July 2024 Roundup — featuring Garett Jones from Bluechip Ratings and Tyler Sherwin and Ray Buckton from RWA World.
The third edition of QX Institutional covers a walkthrough of the HQLAx/Finality cross-chain intraday repo case study, now formally published. Alongside it, this episode covers the German Commercial Bank Money Token proof of concept results, Circle’s Patrick Hansen with seven forecasts for the stablecoin market, Bluechip’s State of Stable Coins report for H1 2024, and Standard Chartered’s eye-catching $30 trillion tokenised asset market cap prediction for 2034 — with RWA World’s characteristically measured commentary on what that number actually means.
Part One: DLT and Blockchain in Finance
The HQLAx/Finality Case Study: How Cross-Chain DVP Actually Works
Last month’s announcement that HQLAx and Finality International had completed successful end-to-end testing of cross-chain intraday repo settlement has now been followed by the publication of the full case study. Here is what is actually happening under the hood.
The use case is a delivery-versus-payment (DVP) transaction involving a basket of securities traded between two banks, settled via HQLAx, Finality International, and a third party — using both Corda and Ethereum DLT simultaneously. Securities are managed on a private, permissioned Corda network. Cash is managed on a private, permissioned Ethereum network (the Finality Network Payment System, or FNPS). These are architecturally distinct systems. The cross-chain atomic settlement is enabled by Finality’s Atomic Settlement Protocol (ASP), which is built on the Enterprise Ethereum Alliance DLT Interoperability Specification.
The settlement flow proceeds as follows. Bank A and Bank B agree to settle a DVP trade. Bank A submits trade details to the DVP smart contract on the FNPS Ethereum network. Bank B also submits trade details to the DVP contract on the FNPS Ethereum network. Bank B then verifies the trade details and places the cash leg on hold for Bank A, marking the DVP contract as notified on the cash network. HQLAx verifies the trade details and places the securities delivery leg on hold for Bank B using a Corda transaction signed by Bank A, Bank B, the custodian, and a notary. HQLAx then constructs an attestation proof of the delivery leg hold on the Corda network, which is translated into an EEA-compliant cross-chain function call and sent to the FNPS through Bank A. Bank A executes the payment by calling a cross-chain function on the FNPS Ethereum network to execute the payment leg hold, after successful verification of the proof. An event containing an EEA-compliant cross-chain function call is then emitted to execute the delivery leg hold.
Bank A receives cash on the FNPS network. HQLAx requests an event attestation proof of the payment leg execution on the FNPS network, which is translated into an EEA-compliant cross-chain function call from the FNPS. HQLAx then executes the delivery by calling a cross-chain function on the Corda network, after successful verification of the proof, to execute the delivery hold. Bank B finally receives the basket of securities on the Corda network.
The practical significance: this is atomic settlement — neither the cash leg nor the securities leg can execute without the other, eliminating the counterparty exposure that currently characterises intraday liquidity management. The settlement risk is eliminated, not managed. A second case study — implementing the EEA Interoperability Specification between Starknet and Polygon — will be published next month.
Other Institutional Developments
Schroders Capital and Anova successfully piloted the tokenisation of insurance-linked securities investments, demonstrating meaningful improvements in transparency, streamlined investment processes, and client experience in the reinsurance sector.
DekaBank issued a digital bearer bond without using a Central Securities Depository, as part of the ECB’s wholesale DLT settlement trials. The bond was issued on the SWIA network — an institutional blockchain network funded by DekaBank with LBBW and Santander’s SC Ventures among co-investors.
Clearstream, DekaBank, and Deutsche Bank jointly issued a €25 million tokenised bond — the first institutional-grade DLT issuance in Germany using digital central bank money.
Hamilton Lane, managing over $900 billion in assets, launched a $550 million Senior Credit Opportunities fund on the Solana blockchain, offering accredited investors access to private credit with a 10% annualised yield. While most institutional tokenisation activity has concentrated in the Ethereum ecosystem, Hamilton Lane’s choice of Solana signals that institutional-grade activity is beginning to diversify across public permissionless networks.
