The narratives that drive the market in the world of Bitcoin and altcoins are constantly changing. Now, DeFi integration of real-world assets is gaining attention. Here are the details…
This altcoin supports stocks of big companies
The integration of real world assets (RWAs) into the DeFi world has been one of the biggest narratives ever in 2023. This week, Switzerland-based Backed Finance; It has launched a tokenized version of a BlackRock ETF (CSPX) that includes tons of big names like Apple, Microsoft, Amazon, Alphabet and 496 other big American companies. The token is named bCSPX and works on Ethereum as an ERC-20 token. According to Backed, the token is backed 1:1 by these stocks and the shares are held by a licensed protector.
Also, as long as it runs on Ethereum, that means it can hypothetically interact with all DeFi applications. This leads to some pretty innovative ideas, like printing MakerDAO’s decentralized stablecoin DAI using a stock index as collateral. This doesn’t just apply to the S&P 500, either. According to the project’s marketing materials, the expectation is to receive additional public securities under a regulatory framework that takes a page from Switzerland’s distributed ledger technology law.
If we look at who can benefit from these tokens, there seems to be three types of users. The first is professional traders and exchange platforms that might want to offer the token to customers. Second, token holders who are also interested in using the underlying asset and have gone through the KYC process. Third, everyone else in the market. However, users in the United States cannot purchase the altcoin project. Backed Finance seems unwilling to take the risk as the US securities regulator SEC is currently focusing on the cryptocurrency space.
Securities tokenization comes to the fore in the next generation market
When the product was first launched, a Uniswap pool was established with enough liquidity for people to start trading bCSPX. Now, however, Uniswap’s interface indicates that Backed’s new token is “not supported” because “it may not work well with smart contracts or Uniswap will not allow trading for legal reasons”. Of course, this may not be the biggest issue. If you’re a US citizen, you probably won’t need such a product. You can go to Fidelity or another broker and collect your investment there.
Unfortunately, this means that American traders cannot enjoy fast trades, for example between Apple stock and Circle’s USDC. Also, if assets like bCSPX are deeply integrated into other DeFi applications, they may lag behind. Still, BlackRock CEO Larry Fink doesn’t seem too worried about it. “The next generation for markets and securities will be the tokenization of securities,” the finance executive said in December, as we reported on Kriptokoin.com.
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