Welcome to the Forward Guidance newsletter, brought to you by Casey Wagner and Ben Strack. Here’s what you’ll find in today’s edition:

• Ben has an update on tokenization adoption after a day at the RWA Summit in New York. 

• What’s going on in the bond market? We have some theories. 

• Casey unpacks the latest comments from industry leaders ahead of Election Day.

Takes on tokenization vary at RWA Summit

Plenty of people feel strongly about the tokenization/RWA space that appears poised to one day transform financial services — even if that change takes years to play out. 

A bunch of those takes were expressed during day one of the RWA Summit in Brooklyn on Tuesday, as the promises and projections for the segment were both touted and questioned.

RWA, if you forgot, is short for real-world assets. In this context, it refers to the efforts to bring tokenized versions of such assets — from bonds to real estate — onto blockchains.

We have seen some big projections, with Standard Chartered, for example, expecting the tokenized RWA market to hit $30 trillion by 2034.

Various executives stated what they acknowledged to be obvious, but still critical: The specific utility and benefits (and the economics behind that) will drive tokenization forward.

“Rather than asking the question of what can I do with the technology, I think adoption is going to come from what are the issues that investors are facing?” said Fidelity’s Cynthia Lo Bessette. “What are the pain points or expensive operations, and what can we do to solve those pain points?”

A March survey by EY-Parthenon found that 52% of asset managers cited access to new investors and capital as the main driver of tokenization for their firms. Ranked second, at 46%, was cost savings and lower administration fees.

On the latter point, Franklin Templeton’s Roger Bayston mentioned the price difference in the transfer agency process. To clear 50,000 transactions under the legacy system, it’d cost about $1 per transaction, so roughly $50,000. With blockchain: $1.52 total.

That got the attention of Franklin Templeton CEO Jenny Johnson, he noted. 

The asset management giant’s Franklin OnChain US Government Money Fund had $435 million in assets, as of Sept. 30. BlackRock more recently built a competing product that surpassed $500 million in assets in July.

These money market funds contribute to the $12 billion or so tokenized RWA category, which is separate from the $170 billion or so market capitalization of stablecoins.

Securitize’s Eric Ervin said during a panel I moderated at Permissionless earlier this month that he believes the BlackRock fund alone could reach $50 billion in assets in the next few years. 

Another EY-Parthenon finding is below:

CoinFund president Chris Perkins said the $7-plus-trillion-per-day foreign exchange market offers “an opportunity set” for stablecoins that is “just staring everyone in the face…because of the instant settlement.” 

Potential CFTC clarity on how firms can use blockchain tech to hold and transfer non-cash collateral could be a major unlock for tokenization adoption, Perkins added.

While Dragonfly’s Rob Hadick noted stablecoins’ utility, he voiced some skepticism about tokenization/RWA more broadly — at least for now.

“My guess is that equities, bonds — things that are regulated products that exist in the current financial system — it’ll be really hard to extract those and put them on a public chain in a place where unregulated entities are,” Hadick said.

And then there was Crucible founder Meltem Demirors, who spoke a bit more freely during a spar with Superstate CEO Robert Leshner in a discussion called “Debate: RWAs Are the Real Point of Crypto.”

Tokenization is like putting lipstick on a pig, she argued. You dress up an asset that is not liquid and doesn’t trade easily to make it crypto compatible. It’s “a worthwhile endeavor” and a great use of blockchain tech, but that doesn’t make it crypto.

Also, she made clear: “Taking a pile of dogshit, putting a wrapper around it and putting it onchain does not make it a better asset, does not create demand for it. Case and point: real estate.

“My objective is to bring dollars from outside of crypto onchain and into crypto,” Demirors added. “RWAs today are taking dollars from within crypto and giving them to traditional financial institutions, custodians, banks and — as we saw with the Stripe acquisition of Bridge — [payments service providers], who are going to benefit, not the crypto ecosystem.”

Even if you are bullish on the space, execs agree it will take a while before some of the multi-trillion-dollar projections are met.

Leshner noted that ultimately $500 trillion or so of assets will migrate “from bad ledgers to good ledgers” — aka move onchain, so those assets “can do more and be better.”

But, he added: “We are in the very, very, very preliminary stages of all of the wealth in the world changing where it lives.”

Will Nuelle, a general partner at Galaxy Ventures, said that while stablecoins are a “beachhead market,” a broader tokenization boom will take longer than two years, or even five years.  

He added: “We think this is a two-decade story.”

