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Goooood Morning, Rainmakers! ☀️

🇺🇸For those of you in the US, I hope you had a fantastic 4th of July Weekend!🇺🇸 

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

1️⃣ 🇨🇱 Chile’s CSD Just Got Spicier: DCV Upgrades for Security Tokens

2️⃣ 🤖 AI-Powered Security Token: Smart Wealth and Chartered Investment

Without further ado, it's time to…

Get Liquid 💧

A MESSAGE FROM MASTERWORKS

A million dollar Banksy got investors 32% returns?

Mm-hmm, sure. So, what’s the catch?

We know it may sound too good to be true. But it’s not only possible, it’s happening—and thousands of investors are smiling all the way to the bank, thanks to the fine-art investing platform Masterworks.

These results aren’t cherry-picking. This is the whole bushel. Masterworks has built a track record of 8 exits, the last 3 realizing 10.4%, 35%, and 13.9% net returns even while financial markets plummeted.

But art? Really? Okay, skeptics, here are the numbers. Contemporary art prices:

• Outpaced the S&P 500 by 131% over the last 26 years

• Have the lowest correlation to equities of any asset class

• Remained stable through the dot-com bubble and ’08 crisis

Got your attention yet? Offerings can sell out in just minutes but What’s Drippin’ readers can skip the waitlist with this exclusive link.

“Net Return" refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the date the sale is consummated. IRR may not be indicative of Masterworks paintings not yet sold and past performance is not indicative of future results. See important Regulation A disclosures at masterworks.com/cd.

🇨🇱 Chile’s CSD Just Got Spicier: DCV Upgrades for Security Tokens

This week’s newsletter comes to you a couple days later due to 4th of July, and thanks to that we get to squeeze in this news coming out of Chile! Their central securities depository, DCV, is upgrading to use Nasdaq’s digital assets capabilities for issuance, registration, and settlement. This will include lifecycle events such as interest payments.

This upgrade will still keep the Deposito Central de Valores (DCV) interoperable with other depositories, yet enhanced for tokenized assets. Some may say that blockchain will replace central securities depositories (CSDs) and while that may be true one day, today CSD’s are proactively integrating distributed ledger technology to support legacy and new systems.

As we saw in late 2022, SIX Digital Exchange (SDX) has issued bonds with UBS on both their digital CSD and analog version, allowing those preferring tokenized versions to reap the benefits without excluding traditional investors from participating.

This CHF375 million bond was tokenized November 2022 making UBS the first commercial bank to tokenize and trade on a regulated digital exchange. The securities are strategically also held analog on the SIX CSD (traditional) to avoid scaring away investors due to a technology-based barrier to entry. While SIX CSD held them off-chain, their integration with SIX-CSD enabled them to still issue on-chain and reaping the blockchain benefits.

Congratulations to Chile on this forward-thinking move, great example of yet another region embracing tokenized securities 👏🏼

🤖 AI-Powered Security Token: Smart Wealth and Chartered Investment

Smart Wealth (Switzerland) and Chartered Investment (Germany) are introducing what they claim to be the world's first security token for an AI-based multi-asset investment strategy. This issuance is in accordance with the German Investment Code (eWpG) and BaFin regulations.

According to their press release, “Structuring security tokens requires a blend of asset management, legal, structuring, and IT expertise to fully leverage the benefits of blockchain technology” which I believe the Security Token Advisors team can attest to.

Smart Wealth AG and Chartered Investment are using AI to dynamically change allocations in client portfolios. Their flagship product, Multi Asset Global Rotation AMC, launched in February 2021 and now they are offering investors tokenized exposure to it via this offering. This even includes its own ISIN (identification number for securities) on-chain!

Investors will be able to self-custody their security tokens and are taking full advantage of the leading legal framework of the Electronic Securities Act which anticipates European MiCA, making it future-proof.

This isn’t the first time we’ve seen AI enter tokenization though. Just a couple months ago I covered OpenCall Capital’s AI-powered investment platform which was designed to give investors and edge via market insights and other features. Smart Wealth is offering a tokenized issuance of their flagship investment product while OpenCall Capital is offering infrastructure/investment tools. Regardless, it’s exciting to see these two worlds come together as we go into Q3 2023.

Have any thoughts on this? Let me know on Twitter @Jason_Barraza_

💦 What else is Drippin’

The Liquidity Problem - STA Success Network

The STA Success Network will be hosting a panel on The Liquidity Problem on Wednesday, July 19th at 9am EST.

Jason Barraza is joined by Marcus Paart of Equity Shift, Julian Kwan of IX Swap, and Gabriel Sadoun of DigiShares for a meaningful conversation around a problem the whole tokenization industry suffers from.

Have questions you'd like to ask the panel? Email them to Jason ([email protected])!

This is a Success Network Members-Only Event, available under both the STA Insights and full Success Network plans.

Platform Spotlight: Securrency - STA Success Network

The STA Success Network will be hosting a spotlight on Securrency on Wednesday, July 26th at 1pm EST.

Securrency rang in the New Year with a new CEO - Nadine Chakar from State Street Digital. Nadine’s appointment comes shortly after WisdomTree, Inc. announced 9 new SEC-approved blockchain funds with Securrency Transfers, the transfer agent arm of Securrency.

Peter Gaffney is looking forward to discussing the firm's patented Compliance Aware Token (CAT) and institutional control location services for security tokens with Beralda Kokoshi.

Have questions for Beralda? Email them to Peter ([email protected])!

This is a Success Network Members-Only Event, available under both the STA Insights and full Success Network plans.

State of Security Tokens 2023 - Q1 Extended Report

The Security Token Advisors State of Security Tokens 2023 - Q1 Extended report is brought to you by Provenance Blockchain Foundation!

Our Head of Research and Institutional, Peter Gaffney, dives deep with updates from across the industry, from issuers to platforms to protocols. This piece will detail the macro trends taking shape within the tokenization space as a function of service providers like transfer agents, broker-dealers, alternative trading systems, custodians, and third-parties, as well as issuers, blockchain foundations, asset managers, investment banks, and activity that Security Token Advisors sees on its advisory side

Take a read for analysis on common themes emerging for both primary and secondary markets! 👇

This is not financial or investment advice.

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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.