Vaults and the SEC + CFTC 🔥

In a single stretch, the SEC and CFTC dropped joint crypto classification guidance that supersedes a framework the industry has hated since 2019, the SEC approved NASDAQ's plan to trade tokenized securities, Commissioner Hester Peirce publicly apologized for the commission's past treatment of the crypto industry, and Moody's rolled out an official stablecoin ratings methodology. Oh, and the GENIUS Act is reportedly close to clearing its final hurdles in Congress.

Meanwhile, stablecoins are flirting with all-time highs above $300 billion, RWAs just crossed $27 billion and have been adding 2% week over week for four straight weeks, and we had Brian Cho from rwa.xyz on the show to break down why every TradFi institution calling him right now is asking the same question: what are vaults and how do I use them?

Let's get into it.

📈 RWA market cap was up 2% WoW to $27.3 billion
🏆 Biggest RWA winner: JTRSY (Centrifuge) gained 30%, up to $800M
🏆 Biggest network winner: Ethereum added $200M, approaching $16B in RWA supply

📈 Stablecoin market added just under $1B, now at $301.7B and nipping at all-time highs
🏆 Biggest stablecoin winner: USDT added ~$750M
🏆 Biggest network winner: Polygon added ~$100M

📈 Onchain risk free rates:

• Short term treasuries (1m): down 2 bps
• On-chain rate: down 2 bps, still 70 bps below the off-chain risk-free rate

Why Every Institution is Asking About Vaults: Brian Choe Breaks It Down

The single most common inbound question from TradFi institutions hitting up rwa.xyz right now? Vaults. Not "what is tokenization" or "how do I issue on-chain." They have moved past that. The question is now: how do I plug into DeFi infrastructure to actually create demand for my tokenized assets?

Brian Cho, head of research at rwa.xyz, joined the show to walk through his team's new vaults primer, a document specifically designed for institutional asset managers, not crypto natives. The core concept: allocation vaults sit on top of lending and borrowing markets, accept deposits (typically stablecoins), and allocate capital across various on-chain markets based on predefined parameters. Think of it as the 401(k) problem solved with smart contracts. There are hundreds of products, most sound alike, and most people don't want to figure out the optimal allocation themselves. A vault curator handles that, similar to how a target-date fund manager would.

Brian laid out a three-phase arc of tokenized assets that frames where we are perfectly. Phase one (2022-2023) was about operational efficiency and cost savings. Firms like Franklin Templeton launched tokenized funds emphasizing blockchain's throughput and reconciliation benefits. Phase two kicked in when on-chain yields dropped during the bear market while the Fed was hiking, creating this inversion where risk-free treasury rates exceeded what you could earn in DeFi. That drove a gold rush of tokenized treasuries being minted on-chain, and institutions realized blockchain wasn't just a cost play but an entirely new distribution channel with real demand from crypto-native stablecoin holders.

Now we are in phase three: pairing tokenized assets with DeFi infrastructure to create a demand flywheel. Just tokenizing an asset, however good it may be, is not enough. You need to connect it to composable, programmable markets. And that is exactly what vaults do.

Charlie drew what might be the best analogy yet: vaults are the next ETF. ETFs started as a tax and operational efficiency play, then became the dominant distribution channel for retail access, and eventually got their own regulatory treatment. Vaults are following the same trajectory. They make access more efficient, they are becoming the primary way people interact with tokenized assets, and regulation will eventually catch up with specific frameworks.

One important nuance that came up: the lending protocols underneath these vaults (Morpho, Euler, Kamino, etc.) function as platforms, not brokers. There is no intermediary exercising discretion in the traditional prime brokerage sense. These are smart contracts with set parameters. That distinction matters enormously as regulators figure out how to classify these activities. The underlying assets may be securities, but the protocol layer is asset-agnostic infrastructure. How regulators view the intersection of asset classification and on-chain activity remains one of the biggest open questions in the space.

Brian's parting thought was perfect: we are at the end of the beginning. Not the middle. Not the endgame. The possibilities for customization and composability through stacking smart contract layers are genuinely endless, and institutions are just now starting to see it.

The full vaults report is available here.

The SEC and CFTC Just Rewrote the Crypto Rulebook

The SEC and CFTC issued joint crypto classification guidance that creates a five-category taxonomy: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. This supersedes the 2019 framework that the industry universally despised.

Here is why it matters. Bitcoin, Ethereum, Solana, and a whole list of blue-chip tokens now fall under digital commodities, regulated by the CFTC. For spot trading, the CFTC's approach is essentially: don't commit fraud and don't manipulate your market. That is it. If you are Coinbase letting customers buy spot BTC and ETH, there is not much more you need to do. That alone is a massive unlock.

The guidance also creates a graduation path. A token can start as a security (think Ripple's initial XRP issuance) and evolve into a digital commodity if it achieves real decentralization and functionality. Fulfillment is judged against what was promised and whether genuine decentralization was delivered. Mining and staking are explicitly not securities transactions, with boundary conditions around whether providers are exercising discretion versus agnostically providing protocol access.

