3rd November 2023 > > Custody & NFTs.

tl;dr

We can now move on from FTX. Custodial solutions are driving crypto adoption. Vicarage Road rather than the San Siro might have been the better choice for the latest iteration of blockchain enabled football fan ventures.

Market Snap

Market Wrap

The retreat from a 5-handle for 10-years looks to have some momentum, providing a benign backdrop for stocks despite some issues around the globe. 2s-10s at an inverted 33bps remains my lodestar for the future trajectory for interest rates in 2024 and beyond.

Curious Cryptos’ Commentary – FTX

My suggestion in yesterday’s CCC that it would take the jury five minutes to decide that Bankman-Fried is guilty seems to have been an overestimation.

Curious Cryptos’ Commentary – Crypto custody

We love a bit of progress on the old crypto custody front here at CC Towers, and today we have a peach.

SGKB (St. Galler Kantonalbank) is the fifth largest of the Swiss regional banks, partly owned in a historical quirk by the federal states of Switzerland.

SGKB has announced custody and trading services for BTC and ETH to a limited client base, at least at first. If successful (which it undoubtedly will be) the product will be offered to an ever-widening set of clients. This launch is in collaboration with SEBA Bank who are the actual custodians, and who are providing the liquidity for SGKB’s clients to trade cryptos. Head of B2B and Custody Solutions at SEBA describes their joint ambition:

"St. Galler Kantonalbank and SEBA signed the contract earlier this year, after a short implementation project, SGKB is now ready to offer access to cryptocurrencies to a selected group of clients, in a first step bitcoin and ether, other currencies will follow shortly.”

SGKB believes it has client demand to buy and hold cryptos for investment purposes. This product will facilitate the entry of institutional money and high net-worth money into cryptos in a safe and secure environment.

Wholesale crypto adoption is fuelled by custodial solutions such as this.

Curious Cryptos’ Commentary – Tokenisation

Milk Road (https://milkroad.com/subscribe/?ref=o5CmCFhBAK) reports that AC Milan have tokenised their pitch to sell as NFTs.

I know, everyone thinks NFTs are done and dusted, but that isn’t the case, and this example proves why not.

A digital representation of AC Milan’s home pitch – at around 8,000 square yards – has been divided into 1-yard square blocks to be sold as NFTs. An owner of a block is awarded points for action in that block. Points can be exchanged for goods or services such as memorabilia, tickets and so on, much like the extraordinarily successful supermarket loyalty points programmes.

Putting aside the obvious criticism of this project (using Vicarage Road rather than the San Siro would be much more likely to make it successful) it has some legs. Club fans worldwide would be queuing up in their droves to own part of their club’s pitch, real or otherwise. Prizes for points cost little to nothing for the club, but after taking close to 100% of the initial sale of the NFT the club takes a cut of all subsequent sales.

There is a business opportunity here to industrialise the tokenisation of football pitches, regardless of who plays on them. This is a model that will work for Champions League winners all the way down to the officially recognised 11th tier teams in the UK. Who will grasp it?