🇮🇳 Bank of India Betting on Blockchain: Tokenized Collateral Network Pilot

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Gooood morning, Rainmakers! ☀️

🇺🇸 For those in the US, I hope you had a great Memorial Day Weekend 🇺🇸 

As always, we have two captivating topics for you to dive into:

1️⃣ 🇮🇳 Bank of India Betting on Blockchain: Tokenized Collateral Network Pilot

2️⃣ 🏦 JPM’s Got Competition: Broadridge’s Repo Transactions

Without further ado, it's time to…

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🇮🇳 Bank of India Betting on Blockchain

The Small Industries Development Bank of India is now exploring a tokenized collateral network, specifically for Mico, small, and medium enterprises or M-SME’s.

This bank is state-owned and provides assistance to M-SMEs through a range of financial products and services, including loans, guarantees and venture capital however since institutional lenders have a siloed view, a borrower can get away with duplicate pledging of the collateral that results in lender losses and a deterioration of trust. As we have seen in the United States, trust is an asset a bank can ill afford to lose.

How does this work?

The Bank of India is working with Infosys in building this platform on a mission to combat these discrepancies via blockchain’s promise of immutability and transparency.

Information about the loan itself along with the collateralized securities will be on-chain meaning you can’t tamper with it and lenders will be able to see all of a borrower’s loans/pledges. This should address thee duplicate pledging problem.

However as an added layer of due diligence, lenders will also have access to credit check details which informs them on borrowers creditworthiness with existing loans.

It doesn’t stop there though! Regulators are also happy with this for 2 reasons:

1. Automatic enforcement of regulatory restrictions via smart contracts

2. Regulators are notified when those restrictions are modified or turned off

This is being very well received in India. So much so that the Bank’s regulator, the Reserve Bank of India (RBI) said it would consider implementing blockchain in the entire Indian financial system!

🏦 JPM’s Got Competition

So a bit over a month ago I told you about UBS tokenizing cross-border repurchase agreements (repos). Remember what platform they used though?

I’ll give you a second…

It was Broadridge’s Distributed Ledger Repo (DLR) platform! Well here’s an update from them this week: Broadridge is announcing new trades on their intraday repo platform by DRW, Societe Generale, and another Tier 1 bank!

This comes just one month after they had announced their first cross-border repo trades with an Asian bank and UBS as counterparties. JPMorgan has been the go-to example of tokenized repos with their $700B in transaction but Broadridge is proving to be a strong competitor coming in at $1T in monthly volume.

Considering that Broadridge is using DAML, the same language powering the Canton Network (multiple banks), they’re very well positioned to continue growing their monthly volume as the rest of the network familiarize themselves. Could they be taking market share from JPM… 🤔 

💦 What else is Drippin’

Real World Asset Tokenization 2023

With Real-World Assets (RWA) shaping up to be the theme of 2023 within digital assets, Security Token Market just published a primer that looks at 13 public blockchains and sample cases, as well as shows some love to initiatives on the private blockchain side.

RWAs can take the form of real estate, private funds, mortgages, asset-backed securities, even receivables. Essentially, onboarding traditional or existing assets to the blockchain in order to make use of them in the DeFi ecosystem. The idea is that 1) real-world assets serve as superior collateral than an unbacked stablecoin or digital asset and 2) investors and asset owners yearn to make use of the DeFi ecosystem (lending, swapping, real-time settlement) in a controlled and compliant manner. Ideally, the DeFi ecosystem will provide asset owners with added benefits and precision NOT found in the traditional capital markets landscape.

Keep in mind this is geared towards:
-prospective security token issuers with models from active issuers
-asset managers
-tokenization service providers like digital broker-dealers & issuance platforms
-Layer 1 and Layer 2 blockchains, and private networks

This is not financial or investment advice.

Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.