How crypto convert Trump may create regulatory framework for ‘digitized’ stocks and bonds
President Trump is such a crypto convert that Wall Street executives believe he is poised to create a regulatory framework for “digitized” stocks and bonds that could be traded over the blockchain, On The Money has learned.
Late last month, BlackRock CEO Larry Fink discussed the need for digitized stock and bonds and the use of blockchain to clear securities trades while speaking at the World Economic Forum in Davos, Switzerland.
Fink, a relatively recent convert to crypto himself, pointed out how other countries are years ahead of the US in integrating blockchain technology – which is designed to eliminate middlemen in transactions – into their financial systems.
Brazil is among those that have adopted so-called decentralized finance for cross-border transactions with financial players in the country, Fink noted.
With Trump all in on cryptocurrency and its technology (he courted crypto types for money and votes ahead of Election Day, vowing to de-regulate the business once in office), Wall Street CEOs are looking for ways to use the blockchain and crypto to serve customers.
Fink’s BlackRock, I should point out, is the largest investor in the world with $11 trillion under management. It serves both large pension funds, so-called institutions, and individuals, known in the financial business as “retail.”
He also has Trump’s ear; he was The Donald’s money manager back in the day.
“It’s coming, particularly for institutions that serve mass retail, and It will create huge opportunities,” said one corporate lawyer in the Trump orbit. “Just think how much less wasted extension of credit just to bridge settlement you will have.”
Trump has assembled a task force to promote AI and crypto that is led by David Sacks, the Silicon Valley entrepreneur and venture capitalist. According to people with knowledge of the matter, Sacks will eventually have the digitized stock and bond markets on his increasingly large agenda. Sacks declined to comment.
Proponents, if you believe them, say the blockchain is perfect for stock and bond buying and trading. So-called clearing or guaranteeing of trades can take place immediately as opposed to the current two-day settlement time in US markets. The costs of custody, transaction fees, and bankers are eliminated because trades are done peer-to-peer.
The blockchain itself verifies transactions in real time through so-called “nodes” or people who validate the activity.
Of course, creating a new system of trading stocks is never easy; regulators need to be able to provide some degree of safety over a system of commerce that is still pretty new. For all the hoopla about crypto, it’s speculation in digital coins that created a business now valued at $3.5 trillion.
Advances in blockchain have been slower to develop or most people by now (aside from crypto types) would be buying pizza on it.