The First Trillion Podcast Summary — The Day DeFi Won

This week, the SEC's Division of Trading and Markets released guidance that may mark the moment the intermediated financial system met its match in the disintermediated one.

Market KPIs (brought to you by RWA.xyz):
📈 RWA market cap was up 2% WoW to $29.8 billion
🏆 Biggest RWA winner: Syrup USDT added 20% to $1.2 billion
🏆 Biggest network winner: Ethereum added $300M to $16.6 billion

📈 Stablecoin market cap was up 1% WoW to $303.2 billion
🏆 Biggest stablecoin winner: Tether added $1.5 billion in a single week
🏆 Biggest network winner: Solana added 15% to its stablecoin supply

📈 Onchain risk free rates:
Short term treasuries (1m): 3.17%
Aave / DeFi: Flat at 50 bips below treasury rate

The Guidance That Changes Everything

In my humble opinion, the biggest thing to happen to capital markets globally since the early 2000s happened this week. The SEC's Division of Trading and Markets released long-awaited guidance on protocol trading interfaces, specifically under what conditions they can operate without registering as broker-dealers.

Think Uniswap, MetaMask swaps, Jupiter on Solana, or any wallet that lets you trade tokens natively. For crypto blue chips like ETH, this was never really debated. But for tokenized securities like Nvidia stock? That's been an ongoing fight with unclear rules. Until now.

The guidance establishes 12 conditions that create a safe harbor for trading interfaces. Meet these conditions, and you don't need broker-dealer registration. You can continue operating as pure software that anyone in the world can connect to and access. It's absolutely massive.

The key conditions include: fee neutrality (you can't get paid for preferential routing), counterparty agnosticism, full transparency about execution logic, MEV disclosure requirements, and explicit prohibitions on solicitation, recommendations, custody, or personalized execution.

What this guidance represents is nothing short of a potential path for the disintermediated financial system to not just compete with, but potentially overtake the intermediated one. If you're sophisticated and know what you're doing, you can access better costs, more opportunities, and instant execution through self-custody DeFi protocols. No brokerage fees, no waiting for settlement, no SIPC insurance either, but that's the tradeoff.

This guidance is in effect for five years. It's not formal rulemaking, so there's still a "trust me, bro" element from the SEC. But it's how rulemaking for something this significant typically starts.

The Industry Response Will Be Fierce

This guidance is going to piss off everybody, which makes it the perfect compromise. On our side, most existing interfaces are probably non-compliant. MetaMask charges almost 1% fees and explicitly markets "best price." 1inch, Jupiter, and Cowswap all have similar issues with their routing optimization. Even Uniswap's UniswapX product might cause problems.

Only Rabby Wallet and maybe core Uniswap appear to comply today. Everyone else will need to build simpler, more passive versions of their current offerings.

On the other side, Citadel and SIFMA are going to absolutely vomit all over this. They've been vociferously opposed to any accommodation for trading UIs, arguing that everyone should register as a broker-dealer or trade on exchanges. Their entire revenue model around payment for order flow is threatened by this guidance.

They'll argue this fragments liquidity and undermines market integrity. They have some valid points about investor protection, MEV attacks like the recent $50 million Aave slippage incident, and unregulated liquidity providers. But their real concern is losing control of the revenue streams they've built in the intermediated system.

This rhymes heavily with when Reg ATS was adopted in the late 80s, allowing trading venues outside primary exchanges. The same arguments about fragmentation and market integrity were made then. The markets adapted with best execution rules and other protections. I expect similar evolution here.

The Bigger Picture

We might look back on this moment as when the intermediated financial system lost the war. Right now, that system is measured in hundreds of trillions of dollars. The disintermediated system is under a trillion, arguably under a hundred billion backing out stablecoins.

But imagine AI agents executing trades on behalf of users. Why would they book trades with broker-dealers when they can execute the same trade in DeFi for much less money and instant settlement? The time horizon is probably 20-25 years out, but the technology foundation is being laid now.

More immediately, this opens up global access to US financial markets in ways that are safer and more reliable than what exists today. Someone in Argentina who wants to hold Nvidia stock can now do so through these protocols with much better protection than current alternatives.

The massive caveat is that individual whitelists at the transfer agent level still fragment liquidity on an asset-by-asset, issuer-specific basis. That's the problem we're solving with Global Access Protocol and the relief we're seeking from the SEC. But this guidance removes the biggest regulatory hurdle to building the infrastructure layer.

Shoutouts

Despite the SEC news dominating everything, we had an unusually strong week for announcements. Tether launched their own self-custodial wallet at wallet.tether.io, positioning themselves as a potential neo-bank. Keyrock issued an onchain corporate bond with Signum and Obligate. Fireblocks launched their earn program, letting MPC wallet customers earn yield through Aave and Morpho.

Securitize partnered with Tron to expand their tokenized funds, Deutsche Börse invested $200 million directly into Kraken, and Paxos Labs raised $12 million for their Amplify platform. Figure expanded beyond HELOCs to include auto loans on their tokenized lending platform. 360X partnered with Ondo Finance to offer GM tokenized stocks and ETFs, and SuperState announced that Invesco Private Capital invested in their Series B after taking over as asset manager for USTB.

Congratulations to all these teams. It's clearly RWA summer.

Watch or listen to the full episode on Spotify.