Weekly Update: 9th of October

Hodl Team
9 October 2024
Welcome to our weekly update, where we provide insights into the latest developments in the digital assets market.

What happened between the 2nd and the 9th of October?

  • The digital assets market recovered as US economic figures signaled a resilient US economy after increasing tensions and fear of further escalation in the Middle East. Read more
  • Digital asset manager Bitwise files the first S-1 form for an XRP spot ETF with the US Securities and Exchange Commission, even with Ripple’s legal scrutiny. Read more
  • Digital Asset’s Canton Network, an institutional-grade blockchain, tokenizes gold, Eurobonds, and gilts to utilize them as collateral. Read more
  • Swift announced that financial institutions worldwide can start trialing live digital asset and currency transactions on the Swift network in 2025. Read more

Digital assets recover after strong US figures

Tensions in the Middle East intensified when Israel launched a ground offensive in southern Lebanon, prompting a military response from Iran. Concerns about further escalation led many investors to adopt a risk-off approach, resulting in a brief downturn across financial markets and digital assets. While digital assets initially dropped, they gradually regained ground, a recovery strengthened by positive US economic data. The US added over 250,000 jobs—100,000 more than anticipated—and the unemployment rate came in lower than expected, signaling a resilient economy. With growing optimism that the Federal Reserve might achieve a soft landing, markets regained upward momentum.

Bitwise files for the first XRP spot ETF

On the 2nd of October, digital asset manager Bitwise filed the first S-1 form for an XRP, better known as Ripple, spot ETF. Earlier this year, the digital assets market witnessed the first applications for a Solana ETF, which was less surprising compared to XRP due to the latter's legal scrutiny. Since 2020, Ripple has been in legal battles with the SEC, which claims that the sale of XRP tokens constituted a securities contract. After a long dispute, a judge ruled that only sales to institutional investors fell under this classification. However, the SEC has since filed an appeal. Given this situation, Bitwise’s filing for an XRP ETF is noteworthy, as a successful SEC appeal could effectively eliminate any chances of approval. Nonetheless, it’s an exciting development that shows asset managers are beginning to explore a broader range of digital assets, potentially paving the way for others.

Tokenization gains increasingly more traction

Over the past years, the digital assets markets have observed an acceleration in financial institutions exploring and adopting blockchain technology, particularly tokenization. One of these famous examples is the Canton Network, an institutional blockchain created by the firm Digital Asset, allowing firms to experience increased connectivity and transparency. On the 2nd of October, the firm published that it had completed a large pilot with settlement service Euroclear, the World Gold Council, and global law firm Clifford Chance to tokenize gold and bonds — Eurobonds and gilts. On the Canton testnet, the initiative brought together 27 anonymous market players, 11 of whom were observers. They tokenized assets and utilized them as collateral in more than 500 real-time transactions. It is becoming increasingly clear that tokenization is set to become the industry standard for financial institutions, offering speed, transparency, and enhanced connectivity.

Swift to explore digital asset transactions in 2025 

On the 7th of October, global financial messaging provider Swift announced that financial institutions will have the ability to use its platform to conduct digital asset and currency transactions in 2025. The purpose of these experiments is to show how institutions may use their present Swift connection to trade interchangeably across developing and existing asset and currency kinds. According to the utility, recent tests have shown that it can combine various digital asset and currency networks, interconnect global central bank digital currencies (CBDCs), and link public and private blockchains. This would be a monumental step for digital assets as it would allow traditional financial institutions to connect effortlessly with public blockchains and down the line potentially DeFi protocols.

In other digital assets news

  • US asset manager Franklin Templeton launches its tokenized money fund on layer 1 network Aptos, expanding its fund for the fourth time this year, previously launching on Polygon, Arbitrum, and Avalanche.
  • PayPal executed its first business transaction with its proprietary stablecoin PYUSD with Big Four accounting firm Ernst & Young.

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