WEEKLY - historical utility tokens + Korean stablecoins
plus: assorted links, Wombles and more
Hello everyone! I hope you’re all doing well, and taking care of yourselves! I know it’s summer ‘n all, but it feels like things are starting to ramp up…
PUBLISHED IN PARTNERSHIP WITH: ✨ALLIUM✨
Allium provides blockchain data and analytics for institutions and fintechs, helping teams generate key insights from on-chain activity. Leaders like Visa, Stripe, and Grayscale rely on Allium to power mission-critical analyses and operations.
For more information: www.allium.so.
You’re reading the free weekly Crypto is Macro Now, where I reshare/update a couple of posts from the past few days, offer some interesting links I came across in my weekly reading, and include something from outside the crypto/macro sphere that is currently inspiring me (it’s a fascinating world out there).
If you’re not a subscriber to the premium daily, I do hope you’ll consider becoming one!
Feel free to share this with friends and colleagues, and if you like this newsletter, do please hit the ❤ button at the bottom – I’m told it feeds the almighty algorithm.
In this newsletter:
Fine, but it is new?
The South Korean stablecoin frenzy
Assorted links: unlimited debt, comments, democracy, trust and more
Furry stop-motion nostalgia
Some of the topics discussed in recent premium dailies:
Coming up: central banks, jobs, Congress and a holiday
Movement on the trade front
Macro-Crypto Bits: consumer spending, relieved surveys, relieved markets
Robinhood and the sector shift
More China + crypto
Macro-Crypto Bits: market records, weird stuff and more
The South Korean stablecoin frenzy
The central bank power panel
Macro-Crypto Bits: manufacturing, jobs, BTC, stablecoins, ETFs
Remembrance
Coming up: BRICS, FOMC thoughts, jobs
Trade confusion deepens
Political shifts and BTC
Macro-Crypto Bits: jobs, services, complacency risk, hedging and more
Chaos is a ladder
Markets: those bond yields
Podcast notes: Even recessions have changed
Tokenized equities: why?
A new type of bank?
Macro-Crypto Bits: copper, yields, and yikes
China vs US: the distraction of noise
Tokenized securities: an SEC warning
Macro-Crypto Bits: more tariffs, BTC all-time high, OPEC
A Wimbledon crypto example
The China crypto drumbeat gets louder
Macro-Crypto Bits: BTC on a tear, tariffs again ho hum
Fine, but it is new?
With the Wimbledon finals this weekend (c’mon Alcaraz!), I want to talk about utility tokens that are also securities. Or rather, I want to show that they are not as new a concept as many think.
(image via people.com)
Let’s take a look at Wimbledon debentures.
First, some history. The Championship dates back to 1877, and for its first 45 years, was held at grounds in central Wimbledon that rapidly became too small. Ticket sales did not stretch far, and with no convenient line of bank financing available, the All England Lawn Tennis Club (AELTC) needed to come up with a way to fund an expansion.
A common practice amongst corporations and governments in the early 20th century was the issuance of debentures, unsecured debt instruments backed by the issuer’s creditworthiness, similar to today’s bonds but with a different legal structure. So, the incorporated Club decided to go this route and rely on its public’s enthusiasm for the game as a source of demand.
In 1920, the AELTC sold £100,000 worth of debentures (roughly £5.7 million in today’s money) to fund the acquisition of a new site on Church Road (where it still is) and the construction of the Centre Court.
(image via Wimbledon.com)
Back then, most debentures paid interest, but the AELTC came up with a twist: instead of a monetary return, the debentures would grant holders exclusive rights to prime seating every day of the tournament.
Debentures have remained a cornerstone of Wimbledon’s strategy to this day, and are still issued every five years, with separate series for Centre and No. 1 Courts. Recent raises have funded the construction of roofs so play could continue in inclement weather (a good idea in England), and the latest series hopes to finance an expansion into Wimbledon Park.
Over time, the conditions evolved. The privileges are now limited to five years of the debenture term, and have expanded beyond prime court seating for the length of the Championship, to include exclusive debenture lounges, bars and restaurants as well as a dedicated entrance with nearby parking. Despite high demand, scarcity is guarded – there are only 2,520 Centre Court and 1,250 No.1 Court debentures outstanding.
Of course, if you’re eager for the prestige and don’t want to wait for the next round of issuance (2029 for Centre Court), you can buy one on the secondary market. These aren’t exactly liquid, but they are active. Dowgate Capital, for instance, runs a weekly auction, with recent prices for the Centre Court 2026-2030 series as high as £150,000, a 30% return on the issue price adjudicated a year ago of £116,000 (even more when you consider it is still being paid in instalments).
