Takeaways from the SEC Roundtable and Privy Acquisition | Weekly Roundup

This episode unpacks pivotal shifts in the crypto landscape, from the SEC’s evolving stance on self-custody and on-chain systems to strategic acquisitions like Stripe’s takeover of Privy, signaling a maturing infrastructure layer crucial for Crypto AI development and investment.

Introductions and Conference Catch-ups

• Jason kicks off by mentioning his attendance at the Coinbase State of Crypto Summit, highlighting its strong lineup including Jeremy Lair (CEO of Circle) and Brian Armstrong (CEO of Coinbase). He notes the moderator, Lulu Chang Meservey, made a memorable opening remark: “Brian, Jeremy, great to have you here. I can see that you both attend the same barber shop.”
• Santi shares his experience at the Proof of Talk conference in Paris, describing it as well-curated with a quality speaker lineup, where he participated in a DePIN (Decentralized Physical Infrastructure Networks) panel. DePINs leverage token incentives to build and maintain real-world infrastructure, a field with potential overlaps for decentralized AI compute and data networks.
• The conversation briefly touches on challenges in remote interviewing and testing for technical roles, a common hurdle for rapidly scaling tech companies, including those in the Crypto AI space.

SEC Crypto Task Force Roundtable: A Potential Turning Point for DeFi and Self-Custody

• Jason details the SEC’s Crypto Task Force Roundtable, emphasizing the significant remarks from Paul Atkins, referred to as the Chairman of the SEC (though his role is more accurately a former Commissioner and current CEO of Patomak Global Partners, often involved in policy discussions).
• Key attendees included SEC Commissioners Hester Peirce, Mark Uyeda, and Caroline Crenshaw, alongside industry figures like Jill Gunter from Espresso Systems and Erik Voorhees.
• Paul Atkins' Key Statements:
  • He expressed support for “affording greater flexibility to market participants to self-custody crypto assets,” particularly where intermediation adds unnecessary costs or restricts on-chain activities like staking.
  • Atkins highlighted his excitement for “the use of onchain software systems by issuers to eliminate economic frictions [and] increase capital efficiency.” This is particularly relevant for Crypto AI, where on-chain AI model verification or decentralized data marketplaces could thrive.
  • He reiterated that the “right to self-custody one’s private property is a foundational American value.”
• Caitlin Long's Analysis: Jason shared insights from Caitlin Long (CEO of Custodia Bank), who views these remarks as the SEC “officially begun reversing decades of attempts to eradicate bearer assets from the US financial system.” She believes moving back towards direct ownership of securities reduces systemic risk and allows the financial system to embrace digital nativity.
• Market Impact & Implications for Crypto AI:
  • DeFi tokens reportedly rallied 14% following Atkins' speech. Santi notes this could signal a resurgence for DeFi, which has been “left for dead.”
  • Jason sees this as a “massive victory for DeFi and crypto in the US.” For Crypto AI researchers and investors, a more favorable stance on self-custody and on-chain systems could de-risk projects building decentralized AI infrastructure or utilizing tokenized AI assets.
• Jason teases an upcoming Blockworks launch related to disclosures, developed in consultation with legal experts and to be presented to the SEC, aiming to become an industry standard.

Bill Gurley on Broken IPO Markets and the Promise of On-Chain Capital Formation

• Jason discusses insights from venture capitalist Bill Gurley's appearance on the “Invest Like the Best” podcast, where Gurley argued that traditional public markets, and consequently venture markets, are broken.
• Companies are staying private longer, with robust secondary markets emerging for giants like SpaceX and Stripe, albeit less efficient than public markets.
• Gurley highlighted SEC Commissioner Hester Peirce's argument that “blockchain is actually the path to fix this broken IPO market.” Gurley himself stated, “If you tokenize the security, it's going to get interesting. I'm going to start watching this.”
• Santi's Perspective on Crypto's Strengths:
  • Crypto excels at price discovery through mechanisms like AMMs (Automated Market Makers) – algorithms that enable decentralized trading without traditional order books – and providing liquidity for a long tail of assets.
  • He acknowledges that while crypto offers a shorter path to liquidity, price discovery for early-stage projects can be inefficient, and the lack of a real-time price can sometimes benefit startups.
• The Future of Tokenization:
  • Jason envisions a future where all assets are tokenized, allowing for on-chain IPOs with lower barriers to entry and reduced capital costs.
  • This could directly impact Crypto AI projects seeking funding or aiming to tokenize AI models, datasets, or compute resources, offering new avenues for capital formation and liquidity.
• Venture Capital Landscape:
  • Jason references a tweet by Vance Spencer (Framework Ventures) suggesting crypto is becoming a uniquely compelling investment category compared to consolidating fintech, challenged consumer tech, and compressing SaaS multiples.
  • Santi adds a point about private equity, noting that many businesses acquired in a low-interest-rate environment may become forced sellers, creating opportunities for investors. This environment could also push traditional businesses towards innovative solutions, including tokenization or AI integration.

