European central bank money onchain Monday, Ondo joins DTCC — Fri 18 Sep

Good morning. On Monday the Eurosystem starts settling tokenised securities in central bank money, with a Lithuanian company among the four operators that can connect to it. In the same week tokenised funds finally reached the distributors — and two regulators declined to say who needs a licence to sell any of it.

💎 Pontes opens on Monday, and the ECB has dropped the pilot label
💎 Vilnius-based Axiology is the only operator on the list from outside Germany
💎 ESMA and Finansinspektionen both answer: it depends on how the service works
💎 GreenMerc drops its Swedish appeal and runs on Northcrypto's Finnish licence
💎 Ondo becomes the first tokenisation platform inside DTCC's fund network

— Morten

The Eurosystem opens Pontes on 21 September, letting tokenised securities on private blockchains settle in central bank money. Security and payment are exchanged in one operation, which removes the credit risk on the cash side. The ECB has dropped the word pilot: this is a service in regular operation. Euro only to begin with.

Why it matters: Tokenised bonds have settled on one track while the money moved on another, and the reconciliation afterwards is the cost that has kept volumes small.

Source: ECB links central bank money to tokenised securities — Kaupr

Four operators are registered to connect securities to Pontes. Three are German or German-owned: Clearstream, SWIAT and Cashlink. The fourth is Axiology in Vilnius, supervised by the Bank of Lithuania and licensed as a trading and settlement system under the EU's DLT pilot regime. Its certification is not finished, and has to be before it can go live.

Why it matters: A Baltic company sits on a four-name list that decides who can reach central bank money for tokenised securities in the euro area.

Source: Lithuania's Axiology among four operators in ECB's Pontes — Kaupr

Kaupr asked both regulators whether distributing crypto services under your own brand requires a MiCA licence, when an authorised firm executes behind the interface. Both answered in writing, and both said it depends on how the service works in practice. ESMA pointed to a question on its own site that has been unanswered since January.

Why it matters: The Commission has already said an agent must itself be authorised, so the space where branded distribution sits is the gap between that and the outsourcing rules.

Source: Two regulators will not say if crypto distribution needs a licence — Kaupr

The board has withdrawn Ijort Invest's appeal against Finansinspektionen's refusal of a Swedish MiCA licence, announced as inside information on 16 September. The Swedish business now runs under the authorisation held by Finnish sister company Northcrypto, using MiCA's passporting rules. Trijo customers move across without doing anything, and the brand stays.

Why it matters: Two tracks were running at once until this week, and the company has now picked the one that does not depend on the Swedish regulator changing its mind.

Source: GreenMerc drops MiCA appeal and uses Northcrypto's licence in Sweden — Kaupr

Ondo Finance's subsidiary Oasis Pro Markets has joined DTCC's Fund/SERV, the platform that processes more than 85 per cent of US mutual fund transaction activity. It is the first tokenisation company to become a member. The connection covers account data, confirmations, reconciliation, distributions and tax reporting through one standardised link. (Source: press release)

Why it matters: Tokenised funds have had to be integrated fund by fund, and the wealth platforms that distribute the rest of the industry were never on the other end.

Source: DTCC's Fund/SERV adds Ondo Finance as its first tokenization member — Ondo Finance

Centrifuge announced on Thursday that HYB, the tokenised version of New York Life Investment Management's US high-yield corporate bond strategy, is live on Avalanche. NYLIM manages around $807 billion. Subscriptions and redemptions settle in USDC, NYLIM keeps control of the portfolio, and access is limited to eligible investors. The partnership was announced in June.

Why it matters: Most tokenised funds hold Treasuries or short-duration paper. Actively managed corporate credit is a different asset to put onchain, with default risk attached.

Source: Avalanche partners with NYLIM to launch tokenised high-yield bond fund HYB — PANews

Emma Pecenicic told Paperjam that putting an existing fund on a blockchain gives an investor no reason to change behaviour. Fidelity's tokenised liquidity fund holds around $50 million after six months, and required a 24/7 operating model across transfer agent, administrator and payment partners. Cybersecurity is the main obstacle she sees, ahead of interoperability.

Why it matters: She puts the sequence plainly: the first layer of a tokenised market is cash, and everything else waits on that.

Source: Fidelity sees tokenisation as the next distribution channel — Paperjam

The regulator published a call for input on 14 September on whether tokenisation could improve how gold is traded, transferred, pledged and held in UK markets, including as wholesale collateral. One option under review is an exemption from the collective investment scheme and alternative investment fund frameworks. Responses close on 23 October.

Why it matters: London is the largest centre for spot gold trading, and the uncertainty the FCA is asking about is the reason firms have held back from building there.

Source: FCA publishes call for input on tokenised gold — Norton Rose Fulbright

Head of research Zach Pandl said at the Avalanche Summit that bitcoin's low near $58,000 at the end of June remains his call for the bottom of this bear phase. Grayscale is now giving clients a green light to allocate, assessing the structural trend, the stage of the cycle and the macro backdrop. Coinbase's chief executive said something similar last week.

Why it matters: Bitcoin trades around 39 per cent below its record, so a house telling clients to allocate is taking a position its own clients can check against the price.

Source: Grayscale's Pandl still sees bitcoin's $58K low as the bottom — The Block

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Wishing you a great weekend. If you also subscribe to Kaupr Digest, it lands on Sunday with a new episode of the Kaupr Weekly podcast — and Kaupr Daily is back on Monday morning.

Best regards Morten Myrstad Founder & Editor