Issuant Articles

Programmable Assets Have Reached $43 Billion in Value

Carter Bray — Tue, 16 Jun 2026 22:37:41 GMT

In brief: The programmable asset market has crossed $43 billion in total value, driven by issuance in private credit, government securities, and fund structures. Major asset managers, banks, and sovereign-linked issuers are moving beyond pilot programs into production-scale deployment. Regulatory clarity from the SEC and the GENIUS Act has given institutions the framework they need to proceed with confidence.

$43 Billion and Still Concentrated: What the Market Actually Holds

The headline figure reflects a market that has grown with unusual speed but remains structurally narrow. Private credit alone accounted for over 58% of programmable asset flows in the first half of 2025, while government securities accounted for 34%, pointing to strong institutional issuance in the most credit-familiar parts of the capital structure.

Programmable funds - backed by US Treasury bills, bonds, and money market instruments - represent the largest single segment, comprising roughly 44.5% of the total market at approximately $10.5 billion in value, followed by commodities and equities.

That concentration is a feature, not a flaw. Issuers and managers are proving out the infrastructure on instruments they already understand - short-duration, high-quality, liquid - before extending it to more complex asset classes. The pattern mirrors how electronic trading expanded in fixed income: methodology before breadth.

The Institutional Roster Has Changed

This is no longer a market defined by specialist platforms. The names issuing and operating programmable instruments now include the largest asset managers in the world.

BlackRock has established early leadership in bringing institutional-quality products to digital markets at scale, with nearly $150 billion in AUM connected to digital assets. Its programmable treasury fund has grown into the largest such fund in the world, alongside $65 billion in stablecoin reserves and nearly $80 billion in digital asset exchange-traded products.

Franklin Templeton has taken a different but equally deliberate path. The firm amended two Western Asset institutional money market funds to connect directly into US stablecoin reserve structures and programmable distribution channels, without altering their status as SEC-registered 2a-7 MMFs. The amendment preserves the regulatory identity of the instruments while extending their operational reach - a model other managers are watching closely.

Franklin Templeton has also partnered with Binance to allow programmable fund shares to serve as collateral for institutional trades, demonstrating that eligibility and collateral logic can now be enforced at the moment of transfer rather than through post-trade reconciliation.

Institutional adoption is accelerating across other asset classes as well. In real estate, Apex Group has begun providing fund services using Goldman Sachs' Digital Asset Platform, underscoring growing demand for programmable settlement and administration.

The Regulatory Floor Has Been Laid

Market growth at this pace is rarely supply-driven alone. What changed in 2025 was the regulatory posture - in the United States specifically, but with implications across jurisdictions.

In January 2026, the SEC Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets issued a statement setting out a basic taxonomy of programmable securities, elaborating on the principle that "securities, however represented, remain securities."

That position is both a constraint and a clarification. The SEC finds that the legal treatment of digital assets is determined by economic reality rather than technology. While distributed ledger technology and programmable assets can facilitate more efficient, transparent, and cost-effective transactions, increased activity makes strict compliance with applicable legal and regulatory requirements essential.

From a compliance perspective, the SEC is signaling that firms should stop waiting for bespoke rules and instead focus on applying existing obligations thoughtfully and rigorously. For broker-dealers, this means demonstrating how custody rules, supervisory obligations, and books-and-records requirements are satisfied in a distributed ledger environment. For firms engaging with programmable instruments, it means understanding how traditional concepts - possession, control, settlement

Is State Street's SSCXX the New Standard for Stablecoin Reserves?

Patrick Dyer — Tue, 16 Jun 2026 20:29:50 GMT

In brief: State Street Investment Management has launched SSCXX, a Rule 2a-7 government money market fund structured specifically to hold reserves backing dollar-denominated payment instruments under the GENIUS Act. The fund accepts anchor investment from State Street Bank and Trust Company and Anchorage Digital and positions one of the world's largest custodians directly in the reserve management business. For institutions evaluating how to issue, structure, or capitalize payment instruments at scale, the product sets a new bar for what compliant reserve infrastructure looks like.

The GENIUS Act Creates a Mandatory Reserve Architecture

The Guiding and Establishing National Innovation for U.S. Stablecoins Act, passed into law by the United States Congress in July 2025, creates a clearer regulatory framework to utilize money market funds registered under the Investment Company Act of 1940 to back the issuance of stablecoins.

That framework is not permissive - it is prescriptive. Issuers are required to hold at least one dollar of permitted reserves for every one dollar of stablecoins issued, with permitted reserves limited to coins and currency, deposits at insured banks and credit unions, short-dated Treasury bills, repurchase agreements and reverse repos backed by Treasury bills, government money market funds, central bank reserves, and any other similar government-issued asset approved by regulators.

Compliance is not simply a matter of asset selection. The GENIUS Act defines the disclosure requirements of any payment stablecoin issuer, including its redemption policy, monthly attestations of the composition of the reserves, and monthly CEO and CFO certifications of the reports. Issuers operating above the threshold face an additional layer of scrutiny: issuers with more than $50 billion in stablecoins outstanding are required to submit audited annual financial statements.

The Congressional Research Service's overview of the GENIUS Act and the Federal Reserve Bank of Richmond's analysis both confirm that the 1:1 reserve requirement, segregation of reserve assets, and prohibition on rehypothecation are binding obligations - not guidance.

State Street's Product: Structure and Participants

State Street Investment Management's fund is among the first GENIUS Act-aligned government money market funds to support stablecoin issuance at scale. It trades under the symbol SSCXX.

Operating as a registered Rule 2a-7 government money market fund, SSCXX places assets into cash holdings, short-dated U.S. Treasuries, repurchase agreements, and comparable cash equivalents - a configuration intended to deliver liquidity, preserve capital stability, and generate income for reserve holdings.

Its mandate focuses on cash, short-term U.S. Treasuries, repurchase agreements, and other cash equivalents, with objectives that fit stablecoin reserves: preserving principal, maintaining daily liquidity, and keeping a stable $1 net asset value per share.

State Street Bank and Trust Company and Anchorage Digital, home to the first federally chartered crypto bank in the United States, are initial investors in the fund. State Street Investment Management, the asset management arm of State Street Corporation, oversees more than $5 trillion in assets and ranks among the world's largest investment managers.

Why Reserve Management Is Now a Competitive Market

The reserve management business is no longer incidental to stablecoin issuance - it is the central commercial prize. The move intensifies competition among major asset managers such as BlackRock, Franklin Templeton, Fidelity, and JPMorgan to oversee the Treasury bills, cash, and money market funds that support stablecoins. With Tether and Circle already holding tens of billions of dollars

Can a Stablecoin Issuer Freeze Your Funds?

Ian Irizarry — Sat, 25 Apr 2026 00:00:00 GMT

On April 23, 2026, Tether froze more than $344 million in USDT held across two Tron addresses, acting in coordination with the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) and federal law enforcement. The funds were linked to accounts suspected of sanctions evasion connected to Iranian financial networks. Tether Supports Freeze of More Than 344 Million in USDT in Coordination with OFAC and U.S. Law Enforcement

Treasury Secretary Scott Bessent stated: "We will follow the money that Tehran is desperately attempting to move outside of the country and target all financial lifelines tied to the regime." U.S. Treasury Press Release SB0465

Compliance Implications for Institutional Issuers

This action is a clear signal that the compliance obligations governing traditional financial instruments now apply with equal force to programmable assets. For institutions issuing, managing, or transacting in digital assets, several practical obligations follow.

Heightened source-of-funds scrutiny. Counterparties and investors are conducting more rigorous due diligence on the provenance of capital. Institutions that cannot document funding sources to a high standard face material transaction risk.
Compliance as a structural requirement. Regulatory conformance is not a post-issuance consideration. Sanctions screening, KYC/AML controls, and transfer restrictions must be embedded at the point of asset design and maintained through the asset's lifecycle.
Auditability as a commercial asset. Clear, complete financial records reduce friction with institutional counterparties and regulators alike. The capacity to produce a full audit trail on demand is increasingly a condition of market access, not merely a best practice.

Even minor compliance gaps carry disproportionate consequences. Institutions should engage legal counsel early in the issuance process and maintain ongoing review as the regulatory environment evolves.

Frequently Asked Questions

What does this mean for institutions using digital assets in capital-raising or treasury operations?

Transactions in digital assets are subject to the same sanctions regimes as any other financial instrument. Institutions must ensure that all activity is screened against applicable OFAC and international sanctions lists, and that compliance programs are commensurate with the risk profile of the assets and counterparties involved.

How should businesses structure compliance programs to address international sanctions exposure?

Effective programs combine automated screening tools, regular independent audits, and clear escalation procedures. Compliance obligations also shift as sanctions designations are updated, so continuous monitoring is required rather than periodic review.

Are stablecoins appropriate for institutional transactions?

Stablecoins offer price stability and settlement efficiency, but their regulatory treatment continues to develop across jurisdictions. Institutions should conduct legal analysis specific to their use case and ensure that any stablecoin employed in an issuance or transaction structure meets current regulatory requirements in each relevant jurisdiction.

Conclusion

Sanctions enforcement actions of this scale confirm that programmable assets operate within — not outside — the established regulatory perimeter. For institutions issuing or managing real-world assets in digital form, compliance infrastructure is a prerequisite, not an afterthought. The rules governing capital flows apply uniformly; the instruments have changed, but the obligations have not.

European Banks and Digital Assets: What MiCA Has Unlocked

Ian Irizarry — Sat, 25 Apr 2026 00:00:00 GMT

Eight of Europe's top twenty banks now offer live digital asset services. That figure, modest in isolation, marks a structural shift: the continent's largest lenders are no longer observing the market for programmable assets — they are operating inside it.

The Regulatory Foundation: MiCA

The Markets in Crypto-Assets regulation has been the primary enabler. By establishing a single, harmonised framework across EU member states, MiCA gave banks the legal clarity required to extend custody, trading, and transfer services for digital assets within their existing compliance architecture. Regulatory certainty, not market enthusiasm, is what moved institutions off the sideline. European banks accelerate crypto adoption: 8 of top 20 offer live services

Where Banks Are Deploying Services

Several major European institutions have already moved from pilot to production:

BBVA has integrated digital asset trading and custody — covering Bitcoin and Ether — directly into its standard retail and private banking application. BBVA's crypto service launch: another sign of EU's leadership status
KBC Bank became the first Belgian lender to launch regulated digital asset trading through its Bolero platform, operating under MiCA authorisation with Crypto Finance as a licensed partner. KBC Bank launches regulated crypto services with Crypto Finance as partner
CaixaBank has secured EU-wide authorisation to provide custody, order execution, and transfer services for digital assets, establishing infrastructure for a full institutional offering across member states. CaixaBank introduces digital assets investment services

Implications for Issuers and Asset Managers

The expansion of bank-grade digital asset infrastructure has direct consequences for institutions raising capital or managing assets:

Programmed issuance: Equity or fund interests can be issued as digital securities — instruments that carry eligibility and transfer rules directly within the asset. Distribution through established banking channels then becomes operationally viable at scale.
Asset-backed financing: Institutions holding digital assets can use them as collateral within bank lending facilities, providing a financing structure that sits alongside — not in place of — conventional credit arrangements.
Settlement and payment rails: Digital asset infrastructure operated by regulated banks reduces correspondent costs and compresses settlement cycles for cross-border transfers.

