WEEKLY - tokenization, CBDCs
plus: assorted links, acapella bass and more
Hello everyone, I hope you’re all doing well! Perhaps it was naïve of me to hope for a slowdown in crypto-macro news over the summer. It’s not just the swirling market narratives that are making the time fly by too fast, there’s also the stampede of tradfi-crypto crossovers. Much to cover in coming days.
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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).
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:
The digital euro gets shakier
BNY and Goldman: tokenization with a twist
Assorted links: space, libraries, EU stupidity, renewable lies and more
Acapella depth
Some of the topics discussed in this week’s premium dailies:
Coming up: EU-China, Powell, US housing, ECB and more
ETH momentum
Japan elections
Macro-Crypto Bits: consumer confidence, crypto legislation
The digital euro gets shakier
Macro-Crypto Bits: ETF inflows, global trade
Podcast links: stablecoins, geopolitics, Fed independence, perpetual futures
Tariffs: the noise is the signal
Markets, rates and the Fed
Altcoin season?
RIP Ozzy
BNY and Goldman: tokenization with a twist
Crypto lending and tradfi
Macro-Crypto Bits: the Fed, complacency and correlations
The digital euro gets shakier
Last week, the European Central Bank (ECB) published an update on the ongoing work around the digital euro, with some red flags.
Although the report was released last week, it only covers work undertaken between November 2024 and April 2025, which does not exactly scream “efficiency” – it’s not a long document, there are no charts, so a reasonable question is why the delay.
More red flags can be seen in the areas we’re told they have made progress on:
Drafting the rulebook
Arguably one of the most crucial and yet most bureaucratic pillars of the digital euro is the set of rules that all institutional participants will need to abide by. These include implementation specifications, user experience requirements, required certifications, brand rules, risk management, etc.
It’s kind of hard to draft a rulebook, though, when the legislation hasn’t been finalized, and that’s not even close. The process has been stalled ever since the EU “rapporteur” responsible for ushering the proposals through the negotiation process resigned last year, saying he doesn’t think a retail-facing digital euro is a good idea. It turns out his successor also has reservations. (I wrote last month about how desperate ECB officials are getting, with President Christine Lagarde publicly begging lawmakers to get a move on.)
The new progress report spends a couple of paragraphs stressing how the ECB is doing everything it can to facilitate the legislators’ work, such as regularly updating finance ministers on the technical progress. Yet, according to the document, the last submitted update was in January.
It’s not looking like the legal part will be taken care of before the ECB deadline, and the central bank as recently as last December said that “the decision on whether to issue a digital euro will only be taken by the Governing Council once the European Union’s legislative framework has been adopted”. Nevertheless, they will probably and unfortunately find a way around this as I can’t see Lagarde accepting defeat here, especially with so much already spent on the development.
(photo by Masood Aslami, via Unsplash)
Offline payments
Speaking of which, the report confirms that the ECB is still finalizing five tender procedures for the development of various aspects of the digital euro, and that this is scheduled to be completed by the end of 2025.
This process was initiated in January 2024, with a view to work actually starting in January 2025 – that the tender process is still ongoing suggests issues with specifications and cost.
Back in January 2024, the published budgets for each tender showed that more than half of the total would go toward developing the offline functionality. The latest report gives an update on this progress and hints, through several uses of the word “should” rather than “will”, that it’s more complicated than expected.
This is probably at least in part because of the ambition: the ECB doesn’t want to just ensure payments and balance top-ups in the event of a power outage, it also wants programmability and atomic (all-or-nothing) settlement to be respected offline.
Unfortunately, the likely cost overruns mean that the ambition may end up being scaled back. This would be a pity, as offline functionality is easily the most intriguing of the ECB promises, the only one I consider worthwhile.
Design features
Less worthwhile is the amount being spent on design. In January 2024, this was allocated a maximum of €154 million, which to most developer companies will sound like a lot – a deeper issue is why a central bank is spending resources on creating a retail-focused app at all.
Anyway, not to worry, the report stresses the emphasis on inclusivity, making sure that the needs of under-represented groups such as minors (??) and people with disabilities are taken into account.
And, despite working with an innovation panel comprised of 70 banks, traditional payments processors, merchants, fintechs and startups, the only “pioneering” feature the ECB chose to mention in the update was programmable payments.
Budget
What the progress report does not do is update on the allocated budget for the whole exercise. In January 2024, just the tenders alone came to around €1.2 billion. I haven’t been able to find any more recent figures which, from a public institution, is strange.
And that’s just on the internal allocation.
Earlier this year, the European Association of Co-operative Banks (EACB), the European Banking Federation (EBF) and the European Savings and Retail Banking Group (ESRBG) asked PwC to estimate how much adaptation to the digital euro system would cost the banking industry.
The conclusion? Across the euro area, adopting the digital euro would cost retail banks roughly €18 billion, for a service that poses a threat to their deposit base.
