Crypto and Wall Street leaders set to meet at Abu Dhabi Finance Week next month

Taiwan to review crypto ETFs amid developments overseasThe Financial Supervisory Commission (FSC) in Taiwan has disclosed its close examination of foreign cryptocurrency futures products and exchange-traded funds (ETFs), signaling a potential shift in its regulatory approach.According to a report in Chinese-language financial newspaper, Taiwan’s Commercial Times, the FSC aims to gradually ease restrictions, aligning its stance with global market conditions.Photo by bordercollie 1712 on UnsplashResponding to crypto ETF activity internationallyThe Taiwanese regulator is carrying out this exploration against the backdrop of significant global developments. The possibility of the Federal Reserve cutting interest rates and the upcoming review by the U.S. Securities and Exchange Commission (SEC) of the spot bitcoin ETF in January next year are key factors influencing the FSC’s considerations.The anticipation surrounding the Bitcoin halving in April, combined with speculation that a spot bitcoin ETF approval is imminent in the U.S., have contributed to a 145% surge this year in Bitcoin’s unit price, adding momentum to that regulatory contemplation in Taiwan. There has been speculation that BlackRock, the world’s largest fund manager, is already preparing for the approval of its iShares Bitcoin Trust ETF.Recognizing the potential impact of a Bitcoin index stock fund, contingent on SEC approval and subsequent public investment permission, the FSC is closely monitoring global trends.Closer to home, it emerged last month that Hong Kong’s Securities and Futures Commission (SFC) is actively exploring the possibility of permitting retail participation in a spot crypto ETF. Domestic investment banks in Taiwan, attuned to these developments, have expressed longstanding interest in introducing similar crypto products.The FSC draws parallels with global counterparts, citing the proliferation of cryptocurrency futures products and ETFs in various markets.Cautious regulatory reviewAdopting a phased approach, the FSC emphasizes self-discipline and standards in relaxing regulations around crypto ETFs. This cautious strategy aligns with Taiwan’s historical prudence, previously observed in the delayed approval of cryptocurrency ETFs and blockchain ETFs due to concerns over volatility and speculative nature.As Taiwan contemplates a significant move into the cryptocurrency ETF domain, industry players remain cautiously optimistic. While some had considered private placements for overseas cryptocurrency ETFs, challenges such as tightened regulatory supervision and concerns over errors and price lags prompted a reevaluation.Earlier this month, ETF issuer ProShares launched its short Ether-linked ETF product on the New York Stock Exchange’s Arca, using the ticker symbol SETH. Spot bitcoin ETFs have been launched in Canada, Germany, Australia and Brazil. The products have also been made available via tax havens such as the Cayman Islands, Jersey, Liechtenstein and Guernsey.The regulator in Taiwan hints at a potential strategy involving “cryptocurrency concept ETFs.” These funds could invest in cryptocurrency-related software and hardware vendors, offering investors exposure to the industry without direct linkage to cryptocurrency price fluctuations.