What Institutions Should Assess

Are these services equivalent across banks?

No. Authorisation scope varies materially. Some institutions hold custody and execution licences; others are limited to specific asset classes or distribution channels. Institutions should conduct direct due diligence on the precise scope of each bank's MiCA authorisation before structuring any arrangement.

Does this displace existing capital market infrastructure?

It does not. Bank-operated digital asset services extend the available instrument set; they do not replace debt, equity, or fund structures that already function. The practical value lies in programmability — the ability to embed compliance, transfer restrictions, and corporate action logic into the instrument itself.

What is the appropriate starting point?

For institutions exploring programmed issuance or digital asset custody, the logical first step is a structured conversation with relationship banks about their current authorisation scope and operational readiness, benchmarked against the institution's own capital markets objectives.

The convergence of MiCA's regulatory framework and bank-grade operational infrastructure has materially lowered the barrier to issuing and managing digital assets within a compliant, institutional context. The conditions for programmed issuance at scale are in place. The question for issuers and asset managers is how to position within a market that is already moving.

The GENIUS Act: What the First Federal Stablecoin Framework Means for Issuers and Institutions

Ian Irizarry — Wed, 22 Apr 2026 00:00:00 GMT

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, enacted in July 2025, is the first federal framework to govern payment stablecoins in the United States. It introduces mandatory reserve backing, licensing obligations, and consumer protections that will reshape how stablecoins are issued, held, and competed over — with material consequences for banks, non-bank issuers, and institutional participants alike. Full analysis via Grant Thornton.

What the GENIUS Act Requires

The Act targets payment stablecoins — instruments pegged to the U.S. dollar and backed by liquid assets — and establishes four core obligations for issuers:

Licensing and oversight. Issuers must register with federal regulators. Those exceeding $10 billion in issuance fall under federal supervision; smaller issuers may operate under state-level oversight.
Reserve requirements. Issuers must hold 100% reserves in cash, U.S. Treasury securities, or equivalent liquid instruments. The 1:1 backing requirement is not discretionary.
Audit and disclosure. Monthly third-party attestations and regular public reserve disclosures are mandatory, establishing a minimum standard of transparency for institutional counterparties.
Consumer protections. In an insolvency, stablecoin holders hold senior claims ahead of general creditors — a structural protection that distinguishes regulated instruments from their unregulated predecessors.

Enforcement practice will depend on the regulators involved and may vary across federal and state channels as the framework matures.

The Competitive Concern for Banks

Traditional banks have lobbied to delay implementation and tighten the Act's scope, principally on competitive grounds. Their concern: non-bank entities — fintechs and other payment-focused issuers — may issue stablecoins without being subject to the same capital requirements that apply to deposit-taking institutions. The result, in banks' view, is an asymmetric competitive environment.

A secondary point of contention is yield. The Act prohibits issuers from paying interest directly to stablecoin holders, but it does not clearly prohibit affiliated platforms from offering reward or yield programs. Banks have pressed for that gap to be closed, arguing it represents a substantive loophole in the interest-equivalence restriction.

Institutional Implications

For institutions evaluating stablecoin infrastructure, the GENIUS Act materially changes the counterparty landscape. Regulatory clarity at the federal level is likely to support institutional adoption by reducing the compliance uncertainty that has limited engagement to date. Key considerations include:

Partner due diligence. The Act creates a clearer basis for assessing whether a stablecoin issuer meets licensing and reserve standards — reducing, though not eliminating, counterparty risk.
Funding and settlement applications. Compliant stablecoin infrastructure can support payment workflows, tokenized asset settlement, and diversified funding arrangements that were previously difficult to structure under an ambiguous regulatory regime.
Ongoing regulatory engagement. The framework is new and its implementation will evolve. Institutions with active positions in stablecoin-adjacent products should monitor rulemaking closely and engage regulators where appropriate.

The GENIUS Act does not resolve every open question in stablecoin regulation, but it establishes the minimum floor from which institutional-grade infrastructure can now be built and evaluated.

Cryptocurrency ETNs in UK ISAs: What Issuers Need to Know

Ian Irizarry — Wed, 22 Apr 2026 00:00:00 GMT

From April 2026, FCA-approved cryptocurrency exchange-traded notes (ETNs) will be eligible for inclusion within Innovative Finance ISAs (IFISAs). Gains held inside an ISA wrapper are free from UK capital gains tax. For issuers and asset managers designing digital asset products for the UK market, the change materially expands the addressable investor base.

Innovative Finance ISAs: Structure and Scope

IFISAs were established to accommodate alternative investment instruments — principally peer-to-peer loans — that sit outside the scope of conventional Stocks and Shares ISAs. The April 2026 expansion extends eligible assets to include cryptocurrency ETNs that meet FCA requirements.

Key characteristics of the IFISA wrapper:

Tax treatment: Capital gains realised within an IFISA are exempt from UK capital gains tax.
Asset eligibility: Only FCA-approved cryptocurrency ETNs qualify; direct crypto holdings do not.
Market availability: IFISA providers remain fewer in number than mainstream ISA platforms, though the regulatory change is expected to prompt new entrants.

Implications for Issuers

For firms structuring or distributing cryptocurrency-linked instruments, IFISA eligibility represents a meaningful distribution advantage. Investors seeking tax-efficient exposure to digital assets have, until now, had limited options within a regulated wrapper.

Issuers considering this pathway should address three areas:

Instrument structuring: The ETN must be designed to satisfy FCA eligibility criteria for IFISA inclusion. Early engagement with legal and compliance counsel is essential.
Platform distribution: Partnering with established IFISA providers is the most direct route to market. Issuers should assess platform due diligence requirements and investor suitability frameworks in advance.
Investor disclosure: FCA rules require clear, accurate disclosure of the risks associated with cryptocurrency instruments — including volatility and potential for capital loss. Risk warnings and anti-money laundering controls are not optional.

Regulatory Requirements

The FCA retains authority over which instruments may be admitted to IFISAs. No cryptocurrency ETN may be included without FCA approval. Issuers must ensure their products comply with applicable conduct rules, prospectus requirements, and ongoing reporting obligations.

Regulatory essentials for issuers:

Obtain FCA approval for the ETN prior to any IFISA distribution agreement.
Maintain transparent investor communications covering product risks, fees, and liquidity terms.
Implement appropriate safeguards, including risk warnings and AML policies, as conditions of platform admission.

Market Precedent

At least one UK fintech has already launched a Bitcoin ETN structured for IFISA eligibility. By securing admission to an established IFISA platform, the issuer gained access to a pool of investors specifically seeking tax-efficient digital asset exposure — a distribution channel that had not previously existed in this form.

Can all cryptocurrencies be included in IFISAs? No. Only ETNs referencing cryptocurrencies that have received FCA approval for IFISA eligibility qualify. Direct holdings of cryptocurrency do not.

What are the investment risks? ISA tax treatment does not eliminate investment risk. Cryptocurrency instruments carry significant price volatility, and investors may lose capital. Issuers must communicate this clearly.

How should issuers confirm eligibility? Engagement with legal and financial advisers experienced in FCA authorisation and ISA regulations is the appropriate starting point. Eligibility determinations rest on specific product characteristics and FCA guidance.

For the underlying regulatory context, see the Morningstar UK article on the amended ISA rules.

Kraken's 56 Million Tax Forms: The Case for Digital Asset Reporting Reform

Ian Irizarry — Wed, 22 Apr 2026 00:00:00 GMT

In 2025, Kraken submitted 56 million Form 1099-DAs to the IRS. Approximately 18.5 million of those forms covered transactions under $1. More than half covered transactions under $10. Only around 8.5% exceeded the $600 threshold that typically anchors reporting obligations in other asset classes. The volume and distribution of those filings make a pointed argument: the existing tax framework was not designed for the transaction granularity of digital asset markets. Kraken has set out its position in full.

Compliance Costs Are Disproportionate to Economic Activity

For individual investors, reconciling a large volume of small digital asset trades against current reporting requirements is operationally burdensome. Standard tax software does not accommodate digital asset activity at scale, which has created a market for specialist tools priced between $49 and $599 annually — a recurring compliance cost with no corresponding economic benefit at low transaction values.

For businesses and issuers, the administrative load is more acute. Managing a high volume of small transactions diverts resources from core operations, and the reporting obligation is uniform regardless of whether a transaction carries any material tax consequence.

The Case for a De Minimis Exemption

A de minimis threshold would exclude small digital asset transactions from treatment as taxable events. Under current rules, a routine payment — purchasing a $7.99 item using Bitcoin, for example — constitutes a taxable disposal requiring cost basis tracking and gain or loss calculation. At that transaction size, the compliance burden is wholly disproportionate to any revenue at stake.

A well-structured exemption, with clear definitional boundaries to prevent misuse, would materially reduce the reporting volume for exchanges, investors, and the IRS alike, while preserving full reporting obligations where economic activity is meaningful. Further detail on the proposed reform is available here.

Staking Rewards: A Structural Mismatch

Current IRS guidance treats staking rewards as ordinary income at the moment of receipt, regardless of whether those rewards have been realised through a sale or exchange. This creates a phantom income problem: a taxpayer incurs a tax liability on an asset that has not been converted to cash and may decline in value before it is.

Allowing taxpayers to elect taxation upon disposal — rather than receipt — would align the timing of the tax event with the realisation of economic value. It would also reduce the volume of incidental tax filings generated by staking activity that has not yet produced a liquid return. The staking taxation issue is discussed further here.

Implications for Capital Formation

Regulatory ambiguity and disproportionate compliance obligations are material considerations for institutional investors evaluating exposure to digital asset ventures. Where tax treatment is uncertain or administratively costly, risk-adjusted returns are depressed. Clearer exemptions and more rational treatment of staking income would reduce a friction point that currently affects both retail participation and institutional capital allocation in this market.

FAQs

What is a Form 1099-DA?

Form 1099-DA is the IRS reporting instrument for digital asset disposals and transactions. It records all reportable digital asset activity for a given tax year. Further information is available via Kraken's support documentation.

Why does current law require reporting on every digital asset transaction, regardless of size?

