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13th November 2023 > > Balls & tokenisation.


Rewards for failure are not always reserved solely for those working in the government. Yet another real-world tokenisation project, this time with the support of BlackRock.

Market Snap

Market Wrap

Funding rates are staying dangerously high. The longer this goes on, the more likely we have a long squeeze, and at these elevated rates, we could be talking about a significant market reaction to shake out this over-exuberance. Remember the number one rule – markets will hand out maximum pain to the greatest number of people possible. That’s just how markets work – if you are leveraged long, stay vigilant because the squeeze, if it happens, will be fast and furious.

Curious Cryptos’ Commentary – This is a bit ballsy

Two former executives of FTX have teamed up to launch a new centralised cryptocurrency exchange called Backpack Exchange based in Dubai. The project is being led by Can Sun, formerly legal counsel at FTX, with his previous deputy at FTX, Claire Zhang, reporting to him once again. Sun explained his motivation:

“In a post-FTX world, you need trust and transparency to create a true alternative to the other players.”

No kidding?

To Sun’s credit he resigned once he found out that funds from clients of FTX were being misappropriated by Alameda Research. But it’s a stretch to convincingly explain his claimed prior ignorance about the lack of management expertise and experience at FTX, and the total absence of risk management at Alameda.

Despite these obvious warning signs, the company has raised investment capital from Trek Labs, itself a start-up that has received a license from the Dubai regulator for crypto related services.

Outside of the government, it is only the crypto world in which you can go from being important at somewhere like FTX right up until the final few frantic days, to being even more important running the same type of business just one year later.

Oh, and did I mention that Zhang is married to Armani Ferrante, CEO of Trek?

It will take another bear market to shake out this horror show.

Curious Cryptos’ Commentary – Tokenisation

A new stablecoin, stUSD, is to be launched by Midas.

This coin will have three key advantages over the whole gamut of stablecoins out there.

Firstly, it will be backed 100% by U.S. Treasuries with the assets held at BlackRock, a custodian of some note. No risk of commingling of clients’ funds, with which Sun and Zhang above have some experience of.

Secondly, Midas is also fully compliant with relevant securities laws in Europe, and anti-money laundering rules, a prerequisite I imagine for the involvement of BlackRock to give the project some heft.

Finally, and most importantly, the stablecoin is a tokenisation of the Treasuries, meaning that owners receive the yields paid on those debt securities. Currently, issuers of stablecoins are banking those yields themselves handing stUSD a clear competitive advantage.

With short-term rates above 5%, and virtually no market risk, holders can then turbocharge those returns by using stUSD across DeFi platforms. But even those who do not consider themselves degens gain the advantage of being able to invest in short-dated US Treasuries in whatever size they want, with tiny bid-offers, completely secure custody, with definitive legal rights to the underlying, and no tax liability (probably) until the investments are converted back to fiat (see yesterday's CCC for a discussion of some of the tax issues around cryptos).

Just one more pathway to the wholesale adoption of cryptos by both institutions and retail.


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