You can see where I’m heading with this? Wimbledon debentures are financial instruments that are freely transferable (within obvious legal restrictions) on public markets, and that confer certain privileges to their holders.
They are the analog version of the idea of a utility token that confers access to a network, application, game or event while trading on an open market.
There are other examples: in Japan back in the 1980s, a popular “store of value” was elite golf memberships. Status-conscious investors with excess cash (this was Japan’s financial heyday) would park it in an expensive membership that could be resold, with at one point over 500 brokerage firms in Tokyo alone handling the transactions. By 1990, the total market value of golf memberships was roughly equivalent to that of the total Tokyo Stock Exchange, and Nikkei even created a Golf Club Membership Index which jumped 190% in 1989 alone.
Now, before someone comes up with the idea of tokenizing Wimbledon debentures or golf club memberships, please ask “why??”. The aforementioned examples show that a blockchain is not needed to confer scarcity and utility.
Yes, blockchain rails could be more efficient in terms of transfer paperwork and price transparency. Yet incremental gains in efficiency are not enough to change ingrained habits, especially when accompanied by venerated traditions.
Doing what already works, just more efficiently, is not enough for meaningful change. For the potential to catch on, there needs to be more.
This is a frustration with the current state of tokenization, as regular readers are probably tired of me saying. We’re doing the same old stuff, just on a blockchain, with less liquidity and considerable implementation costs, and we’re acting like it’s a breakthrough triumph. Institutions are not going to spend a fortune in rewiring markets just for shaving a few basis points off of transaction fees.
The building enthusiasm for tokenization in some tradfi corners, however, suggests that some of the other advantages are kindling interest. Faster cross-border payments is the main driver of the rapid growth of mainstream interest in stablecoins. They’re not necessarily cheaper to use once you take into account the costs of FX conversion, on- and off-ramping and the like. But corporates and individuals can now do something they couldn’t before: move money with a few swipes 24/7. Embedded transparency, traceability and programmability are also new features that will appeal to many.
Most tokenization ideas, however, fade at the first hurdle, the explanation of why they matter for the market at large. Just because assets such as Wimbledon debentures can be tokenized doesn’t mean they should – and fortunes have been wasted chasing after the “next shiny thing”.
I don’t mean to dismiss recent progress – pipes and processes need to be tested, participants need to earn experience, authorities need to be convinced of the technical safety, and future users need time to adjust expectations of what’s possible.
But too much froth too soon leads to a loss of credibility which can hurt the longer term potential.
True, “reasonable” expectations will lose out on funding to those that promise the moon – that is an unfortunate consequence of the current funding landscape and the scramble for fast returns.
But, in the end, patient money and patient building will win. And longer term vision starts with the right questions. It’s not “what can we do with this?”. It’s “why should we?”.
The South Korean stablecoin frenzy
South Korea has long been ahead of other nations when it comes to crypto enthusiasm. Even back in the ecosystem’s early days, BTC and other assets would trade at a premium on Korean exchanges due to capital control friction. And a recent survey conducted by the Hana Financial Research Institute found that more than a quarter of respondents already own digital assets, with 70% (and 86% of current holders) intending to buy more over the coming year.
Still, the recent market frenzy around stablecoins has taken many by surprise – stablecoins are not exactly speculative assets. But stablecoin-related businesses can be, and expectations of strong growth have wreaked havoc with some share prices.
First, where did the expectations of growth come from? In part, from the likely passage of the GENIUS Act currently working its way through the US Congress, which is expected to trigger a flurry of institutional stablecoin activity. They’re also no doubt a reaction to the astonishing appreciation in the price of stablecoin issuer Circle since its stock exchange debut – at one point it was more than 360% higher than the IPO level, and as I type almost a month later, it is still up 180%.
But high expectations are also to do with a flurry of local stablecoin interest.
One of the campaign promises of President Lee Jae-myung in the run-up to his victory in South Korea’s national election early last month was support for the local crypto industry, including approval of spot crypto ETFs and won-backed stablecoins.
Within a few days, a bill had been drawn up proposing a licensing regime for stablecoin issuers.
Not long after that, some big names were signalling their intent. Last week, South Korea’s largest bank KB Kookmin filed applications for stablecoin-related trademarks.
And payments giant KakaoPay revealed that it had filed several stablecoin-related patents. Over the past month, its share price had more than doubled in anticipation of a stablecoin initiative – the patents news sent it up another 50% and led to the suspension of trading on Thursday due to “investment risk”. The price corrected on Friday’s open and seems to have cooled off, but it is still up more than 100% over the past month, 190% year-to-date.