Existing rules apply uniformly to all digital asset trades. There is no materiality threshold equivalent to those that exist in other areas of tax law. This produces reporting volumes — as Kraken's 2025 filing illustrates — that are operationally unmanageable and yield minimal incremental tax revenue.

How would a de minimis exemption affect businesses?

It would eliminate the obligation to track and report transactions below a defined threshold, reducing administrative overhead and allowing operational focus to return to core business activity.

Kraken's 2025 filing is, in effect, a documented record of where current tax policy creates friction without proportionate benefit. A de minimis exemption and revised treatment of staking income are targeted, technically sound reforms. For issuers, exchanges, and institutional participants operating in this market, their adoption would reduce compliance costs and improve the clarity that capital formation requires.

A $35 Million Control Failure: What the Shetty Fraud Case Tells Institutions

Carter Bray — Mon, 09 Mar 2026 16:03:20 GMT

In March 2026, former Fabric CFO Nevin Shetty was sentenced to two years in federal prison for wire fraud. Over the course of his tenure, he misappropriated $35 million of company capital into a personal investment operation — without board knowledge or authorisation. The case is a direct illustration of what governance and control failures cost.

The Facts

Nevin Shetty joined Seattle-based software company Fabric as CFO in March 2021. He helped draft the company's own investment policy, which mandated conservative, low-risk capital deployment. Despite that, he redirected $35 million of company funds into high-risk speculative investments through a privately held vehicle, HighTower Treasury, which he controlled.

Neither Fabric's executives nor its board were informed. The transfers were conducted without authorisation and outside the bounds of the policy Shetty himself had authored.

Initially, the positions generated a modest $133,000 return. In May 2022, the collapse of the Terra ecosystem wiped out nearly the entire position. The financial damage forced Fabric to lay off 60 employees. Shetty was subsequently convicted on four counts of wire fraud.

Former startup CFO gets 2 years in prison for wire fraud, crypto-scheme that cost company $35M | DOJ Press Release

What the Case Exposes

Three control failures compounded to produce this outcome.

1. Policy without enforcement. Fabric had an investment policy. Shetty wrote it. Its existence did not prevent the breach — because no independent mechanism verified that treasury activity conformed to it. A written policy that is not tested against actual cash flows is not a control; it is a document.

2. Absent board visibility. A CFO was able to transfer $35 million across multiple transactions over an extended period with no board-level detection. That is a structural gap in financial oversight, not an isolated lapse. Boards and audit committees require timely, independently prepared reporting on treasury positions and material capital movements to discharge their oversight function.

3. Inadequate counterparty and personnel diligence. Shetty's conflict of interest — operating a personal investment vehicle while directing company capital — was not identified prior to or during his tenure. Thorough diligence on principals with fiduciary authority, including review of outside business interests, is a basic precaution that this case demonstrates cannot be treated as optional.

Practical Implications for Institutions

The lessons here are not novel, but the Shetty case gives them concrete form.

Enforce the investment policy, not just its existence. Regular, independent reconciliation of treasury activity against authorised parameters is the mechanism that makes a policy operational.
Require board-level transparency on capital deployment. Material movements of company capital should be subject to independent reporting lines that do not pass solely through the officer responsible for executing them.
Conduct structured diligence on fiduciary appointments. Background review, conflict-of-interest declarations, and ongoing disclosure obligations for senior financial officers are proportionate to the authority they hold.
Calibrate risk exposure to mandate. Speculative, illiquid, or highly volatile positions have no place in a treasury portfolio governed by a conservative mandate. When investment policy and actual practice diverge, the divergence should be visible — and consequential.

Context

The Shetty case is not isolated. A separate Seattle-area fraud involving a technology employee — sentenced to three years for misappropriating employer and third-party funds for personal use — underscores that this pattern of conduct is recurring, not exceptional. Both cases reinforce that sound financial governance is a structural requirement, not a periodic exercise.

FAQs

How can institutions reduce exposure to this class of fraud? Through layered controls: independent reconciliation of treasury activity, board-level reporting on capital deployment, structured diligence on fiduciary appointments, and a clear escalation path for employees who identify policy breaches.

What is the risk when investment practice diverges from investment mandate? Significant. Undisclosed deviation from an authorised investment policy creates legal, financial, and reputational exposure — compounded when the deviation involves speculative or illiquid positions that cannot be unwound quickly under adverse conditions.

Why does transparency in financial operations matter to investors and counterparties? Because it is the basis on which they extend trust and capital. Institutions that can demonstrate rigorous, independently verified financial governance are materially better positioned to attract and retain institutional relationships.

CME Group's 24/7 Crypto Derivatives: What Continuous Trading Means for Institutional Markets

Ian Irizarry — Sun, 22 Feb 2026 16:02:33 GMT

CME Group's Around-the-Clock Crypto Derivatives: Implications for Institutional Markets

From May 29, 2026, CME Group will extend trading in cryptocurrency futures and options to a continuous, 24-hour schedule — subject only to a brief weekend maintenance window. The change is a material structural development in U.S. regulated derivatives, aligning exchange-traded instruments with the settlement and price-discovery rhythms of the underlying digital asset markets. CME Group: Coming May 29, 2026 — Crypto futures and options 24/7 trading

Operational Considerations for Institutions

For asset managers, corporate treasuries, and capital-raising entities, continuous derivatives access carries several practical consequences:

Real-time hedging. Exposure to digital asset price movements can be managed intraday and across sessions, without the gap risk that arises when regulated venues are closed while underlying markets remain open.
Liquidity depth. Extended hours broaden the pool of active participants across global time zones, which tends to compress bid-ask spreads and improve execution quality over time.
Cross-border portfolio management. Institutions operating across jurisdictions can align hedging activity with local market hours rather than subordinating it to U.S. session constraints.

What Changes Structurally

Traditional regulated exchanges operate within defined sessions. CME's extension removes that constraint for its crypto derivatives suite, creating a single, continuous regulated venue for Bitcoin and Ether futures and options. The practical effect is that price discovery in listed derivatives will remain open during the same hours as spot digital asset markets — reducing the informational asymmetry that previously accumulated overnight and over weekends.

Suitability and Compliance

Continuous access does not alter the underlying risk profile of these instruments. Institutions should assess:

Risk tolerance and mandate alignment. Not every investment policy statement or fund mandate accommodates derivative overlays on digital assets. A review of governing documents is advisable before extending existing programs.
Operational readiness. Continuous trading requires monitoring and execution infrastructure capable of operating outside standard business hours.
Regulatory compliance. Existing obligations under applicable derivatives regulation — including reporting, margin, and documentation requirements — apply irrespective of session timing. Institutions should confirm their compliance frameworks cover the expanded schedule.

A Considered Position

CME Group's move is a considered response to a structural gap: regulated derivatives closing while the underlying market does not. For institutions already active in listed crypto derivatives, the extension removes a meaningful operational friction. For those evaluating entry, it lowers one practical barrier — continuous, exchange-regulated access — while leaving the substantive questions of suitability and mandate squarely in place.

Staying current with structural market changes of this kind is routine institutional practice. The extension of trading hours does not require a revised view on digital assets; it does warrant a review of how existing risk management and hedging programs are configured.

Borrowing Against Staked Assets Without Leaving Regulated Custody

Ian Irizarry — Sun, 15 Feb 2026 16:03:59 GMT

Anchorage Digital, Kamino, and Solana Company have introduced a tri-party custody model that allows institutions to borrow against natively staked SOL without removing assets from regulated custody. Collateral management, loan-to-value controls, and liquidations are handled programmatically, while assets remain in segregated accounts throughout. Solana Company NASDAQ HSDT Becomes First Digital Asset Treasury to Enable Borrowing Against Natively Staked SOL in Qualified Custody

New Mechanics for Institutional Liquidity

Anchorage Digital, Kamino, and Solana Company have jointly introduced a tri-party custody arrangement that allows institutions to borrow against staked SOL while those assets remain in qualified, segregated custody at Anchorage Digital Bank. No asset transfer is required to access liquidity. Solana Company NASDAQ HSDT Becomes First Digital Asset Treasury to Enable Borrowing Against Natively Staked SOL in Qualified Custody

Institutional Implications

For institutions holding staked digital assets, the arrangement addresses three operational requirements:

Custody integrity: Staked SOL remains in a segregated account at Anchorage Digital Bank, satisfying regulatory custody requirements without interruption.
Liquidity access: Kamino's lending markets provide borrowing capacity against the collateral position without requiring an asset transfer or unstaking event.
Continued yield accrual: Staking rewards continue to accrue to the account holder while the assets serve as collateral.

How the Tri-Party Arrangement Operates

The model assigns a distinct role to each party: details

Anchorage Digital manages collateral operations via its Atlas platform — including loan-to-value ratios, margin calls, and liquidations — in its capacity as qualified custodian.
Kamino provides access to lending markets, enabling institutions to draw credit against staked collateral without relinquishing custody.
Anchorage Digital Bank holds all assets in segregated accounts throughout the life of the transaction, maintaining the regulated custody chain.

Significance for Institutional Participants

This structure resolves a long-standing tension for institutions seeking to deploy digital assets as collateral: how to access liquidity while preserving compliance obligations. The arrangement offers three concrete advantages:

Compliance continuity: Assets do not leave a regulated custodian at any point, allowing institutions to participate in programmatic lending markets without compromising their custody or compliance frameworks.
Operational efficiency: Automated collateral controls and real-time monitoring reduce manual oversight requirements and margin-call latency.
Capital efficiency: Institutions avoid the friction of unstaking — including associated transaction costs and re-staking delays — while maintaining full exposure to staking yield.

Case in Point: Solana Company's Treasury Application

Solana Company (NASDAQ: HSDT), a publicly traded digital asset treasury, was the first institution to adopt this model. The company is using its SOL holdings as collateral to support treasury management operations and to fund participation in network security and expansion — without liquidating or moving the underlying position.

Frequently Asked Questions

Q: Is this arrangement available to institutions that currently hold staked SOL?

A: The model is designed for institutional holders of staked SOL seeking liquidity without an asset transfer. Institutions should engage Anchorage Digital and Kamino directly to assess eligibility and borrowing terms.

Q: What risks should institutions evaluate?

A: While the structure enhances compliance continuity and custody security, institutions should conduct independent review of borrowing terms — including interest rates, loan-to-value thresholds, and liquidation mechanics — before entering into any arrangement.

Q: Does this model affect existing compliance frameworks?

A: Because assets remain with a regulated custodian throughout, the arrangement is designed to be consistent with existing institutional compliance protocols. That said, legal and compliance teams should review the specific terms applicable to their jurisdiction and mandate.

