The Sharpe World to Reward Satoshi Believers as China Re-enters Crypto
Everyone is wondering what in the world is going on right now with the global economy. Depending on who you ask, opinions about the current macro environment are as varied as the statistics used to support any given assertion. In this featured article, Arthur Hayes challenges the flawed risk assessment methods used by financial institutions. He argues that these institutions engage in risky activities because they know they will be bailed out by central banks and governments. The article delves into the concept of a "Sharpe World," where institutions follow rules established by academics and rely on long-term government bonds to maintain monetary confidence. However, with the rise of inflation and short-term rates, the narrative questions the relevance of holding long-term government bonds and suggests alternative investments like equities, gold, crypto, and long volatility tail hedges. Interestingly, Hayes highlights the concentration of wealth among the top percentage of Americans and discusses the impact of mass affluent individuals on the crypto market. It touches upon the role of the US government in upholding the financial system, the distribution of wealth, and the implications of China and Japan's economic models. According to Hayes, it appears that our neighbors across the Pacific have the keys for the next bull cycle.
Are Custody Services Table Stakes for TradFi Firms Entering Crypto?
Traditional finance firms are finally showing their hands... On a weekly basis we are hearing more and more about tradfi players entering the digital assets arena. Each one has either developed or acquired their preferred solution for on-ramping their existing clients into crypto. Deutsche Bank has recently shared news about a prototype for a digital asset custody platform and their plans to expand into issuance and trading. The brief story outlines their 4-prong focus starting with institutions. It seems like headline global finance players couldn't resist the temptation of those sweet crypto gains. Better late than never, right? Big banks have finally realized that crypto is here to stay.
Soros Fund Management CEO Dawn Fitzpatrick remains optimistic about crypto despite recent setbacks. During a Bloomberg investment summit, she acknowledged the challenges but saw it as a chance for established financial institutions to lead in the market. Fitzpatrick humorously pointed out the irony of traditional institutions taking the helm in a disruptive industry. She emphasized the need for professional guidance in crypto platforms and the benefits of adhering to long-standing norms for customer asset treatment. In a lighthearted manner, she suggested that some maturity and expertise could bring stability to the world of digital assets. A welcomed feeling for most working within the industry right now. Boiling it down - opportunities abound, if you've been there before. Or if you ride in their wake...
We went back into the music catalog and remember the good ol' days when Lil' Wayne rapped about a "milli" (i.e., million) as the latest disposable amount to flaunt social status. It appears the numbers have gone up significantly since then. Not only does everything cost more - in terms of numerical value, but the cost of capital is getting more expensive too. The dollars are waiting on the sideline, but where does smart money think the next opportunity lies? Apparently, tokenization is the next big move poised to tip the scales. Tokenization can be applied to various industries, including real estate, art, capital markets, and more, promising to unlock trillions of dollars of untapped value and transform the way we perceive ownership and investment. In this article, Bernstein believes we get to $5 trillion in tokenized dollars - which would be about 2% of the current global money supply. Read more about it in the link below.
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