StartUp / Fintech
Monitor fintech startups, digital finance innovation, payments, banking disruption and emerging financial technology business models.
Tokenizing US Treasuries With Don Wilson
Topic
Tokenizing US Treasuries
Key insights
- Cathie Wood interviews Don Wilson of DRW Holdings in Cumberland DRW Holdings
- Cumberland DRW Holdings was an early entrant into crypto and helped build Canton Blockchain
- Canton Blockchain is an institutional blockchain for asset settlement
- Discussion on faster on-chain settlement and collateral mobility
- Debate on whether minor extractable value is the same as payment for order flow
- Depository Trust & Clearing Corporation announced they are using Canton Blockchain as their settlement layer for tokenizing treasuries
Perspectives
short
Cathie Wood and ARK Invest
- Highlights the importance of understanding technological disruption in investment
- Claims that tokenization will significantly reduce costs in financial intermediation
- Proposes that 5% of global financial value will be tokenized by 2030
- Warns about the potential for illegal activities in minor extractable value
- Argues that tokenized assets will enhance capital efficiency and liquidity
Don Wilson and DRW
- Describes DRWs early involvement in crypto and the evolution of the Canton network
- Claims that institutions are seeking privacy and configurability in blockchain transactions
- Highlights the need for efficient value movement in traditional markets
- Argues that Canton is well-positioned to become the default institutional RWA network
- Rejects the notion that private permission chains are the future of blockchain
Neutral / Shared
- Discusses the role of DTCC in transitioning to tokenized treasuries
- Mentions the importance of stablecoins in the Canton ecosystem
- Explores the implications of private equity and credit on the Canton network
Metrics
tokenization_percentage
5 percent %
expected global financial value to be tokenized by 2035
Indicates a significant shift towards digital assets in the financial sector.
we think that around by 2035 percent of global financial value will be tokenized.
financial_assets_value
a quadrillion dollars USD
estimated total value of financial assets globally by 2030
Highlights the vast potential market for tokenized assets.
we think there's going to be a quadrillion dollars of financial assets globally by 2030.
protocol_fee_percentage
1 percent %
expected fee for underlying protocols post-tokenization
Demonstrates the significant savings for the economy.
the underlying protocols are going to be able to operate successfully collecting just 1 percent.
years_known
10 years
Duration of acquaintance between Don Wilson and Kathy.
Highlights the long-standing relationship and trust in discussions about innovation.
it's 10 years Don.
first_exposure_year
2015 year
Year DRW Holdings gained exposure to Bitcoin.
Marks a significant milestone in the firm's engagement with cryptocurrency.
in 2015, we were the first public asset manager to gain exposure to Bitcoin
canton_network_launch_year
recently
Indicates the recent launch of the Canton network.
Signifies the latest development in leveraging technology for financial markets.
your involvement with the Canton network.
validators_count
over 600 count
total number of validators in the network
A higher number of validators indicates greater decentralization and security of the network.
there are over 600 validators
super_validators_count
32 count
number of super validators in the network
Super validators play a crucial role in maintaining the integrity and performance of the blockchain.
there are 32 super validators
Key entities
Timeline highlights
00:00–05:00
The adoption of Canton Blockchain for asset settlement by the DTCC will facilitate faster on-chain transactions, leading to significant cost savings in financial intermediation.
- Cathie Wood interviews Don Wilson of DRW Holdings in Cumberland DRW Holdings
- Cumberland DRW Holdings was an early entrant into crypto and helped build Canton Blockchain
- Canton Blockchain is an institutional blockchain for asset settlement
- Discussion on faster on-chain settlement and collateral mobility
- Debate on whether minor extractable value is the same as payment for order flow
- Depository Trust & Clearing Corporation announced they are using Canton Blockchain as their settlement layer for tokenizing treasuries
05:00–10:00
The launch of the Canton network aims to enhance the efficiency of value movement in traditional financial markets, potentially revolutionizing market infrastructure.
- Don Wilson is the founder and CEO of DRW Holdings, a proprietary trading firm
- DRW Holdings started Cumberland DRW Holdings, its crypto arm, in 2014
- In 2015, DRW Holdings was the first public asset manager to gain exposure to Bitcoin through GBTC
- Don Wilson and Kathy have known each other since 2015
- Digital asset holdings were started to leverage technology for traditional financial markets
- The Canton network is a public permissionless chain designed for traditional financial markets
10:00–15:00
The decentralized permissionless chain with over 600 validators enhances transaction privacy, reducing material slippage in execution for institutions embracing technology.
- Institutions want to embrace technology while ensuring privacy in transactions
- Leaking information about stock ownership can lead to material slippage in execution
- There is a need for configurable permissioning depending on the asset
- The network is a permissionless chain with over 600 validators and 32 super validators
- Canton is not widely known in the crypto community, but is well regarded by DRW and digital assets
- DTCC chose Canton to tokenize a subset of US treasuries held at DTC
15:00–20:00
The Depository Trust & Clearing Corporation is transitioning to tokenize treasuries on the Canton Network, enhancing ownership tracking and liquidity for market participants.
- Depository Trust & Clearing Corporation announced it will tokenize some of the most liquid treasuries on Canton Network
- Ownership of treasuries can be tracked on the Canton Network network instead of Depository Trust & Clearing Corporations database
- The transition from share certificates to a database was facilitated by Depository Trust & Clearing Corporation for equities
- Transfer agents sit between companies and the Depository Trust & Clearing Corporation for managing securities
- Equities can be held in street name to allow for borrowing and trading
- Depository Trust & Clearing Corporation tracks shares that are readily bought, sold, or borrowed against
20:00–25:00
The Depository Trust & Clearing Corporation (DTCC) is expected to transition a majority of its $100 million in assets on-chain within five years, enhancing market liquidity and operational efficiency.
- Most markets are expected to operate 24-7 or 24-5
- Collateral mobility is important for switching between cash and crypto
- USTC was used as the on-ramp offering in this case
- There may be a proliferation of stablecoins as switching between them becomes easier
- Depository Trust & Clearing Corporation holds $100,000,000 of assets, with a majority expected to move on-chain in the next five years
- Depository Trust & Clearing Corporation is connecting to other networks and will decide which networks to connect to
25:00–30:00
Canton is positioned to become the default institutional RWA network, enabling borrowing against equity at market-reflective rates, which could transform market dynamics.
- Depository Trust & Clearing Corporation believes that Canton could become the default institutional RWA real world asset network
- Criticism of tokenization includes it being seen as just wrapping the same assets with more buzzwords
- Tokenized assets on Canton allow for borrowing against equity with rates reflecting market demand
- Prediction markets are shifting from retail to institutional market making
- Some prediction markets are similar to traditional trading practices
- Many prediction markets operate with transparent positions and trades