Operational Consideration

Market volatility can affect the value of collateral positions and trigger margin calls or liquidations under the programmatic controls managed by Anchorage Digital's Atlas platform. Institutions should monitor collateral metrics on an ongoing basis as part of standard treasury risk management.

The tri-party custody model represents a meaningful advance in how institutions can program their digital asset positions — accessing liquidity, preserving yield, and maintaining custody without compromising regulatory standing. As the range of assets eligible for such arrangements expands, the underlying mechanics will become an increasingly standard component of institutional treasury practice.

Hong Kong SFC Expands Regulated Access to Virtual Asset Financing and Derivatives

Ian Irizarry — Sat, 14 Feb 2026 16:03:52 GMT

Hong Kong's Securities and Futures Commission (SFC) has extended its regulatory framework to permit licensed brokers to offer margin financing against virtual assets, and to grant professional investors access to perpetual contracts. The measures apply institutional-grade risk controls to a new asset class and reinforce Hong Kong's position as a regulated centre for digital asset activity.

SFC Extends Margin Financing to Virtual Assets

The SFC has amended its conduct requirements to allow licensed brokers to extend margin loans where Bitcoin (BTC) and Ethereum (ETH) are held as collateral. The framework mirrors the risk discipline already applied in traditional securities lending: brokers must apply appropriate haircuts, maintain robust collateral management, and assess client suitability before extending credit. China Daily HK

Key provisions:

Eligible collateral: BTC and ETH only, reflecting their relative liquidity and market depth among virtual assets.
Risk controls: Brokers are required to apply conservative haircuts and maintain collateral levels sufficient to absorb market movement.
Client suitability: Brokers must satisfy themselves that clients understand the risks specific to virtual asset collateral before lending proceeds.

Perpetual Contracts for Professional Investors

The SFC has also introduced a regulatory pathway for perpetual contracts — derivative instruments with no fixed expiry — restricted to professional investors. The framework sets defined leverage limits and minimum margin requirements, consistent with the SFC's broader approach to managing systemic risk in complex instrument classes. QuikNotes: Hong Kong's SFC Approves Crypto Margin Financing and Perpetual Contracts

Structural requirements:

Leverage limits: Capped to constrain outsized exposure.
Margin requirements: Minimum thresholds maintained throughout the life of the position.
Market stability controls: Additional safeguards apply to preserve orderly market conditions.

Implications for Institutions and Issuers

For asset managers, issuers, and brokers operating in or entering the Hong Kong market, these developments carry practical significance:

Expanded capital access: Virtual assets held as collateral can now support margin financing arrangements, broadening the range of instruments that qualify in lending structures.
Regulatory clarity: Defined conduct obligations reduce compliance uncertainty and support institutional confidence in the market.
Product scope: The availability of regulated derivatives for professional investors extends the range of instruments that licensed intermediaries can offer.

Compliance Considerations

Institutions seeking to operate within this framework must meet existing SFC licensing obligations for Virtual Asset Service Providers (VASPs) and Virtual Asset Trading Platforms (VATPs), in addition to the conduct requirements specific to margin financing and derivatives. Air Corporate: Hong Kong Crypto License

Material obligations include:

Licensing: Confirm applicable VASP and VATP authorisation requirements before offering in-scope products or services.
AML/KYC: Maintain Anti-Money Laundering and Know Your Customer programmes adequate for the risk profile of virtual asset activity.
Investor protection: Adhere to the SFC's conduct standards for both professional and retail clients, as applicable.

Institutions should also account for the continued volatility characteristics of virtual assets when structuring collateral and margin arrangements.

FAQs

Q: Who qualifies as a professional investor under Hong Kong's regulations?

A: Individuals with portfolios of at least HK$8 million; corporations with portfolios of at least HK$8 million or total assets of at least HK$40 million; and institutional investors including licensed banks, broker-dealers, and asset managers. Lexology: Panoramic Hong Kong Cryptoassets & Blockchain

Q: Is margin financing for virtual assets available to retail investors?

A: No. Under the current framework, margin financing against virtual asset collateral is restricted to professional investors.

Q: What are the consequences of operating without the requisite authorisation?

A: Unlicensed activity may result in substantial financial penalties, imprisonment of responsible officers, and permanent disqualification from the market. CCN: Hong Kong Crypto Regulations - VASP & Stablecoin Licensing Explained

UAE Registers Its First USD-Backed Payment Token Under the PTSR

Ian Irizarry — Thu, 05 Feb 2026 16:14:53 GMT

The Central Bank of the UAE (CBUAE) has registered USDU, the country's first USD-backed payment token, under its Payment Token Services Regulation (PTSR). Issued by Universal Digital International Limited, USDU now operates within a defined regulatory framework, offering institutions a compliant instrument for digital settlements and payments.

The UAE's First Regulated USD-Backed Payment Token

The Central Bank of the UAE (CBUAE) has formally registered USDU under its Payment Token Services Regulation (PTSR) — making it the first USD-backed payment token to receive this designation in the country. Issued by Universal Digital International Limited, USDU is a dollar-pegged instrument that operates within the CBUAE's regulatory perimeter, giving institutions a defined, compliant channel for digital transactions.

What USDU Is, and What It Is Not

USDU is a payment token pegged 1:1 to the US dollar. Its reserves are held at established UAE banking institutions, including Emirates NBD and Mashreq. Crucially, USDU is scoped for digital asset settlements and derivatives — it is not intended for retail or point-of-sale use.

Key characteristics:

Regulatory standing: The first USD-backed payment token registered by the CBUAE under the PTSR.
Price stability: Maintained through a 1:1 dollar peg.
Reserve transparency: Reserves custodied at regulated UAE banks.
Jurisdictional compliance: Operates exclusively within the PTSR framework.

Operational Relevance for Institutions

Settlement Efficiency Across Borders

Cross-border payment flows — typically encumbered by correspondent banking chains and multi-day settlement cycles — can be executed more efficiently using a regulated, dollar-denominated payment token. For institutions managing international capital flows or receiving foreign investment, near-real-time settlement reduces both counterparty exposure and operational cost.

Illustrative case: A UAE-incorporated entity receiving capital from a US-based investor may use USDU to effect settlement promptly, with reduced intermediary fees relative to traditional wire transfers.

Liquidity Management

The 1:1 dollar peg allows institutions to hold a digital instrument without exposure to currency volatility. For treasury functions requiring predictable valuations, this characteristic supports more disciplined liquidity planning.

Regulatory Certainty

Operating under the PTSR framework means USDU carries a defined compliance status within the UAE. Institutions can incorporate it into payment, settlement, or investment workflows with clarity on its legal standing. Institutions should nonetheless confirm alignment with their own regulatory obligations and seek appropriate legal counsel prior to integration, as the regulatory landscape continues to evolve.

Frequently Asked Questions

How does USDU differ from other payment tokens?

USDU is the first USD-backed payment token formally registered under the CBUAE's PTSR. That regulatory status distinguishes it from instruments operating outside a sanctioned framework and provides a defined compliance basis for institutional use.

Is USDU suitable for commercial purchases?

No. USDU is designated for digital asset settlements and derivatives within the UAE, not for general commercial payments or retail transactions. Source: Enterprise AM

How can institutions begin using USDU?

Institutions may engage directly with Universal Digital International Limited or its authorised distribution partners to integrate USDU into existing financial workflows, subject to applicable regulatory requirements.

In Practice: Operational Impact

An import-export firm domiciled in the UAE that adopted USDU for supplier payments reported reduced transaction costs relative to conventional banking channels, faster settlement timelines, and continued compliance with local regulations — a combination that materially improved working capital management.

The Broader Regulatory Signal

The CBUAE's registration of USDU reflects a deliberate institutional approach to digital asset oversight: permitting regulated instruments to operate within clearly defined boundaries, rather than leaving the market to self-organise. For issuers and asset managers operating in or considering the UAE, this development signals both the availability of a compliant digital settlement instrument and a maturing regulatory infrastructure for real-world asset activity in the region.

Institutions evaluating digital asset strategies in the UAE should account for USDU as a live, regulated option — and assess how it fits within their broader payment and settlement architecture.

Post-Quantum Cryptography Becomes a Strategic Priority for the Ethereum Foundation

Ian Irizarry — Sun, 25 Jan 2026 16:15:41 GMT

The Ethereum Foundation has formally elevated post-quantum cryptography (PQC) to a top strategic priority, establishing a dedicated team to advance quantum-resistant security across the network. The initiative includes active protocol engineering, biweekly developer working sessions, and two $1 million grant prizes — creating direct engagement opportunities for institutions and technology firms building in this space.

The Ethereum Foundation Formalises Its Post-Quantum Position

In January 2026, the Ethereum Foundation transitioned post-quantum cryptography from a research interest to an operational mandate. It established a dedicated Post-Quantum (PQ) team led by cryptographic engineer Thomas Coratger, with contributions from Emile, known for his work on leanVM. The move reflects a deliberate shift from theoretical inquiry to active protocol development. Ethereum Foundation Post-Quantum Security Team

Justin Drake, senior researcher at the Ethereum Foundation, was direct on the strategic significance:

"After years of quiet R&D, EF management has officially declared PQ security a top strategic priority." Ethereum Foundation Post-Quantum Security Team

Why Quantum Computing Demands Immediate Attention

The cryptographic methods underpinning digital asset infrastructure today — most notably those built on elliptic curve cryptography (ECC) — are vulnerable to quantum attack. Shor's algorithm can solve the mathematical problems on which ECC security depends in a fraction of the time required by classical computation. Wallet security and transaction integrity both face exposure if the transition to quantum-resistant standards is not addressed ahead of the threat.

The scale of institutional unpreparedness is notable: nearly half of enterprises acknowledge they have not yet taken steps to address quantum cybersecurity risks. Post-Quantum Blockchain Cryptography Nearly Half of Enterprises Aren't Prepared for Quantum Cybersecurity Threats

Active Initiatives Within the PQ Programme

The Ethereum Foundation's PQ team is advancing work across three primary areas:

Protocol and Wallet Security Upgrades: The team is actively implementing quantum-resistant cryptography at the protocol level, moving beyond research into engineering. Ethereum Foundation Makes Post-Quantum Security Top Network Priority
Biweekly Developer Working Sessions: Led by Antonio Sanso, these sessions address post-quantum transaction models, account abstraction, and emerging cryptographic methods — providing a structured forum for technical engagement.
LeanVM Integration: LeanVM, a streamlined zero-knowledge proof virtual machine optimised for quantum-resistant hash-based signatures, is central to Ethereum's PQ architecture. LeanVM Integration

Grant Funding for Quantum-Resistant Development

The Ethereum Foundation has committed material resources to accelerate external contributions, including two $1 million prizes:

Poseidon Prize: Directed at hardening the Poseidon hash function against quantum attack.
Proximity Prize: A broader award advancing post-quantum cryptographic techniques across the ecosystem. Poseidon & Proximity Prizes

These programmes offer structured pathways for institutions and technology firms developing quantum-resistant solutions to access funding and establish working relationships with the Foundation's PQ team.

