💎 Tokenized Diamonds: Expobank’s Offering

🏦 HSBC Updates: Custody and Tokenized Gold

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Goooood Morning, Rainmakers! ☀️

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

1️⃣ 💎 Tokenized Diamonds: Expobank’s Offering

2️⃣ 🏦 HSBC Updates: Custody and Tokenized Gold

Without further ado, it's time to…

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💎 Tokenized Diamonds: Expobank’s Offering

We’ve seen quite a few interesting tokenized offerings from whiskey and rum to The Pearl to bitcoin mining. And now we have diamonds!

Financial institution Expobank claims to have issued the first tokenized diamond offering in Russia. Each token, locally known as a Digital Financial Asset (DFA), represents 1/5,000th of a diamond, creating a much lower minimum investment amount for people to be able to participate.

What are the terms?
Let’s dive in.

A 3-carat diamond has a value of 9M rubles ($97,500 USD). Divided into 5,000 pieces gives us $19.50/token which are only available to qualified investors up until December 27, 2023.

The repayment date is in November 26, 2026, calculated by a series of methods:

  • Plan A: a designated calculator on a diamond-rating website based on size, purity, shape, fluorescence and other attributes.

  • Plan B: a diamond price index will be used instead which is also set to launch this month on the Moscow Exchange.

  • Plan C: if neither option is available, investors will receive a fixed 12% premium on their investment.

This of course is not investment advice. That being, it’s an interesting asset class to explore which may fit into individual investors’ portfolios. More so if it becomes tradable given the granularity of each token’s size.

This news comes just a month after Moscow Exchange announced plans to issue real estate digital assets in 2024. Although security tokens have been allowed in Russia since 2021, it’s only as of late that we’re hearing news with new offerings and updates/announcements including:

  • Sberbank opening its DFA platform to retail investors

  • Moscow Exchange receiving the first license for DFA secondary markets

  • Their National Settlement Depository (CSD) becoming a licensed DFA issuer

We’ll be keeping an eye on the Russian market as more tokenization news develops. Stay tuned!

🏦 HSBC Updates: Custody and Tokenized Gold

HSBC has been announcing quite a few headlines lately and I wanted to summarize some of them with you considering they range from offerings to infrastructure.

Starting with an offering, HSBC is now joining WisdomTree Prime (WisdomTree’s app), Sberbank and Mitsui in the tokenized commodities space with their announcement of tokenized gold. HSBC tokenized physical gold stored in their London Vault which can trade on their FX and precious metal platform, HSBC Evolve.

In addition to demand for native digital assets, we are seeing appetite for tokenisation solutions that can maintain a link to specific real-world use cases, such as gold”

John O’Neill, Global Head of Digital Assets Strategy, Markets and Securities Services, HSBC

Speaking of John O’Neill, he also spearheads their HSBC Orion issuance platform which just announced will start offering custody via Ripple’s Metaco. This custody service is meant for institutional clients and only supports tokenized securities, not crypto, issued on third-party platforms. The bank will start offering this service in 2024, completing its digital asset offering for institutional clients.

Metaco is excited to be working with HSBC as it continues to explore the applications of DLT in asset creation and custody. Custody infrastructure such as Metaco’s Harmonize, which integrates with financial institutions’ existing systems, will be critical to how issuers and investors interact, as capital markets and assets in general continue to be represented on distributed ledgers.

Adrien Treccani, CEO and Founder at Metaco

This is something we explored on the “Custody of Digital Assets” panel at TokenizeThis - the fact that seamless, low-cost integrations to existing infrastructure will be the key towards all financial institutions getting onboard with tokenization. While some pieces can be created in-house, others can be integrated if they meet that institution’s level of sophistication. Why is this important? The more in common institutions have, the higher the probability of having interoperable systems rather than everyone siloing off into their own ecosystems.

And last but not least: The Abu Dhabi Securities Exchange (ADX) plans to list HSBC Orion-issued tokenized bonds for secondary market trading. This institutional-level news helps put the UAE into a more blockchain-forward and financial spotlight, building on the momentum they have going from past recent announcements such as the tokenization of The Pearl.

We covered the ADX news in this week’s episode of the Security Token Show which also features some special guests, check it out at 10am EST live streamed on our LinkedIn and Twitter, with the recording also available on YouTube!

💦 What else is Drippin’

The NEW Security Token Show

Have you watched the Security Token Show this week? You’ll notice a new format! We’re going digital, enabling us to include more team members with different perspectives, new segments, and after much demand… Special guests!

That’s right! If you have an announcement or update for your tokenization platform, offering, or other please reach out to me at [email protected].

Want to provide commentary on any given week’s news? Keep an eye out, I may reach out to you. Topics will be posted on the STA Success Network where members will have priority placement so make sure to join if you aren’t a member already!

State of Security Tokens 2023 - Q2 Report

The Security Token Advisors State of Security Tokens 2023 - Q2 report is brought to you by Coinbase!

Our Head of Research and Institutional, Peter Gaffney, dives deep with updates from across the industry, from issuers to platforms to protocols.

This edition 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

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 newsletter 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 newsletter should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.