JPMorgan revealed that Ant International has processed billions of dollars in transactions using JPM Coin’s programmable payment features for internal treasury functions. Ant International also formed a strategic partnership with BNP Paribas to enhance cross-border payment solutions and explore innovations in tokenised deposits for global treasury management.
Cassa Depositi e Prestiti (CDP) — one of Italy’s oldest and most significant financial institutions — issued a €50 million digital bond on the Polygon network, leveraging Italy’s new law allowing DLT for specific financial instruments. A major sovereign-adjacent institution issuing on a public permissionless network is a meaningful signal.
State Street is exploring the creation of its own stablecoin, currently engaging with regulators to understand and implement compliance requirements. State Street has also partnered with MasterCard to launch a virtual card for its new EUR stablecoin in Europe.
Commercial Bank Money Token (CBMT): German Proof of Concept Results
The German Banking Industry Committee and the Federation of German Industries published the results of a seven-month proof of concept for the Commercial Bank Money Token (CBMT). Participants included Commerzbank, Deutsche Bank, and DZ Bank on the banking side, and industrial firms including Airplus, Mercedes-Benz, and Cement on the enterprise side.
The CBMT is designed around several core principles. It is multi-DLT by design: supporting different vendor DLT solutions including Hyperledger Fabric, R3 Corda, and private permissioned or public permissioned networks. It uses a colour token model in which a colour is assigned to each issuer’s CBMT to make liability clear at all times — but critically, all CBMTs regardless of colour are technically identical, enabling interoperability between tokens issued by different banks. Programmable payments are enabled through smart contract technology, with compliance enforced at the smart contract level.
Functional use cases tested fell into three categories: pure money use cases (basic transfers), advanced corporate payment use cases, and multi-currency use cases. The POC results were positive: CBMT demonstrated the technical feasibility of on-chain payments using existing deposit structures, with potential for meaningful benefits to industrial firms — particularly in enabling complex business logic in transaction processes and expanding conditional payment use cases.
Part Two: Stablecoin Safety with Bluechip Ratings
Commentary by Garett Jones, Chief Economist, Bluechip Ratings
News Roundup
FINMA and Swiss Bank Deposit Insurance for Stablecoins: Switzerland’s financial regulator FINMA issued guidance to Swiss banks on how they can limit risks associated with guaranteeing stablecoin customer deposits. A form of private deposit insurance for stablecoin deposits is now being offered by some Swiss banks — another signal of TradFi/crypto convergence.
Donald Trump on Stablecoins: At Bitcoin 2024, Trump stated: “As part of our effort to provide regulatory clarity, we will create a framework to enable the safe responsible expansion of stablecoins.” The entry of stablecoin regulation into presidential campaign rhetoric is itself a signal of how far the sector has matured.
Société Générale Forge updated its CoinVertible stablecoin project to comply with MiCA regulations, claiming “free transferability without whitelisting restrictions” — essentially a MiCA-compliant open stablecoin. SG Forge CEO Jean Marc Stettler described the project as serving “corporate and financial institution clients” — reinforcing the positioning of bank-issued stablecoins as B2B and institutional payment infrastructure.
Coinbase Asset Management is planning to launch a tokenised money market fund — another step in the blurring of lines between stablecoins, money market instruments, and short-term securities.
Patrick Hansen’s Seven Forecasts for the Stablecoin Market
Patrick Hansen, Senior Director of EU Strategy and Policy at Circle, offered seven forecasts at EthCC. Garrett’s assessment follows each.
1. Euro-denominated stablecoins will increase 5x in market cap. A reasonable forecast — Euro stablecoins currently represent a very small fraction of total stablecoin supply, and the structural adoption gap is real. MiCA creates a clear regulatory pathway. Likely accurate.
2. USDC will become the leading stablecoin in overall liquidity and volume. Harder to evaluate — Hansen may be talking his own book given his role at Circle. No specific structural argument was offered. Time will tell.
