Don't Forget to Blink

Not many headlines this week, but a lot of signal. The CFTC extended its wallet relief to every front end in the country. Ondo and BlackRock turned whole portfolios into single onchain tokens. ARK brought a $1.3 billion venture fund with stakes in OpenAI and Anthropic onto Ethereum through Securitize. None of these is the finished product. All of them are Lego bricks, and builders are starting to snap them together. Also, AI broke my eyeballs. More on that at the end.

Market KPIs (brought to you by RWA.xyz)

📈 RWA market cap was up slightly WoW, still sitting just under $40 billion
🏆 Biggest RWA winner: Tokenized SECZ (Securitize) added $140M to reach $400M, riding a roughly 120% run in the underlying stock over the past month
🏆 Biggest network winner: Liquid Network (Blockstream's Bitcoin sidechain) added $100M

📈 Stablecoin market cap was up 0.7% WoW to $306 billion, closing in on the prior all-time high of roughly $310 billion
🏆 Biggest stablecoin winner: USDC added $1.5B to reach $74 billion, one of the largest weekly mints in a long time
🏆 Biggest network winner: Solana added $900M

📈 Onchain risk free rates:
Short term treasuries (1m): 3.87% (up 25 bps WoW as the long end of the curve ran hot)
Aave / DeFi: 3.94% (up ~10 bps WoW, still tracking just above SOFR)

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The CFTC Follows the SEC's Lead on Wallets

Right after we went off air last week, and on the heels of the SEC's innovation exemption, the CFTC's Market Participants Division issued Staff Letter 26-25. Back in March, the CFTC gave Phantom a no-action letter saying it didn't need to register as an introducing broker just because its self-custodial wallet let users reach CFTC-regulated markets. That letter covered Phantom and nobody else. This one extends the same relief to every similarly situated software provider.

The conditions matter. The software has to be passive: non-custodial, no trading discretion, no advice, no funny fees. And it has to route users to venues and intermediaries the CFTC already regulates (FCMs, introducing brokers, designated contract markets). Meet those conditions and you can put a front end in front of regulated derivatives without registering yourself.

I'm taking a small victory lap here. On the show before this dropped, I said the CFTC would follow the SEC with its own version of an innovation exemption. This is a staff no-action position, not an exemption, so I'm giving myself 50% credit. I'll take it.

Why it matters: SEC Chairman Paul Atkins has been talking about the "super app." Put this letter next to the SEC's broker guidance for wallets and a developer can now build something that looks like a neobank and a brokerage inside a self-custodial wallet (say, on an MPC architecture like Fireblocks), with securities and perps side by side, as long as they stay inside the lines on things like best execution promises. "Neobank" undersells how interesting this gets once people really think it through. It's a great time to be a developer.

Charlie made the right caveat on the show. This relief is still built around a custodial model on the venue side. The SEC's exemption lets a front end connect straight to a DEX with everything self-custodial. The CFTC's version still needs the platform you're sending orders to be CFTC-regulated. Hopefully, once they've had more time with it, we get a version for decentralized derivatives venues too.

What I want next from both agencies is what Clarity would have delivered: real protection for software engineers who write smart contracts, so they can build without fear of retribution from either the CFTC or the SEC. That's step two. In the meantime, I love that both agencies reacted quickly to Clarity stalling in the Senate. At a minimum, there's now a path for a lot of real use cases.

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"Mass Tokenization" at the Treasury Market Conference

CFTC Chairman Mike Selig gave the keynote at the U.S. Treasury Market Conference in New York this week. There wasn't much new policy in it. He said U.S. markets need to get ready for mass tokenization, onchain finance, and 24/7 trading, and that high-quality tokenized collateral could make liquidity more dynamic and markets more resilient. It's a clear signal that more is coming.

Here's what I'm hoping for. With Treasury in the room, I think there's a real chance we see something aimed at how broker-dealers and other registered participants onboard customers into tokenized assets. As regular readers know, onboarding is the worst part of tokenization right now. You have to get whitelisted separately for every venue and every smart contract. It's the worst of all worlds.

I don't want to speculate too much. But I think we're a few months of announcements away from a genuinely great developer experience for financial instruments: more standardization, and clear guidance on what you can and can't put in front of an end user depending on whether you're regulated.