Aevo, the Singaporean crypto derivatives platform, is gearing up to broaden its ecosystem by allowing other protocols to build on its rollup infrastructure. ‘The future is modular’Currently, Aevo exchange is the sole application on its rollup, but according to Julian Koh, co-founder of Ribbon Finance, the platform's parent protocol, the intention is to open it up for other developers. On Tuesday, Koh retweeted a social media post by the company which stated “The future is modular,” adding the comment “build whatever.” Koh told The Block that "the primary angle here is we are currently built on our own rollup — but Aevo exchange is currently the only app on this rollup. Our plan is basically to open this up for other [developers] as well and build an ecosystem around our exchange."Photo by Shubham Dhage on UnsplashTransitioning to CelestiaAevo, specializing in options and derivatives trading, operates on its own Layer 2 network, built using the OP Stack and running atop the Ethereum blockchain. In a cost-saving initiative, the platform plans to transition to Celestia for storing transaction data in the near term. Celestia launched on mainnet last October with the aim of enhancing blockchain scalability. It’s a modular data availability network which securely scales relative to the number of network users. This expansion is part of a broader roadmap set to be unveiled in the coming weeks, as Aevo looks towards achieving aggressive growth. According to DeFi data aggregator DeFiLlama, Aevo has already been hitting ever higher numbers in recent months. Only two months ago, the protocol had $10 million total value locked (TVL). At the time of writing that metric has increased to $50 million. Last month, the platform achieved a new record-high weekly trading volume level in excess of $500 million. Julian Koh attributes this growth in part to Aevo's yield-bearing balances. Users deposit their crypto, which is then sent to MakerDAO to generate yield. In return, users receive a derivative token to trade on the Aevo platform, providing a mechanism for traders to earn yield while actively engaging in trading. 2023 rebrandRibbon Finance, which initially launched Aevo separately, merged the projects under the Aevo branding in July 2023. As part of the rebrand, an Aevo token will be introduced, with a 1:1 exchange rate for RBN token holders during migration. Post-rebrand, Aevo plans to roll out an incentive program aimed at boosting the platform's metrics.  Looking ahead, Aevo plans to delve deeper into yield offerings, drawing inspiration from Ribbon Finance. The platform aims to launch yield strategies in Q1 of this year, allowing users to lock up their crypto in various setups designed to generate returns, with the tokens being unavailable for trading during this period. One notable strategy that has contributed to Aevo's appeal is the pre-launch trading of upcoming tokens. The platform supports trading for tokens expected to launch soon, often through airdrops, providing an opportunity for traders to hedge against airdrops or lock in specific prices before the official launch. The project team membership draws on past experience at Coinbase, Kraken and Goldman Sachs, with academic backgrounds attained from Stanford, MIT and Cornell University. 

The Deutsche Bundesbank, Germany’s central bank, has joined Project Guardian, a collaboration established in 2022 between the Monetary Authority of Singapore (MAS) and the financial sector, with an emphasis on the use of asset tokenization to improve liquidity and efficiency within financial markets.Photo by Rachel Davis on UnsplashAssessing DLT technologyIn a press release published on Nov. 8, Bundesbank Executive Board member Burkhard Balz suggested that the central bank is aligned with MAS in that both central banks are interested in determining “how innovative technologies and concepts, such as distributed ledger technology (DLT) or blockchain, can be put to meaningful use in the financial sector.” In joining Project Guardian, the Bundesbank will take part in the Asset & Wealth Management workstream, testing an interoperable blockchain platform for tokenized and digital funds. While the German central bank has just announced details of its participation in Project Guardian, in a speech given at the Layer One Summit, an event which formed part of the Singapore Fintech Festival last week, MAS Deputy Director Leong Sing Chiong welcomed the Bundesbank, alongside the World Bank, to Project Guardian.  The MAS executive clarified that the Deutsche Bundesbank and the World Bank would join the project’s Policymaker Group. He outlined that the role of that group is to “help provide inputs on governance arrangements, guidance on how GL1 [Global Layer One] infrastructures can be developed in line with global standards, and advice on appropriate regulatory guardrails for tokenised asset transactions.” GL1 refers to an initiative that has been established to create the foundational digital infrastructure to facilitate tokenized assets. Cross-border collaborationThrough its involvement in Project Guardian, the German central bank hopes to strengthen cross-border collaboration, while at the same time, progressing matters related to the “standardisation and interoperability of digital assets.” In working towards the goal of standardization, MAS has published two comprehensive reports covering fixed income tokenization and fund tokenization. MAS believes that the use of too many individual private DLT networks is resulting in fragmentation, with a detrimental effect with regard to liquidity. Consequently, the Singaporean central bank is establishing the Guardian Wholesale Network to improve liquidity and achieve asset tokenization at scale. The network will consist of Citi, Schroders, Standard Chartered, UOB and HSBC. Additionally, it was recently announced that SBI Digital Markets, a Singapore-based affiliate company of Japan’s SBI Digital Asset Holdings (SBI DAH), intends to contribute towards greater liquidity through its involvement in a fixed income asset tokenization pilot. Meanwhile, Citi and Fidelity have developed a proof of concept for a digital foreign exchange (FX) swap, enabled within an on-chain money market fund (MMF).  Tokenization inflection pointLeong went on to claim that while nobody has succeeded yet in implementing tokenization at scale, an inflection point has been reached with regard to the use of tokenization. He added that many use cases are promising relative to tokenization but that there is a need for supporting infrastructure “to enable good use cases to scale beyond individual networks.” In the press release, Leong said that the Bundesbank’s expertise “will be invaluable as we work together to enhance liquidity and efficiency of financial markets through asset tokenisation.”