“Pontes brings the stability and trust of central bank money to the European tokenised finance ecosystem”
Hey, it's Marc.
Welcome to the Monday edition of the 51 Insights digital asset newsletter.
The ECB has given banks a way to buy tokenized securities without stablecoins. I think the bigger story is who gets to provide the money behind those markets.
Here's what matters in digital assets at the beginning of this week:
Let’s unpack. 👇
01 / MARKET INFRASTRUCTURE
The ECB gives banks a way around stablecoins
What's going on here?
The Eurosystem launched Pontes on Monday. Thirteen market participants and four DLT operators are onboarded, including Deutsche Bank, Santander and Clearstream. The Bundesbank has also joined. Banks can now settle eligible tokenized trades in central bank money.
The ECB is also preparing to buy tokenized securities with part of its own funds. There is no purchase date yet.
The catch: banking hours. Initial services run on a business-day schedule. The plan is 24/7 by mid-2028, with greater programmability.
What does this mean?
Consider a hypothetical €10 million bond purchase by Deutsche Bank from Santander. On Pontes' TARGET settlement route, the bond is locked on the market blockchain. Pontes coordinates payment between the banks' TARGET accounts with Eurosystem central banks. Payment confirmation allows the bond to be released to Deutsche Bank.
If the payment fails, Deutsche does not get the bond.
In this route, the bond sits on the blockchain and the cash settles in T2. Pontes also supports a cash-token route on a Eurosystem ledger. Both use central bank money, without a private stablecoin issuer.
That distinction matters. At Jackson Hole last month, Isabel Schnabel explained the advantage. A stablecoin issuer cannot supply extra liquidity on its own when demand surges. A central bank can create the currency in which the payment settles.
Why should I care?
CoinDesk’s August report put euro stablecoins at $776 million in a $311 billion stablecoin market. About 0.25%. Europe’s advantage is the central bank money its banks already use.
Our read: the ECB is trying to keep wholesale settlement from moving to stablecoin issuers. Pontes lets banks put the securities on blockchains while keeping central bank money at the centre of the trade.
What we’re watching: the ECB just gave banks a way around stablecoins. Now it has to make that route useful enough to choose. I'd watch repeat transactions and operating hours: a market that trades all weekend needs money that can move with it.
Since Friday
Late Friday · Bastion. The OCC conditionally approved its national trust conversion. Final operating approval remains outstanding.
Saturday · Visa. The Block reports pressure to change memecoin merchant coding. Crossmint said its procedures were unchanged. A card-network rule can change how crypto gets sold.
Weekend debate. Jake Chervinsky argues agency action was underappreciated in the Clarity debate.
Related Pro story: Who won the Clarity fight?
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The week ahead
Wednesday, September 23 · Paris. AEFR's tokenization seminar: watch what Europe wants to build after Pontes.
Wednesday, September 23 · Washington. Georgetown's markets conference: watch BlackRock and DTCC explain where tokenization pays.
Thursday, September 24 · SNB. Monetary policy assessment: watch what changes for the cost of borrowing francs.
👉Follow all the stories on 51insights.xyz
One useful read
The Block's card-payment investigation (The Block, Sep 1). This weekend's Visa reporting makes its examination of merchant codes and crypto distribution newly relevant.
My question for the week: would you choose central bank settlement if it meant waiting until Monday?
That’s all for now, folks.
Take care
– Marc & Team
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