Tokenization brings operational efficiencies and improved liquidity and accessibility, according to a research report from Bernstein released Tuesday. The report estimates that the tokenization opportunity could be as much as $5 trillion over the next five years, driven by stablecoins, central bank digital currencies (CBDCs), private market funds, securities, and real estate. Currency tokenization, via stablecoins and CBDCs, will be used for on-chain deposits and payments, with an estimated 2% of global money supply to be tokenized over the next five years, or about $3 trillion.
Meanwhile, Japan’s cryptocurrency exchanges are pushing for regulators to relax margin trading restrictions on popular cryptocurrencies such as Bitcoin (BTC). Exchanges in the country once offered leverage of up to 25 times principal capital, and trading volumes reached as high as $500 billion annually in 2020 and 2021, according to Bloomberg. However, Japanese regulators limited crypto exchanges to offering leverage of only twice the principal, leading to a drastic drop in trading volumes last year. The Japan Virtual and Crypto Assets Exchange Association is now arguing that these restrictions hinder market growth and discourage new participants.
Bitcoin (BTC) traded little changed on Tuesday despite China’s first cut in benchmark lending rates in 10 months. The People’s Bank of China lowered the one-year and five-year loan prime rates by 10 basis points to 3.55% and 4.3%, respectively. Last week, the country’s biggest state banks cut rates on demand deposits by 5 bps and 15 bps on three- and five-year time deposits. The looser conditions contrast with continued monetary tightening in western economies and follow recent economic reports that indicate the world’s second-largest economy is losing steam and is on the brink of deflation.