NFTs and collectibles get their own category, but with common-sense guardrails: if you are promising returns and treating it like an investment, you are back in securities territory regardless of the label. Wrap tokens are classified as receipts. Airdrops are fine as long as there is no consideration exchanged.

Gaps remain. Restaking is not addressed. Yield-bearing stablecoins are still murky and will depend partly on what happens with the GENIUS Act. But the overall framework is, as Charlie put it, "10 out of 10, no notes."

Commissioner Hester Peirce, who runs the crypto task force, went further and publicly apologized for the commission's prior actions against the industry. This is someone who spent years as the lone dissenting voice during the Gensler era, enduring real pushback from fellow commissioners while insisting that people should be able to control their own assets and that crypto has legitimate use cases. She stuck to her guns through all of it and delivered something that would have been unthinkable two years ago. Huge respect.

NASDAQ Gets the Green Light to Trade Tokenized Securities

The SEC approved NASDAQ's plan to trade tokenized securities through the DTC. There are limitations -- initially restricted to the most liquid stocks and indices, which makes sense as a test bed. And there is still the T+1 constraint since the cash leg has not been solved yet (stablecoins will eventually handle that).

Here is what is hidden in this that is actually exciting: this is a stepping stone to self-custody of tokenized securities. Once you flatten that settlement time with stablecoins, you could take the tokenized form into DeFi and not worry about liquidity risk because you can always go back into the broker ecosystem where markets are hyper efficient and subject to best execution rules.

Commissioner Peirce is very pro-self-custody and privacy. Both the traditional brokerage model (with SIPC insurance and heavy regulation) and self-custody should work side by side. They serve different users with different needs. A sophisticated user who wants to borrow against their tokenized Apple shares in Aave should eventually be able to do that, while everyday investors keep the protections they are used to. This approval moves us meaningfully in that direction.

Hyperliquid Officially Licenses the S&P 500 for 24/7 Leveraged Trading

This one is just cool. Hyperliquid, through Trade XYZ (formerly Unit Protocol) on HIP-3, has officially licensed the S&P 500 index from S&P. Not an unofficial tracker called "USA 500" -- the actual licensed index. Users can now trade 24/7 leveraged exposure to the S&P 500 with up to 50x leverage, the highest available anywhere.

Between this, oil trading on weekends amid Middle East volatility, and their new fiat onboarding that lets users skip the USDC-to-Arbitrum-to-Hyperliquid dance, Hyperliquid is making a clear push to become the go-to platform for normie retail traders who want 24/7 access to everything. Pretty soon they will have a card program and an airport lounge.

CLARITY Act: Light at the End of the Tunnel

Politico reported that outgoing Senate Banking Committee member Tom Tillis said lawmakers are "very close" to resolving the standoff between banks and digital asset firms to clear a path for the landmark stablecoin legislation. The hope is they want this done before the session ends.

The concern? There are rumblings of a compromise on the yield piece. If the compromise means yield is capped at whatever the lowest-yielding bank checking account offers (probably 10 basis points), that would be a disaster and incredibly hard to even enforce. We will wait with bated breath, but the momentum is clearly toward getting this done.

Moody's Drops an Official Stablecoin Ratings Methodology

Announced at the Moody's Digital event, Moody's is now the first NRSRO (Nationally Recognized Statistical Rating Organization) with an official stablecoin rating methodology. S&P had their own risk assessment framework, but Moody's can now issue actual Ratings with a capital R.

What is interesting is that it goes beyond just reserve quality. The methodology accounts for operational risk and technology risk -- things like how quickly you can freeze sanctioned funds, whether you have a plan for blockchain hard forks, and the nimbleness of your crisis response. For non-risk-free-rate instruments in reserves, they comp it against the closest rated equivalent.

This matters because institutional adoption runs on ratings. When a 40 Act fund or a trading desk needs to hold USDC as a base pair, there is an approved list. Moody's ratings will determine who makes that list. More baseline infrastructure that the ecosystem simply needs in order to function at institutional scale.

Shout Outs:

Tempo (Stripe x Paradigm) officially hit mainnet and launched MPP, their AI agent payments protocol extending the x402 standard. MPP opens payment channels for dynamic, metered transactions rather than flat per-request pricing, which could unlock micro-payment models across APIs, news sites, and data providers. Think: 10 cents for a single article instead of an annual subscription. Stripe is also acting as an intermediary so fiat payments work through MPP as well.

BVNK's $1.8 billion acquisition by MasterCard has officially closed. Congrats to both teams on navigating what was a dramatic M&A process.

Injective has added native USDC to their platform. Congrats to the team.

Congrats to the folks at Centrifuge on the Janus Treasury Fund being the biggest RWA winner this week, up 30% to $800M.

Watch or listen to the full episode on Spotify.