May 2024 Roundup — featuring Garett Jones from Bluechip Ratings and Tyler Sherwin and Ray Buckton from RWA World.
The pace of institutional activity in blockchain-based finance has reached a point where a monthly digest is barely sufficient to keep up. In this edition of QX Institutional — QualitaX’s monthly roundup in partnership with Bluechip Ratings and RWA World — we covered three distinct but converging paths: the growing infrastructure investment by established financial institutions in DLT-based settlement systems, the evolving stablecoin landscape with its new yield-bearing entrants and regulatory fault lines, and the extraordinary acceleration of real-world asset tokenization led by BlackRock, Franklin Templeton, and a new generation of blockchain-native issuers.
Part One: DLT and Blockchain in Finance
Funding and Major Partnerships
Three announcements in May signal the direction of institutional investment in blockchain financial infrastructure.
Securitize — the transfer agent and technology provider to BlackRock’s BUIDL fund — raised $47 million in a round led by BlackRock itself, with participation from Hamilton Lane and Tradeweb Markets. That a major fund manager is investing in the infrastructure layer of its own tokenisation strategy says something important about where BlackRock sees the plumbing of digital assets going.
Tradeweb Markets, which operates one of the primary over-the-counter markets for fixed income securities, announced a partnership with Alpha Ledger, a blockchain infrastructure provider for fixed income assets. The combination of a major OTC bond market operator with a blockchain infrastructure provider is a direct signal that settlement infrastructure for digital fixed income is being built in earnest.
Prometheum Capital selected Broadridge’s post-trade solutions to facilitate post-trade operations for digital asset securities as it prepares to launch custody, clearing, and settlement services for that asset class. Post-trade is the unglamorous but essential layer — and investment in it signals that the industry is building for scale, not just for pilots.
Key Industry Initiatives
The DTCC, Chainlink, and ten other industry participants published their learnings from the Smart NAV pilot — a chain-agnostic experiment exploring an extension of the DTCC’s Mutual Fund Profile Service (MFPS) for transmitting NAV and price data to intermediaries. The pilot succeeded in streamlining processes, eliminating paperwork, and improving efficiency. The mechanism was elegant: condensing data into a single smart contract accessible to all participants, delivering on the concept of a unified golden record. One smart contract, one source of truth, accessible to all authorised parties simultaneously. The operational implications for fund administration are significant.
The DTCC, Clearstream, Euroclear, and BCG jointly published a framework for the integration of tokenised assets into the global financial ecosystem, covering legal certainty, regulatory compliance, and operational scalability. This is not a startup white paper — it is the combined output of the entities that currently clear and settle the majority of global securities transactions. Their engagement with tokenisation integration is a strong signal that they are planning for a world in which tokenised and traditional assets coexist in the same settlement infrastructure.
The Regulated Settlement Network (RSN) proof of concept was announced, bringing together the usual institutional participants — DTCC, Citi, Swift, JPMorgan, MasterCard, and others — to explore multi-asset settlement through a 24/7 programmable shared ledger. The RSN will simulate settlement of tokenised cash and securities on a common system, including tokenised commercial bank money. The proof of concept will analyse legal implications and publish findings, contributing to the industry’s understanding of next-generation settlement models.
In international markets, Tokyo launched government subsidies for businesses issuing digital securities, aiming to expand the market and accelerate investment inflows. In the UAE, Liv Digital Bank — part of the Emirates NBD group, the UAE’s second-largest bank — signed an agreement with ControlAlt to explore the tokenisation of real-world assets. And at Consensus, US SEC Commissioner Hester Peirce proposed a cross-border regulatory sandbox between the UK and the United States.
The Shift in Narrative
There is a useful lens for evaluating where blockchain technology genuinely stands in financial services adoption. In 2020, JPMorgan launched JPM Coin without programmability — and for four years it remained a relatively niche infrastructure tool. When they added programmability in Q4 2023, something changed: transaction volumes began reaching high single-digit billions of dollars on some days. The lesson is clear. Programmable money — the ability to combine programmable processes with programmable assets, regardless of their form — is where the genuine operational value lies. Infrastructure without programmability is infrastructure that replicates what already exists. Infrastructure with programmability is infrastructure that enables things that were previously not possible.
The broader observation: blockchain is completing a transition from niche technology with institutional interest to a mainstream solution in financial infrastructure — not just as a supporting technology but as a platform on which financial products are being built and used.
