The following is a guest article by Jesse Knutson, Head of Operations at Bitfinex Securities.
Donald Trump's re-election victory and the huge success of Bitcoin ETFs earlier this year were major catalysts for Bitcoin's rise towards $100,000. The rally over the past few weeks has been driven by hopes for Trump 2.0. The US is the “crypto capital of the world” And for the first time, the financial services industry is feeling that the numbers are going up.
Although details are still unclear, the number of Bitcoiners in Trump's inner circle, including DOGE Director Elon Musk, suggests that Trump may make good on his crypto campaign promises. There is. Promoting a more relaxed approach to banking, self-custody and digital assets could have significant global ramifications. The success of Bitcoin ETFs has greatly contributed to removing the prejudice against Bitcoin among institutional investors. U.S. government assistance is likely to do the same between governments.
A pro-Bitcoin government will almost certainly drive prices higher, causing more countries to follow suit. My Bitcoin pitch has always avoided the end game to people in suits: institutional investors, regulators, policy makers, but suddenly hyperbitcoinization and hash wars seem entirely possible. It's starting to look like this.
What does this mean for Bitcoin first movers like El Salvador? Or are they interested in Bitcoin like Argentina? It's hard to say. On the other hand, as the largest contributor and shareholder to the IMF, if the US takes a more accommodative stance towards Bitcoin, the IMF's opposition to things like El Salvador's Bitcoin Act of 2021 is likely to disappear. On the other hand, Bitcoin could be leveraged to attract human and financial capital and steal much of the thunder from smaller economies.
However, capital markets are a different game. I've often said that the opportunities to monetize Bitcoin-based capital markets are naturally skewed toward small and medium-sized economies. Bitfinex Securities is registered and licensed in El Salvador and the Astana International Financial Center in Kazukastan, rather than in New York, London, or even Singapore. These are two jurisdictions that not only have buy-in from the highest levels of their respective governments, but perhaps more importantly, financial services represent a very small share of GDP. Traditional markets have less moat and less pushback from established players. That's a good bet. Many advantages and minimal disadvantages.
The tokenization that I've seen so far in financial hubs and large financial institutions looks like tokenization of tokens to me. Early this month, UBS Asset Management is usd money market investment fund Built on Ethereum. fund “We aim to open the door to the world of decentralized finance, reduce barriers, provide access to products and services to a wider range of market participants, and bring the two closer together.”but this is also only available through authorized resellers. This seems to be a corporate buzzword. More smoke and mirrors. Authorized resellers sound like the antithesis of decentralized finance.
Many large banks are building their own tokenization technology. For example, HSBC orion. UBS has tokenization. Goldman's has the Goldman Sachs digital asset platform. Most (perhaps all) of these solutions limit participation to institutional and accredited investors, settle in either fiat or CBDC, do not offer integration with Bitcoin or Tether, and do not require transfer agents or It relies on a regular host of traditional capital market participants, such as custodians. , a repository that requires no effort to eliminate intermediaries. The future of finance looks a lot like the past.
I think this is an opportunity for El Salvador and other similar countries. Streamline capital markets, mediate technically unnecessary roles, support self-custody and peer-to-peer trading between whitelisted counterparties, enable broad market participation, and foster connectivity between markets I will. Traditional and digital asset markets through Tether and Bitcoin. This could create a cheaper, faster and more comprehensive alternative to traditional capital markets, where issuers and investors can interact more directly.
Wall Street's approach appears to be focused almost exclusively on the efficiency of tokenized securities, streamlining the market, returning more control to investors, and increasing access to capital markets by a broader range of investors and issuers. seems to have overlooked an opportunity to encourage participation. I think the main thing is to lay off people in the back office and improve profit margins. Regardless of President Trump’s Bitcoin strategy, it is difficult to imagine following the El Salvadoran model and tokenizing major markets weighed down by establishment powers and vested interests. They seem to want innovation without change.
I think we will see competition between competing approaches to tokenization in the coming years. This is partly due to a more digital asset-friendly US government, developed and developing countries, open source and permission chains, inclusivity and institutions only. Bitcoin and Tether vs. CBDC and fiat currencies. It's too early to say which path will emerge as the dominant approach, but I think there's a good chance that freer, cheaper, and less frictional markets will come out on top.
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