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Ondo and BlackRock Put Whole Portfolios Onchain

This one was hot off the presses the morning we recorded. TAC member Ondo launched Ondo Intelligent Portfolios, three portfolio tokens built on strategies BlackRock designed for Ondo: High Income (BLKHIon), Diversified Growth (BLKDIGon), and High Growth (BLKGRWon). Each token gives eligible non-U.S. investors exposure to a weighted basket of tokenized assets from Ondo Global Markets. That's the same platform that already offers a few hundred tokenized U.S. stocks and ETFs, with no U.S. investors allowed. You mint or redeem one token instead of managing every position in the basket, and holdings, weights, and rebalances are all visible onchain.

To be precise about roles: BlackRock supplies the model portfolio strategies. Ondo handles issuance, custody, distribution, and operations, and rebalancing executes at the smart contract level.

People who were early to ETFs love comparing tokenization to the early days of ETFs. Before ETFs, you bought single stocks and built a portfolio one decision at a time with your broker. There was no easy market beta trade and none of the ways to bet on the market that we now take for granted. The comparison works because of the curation and extra features DeFi makes possible, and this launch is a real step toward proving it. Ondo is usually first on these things, and I'm sure there's a lot more coming. I think truly agentic portfolios are still a ways off. But rebalancing and cutting cash drag are exactly what this kind of product is good at.

Charlie tied it back to our long-running thesis that DeFi turned assets into money Legos, and we're only now seeing the first real-world assets used that way. Plenty of ideas that were tried in DeFi never got traction, like actively managed vaults. With crypto correlations above 90% and most people only wanting to hold blue chips, they didn't make much sense. With real-world assets underneath, they do. I'd bet builders go back through the whole DeFi playbook and ask what makes sense now that tokenized real-world assets exist.

I completely agree. Everything we've been doing since ERC-20 launched in 2016 and 2017 is a template for something you can do more reliably with a traditional instrument that has real liquidity and market depth. Crypto only gets that kind of depth once every four years or so, if that cycle even keeps repeating. Take looping. It's interesting for levering yield, but on transparent rails you can also unwind the position faster, so the system doesn't pile up risk it can't get out of the way it did in 2008. In crypto we take instant entry and exit for granted. In a traditional interval fund or some BDC-style yield strategies, you can wait a quarter to get your redemption. People are already building paid liquidity for the gap between redemption windows. It all rhymes with the last decade of crypto.

For now, the biggest buyers of these products are onchain treasuries like Grove, Ethena, and a handful of large crypto treasuries whose projects rely on treasury value to pay the bills. Products like this let them diversify. Over time, I think it spreads well beyond that.

Here's where I think the loop closes. At some point someone will do a native onchain issuance. It could be equity, it could be a network token with equity value attached, it could be something none of us has thought of. We'll know it when we see it, and it will outperform everyone's expectations. The utility it gets from being issued onchain from day one will make native issuance look very attractive to every issuer watching. I think that's inevitable. Until then, products that help the biggest onchain buyers diversify are exactly what we need. We need Ondo times a hundred.

Congrats to the Ondo team. They were a very early supporter of TAC, and it's always great to see them shipping.

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ARK's Venture Fund Goes Onchain. The Real Story Is Secondary Liquidity.

The Securitize announcement we hinted at during the KPIs: ARK Invest tokenized the ARK Venture Fund (ARKVX) through Securitize on Ethereum. It's an interval fund with roughly $1.3 billion in net assets, holding a mix of private and public companies including OpenAI, Anthropic, Stripe, and Databricks. That's a smorgasbord of the private names family offices and everyone else are trying to get a piece of before they IPO. Securitize also plans to publish a daily NAV.

The strategy itself is already available through a regular broker. And to be clear (not investment advice), I don't think there's alpha in the tokenization itself. The interesting part is what happens around redemptions.

Securitize plans to let the tokenized interests trade on blockchain-based markets, and my understanding is that there's a pending request with the SEC to allow that secondary trading on Securitize's ATS. Today, when an interval fund honors redemptions, the manager has to raise cash, often by selling some of the underlying. With a real secondary market, it goes from Cathie to Charlie to Johnny, and Cathie never has to deal with a redemption request. The manager keeps the portfolio intact and gets wider distribution, and holders get liquidity. Everybody gets a good deal.

