Bitcoin and Financial Systems

This is big news. Tokenization is fast becoming the next battleground for financial infrastructure. Goldman Sachs and BNY Mellon just made one of the boldest moves yet. Tokenization transforms real-world assets into digital tokens - unique, programmable representations of value that can be transferred, tracked, and embedded into automated financial workflows. Goldman Sachs and BNY Mellon are turning traditional money-market funds (MMF) into digital tokens. These funds - a $7.1 trillion global market managed by firms like BlackRock, Fidelity, and Federated Hermes - are commonly used by companies and asset managers to hold short-term cash in safe, interest-earning instruments like Treasury bills and commercial paper. But behind the scenes, they still run on decades-old infrastructure, full of manual steps, cut-off times, and delayed settlements. Tokenization changes that. 𝗛𝗼𝘄? By bringing the same speed, transparency, and automation we expect from modern payments and applying it to financial instruments that haven’t evolved in decades. ·      Instant settlement: Instead of waiting hours (or days) for trades to clear, tokenized assets can settle almost instantly - 24/7, without cut-off times. ·      Programmability: Rules and logic (e.g., eligibility checks, compliance constraints) can be embedded directly into the token - reducing manual oversight. ·      Fractional ownership: Investors can hold smaller, more flexible portions of a fund, which is hard to do in traditional structures. ·      Real-time tracking: Every transfer or ownership change is recorded transparently on a blockchain, improving auditability and risk management. ·      Easier collateralization: Tokenized fund shares can be pledged as collateral or moved between counterparties far more efficiently - a big advantage in treasury and liquidity management. 𝗛𝗼𝘄 𝘁𝗵𝗲 𝗽𝗮𝗿𝘁𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝘄𝗶𝗹𝗹 𝘄𝗼𝗿𝗸: ·      BNY Mellon will distribute tokenized money-market funds to institutional clients via LiquidityDirect - its cash management platform that helps treasurers and asset managers invest short-term liquidity. ·      Goldman Sachs will record and track ownership of the fund tokens on its private blockchain, providing speed, traceability, and operational efficiency. ·      The offering will support tokenized versions of funds managed by major players like BlackRock, Fidelity, and Federated Hermes. 𝗪𝗵𝘆 𝗻𝗼𝘄? The new U.S. Genius Act gives legal clarity for stablecoins and tokenized assets -removing regulatory uncertainty and unlocking tokenization across mainstream finance. 𝗪𝗵𝗮𝘁’𝘀 𝗻𝗲𝘅𝘁? This could reshape expectations around liquidity, treasury operations, and how financial assets are managed and settled. Custodians and asset managers will need to adapt. Tokenized Treasuries, equities, and real estate are already being tested. Opinions: my own, Graphic source: CNBC 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐭𝐨 𝐦𝐲 𝐧𝐞𝐰𝐬𝐥𝐞𝐭𝐭𝐞𝐫: https://lnkd.in/dkqhnxdg

Companies Buying Bitcoin — Why? More and more companies — like Trump Media, GameStop, Tesla, Rumble, and MicroStrategy — are holding Bitcoin instead of dollars on their balance sheets. That’s unusual. Traditionally, companies keep cash in safe assets — like bank deposits or U.S. Treasury bills. So why the sudden shift to a volatile digital asset like Bitcoin? Let’s break it down : Reason 1: Betting on Bitcoin’s Price Going Up Some companies believe Bitcoin will rise — so holding it is like investing. But the counter-argument is: “Why use shareholders’ money to speculate? Investors can buy Bitcoin or ETFs on their own.” Example: GameStop buys $500M in Bitcoin hoping it becomes $1B and stock fell by 10% as what happen if Bitcoin crashes? The company and its investors take the hit. Reason 2: Financial Engineering with Bitcoin Some companies claim they can do more with Bitcoin than the average investor. Example: MicroStrategy • Raises billions via convertible bonds (cheap debt). • Uses that to buy Bitcoin. • Now owns $64B+ in BTC. • Its stock trades at a premium because investors believe in the strategy. This isn’t just buying crypto — it’s leverage + smart structuring. Reason 3: Ideology — “Bitcoin is the Future” Some companies genuinely believe Bitcoin is the foundation of future finance. Examples: • Trump Media calls it the “apex instrument of financial freedom.” • Rumble wants to let users pay via crypto wallets. • Strive CEO says Bitcoin should be the new base currency for investing — like Berkshire Hathaway for digital assets. These companies don’t care about cash flow — they care about Bitcoin per share. So Why Do Stocks Fall After Bitcoin Buys? Because most investors still want: • Steady cash flows • Real profits • Predictable growth Bitcoin adds volatility, not always value. Bottom Line: • If Bitcoin rises → Huge win • If it crashes → Huge loss It’s a risky move that can shake investor confidence. Not every company is MicroStrategy. But the trend is catching on — because in the market, hype can reward just as much as results. I personally believe Bitcoin could go to $200K — simply because it’s the only truly decentralized asset in a world full of government-controlled money. What do you think? Is Bitcoin on the balance sheet bold… or reckless? #Bitcoin #Finance #Investing #MicroStrategy #Tesla #GameStop #Crypto #SimandharEducation #CPACMAEA #LinkedInInsights Simandhar Education LinkedIn Guide to Creating , LinkedIn News

