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

It costs $46 to send $200 from Kenya to Uganda. That's not a typo. That's why Africa's crypto ecosystem just hit 1,006 startups. Last year told a powerful story: • Nigerian Naira lost 32.15% of its value • $100B+ in remittances flowed back home (with sub-Saharan Africa alone earning $56 billion) If someone wants to send $200 between 2 neighbouring countries, Kenya to Uganda, they have 3 options: • Use m-Pesa and get charged 6.5% • Use Western Union and pay $12 and wait 4 days • Use a traditional bank like UBA or Ecobank, pay up to 23% and wait for 2 days African builders realised that this is not how things should work. And took the matters in their own hands. Enter a new wave of African builders: South Africa: • VALR and Luno are creating compliant on-ramps, already moving millions in volume. • Momint is tokenizing real-world assets and focuses on clean energy projects. Nigeria: • Trendx is building tokenization infrastructure. • Young team at Jamit is building a decentralized podcast hosting platform. Kenya: • Nomachain is a real estate tokenization platform, designed to make homeownership and real estate investment more accessible and transparent. • Virtual Finance (built by Tony Olendo & Varoun Hanooman) is a stablecoin protocol aiming to bring USD-backed currency to emerging markets, including Nigeria and Kenya. In 2023, stablecoins overtook Bitcoin as the most used crypto on the continent - hitting over $30 billion in transaction value. The takeaway is super clear - Africa doesn't need speculation or hype. It needs a better working financial infrastructure. That's why stablecoins and DeFi-based solutions are winning: → Instant settlement → Near-zero fees → Protection from currency crashes → No intermediary banks This isn't about getting rich quick. But about building what a continent of ~1.5 billion people actually needs. What other regions could benefit from Africa's blueprint for crypto adoption?

Wall Street firms are doubling down on digital assets. Last week's Q2 2025 earnings season exposed a clear divide: while some major banks and firms were relatively silent on digital assets, others positioned themselves as crypto pioneers. Recent legislative developments created more regulatory clarity and running room for financial institutions to explore institutionalizing digital assets, and the market leaders have been front running investments and partnerships and are wasting no time staking leadership claims in the space. Which firms are positioning, partnering, and investing to establish a lead? BlackRock has positioned itself as a leader in shaping the future of finance, with increasing involvement in digital assets, tokenization, and managing stablecoin reserves. Beyond the earnings rhetoric, what is BlackRock doing to drive this innovation? BlackRock's business relationships reveal the depth of their digital asset strategy. Their partnerships span cryptocurrency custody (Coinbase, Anchorage Digital), stablecoin backing (Ethena), and blockchain infrastructure (Injective). They've also invested in digital asset trading platforms like Flowdesk and fintech innovators including Upvest, Texas Stock Exchange, and Sokin; creating a comprehensive ecosystem for digital asset integration across trading, custody, and tokenization. Insights on other major players' digital assets strategies from CB Insights' Earnings Analyst agent insights on their Q2 earnings calls: → Citigroup emerged as another aggressive adopter, with CEO Jane Fraser expressing "high confidence and enthusiasm" about Citi Token Services' ability to provide "multi-asset, multi-bank, cross-border, always-on solutions without needing to partner with other banks." → BNY Mellon and State Street focused heavily on stablecoin infrastructure, with BNY serving as "reserve custodian for Société Générale's first USD stablecoin in Europe" and "primary custodian for Ripple's US stablecoin reserves." State Street's CEO highlighted how "tokenization of money market funds enables uses of these assets in a different way than originally anticipated." CB Insights' Earnings Analyst agent help identify these strategic pivots immediately after calls. Want insights analysis on the major tech firms announcing earnings this week? Comment "Mag7" below for free access to CB Insights' Earnings Analyst breakdown of each Mag7 Q2 2025 quarter and where they are headed.

I’ve received a lot of ‘feedback’ on X and LinkedIn lately. Let’s just say many in the DeFi community are passionate but often miss some very fundamental things about how finance actually works and what’s required to use public blockchains like Ethereum at scale. Some of my DMs response even start with lines like: “That is one opinion. It would be helpful if you could share views without the insults and sarcasm. They don’t add much to the conversation. You come across uninformed and childish.” (Yes, I really send that sometimes.) Here’s the serious point: Neutrality in finance isn’t about how many nodes you run or whether the codebase is open source. It’s about governance, legal enforceability and ensuring no single participant can tilt outcomes in their favor. Swift doesn’t issue assets, doesn’t compete with members and is structured as a cooperative with 11,000+ institutions. That’s why it’s trusted as a neutral orchestrator. Public chains like Ethereum absolutely have a role by providing programmability, transparency, and settlement innovation are essential. But neutrality in global markets only works when you combine open infrastructure with trusted governance, regulatory alignment and dispute resolution. Code alone doesn’t settle billion-dollar disputes. That’s why the future isn’t “Swift or Ethereum.” It’s both. And I t’s multi chain. Institutions need the trust scaffolding Swift provides and the innovation open public infrastructure including blockchains enables. Together, they can deliver the scale, neutrality and resilience that global finance actually requires.

