Today in crypto, BlackRock is reportedly exploring tokenized ETFs, Chinese regulators move to curb state-owned firms’ crypto activity in Hong Kong, and Goldman Sachs’ CEO says the Fed is unlikely to cut rates by 50 basis points.
BlackRock weighs ETF tokenization as JPMorgan flags industry shift: Report
BlackRock, the world’s largest asset manager, is reportedly exploring ways to tokenize exchange-traded funds (ETFs) on the blockchain, following the strong performance of its spot Bitcoin ETFs.
Citing sources familiar with the discussions, Bloomberg reported Thursday that the company is considering tokenizing funds with exposure to real-world assets (RWA). Any such move, however, would need to navigate regulatory hurdles.
ETFs have become one of the most popular investment vehicles — so widespread, in fact, that they now outnumber publicly listed stocks, according to Morningstar.
Tokenizing ETFs could potentially allow them to trade beyond standard market hours and be used as collateral in decentralized finance (DeFi) applications.
BlackRock’s interest in tokenization is not new. It already manages the world’s largest tokenized money market fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), which holds $2.2 billion in assets across Ethereum, Avalanche, Aptos, Polygon and other blockchains.
JPMorgan has called tokenization a “significant leap” for the $7 trillion money market fund industry, pointing to the initiative launched by Goldman Sachs and Bank of New York Mellon, which BlackRock will join at launch.
Under the initiative, BNY clients will gain access to money market funds with share ownership registered directly on Goldman Sachs’ private blockchain.
Chinese firms may face limits on stablecoin activity in Hong Kong: Report
Chinese internet giants, state-owned enterprises and financial institutions operating in Hong Kong may face restrictions on stablecoin and crypto activities.
According to a Thursday report by local news outlet Caixin, mainland Chinese firms operating in Hong Kong may be forced to withdraw from cryptocurrency-related activities. The Hong Kong branches of several state-owned enterprises and Chinese banks are also expected not to participate in the race to obtain a Hong Kong stablecoin license.
The news follows reports that HSBC and the Industrial and Commercial Bank of China (ICBC), the world’s largest bank by total assets, plan to apply for stablecoin licenses in Hong Kong. Hong Kong’s new stablecoin regulatory framework came into effect on Aug. 1 with a six-month transition period. Regulators said 77 institutions had expressed interest in applying.
According to Caixin, recent policy shifts mean that Chinese banks and other institutions applying for a Hong Kong stablecoin license will likely withdraw from the race. An anonymous senior financial industry insider reportedly told the outlet that those players may postpone their applications for stablecoin licenses.
The report follows another Caixin article suggesting the Hong Kong Monetary Authority (HKMA) may ease capital requirements for banks handling crypto.
According to a Thursday Caixin report, the HKMA is reportedly considering easing capital rules for banks holding crypto by lowering bank capital requirements.
Goldman Sachs CEO doubts Fed will cut 50 basis points
Goldman Sachs CEO David Solomon said on Wednesday that it’s unlikely the Federal Reserve will cut interest rates by 50 basis points next week, just days after Standard Chartered Bank said it anticipated a bigger cut due to August’s weaker-than-expected jobs report.
“Whether or not we have a 50 basis cut, I don’t think that’s probably on the cards,” he told CNBC. “I’m pretty confident we’ll have a 25 basis rate cut.”
His take aligns with the broader market consensus, as CME FedWatch shows 92.2% anticipate a smaller cut, while 7.8% expect a 0.5% rate cut at the Fed’s Sept. 17 meeting.
Solomon said he “could see one or two other cuts, depending on how economic conditions play out from here.”
This month’s Fed rate cut meeting is significant not just for the broader market but also for crypto, as lower interest rates make riskier assets such as crypto more attractive to investors.
