Blue Wave, Green Shoots

The Democrats swept both chambers last night, Binance got hit by a $6.3 billion hack, and yet the tokenization industry woke up this morning with the same roadmap it had going to bed. Politics will rattle the cage. It won't break it. Stablecoins are enshrined in law, natively tokenized funds are launching on Nasdaq, and hyperliquid's volume keeps marching north regardless of who controls Congress. That's the story of this week.

Market KPIs (brought to you by RWA.xyz)

📈 RWA market cap was up WoW, finally crossing the $40 billion milestone
🏆 Biggest RWA winner: Benji added $330M, crossing $1B total (largely on Stellar)
🏆 Biggest network winner: Stellar added $500M, rising to $4.4B total

📈 Stablecoin market cap was down ~1.5% WoW to $283 billion, with outflows of more than $10 billion — potentially the largest single-week outflow in the podcast's history
🏆 Biggest stablecoin winner: Ethena added $50M
🏆 Biggest network winner: Solana added $120M

📈 Onchain risk free rates:
Short term treasuries (1m): 3.94%
Aave / DeFi: 4.60% (significant uptick, driven in part by the Binance hack and resulting collateral movements)

The Election: What It Means for Tokenization

Last night was an absolute landslide. Democrats took both chambers, and the crypto market felt it immediately. Bitcoin is down. The obvious casualty is regulatory clarity legislation. The CLARITY Act, which had already had the effect of galvanizing the SEC and CFTC to actually try to develop workable standards, now has essentially zero chance of passing and probably won't even advance in any meaningful form over the next several years.

I want to be honest about where my concern is, because I don't think this is uniformly bad. Stablecoins, as I said in my closing, are enshrined in law. The GENIUS Act passed. That is on the books. No new Congress is going to roll that back. Tokenized assets inherit the regulatory framework of their underlying asset, and I don't think anyone across the aisle is going to make a credible argument otherwise. So the core infrastructure of what we're building is intact.

Where I have genuine hesitation is on the DeFi side of the house. There are two versions of where tokenization goes from here. One is the DTC model, where tokenization lives below the line, inside the existing clearinghouse and broker network, shaving basis points off netting and settlement costs. That is real value. It scales well. It's also relatively protected from political headwinds.

The other version is the emergent one. The one where, if you're comfortable managing your own wallet and running machine-speed trades, you get access to regulated assets with fully programmable features, loops, composability, yield that actually competes with or beats the market. That version relies heavily on DeFi venues. And that version now has a shadow over it. We've seen DeFi protocols go completely offshore before and ring-fence the US market. That's the scenario I'm watching for.

My hope, and I've heard this expressed by commentators spanning the full political spectrum, is that the Democrats who just came into power are pragmatic enough to recognize that the strategy of sue-and-subpoena doesn't actually win them the next election either. Inflation is what handed them these seats. If they want to keep them, they need to govern toward outcomes, not toward headlines. And the things that are actually holding back American competitiveness, including the offshoring of liquidity and financial innovation, should matter to them as much as they should matter to us.

Either way, nothing changes about where I'm building or what excites me. We will soldier on.

The Binance Hack: $6.3 Billion, North Korea, and a Reminder About Keys

Last week, Binance was hit by what appears to be the largest crypto hack on record. The FBI has attributed it to North Korea's hacker unit, allegedly through a social engineering honeypot that compromised at least one DevOps engineer's laptop. The attack resulted in roughly $6.3 billion being exfiltrated.

Circle and Tether moved quickly to freeze approximately $3 billion in stablecoins tied to the attack. The remaining $3 billion or so, denominated in Bitcoin and Ethereum, is still moving onchain. That dynamic, the hackers converting stablecoins they knew would be frozen into assets they could actually move, is a large part of what drove the massive stablecoin outflow numbers this week and pushed onchain rates up to 4.6%.

Binance has committed to covering the losses in full from company funds. At CZ's reported net worth of around $115 billion, this is painful but survivable. They also have the Safu reserve facility in place for exactly this kind of scenario. About $5 billion in withdrawals left the exchange in the aftermath, which is a rational response from users even if Binance is handling it correctly.

I still have that old "not your keys, not your coins" muscle from earlier in my career. Hacks like this keep it sharp. But I want to put this in proper context for the tokenization industry. The exogenous off-chain asset model that most tokenized products use today actually has legal protections built in. If a tokenized treasury fund gets hacked, the underlying asset can be frozen, clawed back, or otherwise protected through legal process in ways that native crypto assets cannot. That's a real structural advantage.

What I do hope is that this keeps us vigilant. At some point in the future, we will have natively onchain assets with yield generated entirely from onchain credit and liquidity infrastructure. When we get there, security best practices will matter even more. Social engineering remains the dominant attack vector, which means the weakest link is always the human. Lock your machine. Don't download and run things. And maybe set up a goats-based shaming system for anyone who leaves their laptop open. It works.

ICE x TradeXYZ: Hyperliquid Comes to Main Street

This is the week where the offshore becomes the onshore. TradeXYZ, which is the largest builder of markets on Hyperliquid and operates officially licensed S&P 500 perps markets along with gold, oil, and equity markets, has entered a joint venture with ICE, the Intercontinental Exchange. ICE is taking a minority stake in TradeXYZ and will serve as the exclusive operator of a retail market and clearing structure built on top of TradeXYZ's infrastructure, which runs on Hyperliquid.

