The Most Conservative Institutions Are All Doing the Same Thing

When I tell people that the DTCC is tokenizing securities and JP Morgan is settling trades on blockchain, the usual response is sure, but that's  probably some random experiments in the U.S. and nothing too serious.

So let me tell you what's happening everywhere else around the globe.

Japan's clearing house, the JSCC, is already using blockchain for government bond collateral management.

Japan's parliament just advanced a bill to classify crypto as financial instruments on par with stocks.

And over the last few weeks, one of Japan's largest financial conglomerates, SBI Holdings, has gone on one of the most aggressive tokenization acquisition sprees.

We're talking hundreds of millions of dollars deployed in weeks in exchanges, institutional trading infrastructure, stablecoin issuance, and risk management platforms. Investments in the very same companies building the infrastructure I've been writing about all year.

An SBI spokesperson said: "The full-scale arrival of the token economy is imminent."

Meanwhile in Europe, Euroclear is co-chairing the governance foundation for the same blockchain network the DTCC chose. The JSCC in Japan is on it. Deutsche Börse invested in Digital Asset back in 2016. Société Générale issued the first digital bond in the US through Broadridge's distributed ledger platform. UBS is issuing tokenized bonds in Switzerland under the DLT Act.

Every one of these institutions is famously conservative. Japanese financial regulation moves at the speed of consensus and European securities law is designed by committee. These are not move-fast-and-break-things economies.

And they're all converging on the same conclusion at the same time.

That's the part of this story that I don't think the market has fully absorbed yet. When the DTCC makes a technology decision, you can argue it's one institution. When the DTCC, Euroclear, the JSCC, and the largest financial conglomerate in Japan all independently arrive at the same answer, that's quite the statement.

These are the decisions that determine how $100 trillion in assets will move for the next 50 years.

I've been covering this story since December. Every month another institution makes a move that validates the thesis. The DTCC launches its tokenization service this week. The four largest American banks just announced tokenized deposits. Kevin Warsh testifies before Congress in a few days where he'll talk about tokenization. And now the largest financial group in Japan just told you the token economy is imminent and backed it with a spree of investments.

At some point, the evidence becomes overwhelming. I think we're past that point. The question isn't whether this happens. It's which companies and assets are positioned at the centre of it.

That's what I cover every week.

Now one last thing before I go, in case you missed it I want to make sure you're aware of Grant's live session next week. He's a good friend of mine based in Australia, and he's developed a system that allows him to find killer trades while he's out playing golf or enjoying the sunshine down under.

I'll be attending his live event because I think Grant is one of the smartest investors I personally know.

You can sign up to the free event by clicking here.

Cheers!