Upside Only (Terms and Conditions Apply)

The SEC's tokenized stock innovation exemption is now a live experiment, and the market is telling us exactly who it was built for and who it wasn't. Issuers are opting out, naysayers are filing comment letters, and a company called Perpetuals.com with a sister brand called "Upside Only" just filed to participate. Meanwhile, SoFi quietly became the first consumer-facing bank to offer tokenized deposits, and the rumor mill is spinning hard on a potential Visa acquisition of Fireblocks at a steep discount to its 2022 peak.

Market KPIs (brought to you by RWA.xyz)

📈 RWA market cap was flat WoW at $39.0 billion, still holding just below the $40B mark
🏆 Biggest RWA winner: Tether Gold added $69M to reach $3B
🏆 Biggest network winner: Solana added $300M up to $46B

📈 Stablecoin market cap was flat WoW at $291.0 billion, stuck below the $300B round number
🏆 Biggest stablecoin winner: USDG added $75M
🏆 Biggest network winner: Solana added $30M (topped both leaderboards despite contractions on all other chains)

📈 Onchain risk free rates:
Short term treasuries (1m): 3.90%
Aave / DeFi: 3.93% (previously elevated rates have come back down to roughly match SOFR)

The Tokenized Stock Exemption: Working as Designed (Mostly)

A few weeks back we covered the SEC's innovation exemption for tokenized stocks, which created a broad market structure for trading tokenized equities in DeFi venues without requiring full broker-dealer registration. This week, the ripple effects arrived.

Two new entrants filed to operate under the exemption. The first is TSV LLC, a joint venture from Obsidian Systems planning to run AMM pools on Canton. The second is Perpetuals.com, a $23M market-cap public company listed on the Nasdaq mini-tier whose family of brands also includes "Upside Only" with the tagline "trade with no possible downside." I am not making that up. Prediction market odds on SEC approval for that particular entrant? Charlie put them at three-to-one against, which I think is generous.

The more substantive news is that sixteen of the sixty-two companies OKX and ICE had listed for tokenization have formally objected. The NASDAQ itself was among them. The only company to issue a public statement explaining its objection was Applied Optoelectronics, which said it is unsure how tokenization would affect its stock price and volatility, worried that investors could be confused by an offering it did not sponsor, and saw no clear benefit to itself or its shareholders.

I am actually sympathetic to that position. Any team that has launched a token knows that it becomes a product the moment it hits the market. You have to support it, communicate about it, and respond to holders as if it is a product. Public company IR teams are set up to deal with the existing system, and the prospect of a tokenized version of your stock trading somewhere you did not authorize and did not build any communications infrastructure around is genuinely alarming. On the price impact concern specifically, I think the worry is probably unfounded as long as the tokenized version can route back to a broker executing at best price, because arbitrage should prevent meaningful dislocation. But I get why a conservative IR department would rather say no than find out the hard way.

The right read on the opt-outs is not that the innovation exemption is failing. It's that the exemption is doing what it should: letting the market sort itself. Randomly tokenizing a basket of NASDAQ industrials was never the move. The issuances that will actually work are the ones where there is an existing onchain community that genuinely wants exposure to the stock, and where the issuer is willing to treat that community like a community rather than just pointing them to the investor relations page and the 10-K. Think Palantir, not Caterpillar. Think Circle and Coinbase. Think any company whose IR team is already leaning into the Wall Street Bets crowd.

Charlie flagged that Steakhouse has whitelisted Robinhood stocks into the Morpho vault they manage on the Robinhood chain. Volume is not the point right now. Experimentation is the point. When you drive the marginal cost of creating derivative financial products to near zero, you create conditions for someone to discover the version that actually works. That is the whole game. I want to see an infinite number of Steakhouse vaults working on an infinite number of issuances until someone stumbles onto the combination that makes the onchain share class genuinely more compelling than the traditional one.

Transfer agents, by the way, are in a uniquely interesting position here. They sit between the issuer and the shareholder and they are the natural place to build the features that bridge the onchain community and the IR function. I think the smart transfer agents are building those features right now.

SIFMA Weighs In (And They're Not Wrong About Everything)

SIFMA filed a comment letter on the innovation exemption with a list of concerns. They want affirmative issuer consent rather than an opt-out system, longer objection windows, tighter guardrails on illicit finance and investor protection, narrower volume limits per venue and market-wide, and stronger look-throughs on beneficial ownership within the TSV structure. Billy from DSI did a good piece on how the current volume limits actually work, and it's worth reading if you want to understand the mechanics.

I agree with the spirit of some of this. The integrity gap between a regulated brokerage with SIPC insurance and a TSV built on a smart contract that has not been audited is real and worth taking seriously. The last thing this experiment needs is a smart contract exploit that becomes the defining story of the innovation exemption's first year.

That said, SIFMA's members are brokerages and asset managers, and a move toward onchain distribution of equities is a real threat to the brokerage model. So you have to weigh their objections against that institutional bias. On the affirmative consent question specifically, Charlie made a point I found pretty compelling: as a public company, you generally cannot tell a broker in a given country that they are not allowed to distribute your stock. The whole premise of being a public company is universal distribution through a fair and regulated system. Extending a tokenization carve-out that allows issuers to selectively block distribution feels inconsistent with that principle. I think we will eventually land in a world where objecting to tokenization is simply not an option for a public company, the same way you cannot opt out of being listed on secondary markets once you go public.