(KakaoPay share price chart via TradingView)
Speculative stablecoin frenzy? Yes, it’s a thing. What’s more, it is being held responsible for making South Korea Asia’s best performing equity market in the first half of the year.
It remains to be seen how South Korea balances capital controls with the free movement of stablecoins. Last week, on stage with fellow central bank chiefs in Sintra (I wrote about that here), Bank of Korea Governor Chang Yong Rhee mentioned the concern that won stablecoins can be easily swapped into USD stablecoins and moved out of the country.
Nevertheless, last Monday the central bank announced that it was suspending trials of its central bank digital currency (CBDC), preferring for the time being to monitor how the stablecoin legislation goes. Since one of the main drivers of the country’s CBDC initiative was use in cross-border trade settlement, we could see a regulatory emphasis on bank-issued stablecoins, which would also in theory be easier to monitor for flows. A big unknown is the potential impact on South Korea’s significant banking industry.
How the country handles this could set a pattern for others, as currency fluctuations due to capital flight is a chronic problem for most developing economies and some developed ones.
And we can all appreciate the irony of global regulatory concern around crypto assets morphing from “too volatile” to “stable, but too popular”.
ASSORTED LINKS
(A selection of reads I came across this week that I think are worth sharing, not always about crypto or macro. I try to choose links without a paywall, but when I feel it’s worth making an exception, I specify.)
Quico Toro penned a powerful warning about the bigger threat behind Trump’s assault on the independence of the Federal Reserve – it’s not just about undermining global trust in the world’s denominator asset, it’s doing so at a time of uncontrolled spending and borrowing. It’s a good read that puts context around the bluster and leaves us with the sinking unease that, whatever comes next, it probably won’t involve a stronger United States. (Messing With the Fed Is Playing With Fire, Persuasion)
In an op-ed in The Hill this week, economists Yeva Nersisyan and L. Randall Wray argue that we don’t have to worry about debt levels because there’s no way the US won’t meet it’s obligations when it can just print more money. Yes, we’re back to that message again, which is an alarming sign that complacency is about to become institutional, and that it will be up to the bond market to show economists what debasement does to confidence. (Why we should stop worrying and learn to love the national debt, The Hill)
Mercifully, Jack Salmon offers a timely and elegant reminder of why the “debt doesn’t matter” thesis is total nonsense. (The Recycled Myths of Debt Sustainability, The Unseen and the Unsaid)
This article by Yascha Mounk is not what it may seem at first: it’s not an anti-Trump rant nor a panicked wail that democracy is over – rather, it’s a sober analysis of the political forces at work beyond the stale partisan divide. While I quibble with some of his details, on the whole Mounk is right to raise the uncomfortable question of just how resilient is US democracy? I’ve been insisting all along that it’s very resistant, and I still believe that – but I also often warn of complacency risk, and perhaps I’ve been guilty of not turning a lens on my own blind spot in this area. If we’re not asking the right questions, we won’t know what to look out for. (Is America Headed Towards Dictatorship?, Yascha Mounk)
If the responses on X to something you posted has ever left you bewildered (me, most days), Adam Singer attempts an explanation of all the different types of comments you might get, sketching a psychological profile of the personalities behind each category. (On sharing controversial things, Hot Takes)
A profound take from the Doomberg team on how China’s dominance of both electricity and steel production is fuelling its military rise which will soon also become military dominance if it hasn’t already. I wrote about this on Thursday, and extrapolated the conclusion that there’s nothing on the horizon to stop this trend. China’s electricity generation lead comes from natural resources but also from investment unfettered by politics. That in turn fuels steel production growth, also fed by iron ore imports from Brazil, not on good terms with the US at the moment, and Australia, whose prime minister is in China this weekend for his second meeting with Xi Jinping while he has not once met with President Trump. Again, what can stop this trend? (Hoodwinked, Doomberg – paywall)
HAVE A GREAT WEEKEND!
(in this section, I share stuff that has NOTHING to do with macro or crypto, ‘cos it’s the weekend and life is interesting)
It’s Wimbledon weekend, and in keeping with the theme while taking a break from tennis, I’m going to dust off one of my favourite TV series from when I was a wee tot: The Wombles of Wimbledon. Anyone else out there remember them? Bumbling, furry creatures who picked up garbage on Wimbledon Common to turn into various household gadgets and decorations. Utterly charming stop-motion animation with a memorable opening tune I can still hum, they went on to produce records and had a CGI revival in the ‘90s. But the best are the early ones in my nostalgic opinion, and here’s just one example:
DISCLAIMER: I never give trading ideas, and NOTHING I say is investment advice! I hold some BTC, ETH and a tiny amount of some smaller tokens, but they’re all long-term holdings – I don’t trade.