3. Three to four leading trading platforms will emerge. Consistent with historical patterns in payment systems — Visa and MasterCard dominate cards, a handful of exchanges dominate equity trading globally. Likely accurate.
4. Financial institutions will enter en masse, with five or more banks launching stablecoins. Given SG Forge’s apparent success in creating a MiCA-compliant stablecoin with open transferability, other regulated institutions will pay close attention. Likely accurate.
5. Many EU crypto startups will be acquired or will vanish; market consolidation through M&A will accelerate. A safe prediction — market consolidation through M&A is a standard outcome as regulatory compliance costs rise. Likely accurate.
6. Several leading crypto teams will relocate to the EU for regulatory certainty. Regulatory certainty is a known attractor for large financial businesses. A reasonable possibility.
7. Three or more fully regulated trading venues for tokenised securities will emerge, settling with stablecoins. Consistent with the broader trajectory. Likely accurate.
Garrett’s overall assessment: aside from the USDC forecast (which may reflect institutional perspective rather than independent analysis), these are broadly safe and directionally reasonable predictions. The historical base rate for any list of seven forecasts landing is probably four — the question is which four.
H1 2024 State of Stable Coins Report Highlights
Bluechip’s biannual State of Stable Coins report for H1 2024 contains three headline findings.
Stablecoin supply is slowly deconcentrating. The top three chains — Ethereum, Tron, and BSC — lost a combined 5% of market share to smaller chains over the first half of the year. The stablecoin market is no longer consolidating toward fewer chains; it is beginning to distribute across more of them.
Yield-bearing stablecoins took market share. The market share shift remains modest — a few percentage points — but will accelerate if interest rates remain significantly above 3% for an extended period.
Tokenised Treasuries are skyrocketing in percentage terms. From a few tens of millions of dollars to well over $1.5 billion in approximately eighteen months represents extraordinary percentage growth. Garrett’s long-run projection: if regulators do not obstruct the process, a $100–200 billion steady-state level for tokenised Treasury bills is plausible.
Part Three: Real-World Asset Tokenisation with RWA World
Commentary by Tyler Sherwin and Ray Buckton, co-founders of RWA World
The $30 Trillion Question
Standard Chartered published a forecast in July anticipating over $30 trillion in tokenised asset market capitalisation by 2034. This arrives in a sequence of escalating predictions: BCG’s $16 trillion by 2030, 21.co’s $10–15 trillion by 2030, McKinsey’s $2 trillion, and now Standard Chartered’s $30 trillion extended to a 2034 horizon.
Ray’s framing of the right question: are we talking about new assets being created and put on-chain, or are we talking about the migration of existing assets onto blockchain rails? The distinction matters enormously for growth trajectory. New assets need to be created and grow organically. Existing assets — real estate, bonds, trade finance receivables, insurance policies — already have agreed valuations outside the blockchain ecosystem. Migrating them is more like flipping a switch than growing from zero.
Standard Chartered’s own breakdown highlights trade finance as contributing $3–5 trillion of the $30 trillion total — a number that becomes credible when you consider that most of the world’s trade finance still runs on COBOL code dating from the 1960s. The tokenisation opportunity in trade finance is not creating new economic activity; it is replacing infrastructure that is overdue for replacement.
RWA World’s position: the total is genuinely uncertain, the direction is not. Every credible forecast says trillions. The more important question is which asset classes migrate first and which infrastructure is being built to support them.
Institutional Developments
Ant International / JPM Coin: Ant International is now using JPM Coin to process billions in payments — a validation that JPM Coin’s programmable payment capabilities are delivering real transaction volumes.
Circle / MiCA: Circle became the first global stablecoin issuer to achieve full compliance with MiCA regulations — the most significant digital asset regulatory framework from a major developed market jurisdiction.
Goldman Sachs is developing several tokenisation projects for institutional clients, expected to launch before year end. Goldman does not run experiments for the sake of novelty — if they are going live before the end of Q4 2024, they have completed their due diligence.
