KEY POINTS
- Guggenheim allotted $20 million to tokenize the digital commercial papers through Zeconomy's AmpFi.Digital
- The digital commercial paper received a Prime 1 rating from Moody's
- '2024 has clearly demonstrated a surge in institutional interest towards tokenization and real-world assets': Zeconomy CEO
Guggenheim Treasury Services (GTS), an indirect wholly owned subsidiary of Wall Street behemoth Guggenheim Capital LLC., and Zeconomy, the blockchain firm behind AmpFi.Digital, recently unveiled a new offering that could further transform the way traditional financial institutions view and engage in the digital assets space.
Zeconomy and GTS announced last week that they have issued the first-ever Ethereum-based Digital Commercial Paper (DCP), which subsequently received the highest credit rating from Moody's of P-1 (Prime 1).
At launch, a staggering $20 million was issued on the Ethereum blockchain, signifying the growing interest of TradFi institutions in a rising sub-segment of blockchain: tokenization.
What is Tokenization?
For starters, tokenization is the process by which tangible or real assets are "tokenized," or converted into digital assets through a token. In the case of the GTS and Zeconomy DCP, Zeconomy's AmpFi.Digital blockchain platform allowed for GTS to transform a real-world asset (RWA) into a dynamic decentralized finance (DeFi) offering backed by blockchain technology's secure functions.
Zeconomy's AmpFi.Digital platform was designed for trading and governance securities.
What is the GTS-Zeconomy DCP?
In traditional finance, commercial papers are unsecured short-term debt instruments issued typically for the funding of short-term liabilities or other similar financial obligations.
Basically, Guggenheim Treasury Services and Zeconomy's digital commercial paper is the tokenized version of the traditional commercial paper, only this time, the DCP is protected by the many benefits of blockchain technology.
Users can trade the DCP on the on-chain platform in the same way as traditional commercial papers are traded over-the-counter, but with faster settlements as enabled by blockchain's speedy processing.
The Tides are Changing in TradFi
With the recent milestone of tokenized government securities, wherein they passed $2 billion in market capitalization, there is a significant rise in institutional interest in the emerging asset class.
"2024 has clearly demonstrated a surge in institutional interest towards tokenization and real-world assets. The Digital Commercial Paper, an asset-backed commercial paper rated Prime-1 by Moody's and issued on Ethereum, was specifically designed to meet institutional investors' demand for trusted and compliant digital assets. The blockchain industry has struggled to make these products available in the past and it's what AmpFi.Digital is here for," Giacinto Cosenza, CEO at Zeconomy, told International Business Times.
At the Forefront of the TradFi Shift
AmpFi.Digital seeks to deliver the compliant and secure services that TradFi entities are looking for. Likewise, Zeconomy is on a mission to enhance the value, utility, and returns of TradFi products through blockchain, and the GTS tokenized commercial paper is just part of such efforts.
"With tens of billions of dollars locked in DeFi and corporate treasuries, we are thrilled to partner with GTS to address a clear need for more trusted and secure blockchain solutions. As clearly demonstrated by the ETFs (exchange-traded funds) approval and the growth of the tokenization space, there is a massive demand for these digital assets, and we want to enable our partners so they can be at the forefront of what could be a transformative moment in the financial industry," Cosenza said in a press release shared with IBT.
