This episode highlights the accelerating convergence of traditional finance and crypto, as Coinbase expands its asset offerings and JPMorgan tokenizes institutional funds on public blockchains.
Coinbase Expands to "Everything App" with Stocks and Prediction Markets
- Coinbase announced a significant expansion beyond its core crypto offerings, aiming to become an "everything app" for asset trading. The company plans to introduce equities trading and prediction markets for eligible U.S. users.
- Coinbase will roll out new services allowing customers to trade stocks using the USDC stablecoin and participate in prediction markets via a partnership with Kalshi.
- The platform also unveiled institutional products, including tools for launching branded stablecoins and "Coinbase Tokenize," a service for tokenizing assets like company shares.
- Tokenized stocks could enable 24/7 global trading and instant on-chain settlement.
- CEO Brian Armstrong states, "Coinbase is now the best place to trade every asset, not just crypto."
Terraform Labs Liquidator Sues Jump Trading for $4 Billion
- The court-appointed administrator overseeing Terraform Labs' liquidation filed a lawsuit seeking $4 billion in damages from Jump Trading and its executives, alleging the firm secretly profited from the TerraUSD (UST) ecosystem before its 2022 collapse.
- Administrator Todd Snyder claims Jump Trading entered undisclosed agreements with Terraform Labs to support UST's dollar peg.
- Jump allegedly received early access to large amounts of Luna tokens, which it later sold for substantial gains.
- The lawsuit asserts Jump "actively exploited" the ecosystem through concealed arrangements, misleading investors about the stablecoin's functionality.
- Snyder states, "This action is a necessary step to hold Jump Trading accountable."
JPMorgan and DTCC Drive Traditional Assets On-Chain
- Major financial institutions are actively moving traditional assets onto blockchain networks, signaling a shift towards tokenized real-world assets (RWAs). JPMorgan launched a tokenized money market fund, and the DTCC selected a blockchain partner for U.S. Treasury tokenization.
- JPMorgan Chase debuted "Mooney," its first tokenized money market fund, on the Ethereum blockchain, seeded with $100 million of the bank's capital.
- Mooney invests in U.S. Treasuries and collateralized Treasury repurchase agreements, available to qualified investors with a $1 million minimum.
- The Depository Trust and Clearing Corporation (DTCC) chose the Canton Network as its blockchain partner to tokenize a subset of U.S. Treasury securities.
- The DTCC received a no-action letter from the SEC, permitting it to implement a service for tokenizing RWAs held within its infrastructure.
- DTCC CEO Frank Lasala remarks, "This partnership is a strategic step as we collaborate industry-wide to build digital infrastructure that connects traditional and digital finance."
Federal Reserve Eases Crypto Restrictions for State Banks
- The Federal Reserve withdrew its 2023 policy imposing strict limits on crypto activities by state member banks, replacing it with a more flexible framework. This reflects an evolving understanding of digital asset risks.
- The previous guidance created a strong presumption against state-supervised banks engaging in activities not clearly permitted for national banks, such as holding Bitcoin or issuing stablecoins.
- The updated 2025 policy allows uninsured state member banks to seek case-by-case approval from the Fed for novel activities.
- The 2023 policy previously denied Custodia Bank, a Wyoming-chartered digital asset bank, access to a Fed master account.
Aave Governance Battles Over Fees; Hyperliquid Proposes $1 Billion Burn
- Decentralized Autonomous Organizations (DAOs) face internal conflicts over revenue distribution and tokenomics, highlighting the complexities of on-chain governance.
- Aave governance delegates questioned whether swap fees from the protocol's new CO swap integration were being redirected to Aave Labs instead of the DAO treasury.
- Estimates suggest the change could divert $10 million annually from DAO revenue, prompting a "poison pill" proposal to authorize legal action to seize Aave Labs' intellectual property.
- Aave Chain Initiative founder Mark Zeller notes, "The shift represents a significant portion of DAO income and raised concerns about alignment with token holders."
- The Hyperliquid Foundation proposed a governance vote to formally acknowledge $1 billion worth of HYPE tokens in its assistance fund as permanently burned, removing them from circulation without an on-chain transaction.
Circle Acquires Axelar Developers; SoFi Launches Bank-Issued Stablecoin
- The stablecoin sector sees strategic acquisitions for cross-chain capabilities and the emergence of regulated, bank-issued tokens on public blockchains.
- Circle acquired the team and intellectual property of Interop Labs, the core developer behind the Axelar interoperability network, to strengthen its cross-chain infrastructure.
- The acquisition explicitly excluded the Axelar network, its foundation, and the AXL token, causing AXL to drop 13% as traders recognized no direct benefit to token holders.
- SoFi Technologies launched SoFi USD, a fully reserved USD stablecoin issued by SoFi Bank on Ethereum, making it the first nationally chartered bank to issue a stablecoin on a public, permissionless blockchain.
- SoFi USD is backed 1:1 by cash reserves held in the bank's Federal Reserve account, reducing liquidity and credit risk while enabling low-cost settlement.
Investor & Researcher Alpha
- Capital Reallocation: Traditional finance capital is actively moving into tokenized real-world assets, particularly U.S. Treasuries and money market funds, signaling a demand for on-chain yield and settlement efficiency. Investors should monitor the growth of institutional-grade tokenization platforms and regulated stablecoin issuers.
- Regulatory Clarity & Bottlenecks: The Federal Reserve's policy shift indicates a more nuanced regulatory approach, potentially opening avenues for state-chartered banks in crypto. However, the Aave governance dispute highlights ongoing challenges in DAO revenue alignment and intellectual property control, posing risks for decentralized project investment.
- Cross-Chain Infrastructure Evolution: Circle's acquisition of Axelar's core development team underscores the strategic importance of robust cross-chain infrastructure for stablecoin issuers. Research efforts should focus on the development of secure, scalable interoperability solutions and the implications for token value accrual in such ecosystems.
Strategic Conclusion
The financial industry is rapidly integrating blockchain technology, with major players like JPMorgan and DTCC tokenizing traditional assets while Coinbase expands its crypto-native platform. The next step involves establishing clear regulatory frameworks and robust governance models to support this convergence and unlock new capital efficiencies.
