Europe’s Second Largest Bank Goes Live On Ethereum

Key Insights

• BNP Paribas launched a tokenized share class for a French money market fund on the public Ethereum blockchain.
• WisdomTree is set to enable 24/7 trading and instant settlement for its tokenized Treasury Money Market Digital Fund.
• The Ethereum blockchain has consistently held 55-60% of all DeFi TVL over the last 4 years.

Despite escalating warnings about the rapid rise in tokenization, institutions are not taking a break. The U.S. started it, and now Europe is following suit despite hurdles from MiCA compliance.

The recent updates touch Europe’s largest bank alongside an asset fund manager in the U.S. The race to enable trading in traditional markets without intermediaries, locations, or time boundaries is heating up.

As institutions merge traditional finance (TradFi) and decentralized finance (DeFi), Ethereum is proving to be a leader on this front. Previously, institutions like JP Morgan, SWIFT, BlackRock, and Securitize, among others, had already tokenized. How will the recent updates impact the financial markets in general?

European Bank BNP Paribas Launches Tokenized MMF on Ethereum Blockchain

The $3 trillion European-based multinational banking giant, BNP Paribas, officially deployed a tokenized share class on the Ethereum blockchain. The integration came amid strict regulations from MiCA, the European body that regulates crypto.

According to BSCNews on X, this share class was a French money-market fund. The AssetFoundry platform successfully piloted the integration. The integration allowed trading and settlement on a public network that was operational throughout the year.

With a presence in 64 countries, the bank commands a large user base. The activities of the MMF are expected to skyrocket now that users will no longer be bound by time or location for settlement.

For Ethereum, it meant a huge milestone. This is because the move by such a big bank was a clear indication that the “too risky, too messy, too experimental” narrative was dead.

WisdomTree To Enable 24/7 Trading of WTGXX Fund

Additionally, WisdomTree Fund was set to make a similar move. The fund would be launching 24/7 trading against the USDC stablecoin for its tokenized Treasury Money Market Digital Fund (WTGXX). This was the first time the fund had made such a move under United States regulations.

The integration followed WisdomTree’s compliance with major regulations issued by the SEC and FINRA. Hence, the fund was granted relief, with its broker, WisdomTree Securities, providing liquidity.

However, this relief came with conditions: trading could be done via dealer-principal and at a fixed $1 intraday price. Additionally, there would be blockchain-based settlement and initial institutional access via WisdomTree Connect.

The integration of USDC increased liquidity in the crypto sector. It also unmasked the importance of stablecoin rails in the TradFi-DeFi merger. Moreover, it seconded the previously mentioned impact of BNP Paribas tokenization.

Based on the information, it was worthwhile to analyze the Total Value Locked (TVL) in DeFi across different chains.

Analysis of DeFi TVL Dominance Across Different Chains

Ethereum held the largest share of DeFi TVL, ranging from 55% to 60% over the past four years. For context, this share was about $123 billion at press time. All other chains were scrambling for the remaining share, which was less than 45%. This figure meant that ETH was the backbone of DeFi.

DeFi TVL dominance by chain | Source: DefiLlama

The recent data showed the share of Bitcoin (BTC) and Solana (SOL) was growing. That of TRON (TRX) and BNB Smart Chain (BSC) was declining over the same period. The findings indicated tokenization, which was a major DeFi activity, was leaning on large caps that had massive user bases.

Altogether, these developments showed the shifting market dynamics from big institutions across the globe.

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