✍️ State of Security Tokens 2023 - Q2 Report

Brought to You by Coinbase

Goooood Afternoon, Rainmakers! ☀️

We are very excited to publish our State of Security Tokens 2023 - Q2 report with Coinbase as the sponsor. As many of you may be aware, our State of Security Tokens series has started out in early 2022 as an industry primer. It then escalated to include institutional updates in late 2022 as that side of the industry gained traction.

Now, it’s a quarterly series covering key themes on the retail and institutional sides, secondary trading activity, comprehensive service provider updates, blockchain developments and use-cases, and additional insights drawn from our advisory and data arms.

The State of Security Tokens 2023 - Q2 report largely covers:

  • Key institutional tokenization initiatives

  • Digital tailwinds in Private Equity, Private Credit, and Commercial Real Estate

  • Secondary Trading Activity

  • M&A and Investments

  • 40+ Service Provider Updates

  • Public and Private Blockchain Developments

We hope you enjoy the read and many thanks again to our sponsor, Coinbase, who is helping bridge the bridges between capital markets and digital assets with their newly launched Prime Web3 Wallet and Base blockchain. To learn more about Coinbase, Onchain Summer, and its institutional services, check out Page 39 in the report.

Here is a word from author Peter Gaffney, Head of Research at Security Token Advisors:

The tokenization theme has only strengthened since the start of 2023 with Q2 arguably applying more pressure than ever. Whether you’re a fan of ‘tokenized assets,’ ‘real-world assets (RWA),’ or maybe prefer the ‘on-chain finance’ nomenclature that’s emerging, the bottom line is that this category within digital assets is now becoming a catch-all - which is something we’ve been expecting.

Tokenization is the digital assets theme that institutions are leaning into. We’ve seen firsthand through our consulting and advisory business that major global asset managers, index providers, commercial banks, and even crypto native firms are evaluating and establishing themselves to prosper as this wave continues to form and as assets transfer to blockchain ledgers. With so many components of existing capital markets to include and improve - from broker-dealers to transfer agent services to fund administration to product distribution channels to deal structuring and to buy-side players like RIAs, wealth managers, and hedge funds - tokenization is truly the next technology overlay to capital markets.

As readers will find out pretty quickly in this publication, the term “tokenization” should be thought of a bit deeper than simply issuing a feeder fund private equity product or a standalone digital fund while 99% of the remaining business line is in legacy form. Rather, begin pondering on the scalability and the benefits that tokenization is enabling in the back- and middle-offices. To really unlock efficiencies that blockchain technology promises at scale, these end-to-end digital solutions that run through the underlying plumbing and operational practices will need to be formed and implemented. That can be done in-house or with the service providers and blockchain partners that we cover in depth here.

With all of that in place, we’ll start to see real buyers and the demand side meet the greater supply that’s already there on the tokenized product side, from real estate to private equity, private credit, and other alternatives, as well as the not-so-niche cohort of money market funds and treasury products that are gaining steam on their way to that $1 billion in collective AUM mark. We hope everybody enjoys the read and finds it useful to their own strategies as it’s largely comprised from the direct conversations and insights we draw as tokenization advisors.

Be sure to also register for our TokenizeThis Virtual Summit October 11-13th for free access. The conference will cover a plethora of topics throughout its panels, fireside chats, and keynotes, carefully curated by the STM team designed to educate attendees about the benefits of tokenization and the varying use cases across capital markets being adopted by financial institutions and private markets alike.

Our VIP Pass includes:

  • Exclusive content and recordings from TokenizeThis conference

  • Signed hard copy of Blockchain Explained written by the founders of STM

  • Limited Edition Hoodie from STM, first-of-its-kind "Blockchain-Verified" for authentication and ownership transfer (only available to the first 150 VIPs)!

Security Token Market Reports: https://reports.stm.co/

TokenizeThis Virtual Summit: https://summit.stm.co/