See also:
BNY and Goldman: tokenization with a twist
BNY and Goldman Sachs, two of the world’s largest financial institutions, have launched a blockchain platform to tokenize money market funds. This may sound relatively commonplace by now, but this initiative has a few intriguing twists:
One is the sheer size of the institutions behind the initiative. BNY is the world’s largest custodian bank, and Goldman Sachs is the world’s second largest investment bank. Neither are newcomers to digital assets, but this move further cements the official acceptance of tokenization potential. What’s more, it’s not a proof of concept or a pilot – it’s a real service for real clients.
Another is the tokenization structure. Clients don’t buy the tokens directly. Rather, they buy a traditional fund, and then a “mirror” token is issued. Ownership records are replicated onchain. This may not sound efficient, especially since onchain transactions can streamline processes and reduce steps, but not if they are a duplicate of a traditional transaction. But it is practical, as it is more likely to get traditional clients comfortable with the functionality of tokens without spooking their compliance departments – the clients buy traditional money market funds, a familiar activity, and then they get a token with which to test the efficiency of onchain use cases such as collateral. The token is a complement rather than the purchased asset.
What’s more, the connection is via BNY’s LiquidityDirect platform, which facilitates treasury management for over 8,000 corporations and institutions. In other words, the potential market here is huge. For now, participating products include money market funds from BNY, Goldman Sachs, BlackRock, Fidelity and Federated Hermes.
This brings us to the third twist: the tokenization part is handled by GS DAP, Goldman Sachs’ private blockchain. Why a private network rather than a public one, which can offer greater flexibility, compatibility and access? Because the priority for these large financial institutions and their clients is compliance. And for that, private networks are the only option likely get past the risk mitigation requirements for traditional institutions – at least for now.
But that doesn’t mean the network is small. GS DAP was built on Digital Asset’s Canton technology, which offers configurable privacy and also powers BNP Paribas’ Neobonds and HSBC’s Orion platforms as well as Broadridge’s DLR repo solution – perhaps there are some compatible crossovers on the roadmap? Also, GS DAP has already been used by the European Investment Bank for digital bond issuance and Hong Kong for green bond tokenization, and is working with OTC platform and technology provider Tradeweb to expand commercial use cases.
What’s more, Goldman Sachs has publicly announced plans to spin GS DAP off within the next 12 months into an industry-owned independent entity, which would considerably broaden its reach and potential application.
In sum, this move isn’t just a tokenization initiative. It’s an institutional treasury management innovation, more about getting corporate clients comfortable with the concept of onchain functionality than it is about flashy press releases.
If you’re not a subscriber to the premium daily, I do hope you’ll consider becoming one.
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.)
A hilarious account from Dave Barry on his brush with AI, death and the intersection between them. (Death by AI, Dave Barry’s Substack)
Space-based internet is touted as a solution to the vulnerability from sabotage or natural disasters of terrestrial connectivity – but scaling is expensive, the economic case is complex, and the risk to human life is not zero. This article is a great primer on the key issues, with some cool visuals. (Out of space: Picturing the big, crowded business of satellite internet, rest of world)
Anthony Grafton looks at the history and future of libraries. (No Cheese Please, The London Review of Books)
A scorching review from Irina Slav of the latest missive from UN chief Antonio Guterres on the inevitability and economic common sense of wind and solar. Don’t get me wrong, I am in favour of the idea of renewable energy, and would love to live in a world in which they worked at scale. But I resent the religious zeal with which some authorities distort economic reality to suit their power-grab, insisting that they’re cheaper, more reliable and will of course ensure boundless growth and prosperity. Even more sinister, there will be people out there who believe them, because surely they wouldn’t have risen so high if they lied, right? (No rest for the insipid, Irina Slav on energy)
In the same vein, Doomberg succinctly points out how the EU’s energy policies are reinforcing its “descent into irrelevance”. Sad and frustrating, but on point. (Paint By Number, Doomberg – paywall)
Regular readers will know I love personal music recommendations (it’s one of the reasons I share a song I’m listening to in every premium daily newsletter). Here’s a list from FT editors of their “song of the summer”, which includes several I didn’t know. (What are the songs of summer?, Financial Times – paywall)
I also love thoughtful book recommendations. Even though I know I’ll never have time to reach a fraction of my “to read” list, one can dream… Here’s a list of books that span the intersection of philosophy and technology, always relevant but now arguably even more so. (Philosopher–Builder Summer Reads, Cosmos Institute)
Adrian Wooldridge offers refreshingly practical look at the case for ID cards in the UK, pointing out that they are more convenient than controlling. I agree, despite my frequent warnings about increased government oversight (and therefore control) of our actions – we have them here in Spain, and they make bureaucracy less painful. (A Reluctant Case for ID Cards in Britain, Bloomberg – 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)
I have to confess a weakness for original acapella covers. Of course, “original” and “covers” maybe shouldn’t go together in the same sentence, but you probably know what I mean – voices that take a song and give it a new life, with a result even more enjoyable than the covered piece.
Here is one stellar example: Billie Eilish’s “Therefore I Am”, sung by The Bass Gang, with extra funk, humour, rhythm and bass.
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.