By Hannah Lang and Elizabeth Howcroft NEW YORK/PARIS (Reuters) -A race by crypto companies to sell tokens pegged to stocks is raising alarm bells among traditional financial firms and regulatory experts who warn that the fast-growing novel products pose risks to investors and market stability. Buoyed by President Donald Trump's pro-crypto stance and his administration's push for friendly regulations, the crypto industry is rushing to capitalize on a global surge in enthusiasm for the sector. Robinhood, ...

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Core Insights - U.K. banks are advancing with tokenized deposits by 2026 despite warnings from the Bank of England Governor regarding stablecoins, indicating a rapid integration of decentralized finance into traditional banking [1][5] - The efforts to tokenize deposits by U.K. banks may influence other asset classes, including stocks and real estate, highlighting the broader implications of tokenization [2] - Tokenization is defined as creating a digital asset that represents a real asset, with stablecoins being a prominent example, typically pegged to fiat currencies like the U.S. dollar [3] Tokenization Advantages - Tokenized assets on the blockchain facilitate more transparent and efficient transactions, reducing costs and providing convenience for currency exchanges [4] - The growing trend of tokenization is evident as European banks are collaborating to launch a Euro stablecoin to compete with U.S. initiatives in the tokenized asset market [4] Regulatory Perspectives - The Bank of England Governor expressed concerns about stablecoins potentially withdrawing funds from banks, advocating for a focus on tokenized deposits instead [5] - Despite regulatory hesitations, the global trend towards embracing stablecoins and tokenized assets is gaining momentum, with Europe aiming to keep pace in the decentralized finance landscape [5] Market Dynamics - The initial success of Bitcoin as a speculative investment has paved the way for a potential boom in stablecoins, as countries and financial institutions strive to establish a competitive edge in the evolving financial landscape [7]

Core Insights - ARK Invest has acquired a stake in Securitize, a leading platform for tokenization, indicating a strategic move into the tokenization space [1][2][5] - The investment aims to enhance institutional adoption of tokenized securities and improve capital markets infrastructure [5][6] - Tokenization is seen as a transformative process for capital markets, allowing for fractional ownership and 24/7 trading of assets [3][6] Company Summary - ARK Invest's ARK Venture Fund (ARKVX) holds 3.25% of its assets in Securitize, amounting to an estimated investment of approximately $10 million [1] - Securitize has tokenized over $4 billion in securities, positioning itself as a leader in the real-world asset tokenization market [2][4] - Prior to ARK Invest, Securitize attracted investments from major institutional players such as BlackRock and Morgan Stanley, highlighting its credibility in the market [4] Industry Summary - The tokenization process allows for the digital representation of assets, making them more accessible and enabling fractional ownership [3] - The investment by ARK Invest reflects a growing belief among institutional investors that tokenization will significantly change capital markets [6] - Securitize's co-founder emphasized that tokenization has reached a critical point, with major asset managers beginning to bring funds and equities on-chain [5]

Market Trends & Adoption - The industry is returning to fundamentals, with privacy becoming a key focus [1][2] - Institutional adoption and tokenization are driving the market in a positive direction [1] - Stablecoin adoption is experiencing significant growth [1] DeFi Innovation - DeFi OG builders are developing improved products [1] - Aave's deposits reached over 75 Billion, driven by their RWA Horizon product [1] - Morpho is enhancing DeFi infrastructure with Coinbase vaults [1] Industry Sentiment - The crypto space has undergone a cleansing and maturation process [2] - The overall sentiment is bullish [2]

Event Overview - RWA × Real Estate: Unlocking Global Property Investment event focuses on the intersection of Web3 and real estate [1] - The event aims to shape the future of digital assets and global investment [1] - The event is scheduled for October 18, from 10 AM to 1 PM, at the W Hotel Times Sq, NYC [1] Industry Perspective - Web3 and Real World Assets (RWA) are transforming the financial landscape [1] - Real estate is highlighted as a promising sector for tokenization, facilitating global capital flow [1]

Core Insights - The partnership between Intercontinental Exchange (ICE) and Polymarket aims to transform asset representation and exchange through tokenization, creating trusted and transparent markets for both institutional and crypto-native participants [1][5][12] Investment and Market Position - ICE has made a strategic investment of $2 billion in Polymarket, valuing the company at approximately $8 billion pre-investment, which positions ICE as a key distributor of Polymarket's event-driven data [2][4] - This investment reflects ICE's commitment to integrating tokenization into its operations, which is expected to influence other stakeholders in the financial ecosystem [7][14] Tokenization Potential - Tokenization is viewed as a revolutionary step in finance, promising benefits such as faster settlement, programmable compliance, and fractional ownership across various asset classes [9][10] - Industry leaders, including Robinhood and BlackRock, predict that tokenization will significantly impact financial markets, with BlackRock's CEO stating that "every asset can be tokenized" [7][9] Collaboration and Innovation - The partnership signifies a collaboration between established financial institutions and innovative decentralized finance (DeFi) platforms, aiming to merge regulatory credibility with the transparency of decentralized networks [12][13] - By combining Polymarket's blockchain-native forecasting with ICE's regulatory framework, the partnership seeks to create comprehensive tokenized data markets [11][14] Regulatory and Compliance Aspects - The collaboration is expected to address trust issues in tokenization by anchoring event data in transparent markets while ensuring compliance through established intermediaries, making it easier for regulators to supervise [14]

Tokenization & Onchain Assets - S&P Digital Markets 50 with S&P Dow Jones Indices are now tokenized onchain, powered by Avalanche [1] - DinariGlobal provides users full right to their investments with real equities onchain [1] - The industry is moving towards tokenizing all the world's assets [1]

Core Viewpoint - S&P Global has launched the S&P Digital Markets 50 Index, a hybrid benchmark that combines cryptocurrencies and crypto-linked equities, indicating Wall Street's increasing acceptance of digital assets [1][2]. Group 1: Index Composition and Structure - The S&P Digital Markets 50 Index will track 50 major components from the crypto economy, including 35 publicly traded companies and 15 cryptocurrencies selected from the S&P Cryptocurrency Broad Digital Market Index [2][6]. - The index aims to provide a unified metric for investors to assess performance across traditional equity markets and decentralized networks [2]. - The index will adhere to standard quarterly rebalancing and governance rules, with no single component exceeding 5% of the index's weight [5]. Group 2: Tokenization and Accessibility - The index was developed in collaboration with Dinari, a tokenization firm, which will create a token version of the benchmark on its dShares platform, enabling blockchain access for investors [3][7]. - The tokenized index is expected to go live by the end of the year, enhancing investor exposure to the index [3]. Group 3: Market Significance and Requirements - The creation of the Digital Markets 50 marks the first instance of S&P combining equities and cryptocurrencies in a single benchmark [6]. - Constituents of the index must meet minimum market capitalization requirements: $100 million for equities and $300 million for cryptocurrencies, ensuring the index reflects the largest and most liquid assets [6]. - This hybrid structure is made feasible by tokenization infrastructure, which allows for on-chain representation of both digital and regulated assets [7].

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