tl;dr
An update on the new ethics provision within the CLARITY Act; to be honest, it doesn’t move the dial. Cows are the latest stop for the tokenisation express.
Market Snap
Market Wrap
The seven-day streak of spot BTC ETF inflows ground to a shuddering halt yesterday with $225m of net outflows, which is a touch annoying.
Curious Cryptos’ Commentary – The CLARITY Act
The text of the updated legislation with the newly proposed ethics provision, agreed with the White House and aimed squarely at restricting Trump’s crypto activities has been published. It includes a sunset clause timed for January 2029, when his current term ends:
https://www.lummis.senate.gov/wp-content/uploads/Clarity-Act.pdf
To the surprise of literally no one, there has been pushback. However, this time it isn’t the naysayers, for whom the mere mention of crypto – aka freedom and liberty – sends them into apoplexy, but it is the Democrat lawmakers who are supportive of crypto.
Senators Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock released a joint statement:
https://www.cortezmasto.senate.gov/news/press-releases/50183-2/
It is a short statement:
“The Republican-proposed text of the CLARITY Act as it currently stands falls short. Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened. We have been working in good faith with our Republican colleagues for the past year and will continue doing so to get this over the finish line.”
In various social media posts and in public appearances, it has been explained that the key sticking point is that responsibility for enforcement lies solely with the Department of Justice, whose new head, Todd Blanche, is a Trump pick. Former SEC Chief of Staff Amanda Fischer puts it bluntly:
I stick to my long-held view – the CLARITY Act ain’t gonna happen.
Curious Cryptos’ Commentary – Tokenisation … of cows
We already know that in a few years’ time almost the entire financial world will be tokenised, alongside other real-world assets including property.
In Brazil – and presumably elsewhere though I must admit this is an area of finance with which I am not particularly familiar – farmers routinely take out loans from commercial banks collateralised with herds of cows. The haircuts are apparently brutal at up to 60%, with good reason: cows can fall ill, die, or wander off.
Ten cows on a dairy farm in Paraná, Brazil, have been tagged with smart collars, each of which is associated with a unique blockchain-linked ID. They have been tokenised. The farmer has put these tokenised cows up as collateral for a loan from BMP, a local credit provider, with only a 17% haircut. That loan has been on-sold to a fund which has registered it on Brazil’s main stock exchange allowing it to be bought and sold on a cow-by-cow basis by investors who have a particular interest in the creditworthiness of cows.
Finding those investors may sound like a long shot to you, but the world is a varied and diverse place.
The company responsible for the collars is Cowmed. Its CEO, Thiago Martins, explains the operation:
“We took the cow, a real and tangible asset, and transformed it into a digital asset backed by a unique code monitored in real time.”
The benefits are made clear:
“The operation allows the farmer to access more attractive credit in terms of cost and limit. We want to connect the farmer and the financial institution with a new alternative.”
There is no practical reason why each cow cannot be further tokenised to allow for investors who only want say 10% or 20% of a cow, and not a whole one.
The world is moving on-chain, whether you like it or not.