Managing Editor’s Note: There’s a significant shift happening in the global financial system that almost no one is talking about…
Significant moves from the world’s largest custodians have signaled that the world’s assets are moving to blockchains.
It’s something you’ll hear about today from Brownstone’s resident crypto expert, Ben Lilly… as well as why no one’s talking about it and why we should be paying attention.
But first, don’t forget to go here to automatically sign up for our colleague Larry Benedict’s event this Wednesday at 11 a.m. ET. He’ll reveal his strategy for taking advantage of today’s market volatility to profit from the wild swings these chaotic market conditions bring.
Just go here to sign up. Then read on for today’s insight from Ben…
The most significant change to global finance since 1792 is going unnoticed.
And it’s not taking place behind closed-door meetings with only global leaders in the know.
It’s unfolding in broad daylight. Trillions of dollars are on the move.
Yet nobody is paying attention.
But before we get into what this gargantuan shift is and the opportunity it’s bringing, we need to step back and first understand why nobody is talking about it.
The reason for the lack of awareness is simple…
Bitcoin broke $100,000 per coin in Q4 of 2024. It has since retraced back to below $80,000 per coin just a few weeks ago. That pullback has caused much of the excitement around digital assets to cool, and many are simply tuning out anything to do with the industry.
Meaning any news items, regulatory progress, or even new opportunities are ignored.
This happens often in crypto. Look below at the Bitcoin Fear And Greed Index by Bitcoin Magazine since January 2023.
It measures how investors feel towards Bitcoin by indexing data from Google Trends, social media posts, volatility, and more. The index then assigns a value between 1 and 100. Anything below 46 is “Fear.”
We went ahead and circled periods when the market was fearful toward the industry.
It’s pretty easy to see how the market tends to turn fearful at the wrong time. And right now, it’s no different.
This high degree of skepticism and fear means that the monumental shifts happening in finance over the last month have been largely ignored.
As a consequence, many are missing the biggest financial shift since 1792 when the New York Stock Exchange began operation – 233 years ago.
And what is about to be fertile ground for a wave of new financial opportunities…
The World Economic Forum (WEF) wrote in January of this year that, in a world where the landscape of our financial system is changing so rapidly under the rising influence of artificial intelligence and also expanding to include digital assets, the global financial system needs high-quality data it can trust.
They pointed to the fact that the London Stock Exchange Group (LSEG) delivers around 300 billion data messages to customers across 190 markets daily. This translates to 7.3 million price updates per second.
Incredibly, the LSEG doesn’t even break into the five largest stock exchanges in the world based on market capitalization.
Meaning the amount of data being created each second across all financial markets around the globe is quite literally unfathomable.
And when we layer in the fact that each market is unique in terms of the currency used, markets offered, hours of operation, and instruments available… How can we ensure that what one data provider says is true is, in fact, actually true?
It’s why the WEF is adamant about our need for high-quality data that we can trust.
And it’s in part what makes the most recent news from the biggest custodian of assets in the world so significant.
The Bank of New York Mellon Corporation (BNY Mellon) holds about $50 trillion worth of assets. That’s about $10 trillion more than the second-largest custodian – State Street. And about twice the amount of JPMorgan Chase and Citibank.
Combined, the four custodians hold around 20% of all assets in the world.
Meaning these four institutions represent global finance. And if they are all moving towards a new solution, that implies that the whole industry is changing.
And what these four entities all have in common is their embrace of digital assets sitting on blockchains.
BNY Mellon just announced the expansion of their Digital Asset Platform.
What initially started as a way to offer clients the ability to hold and transfer Bitcoin and Ether has now begun to offer both on and off-chain data on blockchain networks.
BNY Mellon is moving their data to the world’s public ledger.
And this isn’t a proof-of-concept or pilot program.
BNY Mellon is making this solution available to its first client – the world’s largest global asset management company, BlackRock.