In a stunning evolution of institutional crypto adoption, Jamie Dimon announced at J.P. Morgan's Investor Day that the banking giant will soon permit clients to purchase Bitcoin—though the bank won't custody the assets. This represents a remarkable shift for both Dimon and JPMorgan, who have historically maintained conservative stances toward cryptocurrency. Dimon, famously skeptical of Bitcoin, has repeatedly criticized it over the years, yet market dynamics and client demand have clearly influenced this strategic pivot. Since August, other Wall Street giants like Morgan Stanley has already allowed its financial advisors to pitch some spot Bitcoin ETFs to qualifying clients What makes this particularly significant is the timing: Just days after JPMorgan completed its first tokenized Treasury transaction on a public blockchain (using Chainlink and Ondo Finance), the bank is now expanding its crypto offerings despite Dimon still maintaining he's "not a fan" of Bitcoin. The dual announcements signal a pragmatic approach to the unstoppable momentum of digital assets. While Dimon may still question blockchain's importance (saying "We spend too much on it. It doesn't matter as much as you all think"), JPMorgan's actions speak louder than words. We're witnessing the next phase of institutional Web3 adoption in real time, where even the most cautious traditional players are creating on-ramps for their clients to participate in the digital asset economy. What's your take on JPMorgan's evolving crypto strategy? Is this simply meeting client demand, or something more fundamental? See more here: https://lnkd.in/gMsACMmj #Bitcoin #JPMorgan #InstitutionalAdoption #Blockchain #DigitalAssets #FinancialServices #Crypto #Web3

Portfolio diversification is top of mind for investors right now – and bitcoin’s potential as a portfolio diversifier is driving investor interest in the cryptoasset. Bitcoin investors are deeply focused on several of its key attributes: the uncorrelated nature of bitcoin and its interplay with geopolitics. But what about risk? Is bitcoin a “risk on” or “risk off” asset? Our answer: it’s not that simple. We explore this issue in our latest insight as part of our commitment to help educate investors about this new asset class. What we’ve found is that, in short, bitcoin can be a unique portfolio diversifier. We believe its nature makes it unsuitable for the risk on/risk off framework, and most other traditional finance frameworks. On a standalone basis, bitcoin is a risky asset. But we believe that bitcoin is an asset with risk and return drivers that are distinct from traditional asset classes and that, over the longer-term, its fundamental drivers have been starkly different, and in many cases inverted, versus most traditional investment assets. And yes, we maintain this conviction even as short-term market trading behavior diverges from what bitcoin’s fundamentals would suggest. We recognize that bitcoin is in the early stages of its journey. I encourage you to read our latest insight to better understand the very unique nuances of this new asset class. https://1blk.co/3TAErHS

The conversation around stablecoins has largely focused on their use for faster payments. But what's often overlooked are their far-reaching implications that go beyond simple transactions. We’ve entered Stablecoins 3.0, a new phase where these digital assets are quietly reshaping the global financial landscape. It’s no longer just about convenience; stablecoins are becoming new actors in monetary policy and global markets. When stablecoin issuers buy massive amounts of U.S. Treasuries, they can impact interest rates. When money flows into stablecoin reserves instead of bank deposits, it can even shrink liquidity in the traditional banking system. These aren’t just ideas—they're early signs of a powerful new layer influencing how our money works. This shift isn't a side story. Stablecoins are becoming the connective tissue between the old financial world and the new. Are we ready to move from reactive regulation to proactive oversight? Dive deeper into what this means for the future of finance and why stablecoins are not a side story.

