Morgan Stanley Began Tokenising US Equities and Treasuries on DTCC's New Tokenisation Service

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In Today's Note

• BTC broke back above $80K on Wednesday for the first time since the Binance hack and is trading at $80.3K this morning, while Brent crude fell 8.7% to $94.62, below $100 for the first time since September, and the 10-year Treasury yield fell 5bps to 4.90%.
• Schroders launched a tokenised version of its emerging markets debt fund on Solana through Centrifuge, while French bank Crédit Mutuel Arkéa confirmed a cyberattack in which funds taken from its own account were converted into crypto, with losses estimated by ZachXBT at more than $133M.

Market Snapshot: Overnight Moves

Macro & Markets

• While Senate races in Mississippi and Alaska remain too close to call, markets appear to have taken the US midterm results as reducing political uncertainty and increasing pressure on the administration to seek an end to the war with Iran.
• BTC's 7-day at-the-money implied vol fell from 36.9% on Wednesday morning to 34.1% this morning, its lowest since Oct. 24.

• Oil prices tumbled as investors bet the election result could hasten an end to the war. Brent crude fell 8.7% on Wednesday to settle at $94.62, trading below $100 for the first time since September, while WTI dropped 8.3% to $88.12. Brent has recovered 1.6% to $96.12 this morning amid reports that another tanker was struck by projectiles off Qatar.
• Vice President JD Vance attributed the losses directly to the conflict, writing on X that "The reason we lost is the war." President Trump said that was "largely true because it drove the gasoline up a little bit short term", but added that "if I had it to do again, I'd have to do it again."
• Trump had earlier told the FT that "We're locked and loaded if we need to go, but there may be no reason for it", while Treasury Secretary Scott Bessent announced fresh sanctions against Iran's shadow fleet on Wednesday, warning that "We know where you are, and we will sanction those who continue supporting the Iranian regime, whether by land, sea, or air."

• US Treasuries rallied alongside oil's decline, with the 10-year yield falling 5bps to 4.90% and the 2-year 3bps to 4.58% on Wednesday. The 10-year has slipped further to 4.87% this morning; the DXY dollar index closed Wednesday down 0.35% at 101.51 after touching a four-week low.
• October's nonfarm payrolls report is due tomorrow at 13:30 UTC (consensus +65K).
• CME FedWatch odds of a December hike are around 81%, versus around 85% immediately after last week's FOMC meeting. Fed officials have spoken since the meeting: St. Louis Fed President Alberto Musalem said on Friday that further policy firming would be necessary soon. Cleveland Fed President Beth Hammack, who dissented in favour of a hike, is due to speak at 13:50 UTC today.
• Precious metals rallied as the dollar weakened. Gold futures rose 3.4% on Wednesday to $4,073, back above $4,000, and have extended their gains to $4,132 this morning, while silver jumped 5.1% to $52.12.

• The US midterm election results were also a setback for the crypto industry's political spending. Former Senate Banking Committee chair Sherrod Brown won Ohio's Senate race despite more than $50M of spending against him by crypto PACs, while Rep. Bryan Steil, who chairs the House subcommittee on digital assets, lost his seat. The outcome further clouds the outlook for the CLARITY Act market structure bill, which stalled in the Senate in September.
• Crypto initially sold off as results came in, with BTC falling to roughly $75.7K during the 03:00 UTC hour on Wednesday, below last week's post-hack lows. It then rallied alongside US equities, rising 2.5% between 14:00 and 16:00 UTC to break back above $80K for the first time since the Binance hack, triggering $466M in crypto-wide liquidations over an hour, approximately 81% of which were shorts.

• BTC is trading at $80.3K this morning, around 6% above Wednesday's low and within 0.6% of its pre-hack level of $80.75K. ETH has outperformed, rising more than 9% from Wednesday's low to $2,434 at 23:00 UTC, its highest level since Oct. 22, and now trades 3.4% above its pre-hack level at $2,414.

