Blockchain
Banks embrace crypto-inspired blockchain revolution: The dawn of asset tokenisation
Cryptocurrencies were invented in the heat of the 2008-2009 financial crisis to provide an alternative to banks. The inventors of Bitcoin, who went by the pseudonym Satoshi Nakamoto, envisioned a financial system that didn’t depend on “trusted third parties” that they said couldn’t be trusted in the first place. Instead, it would use cryptography and a decentralized ledger called a blockchain to record transactions and provide irrefutable proof of ownership. Crypto evangelists said this would democratize finance and lower the cost of holding and using money.
Banks scoffed, calling crypto a cypherpunk pipe dream. But more than 15 years later, many banks and other financial institutions on Wall Street are not only in the cryptocurrency business (see ETFs, Bitcoin) but they’re also beginning to adopt the underlying blockchain technology. JPMorgan Chase & Co., Goldman Sachs Group Inc. and other banks are experimenting with or already offering private blockchain services, a concept that strikes many crypto lovers as oxymoronic. Banks are drawn to blockchain technology for its ability to “tokenize” traditional assets like stocks and Treasury bills, making trading them faster and cheaper. Critics say banks aren’t just adopting but co-opting the technology to generate fees, similar to how financial firms turned low-cost, low-touch exchange traded funds into a healthy business.
1. How are traditional assets turned into tokens?
“Real-world asset tokenization” is the process of representing real assets like bonds, stocks, art or even ownership shares in office buildings as digital tokens on a blockchain. Anyone who owns the token owns the asset, and ownership can be moved easily and almost instantly by simply moving the token from one wallet to another.
2. Why do that?
The tokenization process can eliminate settlement delays that come from having to clear transactions and record them across multiple record-keeping systems and from using a slew of intermediaries. Also, by placing contractual information such as the terms of ownership and conditions of transfer on a blockchain, assets can be bought and sold in pieces and traded outside of market hours. Tokens can also be programmed to automatically behave in certain ways: For example, to be released to a seller once goods are delivered to a buyer. Tokenized assets could attract young-adult customers who might not have a brokerage account but already trade crypto.
3. Are any financial companies on Wall Street doing this?
Yes. In March, BlackRock Inc., the world’s biggest asset manager, unveiled its first tokenized mutual fund, the BlackRock USD Institutional Digital Liquidity Fund. It holds assets in cash, US Treasury bills and repurchase agreements, which are a kind of short-term loan, and it keeps records on the public Ethereum blockchain. Investors can transfer their tokens 24/7 to other pre-approved investors. Also, in October, BlackRock used JPMorgan’s Tokenized Collateral Network to turn shares in one of its money markets funds into digital tokens, which were then transferred to Barclays Plc as collateral for an over-the-counter derivatives trade between the two institutions. Banks say this setup can allow customers to more easily use assets as collateral and even use assets that may have previously been unusable as collateral. Franklin Templeton already manages a tokenized mutual fund with more than $360 million in assets. JPMorgan is in the early stages of experimenting with deposit tokens, representing bank deposits.
4. What other kinds of assets could be tokenized?
Stocks, art, houses, golf courses, exclusive memberships — you name it. All assets under the sun could theoretically be tokenized, and many proponents believe they will be. Even sneakers from the likes of Nike are already being represented on blockchains to prove their authenticity when the physical pair is traded.
5. What do financial regulators have to say?
US banking regulators are yet to greenlight innovations such as deposit tokens. They have also expressed worry that instant settlement could intensify bank runs. That’s because customers would be able to use the programmable tokens to automatically withdraw funds from banks when bad news hits. But regulators in other parts of the world, such as Singapore, are already working with many financial institutions on tokenization pilots for, among other things, cross-border payments.
6. What are some concerns?
Tokenization could potentially disintermediate some companies, such as broker-dealers, which currently facilitate many financial transactions. The exact setup of a tokenization project matters as well: With blockchain, there’s only one record for each asset, and the holder of that asset owns it. So if a token is transferred to the wrong address or is stolen, it may be lost forever if a public blockchain is used, for example. That’s why many banks are developing or have developed their own private blockchains. Those blockchains will need to learn to talk to one another if the banks want to be able to handle any substantial interbank transactions. Given how much money and talent banks are pouring into the functionality, that’s probably a matter of when, not if.
Source: biznews.com
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Glidelogic Corp. Announces Revolutionary AI-Generated Content Copyright Protection Solution
Blockchain
Ethereum ETFs Aren’t Blockchain But Is A Revolutionary Tech: Top 6 Amazing Reasons To Invest In Them
The financial landscape is rapidly evolving, with the integration of blockchain technology and cryptocurrencies becoming more prominent. Among these, Ethereum ETFs (Exchange-Traded Funds) have emerged as a significant investment vehicle, offering exposure to the Ethereum blockchain’s native cryptocurrency, Ether (ETH), without requiring direct ownership. However, it’s crucial to understand that Ethereum ETFs are distinct from the blockchain itself and serve different purposes in the investment world.
Understanding Ethereum and ETFs
Ethereum: A decentralized platform that enables the creation and execution of smart contracts and decentralized applications (dApps). It operates using its cryptocurrency, Ether (ETH), which fuels the network.
ETF (Exchange-Traded Fund): A type of investment fund that holds a collection of assets and is traded on stock exchanges. ETFs can include various asset classes, such as stocks, commodities, or bonds.