Engaging with the Initiative

Firms with relevant capabilities have several avenues for involvement:

Monitor Foundation announcements and participate in the biweekly developer sessions to track evolving protocol requirements.
Engage the PQ team directly to align research and development programmes with the Foundation's technical roadmap.
Submit for grant prizes as a mechanism to fund qualifying work and formalise collaboration.

Implications for the Broader Market

The Ethereum Foundation's formal commitment to post-quantum security raises the baseline expectation for the broader digital asset infrastructure market. Addressing quantum risk is no longer a horizon concern — it is an active engineering and standards challenge. Institutions and technology providers that engage with this transition now are better positioned to maintain the security standards that regulators, counterparties, and clients will increasingly require. For firms building quantum-resistant capabilities, the Foundation's programme represents both a validation of the priority and a concrete channel for engagement.

Which Networks Are Gaining Ground in Real-World Asset Issuance?

Ian Irizarry — Sat, 03 Jan 2026 16:31:53 GMT

How Ethereum Established the Tokenization Standard—and Where That Standard Is Being Tested

Ethereum has been the default network for issuing real-world assets for several years. Its compliance-oriented token standards, established developer ecosystem, and institutional familiarity earned it a commanding position. By mid-2025, Ethereum held approximately 66.6% of the total real-world asset market—roughly $12.5 billion in issued assets. Ethereum Role in Tokenization Revolution

That position is not under threat of collapse, but it is being tested. Ethereum's transaction costs, throughput constraints, and scalability limitations have created space for alternative networks and Layer-2 solutions. The Next Chapter in the Public Chain Landscape

Solana: Measurable Growth in Real-World Asset Issuance

The Numbers

Solana's tokenized asset market reached $873.3 million in December 2025, a 10% increase within that month alone, with participating wallet addresses rising approximately 18.4%. Solana Sees Record $873m in Tokenized RWAs Year-to-date, that represents a 140% increase from approximately $418 million at the start of 2025. Solana Tokenized Assets Soar 2025

What Is Being Issued

Notable instruments now issued or expanded on Solana include:

Ondo Finance's USDY and OUSG — yield-bearing Treasury products. State of Solana Real-World Assets
BlackRock's BUIDL fund — expanded its presence to Solana, demonstrating that institutional fund structures are no longer confined to a single network. State of Solana Real-World Assets
Apollo's ACRED — a private credit fund issued on Solana with compliance frameworks appropriate for institutional participants. State of Solana Real-World Assets

What Issuers Are Evaluating

Settlement speed and cost: Sub-$0.01 transaction fees and block finality under 0.4 seconds are material advantages for high-frequency or high-volume issuance.
Institutional participation: J.P. Morgan issued $50 million in commercial paper on Solana, using USDC on a public network. JP Morgan Harnesses Blockchain Debt Issuance
Asset class breadth: Tokenized equities, government securities, and private credit funds have all been structured on the network.

One operational consideration: Solana has experienced periodic network outages. Issuers for whom continuous availability is a hard requirement should weigh this alongside the performance advantages.

Polygon, ZKsync, and Other Networks

Ethereum retains its lead, but Polygon POS has established a meaningful position in digital bonds and structured instruments, with some analysts ranking it as Ethereum's closest competitor in real-world asset issuance. Tokenized Asset Weekly Updates

ZKsync Era holds approximately 17.2% of real-world asset market share in certain analyses; Aptos registers around 4%, with Solana near 3.9% at comparable periods. Solana Tokenized Assets Soar 2025

Each offers improved throughput, lower execution costs, and Layer-2 scaling options that are increasingly relevant to fund structures, structured finance instruments, and tokenized debt.

Institutional Activity: Recent Examples

J.P. Morgan issued $50 million in commercial paper on Solana via USDC. JP Morgan Harnesses Blockchain Debt Issuance
Galaxy Digital issued its own equity on Solana, enabling continuous global settlement. Galaxy Digital Tokenize Stock
Euroclear, HSBC, and Bank of America have each entered agreements through R3 to move tokenization activity onto Solana, representing a significant signal from the traditional financial sector. Banks Sign Deals Through R3 to Shift Tokenization onto Solana

What Issuers and Asset Managers Should Weigh

Advantages of Emerging Networks

Lower issuance costs: Execution fees on Solana and comparable networks are substantially below Ethereum mainnet.
Faster time to market: Quicker settlement and more direct integration paths reduce operational drag.
Broader investor reach: Both institutional and qualified retail investors are active across multiple networks, expanding the addressable market for new structures.

Considerations That Remain

Regulatory precedent: Ethereum has the more established record with legal and compliance frameworks. Alternative networks are maturing, but the precedents are thinner.
Ecosystem depth: Stablecoin liquidity, compliance tooling, and available technical infrastructure remain more developed on Ethereum.
Network trust: Institutional confidence in any network is built over time and through track record. Ethereum's lead here is real, even as others close the gap.

Key Diligence Questions for Any Issuance

Whether evaluating a network for a new programme or advising an issuer on infrastructure decisions, the following questions warrant deliberate answers:

Network selection rationale: What are the material advantages in cost, speed, and compliance support for this specific instrument?
Asset class and instrument structure: Private credit, government securities, real estate, or equity each carry distinct legal, custody, and reporting requirements.
Eligibility and compliance controls: Are transfer rules enforced at the instrument level? Is KYC/AML integrated with the issuance structure? Does the framework satisfy applicable securities regulations?
Liquidity and secondary market access: Where will the instrument trade? What are the mechanics for redemption, yield distribution, and collateral use?

Why the Market Is Moving Now

Several structural factors are accelerating network diversification in real-world asset issuance:

Institutional demand for yield in a moderate-rate environment is drawing more asset managers toward programmable instruments.
Pressure to improve settlement efficiency, auditability, and transparency is encouraging banks and fund administrators to evaluate network options more actively.
Technical improvements in throughput, composability, and stablecoin infrastructure have made alternative networks viable for high-value, compliance-sensitive issuance.

Ethereum's Remaining Position

Ethereum retains approximately 58–66% of real-world asset value across networks. Solana Tokenized Assets Soar 2025 Its stablecoin liquidity, settlement infrastructure, and programme of ongoing upgrades—including Layer-2 scaling developments—continue to reinforce its position for many use cases. Where trust, legal precedent, and liquidity concentration matter most, Ethereum remains the reference standard.

Frequently Asked Questions

Q: Is Solana as regulatory compliant as Ethereum for institutional asset issuance? Not yet at parity. Many programmes on Solana operate within sound compliance frameworks, but Ethereum has more established legal precedent and regulatory familiarity. The critical factor in any jurisdiction is the compliance architecture of the issuer's chosen structure—not the network in isolation.

Q: Can equity or private credit instruments be issued on Solana? Yes. Apollo's ACRED and Galaxy Digital's equity issuance are active examples. Issuers must address jurisdiction-specific requirements, custody arrangements, and securities filings regardless of network.

Q: What return profiles should investors expect from tokenized real-world asset instruments? That depends entirely on the underlying asset. Government securities carry lower risk and correspondingly lower yield. Private credit and alternative fund structures may offer higher returns, with commensurate diligence requirements, liquidity constraints, and lock-up periods.

Q: How do institutional investors evaluate tokenized real-world asset programmes? The same fundamental criteria apply as in traditional structures—cash flow quality, legal seniority, risk-adjusted return—alongside infrastructure-specific factors: network execution costs, settlement speed, transfer rule enforcement, and secondary market access.

Solana's growth and the activity of Polygon, ZKsync, and others represent a structural shift in how institutions are approaching network selection for real-world asset issuance. The decision is no longer a default—it is a considered one. Issuers that approach it with the same rigour applied to instrument structure, regulatory compliance, and investor eligibility will be better positioned to execute at scale and build durable investor confidence.

JPMorgan's MONY: What a Tokenized Money-Market Fund Signals for Real-World Asset Issuance

Ian Irizarry — Tue, 16 Dec 2025 16:22:06 GMT

JPMorgan is launching My OnChain Net Yield Fund ("MONY") on Tuesday, 16 December 2025. It is a tokenized money-market fund issued on Ethereum, available to qualified investors — individuals with ≥ $5 million and institutions with ≥ $25 million in investable assets — with a $1 million minimum subscription. JPMorgan tokenized money-market fund on Ethereum

Why MONY is significant for institutional issuers

MONY is notable less as a fund product than as a structural signal: a major asset manager has issued a regulated, exchange-eligible instrument on a public ledger, with programmable ownership, real-time auditability, and settlement mechanics that differ materially from conventional money-market vehicles.

What the launch demonstrates:

JP Morgan Asset Management launches its first tokenized money-market fund — Regulatory compatibility. Backed by U.S. Treasury securities and fully collateralised repurchase agreements, MONY is structured within existing securities law — confirming that programmable instruments need not operate outside the regulatory perimeter.
JP Morgan Asset Management launches its first tokenized money-market fund — Dual subscription channels. Investors may subscribe with cash or USDC via JPMorgan's Morgan Money platform, integrating both conventional and digital settlement rails within a single instrument.
JP Morgan Asset Management launches its first tokenized money-market fund — Programmable ownership mechanics. Real-time ownership visibility, direct peer transfers, collateral use, and accelerated settlement are operational features of the instrument — delivered through JPMorgan's Kinexys platform on Ethereum.

How MONY operates

MONY is structured as a 506(c) private placement, restricting participation to accredited investors. JP Morgan Asset Management launches its first tokenized money-market fund
The fund is issued on the public Ethereum network. Subscribers receive digital fund units held in a blockchain wallet — instruments that carry their own transfer and ownership rules. JPMorgan steps further into crypto with tokenized money fund
Underlying assets are U.S. Treasuries and fully collateralised repurchase agreements — instruments selected for capital preservation and liquidity. JP Morgan Asset Management launches its first tokenized money-market fund
Subscriptions and redemptions are processed in either cash or USDC through the Morgan Money platform. JPMorgan steps further into crypto with tokenized money fund

Eligibility and minimum investment thresholds

Participation is restricted to qualified investors meeting the following criteria:

Individuals: ≥ $5 million in investable assets JPMorgan tokenized money-market fund on Ethereum
Institutions: ≥ $25 million in investable assets JP Morgan Asset Management launches its first tokenized money-market fund
Minimum subscription: $1 million, regardless of investor category JPMorgan tokenized money-market fund on Ethereum

MONY is an institutional instrument by design. Its eligibility thresholds and structural features are calibrated accordingly.

