Wall Street Puts Treasuries on a Ledger, While MiCA Starts Separating the Field

The world's deepest market just ran a transaction on a ledger, and almost nobody outside the repo desks noticed. Add Europe’s crypto rulebook flexing in two directions at once and a software release that refused to be rushed, and this was a week where things kept moving in the right direction (even if the price didn’t).

TL;DR

• BNY and Citadel Securities completed what BNY describes as the first use of tokenized assets on a major triparty repo platform, with the tokenized Treasury purchase settling in minutes instead of T+1 before being pledged as collateral.

• Europe’s MiCA regime cut both ways in one week: ESMA moved to push non-compliant stablecoin services out, while BNY used its MiCA registration to extend digital asset custody to select EU institutional clients.

• Bitcoin Core v32.0 passed its October 10 target date, and a fourth release candidate shipped October 14 instead. My read: that’s exactly the process you want guarding the network.

The Most Boring Market in the World Just Went On-Chain 🏦

Let me explain why a repo trade is the story of the week, because on the surface it sounds like nothing.

On October 13, BNY announced it had completed a triparty repo workflow with Citadel Securities using a tokenized 2-year US Treasury note. Citadel Securities bought the note through Tradeweb. BNY recorded a tokenized version on its digital ledger, settling the purchase within minutes rather than the standard next-day cycle. Citadel then pledged the tokenized Treasury as overnight collateral in exchange for cash. BNY calls it the first use of tokenized assets on a major triparty repo platform.

Triparty repo is how the biggest balance sheets in the world borrow against the safest collateral in the world, overnight, in the trillions. It’s perhaps the most boring market in finance, but it’s the one everything else stands on. What changed this week is the speed at which collateral can move.

A Treasury purchase that settles in minutes instead of tomorrow is collateral that can be in two useful places in one day, and BNY says it plans to extend settlement coverage toward European and Asian trading hours in 2027. The direction of travel is a collateral market that never closes.

Readers of this newsletter have seen this movie before, three weeks ago, in a different theater. The Eurosystem’s Pontes links market DLT platforms with its TARGET Services so tokenized transactions settle in central bank money. Now America’s largest custodian is running collateral through a ledger of its own.

I’ve argued for years that the end state is a single trustless ledger for financial transactions, and that traditional securities will eventually settle against it. A private bank ledger isn’t that ledger, any more than Pontes is. Eventually, I could see everything settling on Bitcoin but, of course, that remains to be seen.

MiCA Starts Separating the Field ⚖️

Two European stories landed this week that read as one.

On October 8, ESMA published an opinion on services involving stablecoins that don’t comply with MiCA, with pre-existing exposure to be remediated within three months. The same day, BNY announced that it’s expanding its digital asset custody platform to select institutional clients in the European Union, which is a rollout built on its Belgian banking unit joining ESMA’s MiCA register in July.

Granted, my instinct about European regulation is permanent skepticism. I’ve said many times that Europe risks doing to digital assets what it did to the internet, regulating the industry into someone else’s jurisdiction. But fairness requires noticing when the other half of the bargain shows up.

The same rulebook that is pushing non-compliant products out of the European market is working as a passport for compliant ones to come in. An American custodian bank is now serving EU institutions through that rulebook, via a register entry in Belgium.

Europe’s picture is clarity with teeth. So now, compliance has become a moat, and the firms that did the paperwork early are collecting on it.

Bitcoin Core Passed Its Target Date, Thankfully 🛠️

Two issues ago I flagged October 10 as the target for tagging Bitcoin Core v32.0. The date was always an aim rather than a promise, and it came and went.

On October 14, the developers shipped a fourth release candidate instead, with the final version to be tagged once no critical problems remain. Among the changes waiting in it are security fixes, including one for a memory-exhaustion bug.

My read on the slip is simple. In corporate software, a passed date is a failure and somebody’s bonus. In Bitcoin, the maintainers of a network designed to operate around the clock, securing hundreds of billions of dollars, keep testing until they’re satisfied, and no marketing calendar can overrule them. That is the process working, full stop, and it’s a big part of why the network has earned the trust it has.

It’s also why Samara has supported Bitcoin Core development through Brink in the past. The least glamorous work in this industry is the reason everything else in this newsletter gets to happen.

One for the Calendar 🗓️

The Fed’s next rate decision lands October 28, the first since September’s hike to a range of 3.75% to 4.00% and the dot plot that penciled in one more before year-end.

Elsewhere in Bitcoin 📖

• A two-way week on the tape: after $487 million left the spot ETFs on October 7, $175.7 million came back in on October 13, the month’s second-biggest inflow day. Bitcoin moved back toward $84,000 before Tuesday’s hot CPI print knocked it to the $81,500 area.

• Former Celsius CEO Alex Mashinsky agreed to lifetime restrictions under a New York settlement, a standing reminder of what counterparty risk looks like and why last week’s self-custody news mattered.

• Strategy’s Michael Saylor declared the bear market over. I’ll leave the calls to him, since this newsletter doesn’t do price predictions.

Your fellow stacker in sats,

Patrick Lowry

P.S. See what Bitcoin’s purchasing power says about the euros or dollars in your pocket with Samara’s Bitcoin CPI.

Proof of Words is for informational and educational purposes only. Nothing in this newsletter constitutes financial, investment, legal, or tax advice, or an offer or solicitation to buy or sell any security or digital asset. Opinions expressed are those of the author and do not necessarily reflect the views of Samara Asset Group. Always do your own research and consult a licensed professional before making any investment decision.