The product set covers essentially everything you'd find on a CME: indices, commodities, equities. The differentiator is 24/7 markets. That's not an incremental improvement. That's a structural shift in how retail accesses leverage.

The same week, CFTC Chair Selig announced that single-stock perps would be cleared under official CFTC policy, and Kalshi was first to file under that framework. TradeXYZ will almost certainly follow. And yes, the objections are piling up. Citadel, CBOE, various members of Congress. The usual suspects. I'd note that Citadel will almost certainly become a user or market maker on this infrastructure at some point, so the objections are more about negotiating position than about fundamental opposition to the product.

Charlie made a point I want to amplify here. Zero-day options have crossed 50% of all options trading volume in the US. Half the options market is now retail, trading on weekly or shorter timeframes. The mental model for these participants is basically: I want leverage, I want it now, and I want to understand what I'm getting into. Perps are a dramatically simpler interface for that than options. You don't need to understand theta or vega. You need to understand your leverage multiple and your funding rate. That's a much smaller knowledge barrier, and it opens up the product to a much broader audience.

The bigger point is about liquidity reshoring. Hyperliquid does enormous volume offshore today. That volume generates price discovery and liquidity that arguably benefits US markets whether or not it happens on a US-regulated venue. Pulling that onshore under a CFTC-supervised structure is exactly what regulators said they wanted. It's good to see it actually happen.

The Innovation Exemption Update: 54 Opt Out, 8 Remain

When the SEC's innovation exemption for tokenized stocks first launched about four weeks ago, there were 62 companies on the OKX and ICE joint venture. The opt-out window has now closed and 54 of those 62 have withdrawn their stocks from the program. Eight remain: Strategy, Robinhood, Coinbase, Supermicro, Palantir, Circle, Securitize, and Bitco.

The hot takes calling this a failure of the innovation exemption are wrong. I've said this every time a new wave of opt-outs has come through, and I'll say it again. The exemption is working exactly as designed. Companies that don't want their shares trading in uncontrolled, fully liquid crypto markets without any issuer input have exercised their right to say so. That is the point of the exemption. It gives issuers the choice.

What this list actually tells me is that there is a very strong case for a digitally native transfer agent model, where the issuer controls the issuance, the tokenized share class is actually connected to the core ledger, and the issuer has real input into how their stock is distributed and to whom. The YOLO model of just tokenizing shares and distributing them in a way the issuer has zero visibility into is not going to work for most companies. That's not a problem with tokenization. That's a problem with that particular implementation.

The two non-crypto companies on the remaining list, Supermicro and Palantir, are interesting. Both are forward-looking in their technology positioning and presumably see value in having a tokenized share class for whatever reason specific to their shareholder base and capital formation strategy.

Also worth noting: Goldman Sachs filed a preemptive objection against perpetuals.com, one of the three entities that had filed under the exemption. The First Trillion podcast and Goldman Sachs are aligned on this one. We will continue to report as that plays out, and I remain optimistic that at some point we will see an issuance that actually demonstrates what an issuer-engaged, natively tokenized stock can do in terms of community engagement, programmable dividends, and onchain capital formation. We just haven't seen that issuance yet. Anyone who says they know exactly what it will look like is probably guessing.

Centrifuge and Janus Henderson Launch the JQQQ on Stellar

Last week I had the opportunity to speak at the Nasdaq about this, and I'm genuinely excited to cover it here. Centrifuge launched JQQQ, the first issuer-sponsored, natively tokenized Nasdaq 100 fund. It is a natively tokenized share class of broad-based Nasdaq 100 exposure, managed by Janus Henderson, and it launched exclusively on Stellar.

This is a first of its kind. Not a tokenized wrapper, not a synthetic. A natively tokenized share class, managed by a major institutional asset manager, available onchain. And it launched on Stellar, which continues to have a remarkable week. Stellar was already home to Benji, which added $330M this week to cross $1B in AUM. Now they're the exclusive chain for the first natively tokenized Nasdaq 100 fund. For a chain that has been around as long as Stellar has, that is an impressive run of meaningful firsts.

This is exactly the kind of issuance I was referring to when I said we haven't quite seen the issuance that shows everyone what natively tokenized stocks can really do. JTQ is a step in that direction. It's an index fund, so it's not trying to reinvent the equity structure. But it's issuer-sponsored, natively tokenized, and live on a public chain. That's the template.

Charlie noted that RWA.xyz will be getting JQQQ on the platform soon. We're looking forward to it.

Closing Thought

Elections come and go. Hacks happen and get covered. Opt-out lists get published and misread. Through all of it, the actual infrastructure of the tokenization industry keeps building. Stablecoins have legal footing. The first natively tokenized Nasdaq 100 fund is live. ICE is partnering with a hyperliquid-native builder to bring 24/7 perps to US retail. These are not small things. They are exactly the kinds of increments that add up to a first trillion.

Watch or listen to the full episode on Spotify.