Implications for issuers and asset managers

MONY offers a reference point — not a template — for institutions considering programmable issuance. Several structural observations are relevant:

Settlement velocity. Tokenized instruments compress settlement timelines and reduce intermediary dependencies. Issuers building fund structures or capital-raising programmes should account for this shift in operational expectations.
Auditability as a structural feature. Real-time ownership records and auditable transfer histories are now available by design in instruments like MONY. Institutional investors will increasingly regard these as baseline capabilities, not enhancements.
Stablecoins as a settlement rail. USDC's inclusion as a subscription currency is not a novelty; it is an operational choice with legal, compliance, and custody implications. Issuers operating across jurisdictions should evaluate its relevance within their own programmes.

BlackRock's BUIDL fund provides a further reference: an Ethereum-based tokenized Treasury instrument that similarly combines yield with programmable transfer mechanics. BNY Mellon and Goldman Sachs Step into Tokenized Money Market Funds

Risks and structural considerations

Issuers and investors evaluating MONY — or instruments structured similarly — should weigh the following:

Regulatory development. Tokenized securities operate within a framework that continues to evolve. The GENIUS Act clarified certain aspects of stablecoin usage in mid-2025, but the broader regulatory environment for tokenized instruments remains subject to change. JPMorgan tokenized money-market fund on Ethereum
Operational security. Programmable instruments require governance frameworks encompassing legal, technical, and custody controls. Wallet security and smart contract integrity are operational risks that require dedicated oversight.
Secondary market liquidity. MONY is redeemable only by qualified investors, and secondary market depth for tokenized fund units remains limited. Issuers and investors should model redemption mechanics carefully.
Investor familiarity. Institutional adoption of programmable instruments is advancing, but not uniform. Clear, precise disclosure — not advocacy — is the appropriate communication posture.

What JPMorgan's leadership has said

"Active management and innovation are at the heart of how we deliver new solutions for investors navigating today's financial landscape." — George Gatch, CEO, J.P. Morgan Asset Management. JP Morgan Asset Management launches its first tokenized money-market fund

"With Morgan Money, tokenization can fundamentally change the speed and efficiency of transactions, adding new capabilities to traditional products." — John Donohue, Head of Global Liquidity. JP Morgan Asset Management launches its first tokenized money-market fund

Frequently asked questions

Is MONY relevant to fund managers considering tokenized issuance?

As a structural reference, yes. MONY demonstrates that a regulated, institutional-grade fund instrument can be issued on a public ledger with programmable transfer mechanics and dual settlement rails — within existing legal frameworks. It is not a blueprint, but it is evidence of what is now operationally feasible.

When is the right moment to pursue programmable issuance?

That depends on the issuer's legal and operational readiness, the instrument type, and investor expectations. Compliance frameworks must be in place before issuance begins. The relevant question is not whether to pursue programmable issuance, but how to structure it correctly from the outset.

How should issuers think about liquidity in tokenized instruments?

Secondary market liquidity for tokenized securities is currently limited relative to conventional instruments. Valuation models and redemption mechanics are still developing. Issuers should establish clear terms and communicate them precisely to investors at the point of subscription.

Is MONY confined to Ethereum?

MONY is issued on the public Ethereum network via the Kinexys Digital Assets platform. JPMorgan steps further into crypto with tokenized money fund Programmable issuance is not network-exclusive, but network selection carries implications for security, cost, and institutional adoption. Ethereum's depth of institutional infrastructure is a relevant factor in that decision.

MONY marks a meaningful step in the issuance of programmable, real-world instruments by a major asset manager. For institutions considering how to structure, issue, and operate assets at scale — whether fund units, fixed income instruments, or other securities — it illustrates both the structural possibilities and the operational rigour that credible programmes require.

BlackRock and the Shift to Yield-Bearing ETH Exposure

Ian Irizarry — Fri, 21 Nov 2025 16:28:27 GMT

BlackRock has filed an amended proposal with Nasdaq to allow its iShares Ethereum Trust ETF (ETHA) to stake ETH rather than hold it passively — seeking regulatory approval to generate yield on behalf of shareholders. The move marks a meaningful shift in how the largest institutions are approaching digital asset exposure. BlackRock seeks staking option for iShares Ethereum Trust in new filing

From Passive Exposure to Productive Asset

In July 2025, BlackRock filed an amended Nasdaq 19b-4 proposal to permit ETHA to stake ETH through regulated third-party providers. Rather than holding ETH as a passive price instrument, the fund would lock ETH with validators participating in Ethereum's proof-of-stake consensus, earning protocol rewards in return. BlackRock seeks staking option for iShares Ethereum Trust in new filing

The effect is structural: ETH moves from a store of value to a yield-generating holding. Staking rewards — currently in the range of 2–7% annually, depending on network participation, validator uptime, and applicable penalties — would be passed back to shareholders after fees. Mitrade Insights

"A staking yield is a meaningful part of how you can generate investment return in this space." — Robbie Mitchnick, BlackRock Head of Digital Assets. BlackRock CEO says staking could boost Ether ETFs

BlackRock has since registered an "iShares Staked Ethereum Trust ETF" entity in Delaware — not yet approved, but a clear signal of intent. Fidelity and VanEck are pursuing comparable structures. BlackRock takes first step toward a staked ETH ETF

Implications for Fund Managers and Issuers

Yield as a structural expectation

Institutional investors are accustomed to yield — coupons, dividends, distributions. A passive ETH holding that offers no income return is a harder allocation to justify internally when a yield-bearing alternative is available. BlackRock's filing formalises what has been an emerging expectation: digital asset products should carry income characteristics, not merely price participation.

For managers structuring digital asset funds or ETH-linked instruments, the question is no longer whether to offer yield, but how to structure it compliantly and with appropriate risk disclosure.

Regulatory position and SEC review

BlackRock's amended filing remains under SEC review. The Commission has not yet approved staking within an ETF wrapper, and has historically treated staking arrangements with caution — particularly regarding whether staking rewards constitute securities or investment contracts under U.S. law. SEC delays decision on BlackRock's Ethereum staking ETF proposal

Tax treatment of staking rewards at the ETF level also remains unsettled. Managers entering this space will need legal frameworks that are explicit on reward classification, distribution mechanics, and investor disclosure obligations.

Scale and market signal

BlackRock's ETH ETF added over $22 billion in digital asset holdings in Q3 2025, driven primarily by ETH inflows. BlackRock adds $22.46 billion in cryptocurrencies in Q3 2025 report If ETHA moves to staking, the scale of ETH locked with validators would be material — with corresponding effects on network participation rates and yield levels for all stakers.

Key Risks

The following operational and regulatory risks are relevant to any institution evaluating staking exposure:

Regulatory classification. The SEC may treat staking income as a securities offering or investment contract, with compliance implications for fund structuring.
Tax treatment. Staking rewards at the ETF level are subject to evolving guidance; clear disclosure to investors is essential.
Validator risk. Slashing penalties for validator misbehaviour or downtime directly reduce returns and can affect net asset value.
Custody requirements. Staking demands audited, institutionally-grade custody and validator infrastructure.
Yield variability. Staking returns decline as participation increases; projected yields are not fixed. Coinglass: Staking yields and ETF considerations

Considerations for Issuers and Platform Operators

For institutions structuring ETH-linked products or building administration infrastructure, several practical points follow from BlackRock's filing:

Compliance architecture first. Any staking-integrated product requires explicit treatment of regulatory, tax, and operational risk before investor documentation is finalised.
Custody and validator selection. Institutional staking depends on the quality and auditability of the underlying service providers. Third-party relationships need rigorous due diligence and contractual clarity.
Liquidity requirements. ETF structures require the ability to meet redemptions. Liquid staking instruments or redemption reserve mechanisms are a structural necessity, not an optional feature.
Differentiation through reliability. As more managers enter this space, operational track record — uptime, audit history, and incident disclosure — will be the basis of differentiation.

Frequently Asked Questions

Will BlackRock's filing receive SEC approval? The SEC has acknowledged receipt of the amended filing but has not approved it. The regulatory timeline remains uncertain. BlackRock seeks staking option for iShares Ethereum Trust in new filing

What yield does ETH staking currently offer? Approximately 2–7% annually, subject to network participation levels, validator performance, and applicable penalties. Coinglass

How are staking rewards distributed within an ETF structure? Under the proposed structure, the ETF locks ETH with authorised staking providers, who pass protocol rewards back to the fund. Net rewards are then distributed to shareholders in accordance with the fund's governing documents and applicable regulations. Block.cc

Should managers build staking infrastructure or engage third-party providers? For most institutions, third-party engagement offers a faster path to market with lower operational risk. Proprietary infrastructure may provide control and margin advantages at scale, but only where the institution can demonstrate institutional-grade security, compliance, and audit capability.

The Broader Shift

BlackRock's filing is not an isolated event. It reflects a broad institutional recalibration: ETH, and digital assets more generally, are being evaluated as productive holdings with income characteristics — not merely speculative positions. Passive exposure vehicles may face structural competition from yield-bearing equivalents as this trend matures.

For asset managers, fund administrators, and issuers, the practical task is clear: understand the compliance requirements, build the operational infrastructure, and structure products that can deliver documented, auditable returns to institutional investors.

Brazil's IOF expansion: what cross-border digital asset taxation means for issuers and institutions

Ian Irizarry — Thu, 20 Nov 2025 18:24:13 GMT

Brazil's Ministry of Finance is moving to extend the IOF — its financial transactions tax — to digital assets used in cross-border payments, with stablecoins the primary target. The change closes a regulatory gap that has allowed participants to route international capital flows outside traditional foreign-exchange frameworks. Institutions and issuers with exposure to Brazil should assess the compliance and cost implications now.

The regulatory development

Brazil's Ministry of Finance is proposing to bring certain digital asset transactions within the scope of the IOF, Brazil's established tax on financial transactions. Under current rules, digital assets are subject to income tax on capital gains but fall outside the IOF framework. The proposal would reclassify stablecoins and international digital asset transfers as foreign-exchange operations — subjecting them to the same IOF rates, reporting obligations, and anti-money laundering requirements that apply to conventional FX transactions. Exclusive: Brazil eyes taxing crypto for cross-border payments, sources say

Brazil's Central Bank has already established the regulatory foundation. New rules effective February 2026 define stablecoins and qualifying digital asset transfers as foreign-exchange operations, moving this from policy discussion to active implementation. Brazil Central Bank crypto rules: stablecoins foreign exchange

Why this matters for institutions operating across borders

For any institution conducting cross-border transactions, raising international capital, or managing payment flows that involve digital assets denominated in foreign currencies, this shift has direct operational and financial consequences.