Warren Buffett once said, “You only learn who has been swimming naked when the tide goes out.” The next place that tide may go out is private credit. At roughly $2 trillion and growing, private credit has become a critical financing channel for large parts of the economy. But a meaningful portion of that lending is tied to software companies whose economics are now being repriced in real time by AI. That is where the macro story becomes more interesting. Bitcoin sits at a unique intersection in markets. It tends to trade as a hybrid of software beta and liquidity beta. Part of its behavior reflects the growth dynamics investors associate with software and technology. The other part reflects its sensitivity to global liquidity conditions. Right now, both forces are moving against it. AI is forcing investors to reassess traditional software economics, while tighter liquidity is putting pressure on risk assets more broadly. That combination helps explain why Bitcoin has struggled to rally even as adoption and stablecoin activity continue to grow. But history suggests the sequence rarely ends there. When liquidity shocks hit, whether during the 2020 dash for cash or the 2023 regional-bank stress, Bitcoin often falls alongside other liquid assets in the first phase. Then, as policymakers respond and liquidity returns to the system, Bitcoin has historically been one of the fastest assets to reprice that shift. In other words: Bitcoin rarely front-runs the panic. It front-runs the rescue. And while macro liquidity cycles still dominate Bitcoin’s short-term behavior, something structural is happening underneath the surface. As AI agents begin interacting with digital financial rails, the network effects of crypto are quietly expanding. Programmable money, always-on settlement, and machine-native transactions make crypto systems increasingly compatible with an AI-driven economy. That combination, macro liquidity reflexes above and AI-driven network effects below, is why the long-term story continues to strengthen even during periods of stress. I explore this dynamic in my latest piece. https://lnkd.in/ehc44yRm

It’s the social consensus, stupid. Public blockchains are just new accounting systems for the internet. Bitcoin is simply data that you can self-custody, recorded on a transparent ledger. *But there is demand for that data based on the social construct that comes with the technology. The rules. The ethos. The community. The cult. Whatever you want to call it. It's the social consensus built on top of the technology. Bitcoin's social consensus revolves around “there will only ever be 21 million." “Proof of Work.” “Digital Gold.” “Store of Value.” Therefore, Bitcoin is these things. This is what makes Bitcoin valuable. Ethereum's social consensus revolves around “Permissionless. “Open Access." “Build Anything." “Modularity.” Therefore, these are the vibes that the Ethereum community emanates. Solana's social consensus revolves around “Nasdaq on a public blockchain." “Only on Solana." “Speed." "Monolithic." “Chewing glass.” Therefore, we see these traits throughout Solana. Each network is valuable to the extent that its technology forms a social consensus. So don’t get confused. With decentralized networks, it's the social consensus that matters. It’s the social consensus that is valuable. It’s the social consensus that creates a moat. If you’re an investor, you should be asking yourself: How does the protocol/technology monetize the social consensus in a way that rewards token holders? The winning networks and protocols all do this well. ____ *Re: “just new accounting systems for the internet:” there is a reason DeFi and stablecoins have the most clear product market fit in crypto. Their use case is heavily reliant on the superior new accounting system enabling user control of data. ____ Data: BTC vs ETH token holders powered by Token Terminal

Institutional behavior in crypto markets has fundamentally shifted. Wintermute's OTC desk processes billions in daily volume across every major counterparty type. Their data reveals a 20% year-over-year increase in active institutional OTC counterparties. But here's what changed: institutions stopped chasing upside. Instead of the predictable accumulation patterns of previous cycles, they're trading tactically, taking profits early, and staying liquid. This is exactly what happens when an asset class becomes balance sheet relevant. Institutions now need clear macro catalysts, regulatory clarity, or product-driven triggers to deploy capital. They stabilize markets rather than push prices higher. The convergence of retail and institutional positioning around BTC and ETH creates stability. Stability benefits allocators but challenges those hunting asymmetric returns. Derivatives activity confirms this shift. OTC options are now driven primarily by yield strategies and hedging instead of upside speculation. Investors are selling volatility, managing exposure, and getting paid to wait. For the first time, there's permanent demand for downside insurance and significantly lower expectations of wild price swings. The market grew up. The next opportunity requires structural awareness, not narrative momentum. ___________________ P.S. Follow me (Anthony Pompliano) for more insights on finance, business, & technology!