Secondary liquidity versus redemptions sounds mundane, and it isn't unique to tokenization, so I don't want to oversell it. But it's one of the pieces behind the "issuance that makes it click" I mentioned in the Ondo section. If this works, it becomes the case study every manager of a semi-liquid strategy looks at before issuing onchain.

Charlie pointed to lending against fund shares as the use case people get most excited about. Hedge funds and wealthy individuals get this through a prime brokerage, which will lend against almost anything in your portfolio, liquid or illiquid. The average person doesn't have one. One of the most exciting things further out is that someone with $1,000 in their account could get the same basic experience, underwritten at scale onchain instead of one client at a time by a handful of big banks.

Charlie also floated a trade I love: go long ARK Venture and short a basket of other venture funds to isolate pure Cathie Wood alpha. Wealth managers already run long/short books on the same instrument to harvest tax losses along the way. Once all of this is programmable, we honestly have no idea what people will come up with. As Charlie put it, that's the beauty of a permissionless environment. People can just do stuff.

Global securities, commodities, and other assets add up to hundreds of trillions of dollars, and a lot of it turns over every day. I think tokenization drives a big expansion in volume, because an engineer tinkering in a basement can build a new financial strategy as easily as the person running a credit desk at a Wall Street bank. Plenty of it won't work. Some of it will, and we'll get new financial products that can actually handle scale. The financial system is just getting started.

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Shoutout: Agora Gets Its Conditional OCC Charter

Agora, the stablecoin-as-a-service platform behind AUSD, received preliminary conditional approval from the OCC for Agora National Trust Bank. I don't think they expected it before the end of the year, so it's a big, early win. Congrats to the team. If you've been thinking about asking the OCC to regulate you, now is the time. They seem to be handing out these charters like candy.

When Anchorage got its charter, it was the odd duck. Now a line of companies is right behind it. Charlie thinks Anchorage probably got about a two-year business development head start, and the question is whether that becomes a lasting moat. As far as I can tell, it still is one: they're the only qualified custodian I know of that can take an institution's dollars, move them into crypto, and hold the assets as custodian. I could be wrong on that. Either way, whatever they did to get that approval is a master class for anyone who wants a regulatory moat. Study Anchorage.

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What I'm Working On: Token-to-Equity Conversions

I'm getting more and more inbound about converting tokens into tokenized equity. Any crypto-native project with an institutional bent is finding good reasons to do it, and there are several ways to structure it. We're doing it one way with Centrifuge, and it's definitely not the only way. A template is forming, and I think we'll see 25 to 50 of these.

Charlie asked why I don't just keep this for an advisory business. I don't want to run all 25 to 50 of them. An advisory business doesn't scale much beyond one person. What I do want is to give the teams running these projects a high-level picture of what to expect, probably starting with examples anyone can use without me presenting or advising on each one. It's honestly one of the most fascinating legal transactions I've ever worked on, so I'm figuring out how to package it without making it too lawyer-nerdy. Stay tuned.

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A PSA: Don't Forget to Blink

About a week and a half ago, I started getting headaches behind my left eye every afternoon around 2 p.m. By bedtime they were an eight or nine out of ten. I've had migraines since high school, but my usual medication did nothing, and back-to-back migraines are almost unheard of for me. By day seven my vision was going blurry within arm's length. I booked ophthalmology, ENT, and my primary care doctor, and I was 100% sure I was going blind.

The ophthalmologist ran every sci-fi test he had and found nothing. Finally he asked about my day. I told him I run five desktops for the different companies and projects I oversee, and I swipe between them three or four times a minute: a message comes in, an agent needs me to push something forward, and meanwhile there's whatever I'm actually trying to focus on. His diagnosis was severe dry eye. I was barely blinking for hours at a time. He gave me eye drops, I put them in when I got home, and the headache went away.

So yes, AI literally broke my eyes' ability to stay moist. Charlie, who has dealt with dry eyes for years, recommends blinking on purpose, using drops regularly, looking away from the screen at least once an hour, and a heated eye mask that loosens the oils around your eyes. I'm moving off multiple desktops. Be careful out there, and don't forget to blink.

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