Cross-border payment costs: Transfers denominated in stablecoins — previously outside the IOF — will likely carry the same tax burden as equivalent FX transactions. Brazil to tax crypto for cross-border payments
Import and customs exposure: Digital asset payments used to settle import invoices below declared values are an explicit enforcement target. Customs authorities are expected to apply additional scrutiny.
Capital raising: Cross-border funding flows conducted via stablecoins will likely face enhanced reporting requirements and potential IOF liability, affecting net proceeds and deal structure. Brazil crypto tax cross-border crackdown

Exemptions or thresholds for smaller transactions remain possible but have not been confirmed. Institutions should not assume any blanket relief applies without reviewing the final rules.

The scale of the gap being closed

Brazil's move is grounded in documented transaction volumes and estimated fiscal exposure:

Approximately 227 billion reais (roughly USD 42.8 billion) in digital asset transactions were recorded in the first half of 2025, up approximately 20% year-on-year.
Stablecoins account for nearly two-thirds of that volume. Bitcoin represents approximately 11%.
Authorities estimate that more than USD 30 billion annually in import and foreign-exchange activity is currently routed through unregulated digital asset channels, outside the scope of existing IOF and FX frameworks. Brazil crypto tax cross-border crackdown

What the new framework requires

The proposed and incoming measures follow a consistent structure:

Stablecoins and qualifying international digital asset transfers are reclassified as foreign-exchange operations, subject to IOF, mandatory reporting, and AML obligations equivalent to those governing conventional FX. Brazil Central Bank crypto rules: stablecoins foreign exchange
Digital asset service providers will be required to obtain licences and meet expanded regulatory standards.
Transactions conducted through foreign platforms, exchanges, and self-custody arrangements will fall within the reporting perimeter. Brazil crypto tax cross-border crackdown

Institutional preparation: a practical checklist

Map digital asset flows. Identify every cross-border transfer involving digital assets — counterparties, instruments, volumes, and custodial arrangements.
Review contractual terms. Clarify tax and FX risk allocation in payment and investment agreements. Where IOF applies, determine which party bears the cost.
Engage Brazilian tax and legal counsel. The rules are in their final stages. Local expertise is material to accurate compliance planning.
Evaluate payment alternatives. Depending on the applicable IOF rate, conventional FX settlement may offer a lower total cost once the new regime takes effect.
Provision for compliance costs. Licensing, enhanced reporting, and audit exposure should be reflected in operational budgets.

Regulatory objections and government responses

Concern	Regulatory position
Disproportionate burden on smaller participants	No retroactive application is anticipated. Threshold-based exemptions remain under consideration.
Risk of constraining institutional adoption of digital assets	Regulators frame this as alignment with international standards and closure of a structural inequity, not a restriction on the asset class. Brazil closes crypto loophole tax align global standards boost revenue
Implementation complexity	Rollout will be phased, with February and May 2026 as the principal milestones. Brazil Central Bank crypto rules: stablecoins foreign exchange

Key questions for institutions

Which digital assets will be subject to IOF?

Only stablecoins and virtual assets formally classified as foreign-exchange operations under the Central Bank's rules. The classification does not extend to all digital assets at inception. Brazil Central Bank crypto rules: stablecoins foreign exchange

Which transaction types are in scope?

Cross-border payments, transfers, disposals, exchanges, and transfers to self-custody arrangements through regulated providers. Card-related obligations are also included. Brazil Central Bank crypto rules: stablecoins foreign exchange

What is the implementation timeline?

The foreign-exchange classification takes effect in February 2026. Reporting and licensing requirements are being phased in subsequently. Brazil Central Bank crypto rules: stablecoins foreign exchange

Does this affect cross-border capital raising?

Almost certainly. Cross-border funding flows denominated in stablecoins are likely to trigger IOF liability or require restructuring. Counterparties and investors will expect full regulatory transparency.

Could this affect import duty obligations?

Yes. The use of stablecoins to understate declared import values is a stated enforcement priority. Authorities have cited material fiscal losses attributable to this practice. Exclusive: Brazil eyes taxing crypto for cross-border payments, sources say

Illustrative cases

A Brazilian importer that settled a portion of invoices in USDT to reduce declared IOF and FX exposure may be required to reclassify those transactions and settle outstanding liabilities under the new framework.
Digital asset service providers are already advancing licence applications, increasing compliance staffing, and tightening AML procedures in anticipation of the February 2026 effective date.

Implications for capital markets and fundraising

Institutions raising capital across Brazilian borders or managing inbound investment flows should anticipate the following:

Counterparties and investors will require detailed disclosure of tax and regulatory exposure. Legal and compliance documentation should reflect the new framework.
IOF and associated compliance costs will affect net proceeds and may require adjustment to deal economics or valuation assumptions.
Transaction structures that rely on stablecoin settlement may need to be reconsidered in favour of conventional FX or hybrid arrangements.
Robust internal controls and financial reporting systems capable of tracking digital asset flows and supporting regulatory submissions will be required.

Brazil's extension of the IOF to cross-border digital asset transactions reflects a broader global pattern: jurisdictions are bringing digital assets within the perimeter of existing financial regulation rather than treating them as a separate category. For institutions with material exposure to Brazil — whether through payments, capital raising, or asset management — the time to assess structural and compliance implications is before the February 2026 effective date, not after.

Ethereum for Institutions: What the Foundation's New Portal Signals for Asset Issuers

Ian Irizarry — Thu, 30 Oct 2025 16:25:09 GMT

What the Ethereum Foundation's institutional portal covers

The Ethereum Foundation has launched Ethereum for Institutions — a dedicated resource consolidating guidance for enterprises, financial institutions, and developers building on Ethereum infrastructure. The portal addresses real-world asset issuance, stablecoins, privacy tooling, Layer-2 scaling, and compliance in a single reference. Source: OKX News

This is a meaningful signal. An official resource from the Foundation — oriented around institutions, not retail participants — reflects where durable adoption is concentrated.

Real-world asset issuance: current scope

Issuance of programmable assets on Ethereum has reached material scale.

Ethereum currently hosts over 75% of all on-chain real-world assets by value. Source: OKX News
Active issuers include BlackRock, Ondo Finance, Maple, and Centrifuge, each operating across distinct asset classes. Source: Fast Bull
Stablecoin issuers — including Tether, Circle, and PayPal — are highlighted as participants in settlement infrastructure. Source: Fast Bull

For institutions evaluating where to issue programmable assets, this concentration of counterparties and liquidity is an operational consideration, not merely a technical one.

Privacy and compliance architecture

The portal documents privacy and compliance tooling available to institutional deployments.

Zero-knowledge proofs (ZK proofs), trusted execution environments (TEEs), and fully homomorphic encryption (FHE) are presented as implementable controls, with practical guidance rather than conceptual treatment. Source: OKX News
Institutions may elect public mainnet or hybrid and private deployment models — preserving confidentiality where required while maintaining auditability across the broader structure. Source: Crypto Times
The portal addresses alignment with global regulatory standards, including KYC and GDPR obligations. Source: Fast Bull

The availability of configurable privacy models is particularly relevant for issuers operating across jurisdictions with differing disclosure requirements.

Scaling infrastructure: Layer-2 networks

Institutional use cases require throughput and cost efficiency that the Ethereum mainnet alone does not always provide. The portal documents a set of Layer-2 networks already securing significant value.

Linea, Starknet, Base, Scroll, and Unichain are cited as active networks, collectively securing tens of billions in value. Source: OKX News
Network-level metrics — including stablecoin distribution, transaction costs, and settlement throughput — are provided to support infrastructure selection.

For issuers programming transfer rules, coupon schedules, or eligibility conditions into assets, Layer-2 selection directly affects execution cost and settlement latency.

Staking and yield protocols

The portal covers staking and restaking protocols relevant to institutions seeking yield on Ethereum holdings.

Protocols including Lido, RocketPool, Ether.fi, and EigenLayer are referenced as options for institutional staking and restaking, with associated yield generation. Source: Fast Bull
Network resilience: over 1.1 million validators contribute to the security and continuity of the underlying infrastructure. Source: Fast Bull

Institutional case studies

The portal cites several deployments of note.

BlackRock and Securitize: issuance of tokenized U.S. Treasury funds — a direct example of a major asset manager operating programmable fund units on Ethereum. Source: Crypto Times
Visa: settlement flows using USDC across Ethereum and Layer-2 networks. Source: Ethereum.org Enterprise
eToro and Coinbase: infrastructure and issuance build-outs involving programmable assets. Source: Crypto Times

These deployments span asset management, payment settlement, and platform infrastructure — indicating breadth across institutional use cases.

What this means for asset issuers

The launch of a dedicated institutional portal from the Ethereum Foundation consolidates, in one place, the technical and compliance reference material that institutions have previously had to assemble from disparate sources.

For issuers considering where and how to issue programmable assets, the portal offers:

A clear account of the privacy and compliance tooling available.
Documentation of the scaling options suited to different throughput and cost profiles.
Live benchmarks and case studies against which to evaluate infrastructure decisions.

The depth of existing institutional participation — across asset managers, payment networks, and issuers — makes Ethereum infrastructure a considered choice rather than a speculative one.

Frequently asked questions

Is this portal relevant only to firms already operating on Ethereum? No. It is addressed to enterprises and financial institutions evaluating Ethereum as an issuance and settlement infrastructure, including those approaching from a traditional finance context. Source: OKX News

What compliance tools does the portal document? Zero-knowledge proofs, fully homomorphic encryption, and trusted execution environments, alongside guidance on public, hybrid, and private deployment models. Source: OKX News

What are the principal risks for institutions operating on this infrastructure? Regulatory uncertainty across jurisdictions, evolving technical standards, and competitive dynamics in the provider landscape. The portal's compliance guidance is intended to help institutions navigate known risk categories, though it does not eliminate jurisdictional complexity.

Ethereum for Institutions is available at ethereum.org/enterprise. Issuers, asset managers, and financial institutions evaluating programmable asset infrastructure will find it a substantive starting point.

Japan's Banks May Be Cleared to Hold Digital Assets: What Institutions Need to Know

Ian Irizarry — Sun, 26 Oct 2025 17:15:38 GMT

Japan's Financial Services Agency (FSA) is reviewing rules that would allow banks to hold and trade digital assets — including Bitcoin — under defined capital requirements and risk controls. If enacted, the reforms represent a material shift in how Japanese financial institutions can participate in digital asset markets, with implications for institutional capital deployment, custody infrastructure, and programmable asset issuance.

