The following summary of 2020 and predictions for 2021 come courtesy of Tal Elyashiv, founder and CEO of SPiCE VC.
Significant BC/DLT moves in 2020:
- US crypto currency act introduced – This marks a significant development as regulators recognize digital assets as a significant force moving forward.
- China’s focus on accelerating blockchain/distributed ledger technology (DLT) infrastructure and projects.
- JPMorgan crypto currency first commercial use – As mentioned by a JPM executive, “We believe we are shifting to a period of commercialization of digital asset technologies, moving from research and development to something that can become a real business.”
- Major Central Bank Digital Currency (CBDC) efforts in full swing (i.e. digital euro, digital yuan, Asian digital currency, digital dollar, Swiss digital currency, etc.). There also seems to be growing competition for central banks to emerge as a leader in the space.
- DeFi-related noise and activity is on the rise – More than $9 billion in transactions were in the DeFi market today, according to the website DeFi Pulse. That’s up more than 700 per cent from early June.
- Other major developments in 2020 on the Digital Securities front:
- Worldwide Digital Securities regulators licensing ecosystem players (FCA, MAS, SFC, SEC, etc.)
- Japan – In the past few years, Japanese companies have been actively seeking opportunities to enter the digital securitization space. SBI Holdings has been long making the headlines in the industry with their collaboration with Ripple and XRP. Nomura and Nomura Research Institute started the BOOSTRY platform, and Securitize already created a Japanese real estate investment platform.
- Clayton’s statement that “one day all securities may be digital”
- First fully regulated IPO based on digital securities technology goes live
- Two US digital securities ATS acquisitions (Securitize and INX)
Predictions for 2021:
- China will make the fastest progress in the Blockchain/DLT domain via major investments across many verticals using DLT and DLT infrastructure/ecosystem. The result will be a flow of projects going into production in 2021.
- CBDC Prediction: Some implementations will already materialize (early stages/adoption projects), including (and most likely) in China. Switzerland is also making headway, along with other healthy EU initiatives.
- Corporate and institutional focus will be heavily weighted towards permissioned blockchains.
- Digital securities prediction:
- Digital security issuances will grow in size, and some will be involving large banks and institutional players in the US, EU and Japan.
- 2022 will be the year where we start seeing more digital securities liquidity, but some of the signs will be there by late 2021.
- Japan will become a significant jurisdiction pushing digital securities projects. Significant digital securities related activity from major Japanese capital markets players
- DeFi prediction: DeFi noise will quiet down, and although some activity will remain, DeFi will become more of a niche “wild-west” aspect of the digital assets domain, with more limited impact than many anticipated in 2020.
- There will most certainly be significant Institutional adoption and investment in Blockchain/DLT technology and projects. The focus of these institutional players will be in financial verticals like banking, capital markets, payments and insurance.
- Corporate and institutional focus will also be heavily weighted towards permissioned blockchains.
- There will be major progress towards the passing of the US crypto currency act, which will lead to the rapid evolution of the industry – creating a more certain regulatory environment that will create more mainstream adoption.
Tal Elyashiv, a serial entrepreneur, is founder and managing partner of SPiCE VC, which funds early stage companies.
