It is easy to overlook what is taking place when we are immersed in something.
For those involved in cryptocurrency and building things in Web 3.0, we tend to focus upon that which is important to us. Often, this occurs to the exclusion of some of the other events taking place.
While this is natural, once in a while it is beneficial to step back and judge where things stand.
When it comes to the tokenization of real world assets, we are seeing massive progress. Depending upon one's view, this can either be taken as a positive or negative. Wall Street is asserting itself.
The idea of taking existing assets and moving the ownership mechanism to blockchain was long discussed. We now see this becoming a reality.
My experience is when the big players get into something, and there is money to be made, they will move quickly. That is exactly what we are seeing.
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Real World asset Tokenization
The leading name in this is Blackrock.
This firm already has some funds operating on Ethereum. It is mostly tied to US Treasuries, which are held in custody and the investors purchasing tokens. Of course, this is not open to the average person. Instead, it is a fund that caters mostly to institutions along with their larger clients.
Here is where we see a repeat of the existing system. Exclusion is common and we see it forming in this sector.
Blackrock wasn't going to be the only one diving into this. Wall Street found a new toy and it will run as far as it can.
State Street, another massive Wall Street firm, is also entering.
State Street is partnering with Swiss crypto company Taurus to offer new digital asset services, including turning real-world assets into tradeable tokens, to tap growing institutional demand for such investments, the U.S. financial services provider told Reuters.
This is an institution with $44 trillion in assets globally. Tokenization is a service it is providing along with custody for its clients.
Through the partnership, State Street, which provides crypto fund administration and accounting services, will hold clients' crypto assets and help them create tokenized assets, such as funds and other securities.
We already saw the money that rolled into the Bitcoin and Ethereum ETFs once they were released.
For all its ills, one thing Wall Street has is plenty of money. This is, naturally, something that is being echoed throughout the world, as major financial institutions in developed countries seek to leverage this asset class.
Gatekeepers
The challenge with all this is we still have gatekeepers. This poses a number of issues, most of what we see in the existing financial system.
Having cryptocurrency and tokenization integrated into the existing system is not the solution in my view. It only hands more power to the same entities we presently deal with.
Notice how, when we see these articles, it is mostly the same names. No matter what the crypto topic, we see how the large banks are positioning themselves to take over.
Ironic, this is happening without clear regulations in much of the world, especially the United States. Of course, once this comes down, the net result will be regulatory capture. The regulations will favor these larger institutions, making is very difficult (if not impossible) for others to enter.
Gatekeepers are not what was envisioned with Bitcoin rolled out. In fact, the idea was to operate in a peer-to-peer fashion which removed the need for financial intermediaries.
In other words, it made much of what Wall Street does potentially redundant.
This was not going to sit well with the banks. Unfortunately, while they were sitting back, the industry decided to focus upon scams, false promises, and pumps. The majority of the industry only concerned themselves with getting rich.
Interesting that many are the same people who bash Wall Street for only caring about money (and getting rich).
The industry simply replicated what Wall Street banks do, except without the expertise. It also lacked the government backing.
That is all changing.
In the near term, the banks are taking over. We are going to see a massive push with both regulation and bank roll out. These entities are going to access the demand for crypto exposure. We are already seeing this.
Long term is more difficult to predict. There is one thing that could alter this: artificial intelligence.
AI And Crypto
To me, these two are going to be linked.
What makes this conversation interesting is a couple things can happen.
The first is the fact that, when talking AI, we are dealing with a different set of behemoths. While Wall Street institutions are huge, they are actually small compared to Big Tech (at least in market cap). Certainly the idea of swapping one major overlord for another is not appealing to many.
It does, however, move the discussion to a different level. Will the banks be able to fend of Big Tech?
Another is the potential of AI agents in the hands of individual developers. While the early crypto people, for the most part, were misguided (to be nice), the same is not true for those in AI. This is attracting a much different group of people.
Here is where we see a strong push towards open and decentralized. Many, including some heavy hitters, are publicly on this side. We also have a lot of start ups working in this direction.
Could this, at some point, roll into crypto and Web 3.0? I think so. As the agents are developed, others can take them to expand into different areas. Crypto is certainly one area that some will focus upon.
The bottom line is the tokenization of real world assets is coming fast. Wall Street is getting on board in a major way.