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Metal-Backed Tokens

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Satoshi&Co Daily Crypto Newsletter

March 13 · Issue #140 · View online
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In the next wave of tokenization of real world assets, we are witnessing precious metals ‘being codified on the blockchain.’
Paxos, which is the company behind fiat-collateralized USD stablecoin PAX, announced its plans to launch a gold-pegged token later this year. This makes Paxos the first US-based company to tokenize gold on the blockchain. Similar to how every PAX USD stablecoin is backed by a dollar that is deposited in a bank account, Paxos’ gold-pegged token will be backed by a certain quantity of physical gold bars stored in vaults. Investing in a gold-pegged stablecoin provides an investor an interesting alternative to investing in Gold ETFs, access to which is constrained by geographical limitations. By virtue of their design, which is underpinned by censorship resistance, gold-pegged tokens can be transferred between users across geographical borders in a fast and low-cost manner. Of course, it is key that all users here have to go through KYC/AML filters to first get on-board the platform.
Outside the US, there are multiple projects that have tokenized gold and other precious metals, including DGX that will soon be tradeable on ForDeX. Most, however, have failed to scale up in a manner that stablecoins have scaled up to in the past few years. Having a reputable company like Paxos, which is affiliated with Itbit, a major crypto exchange, and whose USD stablecoin, PAX market cap stands at $170 million, launch a gold token could draw meaningful interest from investors across the globe. To estimate the size of opportunity for gold tokenization, note that the world’s largest gold ETF has a market cap of $32B and the total market size of gold is estimated to be over $5 Trillion.
Meanwhile in Crypto Wonderland....
“Elwood To Start Offering Digital Asset Products For Institutional Investors”
Elwood Asset Management, owned by hedge-fund billionaire Alan Howard, plans a range of products to lure big institutional investors into digital assets. The company said the new regulated products will cover the full spectrum of crypto-assets, Chief Executive Officer Bin Ren said in a phone interview. Elwood and Invesco Ltd. have already launched an exchange-traded fund tied to companies that are developing blockchain technology, the ledger tool first created to facilitate Bitcoin transactions. Some institutional investors are looking at crypto investments, but most have steered clear because of an uncertain regulatory outlook and concerns over money laundering and market manipulation. Ren said that makes blockchain an easier sell right now, though Elwood also plans to develop investments tied to the trading of digital assets, and may eventually offer exposure to cryptocurrencies such as Bitcoin and Ethereum.
“Thai Regulator Approves An ICO Portal”
Thailand’s securities regulator has approved the first initial coin offering (ICO) portal in the country. The Thai Securities and Exchange Commission’s (SEC) board of directors has reportedly authorized the first ICO portal that allows to screen ICOs, perform due diligence, confirm smart contract source codes and conduct Know Your Customer (KYC) procedures. The operator of the ICO portal is reportedly a foreign entity.
“Ripple and Forte Launch $100 Million Fund For Blockchain Video Games”
The cryptocurrency company Ripple on Tuesday announced an ambitious project to integrate blockchain technology into video games. The plan, which features a $100 million fund for developers, could remake the gaming industry by creating a new way to create in-game marketplaces for digital goods. The fund will be overseen by Forte, a San Francisco company founded this year by prominent gaming executives, and which is backed and advised by a host of big Silicon Valley names, including Andreesen Horowitz, Coinbase Ventures and Battery Ventures.
“Bcause To Use NASDAQ Tech For Trading”
Bcause LLC, a self-described “full-stack cryptocurrency ecosystem,” plans to use Nasdaq technology to operate its markets. The company announced Wednesday that it would be using Nasdaq’s matching engine, clearing and market surveillance tools through the Nasdaq Financial Framework platform to operate a spot cryptocurrency market, to be launched within the next few months. Bcause has also filed to become a designated contract market and to launch a derivatives clearing organization with the U.S. Commodity Futures Trading Commission (CFTC).
Crypto Twitter Pick
Nathaniel Whittemore
One problem, though, is that most people *don’t* want to be their own banks.

What We Are Reading / Listening To
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