For now, I think the issuer opt-out is fine as a transitional mechanism. The key is that investors and issuers both retain meaningful agency as this scales, and that we do not hand SIFMA's members a veto over a distribution channel that competes with them.

SoFi Quietly Makes History

SoFi launched what appears to be the first consumer-facing tokenized deposit product in the United States. Here is the quick version: SoFi's savings accounts currently yield 4.4%, which has been one of their main acquisition channels, particularly among people who originally came in through student loan refinancing. That yield now flows through a tokenized deposit structure, with the SoFi USD stablecoin serving as the onramp and offramp vehicle.

The product is branded SoFi Earn, which I like, and it's a clever way to deliver the stablecoin experience to a consumer base that is pretty far removed from the typical Phantom wallet user. SoFi's customers are not crypto-native. They are people who needed to refinance student loans and ended up using SoFi for everything else because it was convenient. Getting that population into a tokenized deposit product without requiring them to understand what a tokenized deposit is, that is genuinely good product work.

It also reads as a thoughtful navigation of the GENIUS Act dynamics. Rather than trying to distribute yield on SoFi USD directly (which runs into stablecoin yield restrictions), they wrap it in a savings program where the tokenized deposit is the mechanics under the hood rather than the headline. Smart.

The thing I would love to understand better is whether the product eventually gives customers an exit ramp into DeFi if they want one. Right now the incentive for SoFi as a bank is to keep you inside their walled garden, and that makes total sense. But I think over time customers will demand interoperability, and the banks that build that connectivity early will have a meaningful advantage. SoFi and the Mike Cagney machine have been first movers here before. I expect them to keep moving.

Visa, Fireblocks, and the M&A Rumor Mill

Axios reported this week that Visa is in late-stage talks to acquire Fireblocks at a valuation of approximately $2.5 billion. CoinDesk separately reported that Coinbase had also been in the frame as a potential buyer. For context, Fireblocks raised $600 million at an $8 billion valuation in 2022, so this would represent a substantial haircut. Fireblocks responded by saying the report was news to them and not true at present. Visa declined to comment.

One of the best ways to kill an M&A deal is to leak it, so take all of this with appropriate skepticism. I'd put closing odds at roughly a coin flip at this point, and I'll note that the last high-profile leak we saw in this space, the Mastercard and Zero Hash discussions, did not result in a deal.

On the strategic logic: Visa acquiring Fireblocks makes a lot of sense to me, and not for the reasons most people are discussing. Visa is not a consumer product company. They are a network that connects banks. The threat they are staring down is disintermediation, as more payment volume migrates to stablecoin rails that do not require Visa's network at all. Acquiring Fireblocks would give them a direct relationship with the businesses that are holding and moving stablecoins. You bypass the payment processor, you bypass the receiving bank, and you own the infrastructure layer that the businesses actually touch. That is the steel-man of this deal.

Coinbase being in the mix makes less sense to me. Coinbase has built a significant portion of this infrastructure themselves and has products that compete directly with Fireblocks in certain segments. Maybe it is about bolstering their institutional custody offering, but it feels like a weird fit.

The broader question is whether self-custody and institutional custody are working as well as Fireblocks' 2022 valuation implied they would. The discount being discussed suggests they may not be. We will keep watching.

A16Z Drops "Crypto" and What It Actually Means

Andreessen Horowitz dropped the word "crypto" from the name of their crypto fund. Charlie flagged this as a potential bottom signal, and I think that framing is fair. But the more interesting interpretation is the one Simon Taylor laid out in a recent piece called "Fintech is Dead," which I strongly encourage everyone to read. His argument is that fintech is no longer a category because it has been fully absorbed into finance. The features that made something distinctly "fintech" a decade ago are now just how banking works.

I think the same thing is happening with crypto. Erebor is built on stablecoins. Anchorage is a bank with an OCC charter built entirely on crypto assets. The roster of tokenized fund managers now includes Fidelity, Apollo, Janus Henderson, BlackRock, and essentially everyone else. When I describe what I do, I no longer say I work in crypto. I say I try to build financial experiences that help people generate more wealth. That's the honest version. When Charlie describes RWA.xyz, he calls it a capital markets data startup, not a crypto data company, because "crypto data" conjures a completely different image than what they actually do, which is closer to what Pitchbook or Preqin does.

A16Z dropping the label might be window dressing for their next LP fundraise (and they are, as far as I can tell, always raising). Or it might just be an acknowledgment that defining these categories the way we did five years ago no longer feels authentic. Either way, I do not think it signals a retreat. I think it signals that we won.

Shoutouts

Steakhouse: Hat tip for whitelisting Robinhood stocks into the Morpho vault on the Robinhood chain. The volume may be small but the experimentation matters.

SoFi: First consumer-facing tokenized deposit in the US is a real milestone, executed cleanly. The branding is good too.

Watch or listen to the full episode on Spotify.