EEA DLT Interoperability Specification
The Enterprise Ethereum Alliance released its DLT Interoperability Specification for public review in May, with a two-week window for feedback. This work has been in development for two to three years. QualitaX co-chairs the EEA’s DLT Interoperability Working Group and expects to publish case studies in summer 2024 demonstrating how the specification has been implemented in the financial industry — specifically, how interoperability between DLT networks with different architectures (EVM and non-EVM) can be achieved in practice.
Interoperability is the connective tissue that determines whether the various institutional initiatives described above become a coherent system or a new form of fragmentation. The goal is not to replicate the inefficiency of current financial markets on new rails — it is to reduce settlement costs, reduce settlement times, and enable greater automation. The EEA specification is a foundational piece of that architecture.
Part Two: Stablecoin Safety with Bluechip Ratings
Commentary by Garett Jones, Chief Economist, Bluechip Ratings
The Rise of Yield-Bearing Stablecoins
The end of the zero-interest-rate era has spawned a new category of stablecoin: coins that pay yield rather than simply holding their value. Two recent entrants illustrate the design choices this category faces.
R-USDY, a variant of Ando Finance’s USDY, takes the bank-account approach: rather than growing in value like a bond fund, it pays yield in the form of additional tokens while the principal unit remains stable. At 4% annual yield on a $100 holding, the coin pays $4 worth of additional tokens over the course of a year. This model has intuitive appeal for users accustomed to savings accounts — the number of coins grows, but each coin is still worth approximately $1.
OUSDZ, from Usual Money, is a Fiat-backed stablecoin backed by tokenised US Treasuries that pays yield when coins are locked. The approach reflects the broader category: the end of zero interest rates made holding non-yielding dollar stablecoins an opportunity cost, and the market is now innovating around that gap.
Regulatory treatment of yield-bearing stablecoins remains uncertain, particularly in the United States, where the current regulatory framework does not clearly accommodate coins that pay interest. How regulators in different jurisdictions treat this category over the next two years will be a defining question for the sector’s development.
Regulatory Landscape: Local Currency Stablecoins
Colombia and the Philippines both moved in May toward stablecoins pegged to their local currencies. Bancolombia, Colombia’s largest bank, launched a Colombian Peso-backed stablecoin (CW). In the Philippines — a country with a large overseas worker population sending remittances home — the Central Bank worked with coins.ph to create a Philippine Peso-backed stablecoin, with the goal of enabling overseas workers to convert earnings and remit funds home safely and at low cost. These are exactly the use cases that make stablecoins most practically valuable: cross-border remittances where the correspondent banking system is slow, expensive, and inaccessible to many users.
MiCA, Tether, and the Exchange Dilemma
The EU’s Markets in Crypto-Assets (MiCA) regulation is coming online in the coming months and will create a framework distinguishing compliant from non-compliant stablecoins in European markets. Tether — the largest stablecoin by both trading volume and market capitalisation — is not expected to fare well under MiCA’s requirements.
Bluechip gave Tether a D rating. Standard & Poor’s subsequently gave it a weak rating, citing the same primary concern: Tether cannot demonstrate to auditors’ satisfaction that its reserve assets are held in a credible, independently verified manner. Tether holds reserve assets — that is not in dispute — but the quality, composition, and bankruptcy-remote status of those reserves does not meet the standards that Bluechip (or S&P) require for a higher rating.
The practical consequence is playing out in real time. Kraken, one of the major exchanges, is actively reviewing Tether’s status on its platform. The trade-off facing exchanges is increasingly acute: comply with MiCA by restricting or delisting Tether, or retain the most liquid and widely traded stablecoin at the cost of regulatory friction. This tension will define stablecoin market structure in European jurisdictions over the next twelve months.
Stablecoin Velocity: How Stablecoins Are Actually Being Used
One of the more analytically useful frameworks Garrett introduced is the concept of stablecoin velocity — borrowed directly from monetary economics — as a complement to the market cap figures that dominate most stablecoin coverage.
The measure is straightforward: daily trading volume divided by total market capitalisation. Applied to the US economy broadly, M2 money turns over approximately 1.3 times per year. In the pre-financial-crisis banking system, bank reserves could turn over multiple times per day as interbank payments cleared and were immediately recycled.
Stablecoins are operating closer to the interbank end of that spectrum. USDC, based on three-month average daily volume data, turns over approximately 25% of its total market cap per day — meaning the entire supply cycles through transactions roughly every four days on average. Tether turns over at approximately 60% per day, cycling through in roughly two days on average.