• US spot ETF inflows have lagged the rebound in crypto prices. US spot Bitcoin ETFs took in $74.6M on Wednesday, ending a three-day outflow streak worth $1.16B that began with a $643.3M outflow in the first session after the hack, their largest since June 25.
• Spot Ether ETFs took in $53.0M, snapping a seven-day outflow streak worth $657M.

DeFi / Web3 / Altcoins / Crypto

• Schroders has launched a tokenized version of its emerging markets debt fund on Solana through Centrifuge, marking the asset manager’s first deployment on the network.
• The fund gives investors onchain exposure to Schroders’ actively managed emerging markets bond strategy.
• The portfolio includes sovereign debt, corporate bonds and local-currency investments.
• The launch extends tokenized real-world assets beyond cash and short-term government securities into more complex actively managed fixed-income products.
• Centrifuge provides the tokenization infrastructure for the fund.
• Schroders manages more than $1T in assets, making the launch another example of a large traditional asset manager bringing investment products onchain.
• Centrifuge has also worked with firms including New York Life Investment Management and Coinbase on tokenized funds and other financial products.

• BitGo has launched BitGo Global Markets, a new institutional trading and financial services division following its acquisition of NYDIG’s institutional and trading business in August.
• Former NYDIG executive Pete Janney will lead the unit.
• The division combines BitGo’s existing institutional trading business with capabilities acquired from NYDIG, including derivatives, financing, collateral management and structured products.
• BitGo Global Markets will offer spot and OTC trading, crypto-backed financing, options, swaps and custom structured products.
• Clients will also be able to borrow against crypto holdings, with BitGo handling custody, margin monitoring and collateral management.
• The unit will additionally offer managed investment strategies, private funds and research.
• BitGo’s Go Network will provide clearing and settlement for the business.
• Around 30 NYDIG employees joined BitGo as part of the acquisition.

• Morgan Stanley has begun using DTCC’s new tokenization service to tokenize U.S. equities and Treasurys.
• The bank said it is among the first institutions to use the infrastructure for real-world assets.
• DTCC’s service launched last week with 20 participating institutions, including JPMorgan, Citi, Bank of America, Barclays, BNP Paribas, Fidelity, State Street and UBS.
• The service is operated through DTC, DTCC’s depository subsidiary, which holds about $114T in assets under custody.
• DTCC said the platform was developed with input from more than 150 firms and initially supported Canton and a private Besu network.
• Morgan Stanley said the experience will help inform the development of its broader digital asset infrastructure.
• Separately, the bank plans to support tokenized equities on its alternative trading system in Q1 2027.

• Crédit Mutuel Arkéa has confirmed a cyberattack that enabled fraudulent transfers from the French bank’s own account, with the funds later converted into crypto.
• The bank said customer assets were not affected and that the incident has been contained.
• Onchain investigator ZachXBT estimated losses at more than $133M, while the bank did not confirm an exact figure but said the estimate was broadly in the right range.
• Crédit Mutuel Arkéa said some of the stolen funds had already been blocked.
• According to ZachXBT, the attacker moved funds through multiple crypto transactions, including swaps from USDC into ETH, transfers through instant exchanges, conversions into XMR and cross-chain bridging.
• He said the attack appeared to have unfolded over several days and that the final loss could still change.
• The bank said the incident caused delays to some transfers but did not threaten its financial position.
• ZachXBT also said he had a high degree of confidence that the attacker was not linked to North Korea’s Lazarus Group.

This Week's Calendar

Charts of the Day

Figure 1. Block Scholes BTC Risk-Appetite Index (white, left-hand axis) and BTC spot price (orange, right-hand axis). Source: Deribit, Block Scholes.

Figure 2. Block Scholes ETH Risk-Appetite Index (white, left-hand axis) and ETH spot price (purple, right-hand axis). Source: Deribit, Block Scholes.

Figure 3. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

Figure 4. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

Figure 5. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

Figure 6. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.