BlackRock’s BUIDL fund has passed $500 million AUM, having been seeded with $100 million. Securitize CEO Carlos Domingo noted that tokenised Treasuries are growing faster than stablecoins.
Arbitrum DAO diversified a portion of its treasury into tokenised Treasuries via Superstate — an on-chain organisation seeking sustainable, uncorrelated yield from outside the digital asset industry itself. This pattern — crypto-native DAOs and protocols holding tokenised traditional assets for treasury management — is an emerging and growing theme.
Regulatory Landscape
SAB 121 override failed: The US House was unable to override President Biden’s veto of the SAB 121 repeal. US banks remain unable to take custody of digital assets including the nine approved Ethereum ETFs without significant balance sheet impact. The broader industry expectation is that this situation will change post-November election.
China’s digital RMB: China’s digital currency transactions grew by over 63% in 2023, with further acceleration expected in 2024. The nuance is important: many workers receiving digital RMB payments immediately converted them to bank deposits to earn interest, since the digital RMB currently does not qualify for interest. A government that controls the programmable layer of its currency can enforce whatever monetary policy it chooses, including negative interest rates to encourage spending. This is not a theoretical risk; it is a design capability that exists in the digital RMB architecture today.
Ethereum ETF launch: The nine approved Ethereum ETFs went live in July. The continued absence of bank custodians among them — a direct consequence of SAB 121 — means that the diversification of the custody landscape for these products remains constrained.
Ecosystem Developments
Tokenised Treasuries as DAO Treasury Assets: Arbitrum’s move to tokenise a portion of its treasury into Superstate’s USB fund represents a new use case pattern — on-chain organisations seeking sustainable yield from off-chain traditional assets. Traditional asset managers are now providing solutions to a crypto-native audience that wants on-chain, interoperable yield uncorrelated to the digital asset industry itself.
Chainlink continued its streak of leading real-world asset crypto development activity for the third consecutive month. Virtually every serious RWA project in the market is using Chainlink for some component of its infrastructure.
Key Takeaways
DLT in Finance
- The HQLAx/Finality cross-chain DVP case study is now fully published: Corda (securities) and Enterprise Ethereum (cash) settling atomically using the EEA DLT Interoperability Specification — a step-by-step implementation that other institutions can reference
- The German CBMT POC demonstrated technical feasibility of programmable commercial bank money across multiple DLT environments — multi-DLT by design, colour-coded for issuer liability clarity
- Hamilton Lane on Solana signals that institutional tokenisation activity is diversifying beyond the Ethereum ecosystem
- CDP Italy’s €50 million bond on Polygon is one of the most significant sovereign-adjacent institutional public-chain issuances to date
- Stablecoins
- Patrick Hansen’s seven forecasts at EthCC are broadly directionally credible — the USDC dominance prediction is the outlier most likely reflecting institutional perspective
- SG Forge’s MiCA-compliant open stablecoin with free transferability without whitelisting is a potential model for bank-issued stablecoins at institutional scale
- Tokenised Treasuries grew from tens of millions to over $1.5 billion in eighteen months — Garrett projects $100–200 billion as the plausible steady state
- Swiss banks are now offering private deposit insurance for stablecoin deposits — another signal of TradFi/crypto convergence
RWA Tokenisation
- Standard Chartered’s $30 trillion by 2034 prediction reflects the full migration opportunity, not just new asset creation — trade finance alone could contribute $3–5 trillion
- Goldman Sachs is going live with tokenisation products for institutional clients before year end; BlackRock BUIDL has passed $500 million AUM
- Arbitrum DAO’s tokenised Treasury allocation is an early instance of a new pattern: crypto-native organisations using tokenised traditional assets for treasury management
- SAB 121 veto continues to exclude US banks from ETF custody and broader digital asset custody — industry expects post-election resolution
- Digital RMB’s 63%+ growth in 2023 comes with an important caveat: workers were immediately converting payments to bank deposits to access interest.