Tag: Tokenized Assets

Nigeria Plans to Regulate Digital Asset Platforms

by Blockchain News

Nigeria, one of the most curious nations about cryptocurrencies, is preparing new industry regulations for digital asset platforms. The Nigerian Securities and Exchange Commission (SEC) is considering new regulations that would allow licensed digital exchanges to list tokens backed by certain assets, according to a report by Bloomberg.

Abdulkadir Abbas, the head of securities and investment at the Nigerian SEC, noted that the authority plans to only authorize listings of tokens based on assets such as equity, debt, or property. Cryptocurrencies like Bitcoin and Ether will not be among those assets. The aim is to register fintech firms as digital sub-brokers, crowdfunding intermediaries, fund managers, and tokenized coins issuers. However, the SEC will not register crypto exchanges until the central bank provides clear regulations for the crypto market.

License applicants would undergo a year of “regulatory incubation,” during which the SEC would study their operations and render their services in the country, according to Abbas. He added that by the 10th month, the SEC should be able to make a determination whether to register the firm, extend the incubation period, or even ask the firm to stop operation.

The Central Bank of Nigeria had banned local banks from providing services to cryptocurrency-related platforms in early 2021. On the ban, the regulator cited high risks associated with trading cryptocurrencies such as Bitcoin. The central bank also promised to impose strict penalties for any lender or financial institution failing to comply with the directive.

Despite the ban, Nigeria has emerged as one of the most active countries in terms of adoption and curiosity about Bitcoin and other cryptocurrencies. Nigeria ranks second by search interest for the keyword “Bitcoin,” behind El Salvador, which adopted Bitcoin as legal tender in 2021, according to data from Google Trends. Other jurisdictions in the top-five crypto-curious countries list include Slovenia, Netherlands, and Switzerland.

Nigeria was also among the top 20 countries in terms of crypto adoption in 2022, according to Chainalysis’ crypto adoption index.

While prohibiting cryptocurrencies, the Central Bank of Nigeria has been actively promoting its central bank digital currency known as the eNaira. The eNaira reportedly saw increased adoption due to national fiat reserves facing severe shortages.

In conclusion, Nigeria is taking steps to regulate digital asset platforms, with the SEC considering allowing licensed digital exchanges to list tokens backed by certain assets. The country aims to register fintech firms as digital sub-brokers, crowdfunding intermediaries, fund managers, and tokenized coins issuers. However, the SEC will not register crypto exchanges until the central bank provides clear regulations for the crypto market. Despite the ban on cryptocurrencies, Nigeria has emerged as one of the most active countries in terms of adoption and curiosity about Bitcoin and other cryptocurrencies.

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France’s CBDC Projects to Manage DeFi Liquidity, Settle Tokenized Assets

by Blockchain News

On Tuesday September 27, Villeroy de Galhau, the Governor at the Banque de France, the Central Bank of France, announced two new projects that aim to achieve the benefits of Central Bank Digital Currencies (CBDCs) used at a wholesale level by banks and financial markets.

The governor made the announcement during his speech at the bank’s digital currency conference on Tuesday. The Head of Central Bank said the first project will look at improving CBDCs’ liquidity management in decentralized finance (DeFi), such as via automated market makers. As a liquidity creator, the CBDC will play a role similar to that of investment banks to sustain trading in particular securities.

On the other hand, the second project will focus on issuing and distributing tokenized bonds on a blockchain. This will build on previous findings about CBDCs being used to settle Web3 securities, such as the French Central Bank’s Project Jura.

In his speech, the governor stated that: “A wholesale CBDC could significantly contribute to improving cross-border and cross-currency payments.” But then he acknowledged that: “CBDCs at the wholesale level attract less attention than their headline-grabbing retail equivalent.”

The governor pledged to add more details about the new projects in the coming weeks. A point to remember is that France’s wholesale CBDC is currently in the second stage of the experimentation programme, which will see four to five new projects introduced.

Intensifying CBDC Efforts

In July this year, France’s Central Bank began the second phase of experimentation with its wholesale CBDC, designed to streamline domestic and cross-border transactions between commercial banks.

France’s Central Bank wants to bring CBDC as a settlement asset as early as 2023. The bank is working to get closer to a viable prototype, testing it in practice with more private financial institutions and foreign central banks in the second half of 2022 and 2023.

Banque de France, which started experiments on a wholesale CBDC in March 2020, completed its first stage of experimentation in December 2021. During the experimentation period, the bank had been exploring the use of the CBDC for the exchange of money between financial institutions.

Besides the wholesale CBDC, the Banque de France is also exploring a retail CBDC as part of the European Central Bank’s broader work on the potential development of a digital euro.

Central banks across the globe are exploring the development of digital currencies not only to address the decline in the use of cash but also to tackle the rising interest in private cryptocurrencies among users.

Central banks are increasingly exploring wholesale CBDCs that are built on blockchain technology and promise to help speed up interbank settlements.

Image source: Shutterstock

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Tokenized real estate inches forward despite legal, technical hurdles

by Cointelegraph

An unusually rowdy (and informative) virtual panel at the Security Token Summit yesterday reveals the fractious difficulties of bringing regulated assets on-chain — as well as the promise and progress of the tokenized real estate use case despite those hurdles. 

Michael Flight of the Liberty Fund, Jude Regev of Jointer.io, and Mohsin Masud of AKRU spoke for 30 minutes on the state of securitized real estate in a free-flowing and often-contentious discussion that highlighted the complexities that arise when decentralized finance and stringent governmental oversight meet. Host Kiran Arif of AKRU seldom spoke.

When asked why tokenized real estate is so exciting, Flight pointed to the size of the market and to how few investors can gain exposure to it.

“You’ve got 280 trillion dollars of real estate assets, and tokenized real estate is gonna let all investors into that asset class,” he said.

Mohsin concurred, noting that high prices and regulations have traditionally kept average investors out of the real estate market, aside from purchases like homes.

“We want to offer these securities, these asset-backed securities, to people who traditionally haven’t had access.”

Regulatory shackles 

While the promise of the use case is significant and has been pondered over for close to a decade, aside from a handful of experiments there has been little significant traction. 

Part of the reason, according to Regev, is the friction from bringing a regulated asset to a decentralized system.

“It can’t work,” he said.

He compared current digital real estate to “digital paper,” saying that all of the legal requirements and barriers surrounding real estate remain functionally identical regardless of whether its a digital or physical format, and as a result unaccredited investors still can’t have access.

Likewise, he expressed doubt that such tokens would ever be listed on exchanges or achieve any significant liquidity, rendering the use case useless.

“You remember the days of timesharing, it sounds so good? And when you’re into it, you can’t get out? That’s pretty much what it is,” he said, comparing tokenization to a “magic word” with little substance.

Something is better than nothing

Mohsin rejected many of these points, pointing out that REITs and other real estate-backed products have managed to achieve significant liquidity. Moreover, he noted that there are 12.5 million accredited investor households in the US who could benefit (more recent data suggests there are 13.6 million), even if tokenized real estate doesn’t fully “democratize” the market. 

Flight also pointed out the significant advanced in utility that can be made with tokenized real estate. He said that Liberty is working with centralized crypto lender Blockfi to allow real estate-backed security tokens to be used as collateral, and even to earn interest as a yield-bearing asset.

While he remained suspicious regardless of these points, Regev also made a stirring call for platforms and issuers taking responsibility for users if the use case is ever to gain significant traction.

“We need to protect the simple person who is busy, busy to survive, and wants their money to work for them.”