This is a major move. BlackRock’s BUIDL fund represents $2.5 billion worth of assets, 95% of which sits on Ethereum’s ecosystem.
It’s proof that the global financial system is moving.
As for why, BNY Mellon is moving custodianship data to public blockchains. The stated goal here is to enhance data transparency and accessibility for investors.
It’s a goal that’s fully aligned with the WEF’s signpost.
In a world where data is becoming the lifeblood of markets, BNY Mellon is adopting a solution that is public-facing, not a closed-door solution.
And they aren’t the only ones…
Earlier, there was mention that BNY Mellon plus the next three largest entities in terms of assets under custody represent approximately 20% of all global assets…
What we didn’t mention is that all these entities are adopting blockchain-based solutions.
JPMorgan made an announcement just last week concerning its Kinexys Digital Payments (formerly known as Onyx).
They are now onboarding clients to their platform to access a tokenized version of the British pound (GBP). This latest tokenization joins their other tokenized offerings of the euro and U.S. dollar.
It’s showing that the world’s assets are moving to blockchains.
Even Citi and State Street – the other two entities that make up the bulk of assets in custody – have their own tokenized solutions.
The financial system is tokenizing assets.
We covered this in greater detail two weeks ago in The Bleeding Edge – The Debt Buyer Nobody is Talking About.
In that research, we shared how two of the largest stablecoins by market cap are becoming two of the largest holders of U.S. Treasuries.
We can also add BlackRock’s BUIDL fund to this list of tokenized U.S. Treasury buyers as the fund invests 100% of its assets in cash, U.S. Treasury bills, and repurchase agreements (which are another form of U.S. Treasuries).
The shift is impossible to ignore as we start to realize that more than $100 billion of U.S. Treasuries are tokenized on-chain.
And the world’s largest custodians are making daily news blasts that suggest this figure will soon eclipse the trillion-dollar mark.
Yet nobody is noticing.
But here’s where things get really exciting…
Stablecoins, tokenized treasuries, money market funds like BUIDL, and other assets are moving to financial systems that sit on-chain.
The data is being made available via public blockchain networks like Ethereum, Avalanche, and others.
The assets – along with the data attached to their ownership, transactions, and value – are all being made available on-chain.
Meaning the financial products and services of tomorrow will be built using these public networks as well.
The reason is simple… That’s where the money sits. The money market funds, stablecoins, and assets are sitting on-chain.
For any asset that wants to attract these dollars, it needs to be available on-chain. It’s the financial market of tomorrow.
Which is why we are seeing a race to bring existing financial assets on-chain. And that’s done by tokenizing those assets onto a public blockchain.
The U.S. cryptocurrency exchange Kraken announced last week that it’s now expanding its offerings to stocks, ETFs, and FOREX.
Meaning users can now trade the S&P 500 alongside small cryptocurrency tokens. A few years ago, this seemed like a pipe dream.
Instead, it’s now a race.
The publicly traded U.S. exchange Coinbase has now made its stock tradable on-chain as well. Meaning existing on-chain protocols – such as the one we’ve recommended via Permissionless Investor – are now facilitating daily transactions around users buying and selling their stock.
And even new platforms like Ostium are making assets like ETFs, stocks, commodities, FOREX, and crypto all tradable from a blockchain-based wallet.
With the world’s largest custodians moving assets on-chain, stablecoins poised to reach more than $1 trillion in market-cap size thanks to upcoming regulatory clarity, and traditional financial assets coming to public networks…
We can see where the future of finance is going.
It’s a digital asset world, one where the biggest opportunities of tomorrow will originate from. Settlement times happen in seconds on blockchains, and transaction costs are a fraction of traditional finance, radically improving market efficiency.
This is one of the highest-growth markets in high-tech, and one that we will make sure our subscribers will not miss.
Your Pulse on Crypto,
Ben Lilly
Senior Crypto Analyst, The Bleeding Edge
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
