brokers and other financial services firms. 

This will undoubtedly drive-up standards and improve customer safety. We also believe that regulation, both in the UK and Europe, is necessary if the masses are to see cryptoassets as a legitimate asset class in the way they consider stocks and bonds. 

It’s a fine line between appropriate and robust regulation, and strangling innovation but we are confident the broad outline of what the UK government has announced is sensible.

Now that it has confirmed its intent to press ahead, it’s important that we see the finer details of the proposed rules to ensure they successfully protect customers while fostering innovation.

 

Bitcoin ETF will be a game changer

For all the headway the crypto asset sector has made over the past decade, there are still plenty of people reticent to invest in it as an asset class.

Crypto has introduced a whole new vocabulary – wallets, DeFi and blockchain – that is still relatively unfamiliar for some more conservative investors.

However, one of the benefits of a spot bitcoin ETF is that investors can gain exposure to the cryptocurrency in a way they are already familiar with. It also removes some of the risks of holding the cryptocurrency on an exchange or in a wallet.

We strongly believe this will tempt a new wave of investors towards the asset class. We are clearly not alone, given that crypto prices have soared on the back of speculation that a Bitcoin spot price ETF is on the horizon.

It’s impossible to say with any accuracy exactly what effect it would have were the US Securities and Exchange Commission were to approve a spot bitcoin ETF, but we expect significant price inflation. One thing it will do is end speculative bitcoin trading behavior as to whether a US-based ETF will be approved, which has been a popular narrative in the bitcoin market in the past couple of cycles.

Nevertheless, over the long-term, the arrival of a true bitcoin ETC could really be a game changer.

 

World Bank’s €100bn blockchain bond paves the way for RWA asset tokenization to become mainstream

We have long said that the tokenization of real-world assets (RWA) is the future and has the potential to revolutionize the way investors buy, sell, store and trade assets.

However, like most new technologies, it needs the advocacy of a major, respected institution to become adopted by the mainstream.

The World Bank becoming the issuer of the world’s first blockchain bond issue is a very significant milestone and will help speed up the acceptance of this technology. This is only compounded by the FCA joining Project Guardian with regulators from Japan, Switzerland and Singapore to explore the benefits of tokenization and decentralized trading infrastructure. 

As a pioneer in this space, Swarm recognises RWA tokenization’s potential to increase transparency, reduce costs, improve investor access and significantly speed up transaction times. We were the earliest adopter of RWA tokenization back in 2017 and so we can see every day of this technology’s benefits in the real world.

Tokenized bonds and money market funds are real growth areas in particular and so we expect a boom in activity as we go into next year, particularly if the World Bank’s issue is deemed a success.

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