These are very high velocity figures by any monetary economics standard. What they tell us: stablecoins are being used as genuine means of payment and settlement — not primarily as stores of value that sit idle. The high velocity is consistent with their use as clearing instruments between crypto transactions (holding briefly between selling one asset and buying another), as payment rails for cross-border transactions, and increasingly as settlement currency in institutional contexts.
The practical implication: as infrastructure matures and settlement speeds increase, users may need to hold smaller stablecoin balances to achieve the same transaction volumes — putting downward pressure on total supply even as usage grows. Supply alone is therefore a misleading proxy for stablecoin health or adoption.
Red Flag Case Study: USDD (Tron DAO Reserve)
Bluechip awarded an F rating to USDD, run by Tron DAO Reserve — a coin with approximately $730 million in market capitalisation at the time of assessment. The reasoning illustrates Bluechip’s Red Flag framework clearly.
A sound stablecoin, like a sound bank, takes deposits and invests them in something credibly safe — US Treasuries, cash equivalents, or substantially over-collateralised volatile assets. The backing is external, independent, and verifiable. USDD’s backing fails this standard on two counts. Approximately half the backing is Bitcoin — a highly volatile asset that most banks would not use to back deposits. The other half is TRX, Tron’s own token, created and controlled by the same organisation running USDD.
This is structurally analogous to Terra/Luna: backing a coin with the issuer’s own equity or a coin of their own invention. The circularity is the problem. If confidence in Tron’s ecosystem falls, TRX falls in value, reducing USDD’s backing at exactly the moment when redemption pressure is likely to be highest. This is not a speculative risk — it is the failure mode that was predicted for Terra/Luna before it happened and confirmed when it did.
Additionally, USDD’s assets are not held in a bankruptcy-remote manner. In the event of Tron DAO Reserve entering insolvency, a bankruptcy court could potentially direct those assets toward unpaid creditors, wages, or secured debt holders rather than USDD token holders. The combination of circular backing and non-bankruptcy-remote asset holding is sufficient for an immediate F rating — no further analysis required.
Part Three: Real-World Asset Tokenisation with RWA World
Commentary by Tyler Sherwin and Ray Buckton, co-founders of RWA World
The Market Size Question
Market size projections for tokenised assets range widely: Boston Consulting Group projects approximately $16 trillion of tokenised assets on-chain by 2030; 21.co projects $10–15 trillion over the same period. The honest answer is that the precise number is unknowable from where we stand today — the definition of tokenised assets matters enormously, and the regulatory and technological developments of the next six years will shape the outcome more than any current projection. What is clear is that the direction of travel involves trillions, not billions, and that the foundational infrastructure is being built now.
RWA World tracks this market through a thirteen-category taxonomy covering approximately 390 companies spanning marketplaces, Layer 1 and Layer 2 networks, token issuers, and asset classes. Their weekly newsletter synthesises over fifty hours of research per week for an institutional audience that includes the head of the ECB’s tokenisation function and senior leaders across both traditional and Web3 financial ecosystems.
Tokenised Public Debt: The Leading Institutional Category
The largest category of tokenised real-world assets by market capitalisation today is tokenised public debt — primarily US Treasuries — and the growth in this category has been described as a Cambrian explosion.
BlackRock’s BUIDL fund is the dominant player, having attracted significant capital from the Treasury market onto an on-chain environment. Notably, Ando Finance — one of the earlier tokenised Treasury issuers — now deploys approximately 99.5% of its total volume within the BUIDL fund itself, illustrating the confederations forming between blockchain-native tokenisers and the institutional incumbents now entering the space.
Superstate — founded by Compound Finance’s Robert Leshner, who brings deep experience in on-chain assets and DeFi — has passed the milestone of nine-figure AUM in tokenised US Treasuries. The combination of DeFi-native expertise with traditional asset classes represents a significant development in bridging the two ecosystems.
Franklin Templeton has been tokenising Treasury bonds and bills on the Stellar Network for several years. CEO Jenny Johnson has stated publicly that ETFs and mutual funds will eventually make their way on-chain because tokenised asset rails are more efficient for issuers — enabling near-instantaneous T+0 settlement and saving significant basis points compared to conventional infrastructure.