The regulatory shift

Under rules established in 2020, Japanese banks are prohibited from directly holding or investing in digital assets, primarily on grounds of price volatility and balance-sheet risk. Japan May Let Banks Hold Crypto Under New FSA Proposal
The FSA is now reviewing amendments that would permit banks to purchase and hold digital assets, subject to capital adequacy requirements and defined risk-management frameworks designed to contain systemic exposure. Japan May Let Banks Hold Crypto Under New FSA Proposal
The proposed reforms would also allow banking groups to register digital asset exchange subsidiaries and operate trading and custody services — broadening the range of financial institutions that can participate directly in these markets. Japan May Let Banks Hold Crypto Under New FSA Proposal

Implications for the institutional capital landscape

Expanded institutional participation. Bank authorisation to hold digital assets would open balance-sheet capital to direct investment in programmable asset markets — including tokenised funds, structured products, and digital securities.
Improved liquidity conditions for asset issuers. Banks cleared to support digital asset offerings, secondary markets, and collateralised lending against digital assets would reduce the cost of capital for issuers operating in these markets.
Custody and infrastructure demand. Banks entering this space will require robust custody, risk management, and settlement infrastructure. Institutions with existing capabilities in these areas are well positioned to serve as counterparties or service providers.
Regulatory integration reduces issuer risk. As digital assets are brought within standard banking oversight, the regulatory risk premium that funders and investors currently attach to these instruments is likely to compress.

How institutions are already positioning

Nomura Holdings is preparing to apply for a licence to offer digital asset trading services to institutional clients — indicating that major Japanese financial institutions are building capacity in anticipation of regulatory change. Nomura Holdings Preparing to Apply for a Licence to Offer Digital Asset Trading Services
Daiwa Securities Group has begun offering yen-denominated lending against Bitcoin and Ether as collateral, demonstrating existing demand for structured products that incorporate digital assets. Daiwa Securities Group Offering Collateralised Lending Against Digital Assets
MUFG, SMBC, and Mizuho — Japan's three largest banking groups — are jointly developing a yen-pegged stablecoin intended to accelerate and reduce the cost of corporate settlements. Japan Plans to Allow Banks to Trade Bitcoin and Other Digital Assets

What asset managers and issuers should do now

Establish banking-grade governance and risk disclosure

As banks become potential investors and counterparties, they will apply credit and risk standards consistent with prudential regulation. Issuers should ensure risk disclosures, governance frameworks, and custody arrangements meet those standards — not as a future aspiration, but as a present operational baseline.

Align instruments with established legal classification

Instruments that carry their own transfer rules, eligibility conditions, or coupon logic should be structured and documented in alignment with Japan's Financial Instruments and Exchange Act (FIEA) and equivalent frameworks. Early classification certainty reduces execution risk for both issuer and investor. Crypto Regulations in Japan

Engage financial institutions on infrastructure roles

Banks entering digital asset markets will require settlement, custody, audit, and compliance infrastructure. Institutions that can offer these capabilities — or integrate with those that do — are positioned to participate in the first wave of bank-led activity in this market.

Track the legislative timeline

Proposed amendments — including reclassification of digital assets under the FIEA — are expected to take legislative form as early as 2026. The window between regulatory intent and enactment is the appropriate time to structure products, align documentation, and establish counterparty relationships. Japan to Give Crypto Assets Legal Status in Financial Products, Nikkei Says

Risks that warrant monitoring

Balance-sheet volatility. If capital requirements are set at insufficient levels, price movements in held assets could create instability. The adequacy of the FSA's proposed risk controls will be a key variable.
Tax treatment lags regulation. Japan currently taxes gains on digital asset holdings at comparatively high rates. Until tax rules are amended to reflect the new regulatory status of these instruments, the after-tax economics of bank holdings may be constrained. Tax rules may lag regulatory change
Implementation uncertainty. Until legislation is enacted, institutions should treat the proposals as indicative, not operative. Conservative institutions may defer activity until the legal framework is settled.

Key questions

When might these changes take effect? Legislative amendments, including reclassification of digital assets under the FIEA, are expected by early 2026 based on current reporting. Reuters: Japan to Give Crypto Assets Legal Status in Financial Products

Which assets would banks be permitted to hold? Major liquid assets such as Bitcoin and Ether are the most likely initial candidates. Other instruments would likely be assessed individually against liquidity and volatility criteria. Japan May Let Banks Hold Crypto Under New FSA Proposal

Would banks be permitted to distribute digital assets to retail clients? Current proposals suggest retail access would be more restricted in the first instance, with banks likely engaging institutional clients directly or through licensed exchange subsidiaries. Japan Times: FSA Banks Crypto

How does Japan's approach compare internationally? Several global banks — including Standard Chartered — already offer institutional digital asset trading. Other jurisdictions are expanding approved instruments to include exchange-traded products and tokenised securities. Japan's approach is notable for the extent of its legal guardrails, prioritising regulatory integration over speed of access. FT: Global Banks and Digital Assets

The FSA's proposal marks a considered step toward integrating digital assets into Japan's regulated financial system. For asset managers, issuers, and infrastructure providers, the priority now is operational readiness: governance that meets institutional standards, instruments structured within existing legal frameworks, and the counterparty relationships needed to operate at scale when the rules change.

Sony Bank's OCC Charter Filing: What Regulated Stablecoin Issuance Signals for Institutional Asset Services

Ian Irizarry — Fri, 17 Oct 2025 12:56:14 GMT

Sony Bank has filed for a U.S. national trust banking charter via its subsidiary Connectia Trust, N.A. The application, submitted to the Office of the Comptroller of the Currency (OCC), covers USD-pegged payment instrument issuance, reserve asset management, and non-fiduciary custody of digital assets. The filing reflects a broader institutional shift toward federally supervised digital asset services.

What the Connectia Trust Filing Covers

Sony Bank, part of Sony Financial Group, has submitted a charter application to the OCC through Connectia Trust, N.A. If approved, Connectia Trust would be authorised to:

Issue U.S. dollar-pegged payment instruments (stablecoins) backed by reserve assets.
Hold and manage those reserve assets — typically cash or short-duration government securities.
Provide non-fiduciary custody of digital assets for clients.
Offer fiduciary asset management for affiliates and related entities.

Sony Bank files for a U.S. bank charter to launch stablecoin and custody services

The filing is pending OCC approval as of October 2025. Charter review timelines vary; operations cannot commence until approval is granted and operational requirements — reserve infrastructure, custody controls, and compliance frameworks — are fully in place.

The Regulatory Context

Sony's filing is not an isolated event. It reflects a maturing regulatory environment for digitally issued payment instruments in the United States.

What is now more clearly defined

The GENIUS Act requires stablecoin issuers to be chartered banks or bank subsidiaries and to hold safe, liquid reserve assets — establishing a clear statutory baseline. GENIUS Act and OCC context
OCC Interpretive Letter 1183 confirms that national banks may issue dollar-pegged payment instruments and provide custody services for digital assets, subject to standard safety and soundness requirements. GENIUS Act and OCC context

What remains to be resolved

Consumer protection obligations for payment instrument holders at trust banks, as distinct from deposit-taking institutions.
Auditing frequency and public attestation standards for reserve assets.
How non-fiduciary custody arrangements interact with money-transmission and securities regulations.
The interplay between a federal trust charter and state-level licensing regimes, such as New York's BitLicense, for interstate operations.

The Competitive Landscape for Trust Charters

Sony is one of several institutions pursuing federal trust charters for digital asset issuance and custody. Others include:

Circle, which has proposed the First National Digital Currency Bank to manage USDC reserves directly under federal oversight. The institutional charter race
Coinbase, Stripe, and Ripple, each pursuing eligibility for national charters covering issuance and custody services. The institutional charter race
Anchorage Digital Bank, currently the only institution with a full OCC charter for digital asset custody. The institutional charter race

The concentration of applications from institutions with established balance sheets and compliance infrastructure signals that this is no longer an exploratory space. Federal oversight is becoming the baseline expectation for credible digital asset services.

Operational Precedents

Several chartered or near-chartered institutions illustrate how these authorisations translate into practice:

Circle intends to use its trust charter to bring USDC reserve management under direct federal supervision, replacing third-party custodian arrangements. Circle's reserve management approach
Anchorage Digital Bank operates fiat-adjacent services alongside digital asset custody under its full OCC charter. Anchorage's operating model
Sony has indicated Connectia Trust could support internal cross-entity payments, potentially integrating dollar-denominated payment instruments across Sony's gaming, media, and entertainment subsidiaries. Sony's potential use cases

What Institutions Should Assess

For banks, asset managers, and issuers evaluating this space, the relevant questions are structural rather than speculative:

Regulatory standing: Has the issuing entity filed for, or secured, a federal or equivalent trust charter? What is the status of that filing?

Reserve management: Are reserve assets segregated, fully backed, and subject to regular independent attestation? What instruments are eligible — cash, Treasuries, or broader categories?

Custody controls: What are the security, segregation, and reconciliation standards governing digital asset custody? How do they map to existing prime custody or securities custodian standards?

Instrument utility: Is the payment instrument designed for a defined settlement or payment purpose — internal treasury, client-facing transactions, or open-market use? Purpose determines regulatory treatment and counterparty risk profile.

Competitive charter risk: With multiple applications pending, charter outcomes remain uncertain. Institutions building dependency on a specific issuer's instrument should account for approval timelines and contingency arrangements.

Material Risks

Regulatory change: Statutory or administrative shifts can alter reserve requirements, permissible activities, or supervisory expectations with limited transition periods.
Reserve integrity: Attestation failures or reserve shortfalls carry significant reputational and legal consequences for issuers and holders alike.
Instrument differentiation: As multiple chartered issuers enter the market, the commercial value of any single dollar-pegged instrument will depend on distribution, counterparty adoption, and integration with existing settlement infrastructure.
Charter uncertainty: Approval is not guaranteed. Operational and commercial plans built on pending charter applications carry execution risk.

Frequently Asked Questions

Is Connectia Trust's application approved? No. As of October 2025, the filing remains under OCC review. Approval has not been granted. Sony Bank files for U.S. bank charter

When might issuance begin if the charter is approved? No timeline has been disclosed. Following any approval, Sony would need to establish reserve infrastructure, custody controls, and compliance frameworks before instruments could be issued.

How does a national trust charter differ from a full banking charter? A national trust bank is authorised to provide trust, custody, and fiduciary services but does not take deposits in the conventional sense. It operates under OCC supervision but within a narrower activity perimeter than a full commercial bank.

What does the GENIUS Act require of issuers? The Act requires that stablecoin issuers be chartered banks or bank subsidiaries, hold eligible reserve assets on a fully backed basis, and comply with disclosure and redemption requirements set by the OCC and other relevant regulators.

Sony Bank's filing through Connectia Trust is a measured, structurally significant step toward federally supervised issuance of dollar-pegged payment instruments. The broader pattern — established institutions, not only specialist digital-asset firms, competing for trust charters — indicates that regulated issuance and custody are becoming standard features of institutional financial infrastructure, not adjuncts to it.