[███░░░░]: Private Credit's Cure

Welcome to the TAC's Progress Bar, where we combed through 241 relevant tokenization news stories from the week, analyzed the key stories on our weekly podcast, then distilled what you need to know into a few hundred words in this newsletter. Delivered to your inbox in time for Friday happy hour in NYC (usually).

Private credit has an information problem and Galaxy and Avalanche may have just shown us the cure. Also: Kraken got a Fed master account, every bank wants a stablecoin, and the CLARITY Act is still stuck in the Senate.

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• An emerging Private Credit asset manager with a marquee distribution partner based in Asia is seeking capital partners

📈 RWA market cap was up ~2% WoW to just under $27 billion
🏆 Biggest RWA winner: Circle's USYC added 14% to nearly $2 billion, almost entirely on BNB Chain
🏆 Biggest network winner: BNB Chain

📈 Stablecoin market is back above $300 billion, up 0.5% WoW
🏆 Biggest stablecoin + network winner: USDC added $1.2 billion on Ethereum
Honorable mention: Base, which has led every other chain in stablecoin transfer volume every month since January

📈 Onchain risk-free rates:

• Short-term treasuries (1m): 3.7%
• Aave / DeFi: 2.9%

Fourth consecutive week that onchain rates are running meaningfully below the risk-free rate. Borrow accordingly.

Stories we're tracking this week

• The stablecoin race officially became a crowded field. SoFi and Wells Fargo both announced branded stablecoins this week, SoFi USD and WFUSD respectively, joining what's becoming a long list of GENIUS Act-compliant issuers. When every issuer has roughly the same reserve structure, differentiation shifts to distribution, rewards, and integrations. Think the credit card playbook, not a walled garden.
• Kraken made history by becoming the first crypto firm ever granted a Federal Reserve master account, through their Wyoming-based entity. Direct Fedwire access means no more reliance on banking intermediaries for settlement. In the same week, Kraken announced a partnership with Nasdaq to launch global tokenized stock trading through their Backed/X-Stocks platform, targeting 2027 with a genuine commitment to passing through actual shareholder rights, voting and dividends included.
• Morgan Stanley filed for a national crypto trust bank charter with the OCC, the same structure Anchorage holds today. The move creates a clean, purpose-built legal entity for digital asset custody and stablecoin issuance, letting the digital assets business move fast without pulling the main bank into every regulatory conversation.
• The CLARITY Act remains stuck in Senate Banking Committee purgatory. Trump posted about it on Truth Social this week, calling out the banks trying to block it.

Polymarket has it at ~60% odds to pass this year. Meanwhile, the FDIC confirmed stablecoins won't receive deposit insurance, which is actually the right call and creates a more interesting competitive dynamic between stablecoins and tokenized bank deposits than most banks seem to realize.

• SuperState's Opening Bell is facilitating a tokenized IPO for Backpack, the Solana wallet and trading platform, at a $1B valuation. This is SuperState's first actual IPO, not just a tokenized listing of an existing public company. A genuinely significant milestone for the onchain capital markets stack. We're wishing the team at Superstate a smooth path to closing!

Private Credit's Cure

We sat down with Olivia Vande Woude, who recently became Avalanche's head of tokenization, to dig into the Galaxy CLO that just launched on Avalanche. It is worth spending real time on this one because it is a preview of what capital markets infrastructure might look like at scale in the very near future.

A CLO, or collateralized loan obligation, is a securitized pool of loans sold to investors in tranches with different risk and return profiles. Galaxy packaged a credit facility to Arch Lending, a crypto lending platform backed by Galaxy Ventures that offers consumer loans overcollateralized with Bitcoin, Ethereum, and other digital assets. You deposit BTC, you borrow dollars against it. Simple product, real demand, proven collateral.

What Galaxy and Avalanche built underneath the structure is where it gets interesting. In a traditional CLO you have an asset manager, a trustee, a collateral administrator, a paying agent, and usually a handful of other counterparties, each operating in their own system, each seeing only their slice of the picture, and each running on their own reporting cadence. In practice this means collateral monitoring happens monthly, signals travel slowly, and by the time the right person knows something is going wrong, you have already burned through the buffer. In credit, lag is the mechanism of loss.

The Galaxy CLO collapses all of that. Anchorage Digital Bank wears four hats simultaneously: bond trustee, qualified custodian, collateral agent, and administrative agent, all through their Atlas Settlement Network, providing real-time collateral monitoring and secure onchain settlement throughout the lifecycle of the transaction. Accountable provides a live dashboard showing both onchain and off-chain loan performance, not monthly, but continuously, visible to every party simultaneously. All of it settles on Avalanche, making the entire history immutable and permanently auditable.

Olivia called this "vertical compression": five or six handoffs between disparate counterparties collapsed to zero.

When one of Arch's borrowers stops paying or gets liquidated, that information propagates immediately. CLO investors can see it happen in real time. Pricing adjusts continuously instead of at month-end data dumps. There is no version of the same collateral being double-pledged to multiple lenders simultaneously, which is the failure mode that cost J.P. Morgan $170M in the Tricolor collapse, while First Brands revealed similar off-balance-sheet fraud.

The stress in private credit right now is not primarily a credit cycle story. It is an information architecture failure. Funds lending to software companies are sitting on assets whose cashflow assumptions AI is actively repricing. That is a business model risk. The tokenized Galaxy CLO is not doing that. It is lending against over-collateralized Bitcoin and Ethereum with real-time onchain collateral monitoring. You cannot hide the collateral. You cannot double-pledge it. You cannot bury a liability in a footnote. The architecture is built as an answer to the failure modes currently playing out elsewhere in private credit.

INX tokenized the debt tranches on Avalanche, with positions expected to be listed on INX's ATS platform (a wholly owned subsidiary of Republic) offering market access for qualified investors. NAV Consulting is providing fund administration. Grove, an institutional-grade credit infrastructure protocol within the Sky ecosystem (formerly MakerDAO), incubated by Grove Labs, a subsidiary of Steakhouse Financial, came in as the anchor investor at $50 million. This builds on Grove's initial $250M deployment into tokenized assets on Avalanche and reflects an ongoing institutional credit strategy on the network. The CLO is currently financed to $75M with a ceiling of $200M. The senior tranche carries a coupon of SOFR +570 bps with monthly distributions. At this stage it is primarily a buy-and-hold structure with a December 2026 maturity, so secondary volume will be modest for now. That said, the infrastructure is built, and when the next issuance scales and the buyer base broadens, the rails will be ready.

If structured credit had been built with this kind of collateral transparency in 2008, the information lag that amplified the crisis may have looked very different.

The episode summary is available for you here.

Stay ahead of the curve

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Until next time,

The TAC Team