Regulatory Watershed Moments in the United States
Two legislative developments define the US regulatory landscape in mid-2024:
SAB 121 repeal: The SEC’s Staff Accounting Bulletin 121 requires US banks to count digital assets they hold in custody on behalf of clients as liabilities on their own balance sheets — a requirement that exists nowhere in traditional finance and has made it economically unattractive for banks to offer digital asset custody. Repeal legislation passed both the House and the Senate with bipartisan support, but was vetoed by President Biden. RWA World’s assessment is that SAB 121’s days are numbered — the bipartisan legislative momentum is significant, and a future administration is likely to revisit it.
FIT21 (Financial Innovation and Technology for the 21st Century Act): Passed the House with bipartisan support. FIT21 would allow companies to self-register with the SEC as digital asset companies, with the SEC having 60 days to contest the registration. If uncontested, issuers would be exempt from Regulation A and Regulation D requirements. The most significant provision: non-accredited investors could invest up to 10% of their liquid net worth or annual income in these exempt securities — a potential structural shift in who can access tokenised asset markets.
Ethereum ETF approval: The approval of a spot Ethereum ETF — jumping from 25% predicted probability to approval almost overnight — was not on most analysts’ bingo cards for 2024. Its significance extends beyond Ethereum: it demonstrates that the regulatory treatment of digital assets is not confined to Bitcoin, opening a pathway for further investment product approvals. The political dimension is also notable — digital assets have become a meaningful constituency in US electoral politics, and regulatory posture is increasingly shaped by that dynamic.
Ecosystem Developments
Huma and ARF merged, combining forces under a payment finance (PayFi) thesis. PayFi encompasses buy-now-pay-later schemes, credit cards, trade finance, and any credit-based ecosystem accessible to consumers or institutions. The combined market size of credit cards ($10 trillion) and trade finance ($15 trillion alone) illustrates the scale of the opportunity. Huma and ARF have collectively processed over $1.4 billion through their networks — real volume demonstrating real utility.
Plume, a dedicated Layer 2 solution aligned with Ethereum and focused on real-world asset tokenisation, raised $10 million and has launched its testnet with strong early traction. Its significance: a purpose-built blockchain environment for RWA tokenisation, offering issuers a public blockchain environment without compromising KYC, AML, and privacy requirements.
ERC-3643 — the permissioned token standard developed by the Tokeny team — continues to mature as the compliance layer for public blockchain tokenisation. By embedding on-chain identity and ensuring that any token transfer is only permitted if the recipient passes KYC and AML requirements, ERC-3643 addresses the primary concern that has driven regulated institutions toward private chains. The combination of public blockchain transparency with compliance controls removes one of the most significant structural objections to public-chain tokenisation for regulated issuers.
Key Takeaways
DLT in Finance
- Institutional investment in DLT settlement infrastructure is accelerating — Securitize, Tradeweb/Alpha Ledger, Prometheum/Broadridge all represent the post-trade layer being built for scale
- The RSN proof of concept, Smart NAV pilot, and DTCC/Clearstream/Euroclear/BCG framework represent the incumbent clearing and settlement infrastructure actively preparing for tokenised asset integration
- JPMorgan’s experience confirms that programmability is the critical enabler — infrastructure without it replicates the status quo; infrastructure with it enables genuinely new capabilities
- The EEA DLT Interoperability Specification is a foundational standard for connecting different blockchain architectures — necessary to avoid replicating current market fragmentation on new rails
Stablecoins
- Yield-bearing stablecoins are the major structural innovation of 2024, driven by the end of zero interest rates — regulatory treatment of this category remains the key open question
- Stablecoin velocity (daily volume / market cap) reveals that USDC and Tether are functioning as genuine payment and settlement instruments, not primarily as stores of value
- MiCA is creating real pressure on Tether’s European market position — the exchange dilemma between regulatory compliance and customer demand is acute
- Bluechip’s USDD (F rating) case study illustrates the core risk of circular backing: a coin backed by the issuer’s own token replicates the Terra/Luna failure mode
RWA Tokenisation
- Tokenised public debt (US Treasuries) is the leading institutional category, with BlackRock’s BUIDL fund as the dominant vehicle — Ando Finance routing 99.5% of its volume through BUIDL illustrates the consolidation dynamic
- FIT21 and SAB 121 repeal represent the most significant US regulatory developments for tokenisation in years — FIT21’s non-accredited investor access provision could reshape who participates in tokenised markets
- The Ethereum ETF approval signals a broadening regulatory acceptance of digital assets beyond Bitcoin
- ERC-3643 is removing the compliance objection to public blockchain tokenisation — regulated issuers no longer need private chains to meet KYC/AML requirements.