🔴 $150B in Bitcoin ETFs. BlackRock alone holds nearly $100B - bigger than any crypto fund in history! Everyone sees the numbers. Few ask what they really mean. 👇 For a decade, "institutional adoption" in crypto meant investing through crypto-native infrastructure - exchanges, custodians, and on-chain protocols. And yes, it did scale: liquidity deepened, custody matured, large players entered. But not fast enough - and not under the level of reliability, regulation, and integration that major financial institutions require. The rails worked for traders and crypto funds. They didn’t yet work for banks, pension funds, or insurers managing trillions. 👉 Then came the ETFs. And in just a few months, they achieved what years of crypto infrastructure couldn’t: they made Bitcoin institutionally investable - seamlessly, compliantly, and within familiar frameworks. But here’s the key insight: The success of Bitcoin ETFs doesn’t mean crypto is institution-ready. It means institutions still don’t trust the crypto infrastructure enough to use it directly. They’re comfortable with the asset, but not with the rails. They buy through BlackRock, not through DeFi - and that says everything. The contrast couldn’t be clearer: 👉 Bitcoin ETFs: over $150 billion AUM, massive inflows, global liquidity. 👉 Tokenized money market funds: only a few billion in total AUM - even BlackRock, Spiko, and Franklin Templeton's tokenized funds are still relatively small. 👉 Stablecoins: issued by Circle and other regulated players, are growing fast but still only $80B, signaling strong interest but also that adoption is in early stages. Same idea - tokenizing traditional financial exposure - but a completely different scale. This shows the gap between demand and infrastructure maturity. Yet, it also highlights what’s coming next. As actors become more professional and regulation gets clearer, both tokenized money market funds and stablecoins are likely to experience the same acceleration that ETFs just did. Institutions want simplicity and compliance - the exact reasons why Bitcoin ETFs exploded. Once those same conditions exist on-chain, the growth curve will look very similar. Institutions will want more than passive exposure - they’ll look for yield-bearing strategies, tokenized collateral, and on-chain products that meet their standards. The winners will be the builders who create the institutional layer of crypto - regulated, transparent, and interoperable with TradFi. At The Big Whale, we’re following this evolution closely - through our dashboards, research reports, and market calls, helping investors understand where institutional adoption is truly accelerating. Our next Market Call is on November 12 with André Dragosch, PhD (Head of Research at Bitwise Europe) & Aleksandar Bukovski (Analyst at The Big Whale). We’ll dive deeper into these trends: ETFs, tokenized funds, and what they reveal about the next phase of institutional crypto.

For most of the past decade, digital assets and traditional finance evolved in parallel. One ecosystem focused on decentralization and token innovation. The other remained anchored in regulated markets, institutional investors, and established financial infrastructure. That separation is now ending. The future of finance will not be defined by crypto replacing capital markets. It will be defined by the convergence of capital markets and digital asset infrastructure. Today we are already seeing the early signs: • Tokenized real-world assets representing tens of billions of dollars on-chain as traditional financial instruments move onto blockchain infrastructure • Stablecoins surpassing $200 billion in market capitalization, emerging as programmable settlement layers for digital financial markets • Tokenized U.S. Treasuries gaining traction, bringing the core collateral of global capital markets onto blockchain-based infrastructure • Global exchange operators exploring tokenized securities infrastructure, signaling the integration of digital assets with traditional market architecture • Institutional investors increasing their exposure to digital asset markets as regulatory frameworks mature across major financial jurisdictions This shift is not about speculation. It is about financial market infrastructure. Exchanges, broker-dealers, custody providers, and settlement networks will become the rails connecting traditional capital markets with digital asset ecosystems. In many ways, the transformation resembles earlier shifts in financial history, from electronic trading to algorithmic markets. At first, the changes appear incremental. But over time they reshape the architecture of global finance. I wrote a deeper article sharing my personal views on this convergence and what it could mean for the future of financial markets. The institutions building regulated infrastructure today will help define the next financial system. Curious to hear how others see this convergence evolving. #Digitalassets #Virtualassets #Capitalmarkets #Tokenization #Financialinfrastructure #Blockchain #FinTech

Is Bitcoin investable? What does holding cryptocurrencies do for a multi-asset portfolio? Donald Trump’s appointments of cryptocurrency supporters to his administration suggest a more favourable US institutional framework, while falling interest rates also offer a support. But its extreme volatility has not gone away. For investors, it is absolutely crucial to understand the impact of Bitcoin’s outsized volatility on their overall portfolio. Our analysis shows that even small allocations can significantly change a portfolio’s risk. At Lombard Odier, we believe investors must calibrate their exposures to these highly volatile instruments with the utmost care if they choose to hold them in portfolios. To understand what investing in Bitcoin means for your portfolio’s risk and return, don’t miss this new paper by my colleagues Nannette Hechler-Fayd'herbe and Paul Bésanger, CFA.