BlackRock: "We believe that Bitcoin, via its nature as a global, decentralised, fixed-supply, non-sovereign asset, has risk and return drivers that are distinct from traditional asset classes and that are fundamentally uncorrelated on any long-term basis". This week’s BlackRock's report "Bitcoin: A Unique Diversifier" brings to investors’ attention the novel properties of the world's leading digital asset. Co-authored by Samara Cohen, Robert Mitchnick, and Russ Brownback (with contributions from Emily Fredrix Goodman, Wendy Hu, Ashley Saidler, and Derek V. DiMasi), it outlines the power of Bitcoin exposure for institutional investors across a broad range of scenarios. So, the world's largest asset manager just published a paper expressing a constructive and well-argued view on Bitcoin. What are the 5 key points that stand out? 1) Bitcoin's decentralised nature and economic design (i.e. finite supply and mathematically predictable issuance) have "produced major breakthroughs to multiple centuries-old problems that other forms of money have struggled with." 2) Bitcoin is truly uncorrelated, reflecting "little fundamental exposure to other macro variables", as "Bitcoin outperformed all major asset classes in 7 out of the last 10 years, leading it to an extraordinary return in excess of 100% annualised over the last decade. This performance was achieved despite Bitcoin's severe losses in other 3 of those 10 years." 3) Bitcoin can be, as Larry Fink said, a "flight to safety" asset, and has greatly outperformed S&P500 and gold in the wake of major geopolitical events, boasting positive (10%+) performance 60 days after major selloff events in 4 out of 5 (!) cases, when both other assets combined only featured one 10%+ return instance. 4) Bitcoin provides a globally-accessible hedge against currency debasement, particularly as "the state of US federal deficits and debt has increased the appeal of potential alternative reserve assets as a potential hedge against possible future events affecting USD." 5) Bitcoin is still a "risky" asset due to its status as an emerging technology early in the adoption journey BUT doesn't fit neatly into established theories of "risk-on" and "risk-off" assets. BlackRock believes "Bitcoin held at modest allocations can have a diversifying effect on portfolios." (In the way of specific numbers, Nickel’s own research revealed that a 5% Bitcoin allocation to a traditional 60/40 portfolio boosted annualised portfolio return by nearly 500bps per annum from 9.1% to 14.0%, whilst impacting max drawdown by a mere 0.8%, from 21.5% to 22.3% - see comments below) The report concludes that in the face of global uncertainty, "Bitcoin may be seen as an increasingly unique diversifier against some of these fiscal, monetary and geopolitical risk factors investors may face elsewhere in their portfolios". #digitalassets #evolution

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.

Blockchains in Tomorrow’s Financial System ... The Fireblocks paper "Permissioned and Permissionless Blockchains in Tomorrow's Financial System" explores how both public and private blockchain architectures could shape the future of finance, highlighting their unique strengths and emerging interoperability. It emphasizes that public blockchains will continue to drive innovation and attract diverse participants, while permissioned blockchains will provide the necessary infrastructure for financial institutions to operate securely and compliantly. The paper examines the following key points: 1. Public vs. Private Blockchains It contrasts the decentralized, open-source nature of public blockchains with the controlled access and private nature of permissioned blockchains. 2. Unique Advantages Public blockchains offer benefits like wider participation, innovation, and are well-suited for secondary markets, while permissioned blockchains provide faster settlement times, reduced counterparty risk, and streamlined processes, according to the paper. 3. Interoperability The paper explores the growing trend of connecting these two architectures, allowing for a more flexible and robust financial ecosystem. 4. Implications for the Future of Finance It suggests that both types of blockchains will play crucial roles in shaping the next era of finance, with public blockchains driving innovation and permissioned blockchains providing the infrastructure for regulated financial institutions. 5. Regulatory Landscape The paper acknowledges the need for a careful approach to regulation in this evolving landscape, recognizing the potential benefits and risks associated with both types of blockchains. Bottomline - In essence, the paper provides a balanced perspective on the potential of both public and private blockchains to revolutionize the financial industry, emphasizing their strengths and the need for a collaborative approach to navigate the regulatory and technical challenges ahead.