— Ben Strack

The decline in BTC’s price over the last 24 hours, as of 2 pm ET.

BTC was trading at roughly $65,620 at that time, erasing the gains the asset saw earlier this week during a run-up above $69,000. Stocks also declined Wednesday amid an apparent shift to risk-off investments.   

Ether is down about 6% in the past 24 hours, trading at roughly $2,450 at that time.

We touched on this briefly yesterday, but there is something going on in bond markets.  

Yields on 10-year Treasurys rose even higher Wednesday, briefly hitting 4.25%. Two-year yields are also on the rise, reaching 4.07% Wednesday afternoon. (Remember, bond prices and yields are inversely related.) 

What gives? A few things. Probably. 

The first is the election. Polls are still saying the race between Trump and Harris is more or less a coin toss, even as betting markets continue to favor Trump. One theory is that bond markets are anticipating a Republican sweep and are reacting as such. There’s fear that Trump’s plans (higher tariffs, tax cuts, a crackdown on immigration) could send the deficit higher, so it makes sense that Treasurys are tanking.

I’d personally give this theory some weight. But I think the main thing dragging down bond markets are fundamentals. 

As we also covered yesterday, economic data is strong. Maybe even too strong, or at least strong enough that analysts are questioning whether the Fed went too far in September. We know committee members said they see rates ending the year another half-point lower, but the market has its doubts. Higher interest rates means higher Treasury yields. 

And then there’s the national debt. The federal deficit hit $1.8 trillion earlier this month. More debt = more bonds. Higher supply = lower demand. You get the idea. To be clear, I do think concerns about rising national debt are impacting bonds, but I think it’s a concern that goes beyond a potential second Trump presidency. 

As always, this isn’t investment advice, but I think the flash sale on bonds might go on for a bit longer.

— Casey Wagner

Ben already unpacked some of the highlights from yesterday’s RWA event, but it just wouldn’t be a crypto conference without some policy talk. Here’s a recap of what I heard on Tuesday. 

With the election looming, speakers mostly discussed the potential outcomes in both Congress and the White House. But the overwhelming theme seemed to be that the results may not matter as much as you might think. 

“We're starting from a good place,” said Julie Stitzel, senior vice president of policy at Digital Currency Group, referring to the bipartisan progress we’ve already seen in both chambers of Congress. 

“This is going to be the most pro-crypto Congress that we've ever had because of the work that's going on right now on the political side,” Stitzel said. 

The bipartisan efforts Stitzel has noticed include the FIT21 bill, the crypto market structure legislation that passed in the House in May with 71 Democratic votes. The resolution to overturn the SEC’s SAB121 accounting guidance also advanced with support from both sides of the aisle (21 Dems in the House and 12 in the Senate). 

Still, crypto as a whole is more partisan than some would like. Fireblocks general counsel John McCarthy said during a Tuesday panel discussion that in the pre-FTX collapse days, liberal lawmakers were much more willing to engage with the industry. 

“I remember going down to DC a bunch in the spring of 2022; I came back and told everybody at Fireblocks ‘crypto is a bipartisan issue — Democrats, Republicans, everybody wants to make progress on this,’” McCarthy said. “FTX really changed that.” 

As for who takes the White House, most speakers at RWA were too shy to give predictions. Most agreed that regardless of who wins, the next administration is likely to have a better relationship with the industry than what we’ve seen over the past four years. 

And if the next administration happens to be Harris/Walz? Well, Anthony Scaramucci assured the crowd on Tuesday that his former boss would accept the results of the election. 

“Why?” Scaramucci said. “[Trump] doesn’t want to go to jail.” 

— Casey Wagner

• Thirteen days before the US presidential election, Kamala Harris is set to do a town hall hosted by CNN’s Anderson Cooper (tonight at 9 pm ET). A poll by the University of Massachusetts Amherst shows Harris leading Donald Trump 48% to 46%. Catch up on some of our latest election-related coverage here and here. 

• The seven-day inflow streak for US spot bitcoin ETFs broke on Tuesday, as the segment saw $79 million of negative net flows, Farside Investors data shows. The seven-day streak that preceded the day of outflows was nearly unprecedented, with more than $2.5 billion entering the category over that span. 

• The United States and Nigeria are launching a Bilateral Liaison Group on Illicit Finance and Cryptocurrencies, the US State Department revealed Wednesday. This comes as Nigeria has dropped the money laundering case against Binance executive Tigran Gambaryan, according to multiple reports. Gambaryan, who pleaded not guilty to such charges, has been held by Nigeria since last February.