Ethereum ETFs: The Intersection of Traditional Finance and Cryptocurrency
An Ethereum ETF provides a way for investors to gain exposure to the price movements of Ether without directly purchasing the cryptocurrency. This is achieved through an ETF structure, where the fund holds assets linked to the value of Ether, and investors can buy shares of the ETF on traditional stock exchanges.
Key Features of Ethereum ETFs:
- Indirect Exposure: Investors gain exposure to Ether’s price changes without needing to manage or store the cryptocurrency themselves.
- Regulatory Compliance: Unlike the relatively unregulated cryptocurrency market, ETFs operate under the oversight of financial regulators, offering a layer of investor protection.
- Accessibility: Ethereum ETFs are available through traditional brokerage platforms, making them accessible to a broader range of investors.
Why Invest in an Ethereum ETF?
- Diversification: Including an Ethereum ETF in a portfolio can provide exposure to the cryptocurrency market, potentially enhancing diversification beyond traditional assets.
- Convenience and Familiarity: ETFs are a familiar investment product, simplifying the process of investing in cryptocurrencies.
- Professional Management: ETF managers handle the investment decisions, including the buying and selling of assets, which can be advantageous for those less familiar with the cryptocurrency space.
- Regulatory Oversight: ETFs are subject to regulatory scrutiny, potentially offering more safety and transparency compared to direct cryptocurrency investments.
- Potential for Growth: As the cryptocurrency market grows, ETFs linked to assets like Ether may benefit from rising prices.
Key Differences Between Ethereum and Ethereum ETFs
While both are related to the Ethereum blockchain, Ethereum itself and Ethereum ETFs represent different forms of investment:
- Ethereum (ETH):
- Direct ownership of the cryptocurrency.
- Full exposure to Ethereum’s features, including staking and network participation.
- Traded on cryptocurrency exchanges.
- Highly volatile and largely unregulated.
- Ethereum ETF:
- Indirect exposure through shares representing Ether’s value.
- Traded on traditional stock exchanges under regulatory oversight.
- Offers a more stable and familiar investment structure.
- Typically lower volatility compared to direct cryptocurrency ownership.
Future Considerations for Ethereum ETFs
The approval and launch of Ethereum ETFs mark a significant milestone in bringing cryptocurrencies closer to mainstream finance. They offer a convenient and regulated means for investors to gain exposure to the growing digital assets market. However, they also come with limitations, such as not allowing direct participation in the Ethereum ecosystem’s innovations, like dApps and smart contracts.
As the market evolves, we may see more sophisticated financial products that better capture the full potential of the Ethereum ecosystem. For now, Ethereum ETFs provide a balanced option for those interested in cryptocurrency exposure within the framework of traditional finance.
In conclusion, while Ethereum ETFs offer a gateway into the world of digital assets, they should be viewed as complementary to, rather than a replacement for, direct investment in the underlying blockchain technologies. Investors should carefully consider their investment goals, risk tolerance, and the unique attributes of both Ethereum and Ethereum ETFs when making investment decisions.
Source: blockchainmagazine.net
The post Ethereum ETFs Aren’t Blockchain But Is A Revolutionary Tech: Top 6 Amazing Reasons To Invest In Them appeared first on HIPTHER Alerts.
Nexo, a leading institution in the digital assets industry, has reinforced its commitment to data security by renewing its SOC 2 Type 2 audit and attaining a new SOC 3 Type 2 assessment without any exceptions. This rigorous audit process, conducted by A-LIGN, a respected independent auditor specializing in security compliance, confirms Nexo’s adherence to stringent Trust Service Criteria for Security and Confidentiality.
Key Achievements and Certifications
- SOC 2 and SOC 3 Compliance:
- SOC 2 Type 2: This audit evaluates and reports on the effectiveness of an organization’s controls over data security, particularly focusing on the confidentiality, integrity, and availability of systems and data.
- SOC 3 Type 2: This public-facing report provides a summary of SOC 2 findings, offering assurance to customers and stakeholders about the robustness of Nexo’s data security practices.
- Additional Trust Service Criteria:
- Nexo expanded the scope of these audits to include Confidentiality, showcasing a deep commitment to protecting user data.
- Security Certifications:
- The company also adheres to the CCSS Level 3 Cryptocurrency Security Standard, and holds ISO 27001, ISO 27017, and ISO 27018 certifications, awarded by RINA. These certifications are benchmarks for security management and data privacy.
- CSA STAR Level 1 Certification:
- This certification demonstrates Nexo’s adherence to best practices in cloud security, further solidifying its position as a trusted partner in the digital assets sector.
Impact on Customers and Industry Standards
Nexo’s rigorous approach to data protection and compliance sets a high standard in the digital assets industry. By achieving these certifications, Nexo provides its over 7 million users across more than 200 jurisdictions with confidence in the security of their data. These achievements not only emphasize the company’s dedication to maintaining top-tier security standards but also highlight its proactive stance in fostering trust and transparency in digital asset management.
Nexo’s Broader Mission
As a premier institution for digital assets, Nexo offers a comprehensive suite of services, including advanced trading solutions, liquidity aggregation, and tax-efficient credit lines backed by digital assets. Since its inception, the company has processed over $130 billion, showcasing its significant impact and reliability in the global market.
In summary, Nexo’s successful completion of SOC 2 and SOC 3 audits, along with its comprehensive suite of certifications, underscores its commitment to the highest standards of data security and operational integrity. This dedication positions Nexo as a leader in the digital assets space, offering unparalleled security and peace of mind to its users.
Source: blockchainreporter.net
The post Nexo Reaffirms Commitment to Data Protection with SOC 3 and SOC 2 Compliance appeared first on HIPTHER Alerts.
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