🌐 Last week, Fidelity International's tokenised money market fund went live on J.P. Morgan's Onyx platform. This is an exciting step forward for those advocating the integration of blockchain into mainstream financial services, but it also prompts the question: where does this development position us today, and how may the industry evolve further? In my view, we must navigate through three crucial steps before achieving the ultimate goal of 'seamless integration'. Below I outline each of these steps, examining their components and implications: 🏦 In-House Model (Initial Stage): Large financial institutions like JP Morgan are building and operating the entire tokenisation process in-house. From origination to tokenisation to post-trade services, they often leverage private blockchains from day one to create a controlled environment to handle heavily regulated financial transactions on-chain. This vertical integration allows them to establish standards, ensure compliance, and attract institutional interest, laying the groundwork for the growth of the tokenised asset market. 🤝 Collaborative Model (Growth Stage): As the market matures and more players enter the space, we are now beginning to see the emergence of a collaborative model. Financial institutions increasingly partner directly with blockchain protocols to process transactions and record share ownership. This collaboration enables more efficient and cost-effective tokenisation processes while automating current high-touch mid- and back-office processes, such as investor onboarding, subscription, distribution, and record-keeping. During this stage, we can expect to see more tokenised assets migrating to public blockchains as the infrastructure and regulatory frameworks become more robust. 🛒 Marketplace Model (Maturity Stage): As the ecosystem evolves further, we may see the emergence of a more distributed, open marketplace for tokenised assets. In this model, various players, such as issuers, investors, and service providers, interact directly. Tokenisation engines could become more modular, allowing participants to mix and match services based on their needs. Post-trade services, such as clearance, settlement, and custody, will likely remain a critical component to ensure regulatory compliance and maintain the stability of the market. Key factors to consider:   Distribution is Key: Facilitating asset portability across blockchain platforms and traditional ledgers is crucial for tokenised asset growth in financial services, currently underserved. Market Challenges: Tokenised assets are hindered by small scale, sourcing difficulties for high-quality assets, and muted investor interest, crucial obstacles for market growth. Timeline Complexity: Transitioning to a mature marketplace model involves a complex, unpredictable timeline shaped by regulatory changes, consumer demand, and economic incentives.

Bank for International Settlements – BIS - "DeFiying Borders: What Cross-Border Crypto Flows Reveal About Global Finance" 1. Cross-Border Crypto Is Big and Growing - Crypto transactions across borders peaked at $2.6 trillion in 2021, equal to 12% of global trade in goods, with stablecoins accounting for nearly half of the volume. - Despite market downturns, flows rebounded to $600 billion in Q2 2024. 2. Stablecoins Are the Real Movers - While Bitcoin once dominated, by mid-2024 stablecoins (Tether and USDC) overtook, especially in low-value transfers. - This aligns with their increasing role as transactional tools—not just speculative assets. 3. Traditional Frictions Don’t Apply - Unlike traditional finance, crypto flows are less affected by distance, borders, or language. - This means DeFi “defies” gravity—digital assets move freely regardless of geographic or political barriers. 4. Crypto as Remittance Rail - High traditional remittance fees correlate with higher stablecoin and low-value BTC flows, especially from advanced to emerging markets. - This signals crypto’s growing use as a cheaper, faster alternative to move money abroad. 5. Capital Controls? Crypto Doesn’t Care - Capital Flow Management measures (CFMs) aimed at curbing outflows or inflows appear largely ineffective. - In some cases, CFMs are even associated with increased crypto flows, suggesting crypto is being used to bypass restrictions. So What? - This BIS paper underscores that crypto isn’t just speculation—it’s infrastructure. - Whether for remittances, trading, or hedging, cryptoassets—especially stablecoins—are reshaping how money moves globally, outside traditional financial controls. - For regulators and policymakers, ignoring crypto’s cross-border role is no longer an option. Great work Raphael Auer, Ulf Lewrick and Jan Paulick