The London Stock Exchange Group (LSEG) has thrown its weight behind a new cryptocurrency startup that seeks to tokenize debt, reflecting the latest foray into blockchain by traditional finance.
Debt on Blockchain
According to Reuters, LSEG has led a $20 million investment round in Nivaura, a London-based startup that is developing a system to tokenize debt and equity. LSEG has acquired a minority stake in the company for an undisclosed sum.
Nivaura’s platform allows users to issue and administer corporate bonds, loans and equities. Through Nivaura, financial instruments can be settled using existing clearing infrastructure or as tokenized assets recorded on the blockchain. Back in November 2017, Nivaura administered the world’s first bond denominated in cryptocurrency.
Blockchain-based bonds have since grown in popularity, albeit steadily, with the likes of the World Bank and Commonwealth Bank of Australia venturing into the space. As Hacked reported, both institutions were behind the Blockchain Operated New Debt Instrument, a digital ledger bond that raised more than $80 million across seven investors. As Hacked reported at the time:
“Automating financial transactions on the blockchain creates a more efficient system and slashes costs and time associated with traditional bond issuance.”
By “tokenizing” debt, issuers can turn complex financial instruments into tradable tokens. This not only simplifies the fundraising process, it can potentially serve as a catalyst to attract new investors.
LSEG is the latest financial player to embrace blockchain and cryptocurrencies. Earlier this month, JPMorgan Chase & Co announced it was creating its own stablecoin to streamline its $6 trillion per day payments market. Intercontinental Exchange (ICE) is on the cusp of launching a physically-settled bitcoin futures contract, while Fidelity Investments has also announced plans to become a crypto custodian.
Crypto Markets Stabilize
The LSEG announcement had little-to-no effect on the cryptocurrency market as bitcoin and most of its major peers stabilized through the early part of trading Wednesday. The total cryptocurrency market capitalization is worth $130.8 billion, little changed compared with 24 hours ago. Trade volumes have moderated over that period, amounting to $25.1 billion on virtual exchanges alone. It’s estimated that at least that much is cleared daily in over-the-counter markets.
Bitcoin, the largest cryptocurrency, climbed 0.5% to $3,872.26. Ethereum’s price advanced 1.4% to $139.52. XRP held steady below $0.3200. EOS, Litecoin and bitcoin cash were virtually unchanged.
Binance Coin (BNB) was the biggest gainer among the majors, climbing 5% to $9.97. The native token of the Binance exchange has benefited from positive fundamental drivers as of late, including the launch of a new platform for token sales. Related: As Crypto Rally Cools, Binance Coin Remains Buoyant; CEO Changpeng Zhao Offers Encouraging Message to New Traders.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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