Stripe's Acquisition of Privy: Signaling Deep Conviction in Web3 Infrastructure

• Stripe has acquired Privy, a wallet infrastructure provider that simplifies embedding crypto wallets and on-chain interactions into applications via an API. Privy powers over 75 million accounts across 1,000 teams.
  • Wallet Infrastructure: Privy provides tools for developers to easily integrate crypto wallets into their applications, abstracting away the complexity of blockchain interactions for end-users. This is crucial for onboarding users to any Web3 application, including those leveraging AI.
• This move follows Stripe's earlier acquisition of Bridge, further cementing its strategy in the stablecoin and broader crypto payments space.
• Industry Commentary:
  • Jason quotes Patrick Collison (CEO of Stripe): “Money has to reside somewhere, and Privy builds the world's best programmable vaults.”
  • John Collison (President of Stripe) tweeted that “Crypto wallets are going to play an increasingly important role in the growth of the internet economy.”
• Santi's Analysis: He views the Bridge acquisition as an “Instagram moment” for Stripe, opening floodgates for TradFi M&A in crypto. He praises Stripe's execution speed.
• Skepticism and Counterpoints:
  • Jason mentions Jack Zhang's (founder of Airwallex) skeptical take that Stripe bought Privy primarily for risk management to isolate its crypto operations.
  • The discussion touches on Simon Taylor's (Head of Strategy & Content at Sardine) blog post, “Stablecoins aren't cheap, they're better,” emphasizing that stablecoins' value lies in changing user behavior (e.g., less off-ramping) rather than just lower fees.
• Lessons from Privy's Journey:
  • Jason highlights Privy's relentless product focus and customer-centricity, exemplified by co-founder Henry Stern's responsiveness.
  • Privy launched in mid-2021, initially as a privacy protocol focused on user data in Web3. It found significant traction two years later, in August 2023, with its wallet infrastructure solution, particularly through the Friend.tech integration. This pivot underscores the importance of persistence and adapting to market needs.
  • For Crypto AI projects, Privy's journey illustrates that finding product-market fit can take time and may involve significant evolution from the initial concept. The infrastructure Privy provides is foundational for any dApp, including those integrating AI functionalities that require user wallets for transactions or data permissions.
• Distribution is Key: The hosts discuss Amir Haleem's (Helium founder) quote: “First time founders focus on the product. Second time founders focus on distribution.” This is a critical insight for Crypto AI startups needing to reach users and developers.

Singapore's Shifting Crypto Stance: Regulatory Uncertainty Emerges

• Jason discusses concerns raised by Annabelle Huang (Altius Asset Management) regarding Singapore's new Digital Token Service Provider (DTSP) regime.
• The Monetary Authority of Singapore (MAS), the city-state's central bank and financial regulator, introduced rules that caught many crypto natives by surprise, despite prior consultations.
• The rules primarily target unregulated centralized exchanges, market makers, and OTC desks operating in Singapore. While MAS later clarified that utility and governance tokens are out of scope, ambiguity remains for DEXs and DeFi protocols.
• Impact and Implications:
  • Jason notes headlines indicating a regulatory crackdown, with exchanges considering an exit. He mentions a conversation with a major exchange expressing panic.
  • This shift damages Singapore's reputation as a crypto-friendly hub, potentially causing a talent and project migration to regions like Dubai, the US, or Hong Kong.
  • For Crypto AI companies relying on or considering Singapore as a base, this introduces significant regulatory uncertainty that needs careful monitoring.

ETF Updates: Solana Next, XRP on the Horizon?

• Jason shares a Blockworks scoop: The SEC is reportedly asking potential Solana ETF issuers to submit amended S1 forms (registration statements filed with the SEC prior to an IPO or new securities offering) within the next week. This development suggests Solana ETFs could see approval by the end of summer.
• He recounts a conversation with a top-five bank that categorizes BTC, ETH, SOL, and XRP as the “top four” tokens, with everything else being secondary.
• Jason speculates that after a Solana ETF, an XRP ETF is the most likely next candidate (60-70% probability), citing the Chicago Mercantile Exchange (CME) supporting futures markets for Bitcoin, Ether, Solana, and XRP.
• The approval of more crypto ETFs could bring further institutional capital and legitimacy to the space, indirectly benefiting Crypto AI projects by broadening the overall investor base and market infrastructure.

Concluding Thoughts and Other Ventures

• The hosts briefly mention the upcoming Permissionless conference and new data dashboards from Blockworks, including for Hyperliquid and centralized exchanges.
• A discussion on hiring emphasizes the value of high-energy, “high-beta” employees, referencing Brian Armstrong's insights on maintaining an innovative culture while scaling.
• The episode concludes with a preview of an upcoming interview with Chalang and Josh Lim of Arbalos (recently acquired by FalconX), focusing on crypto options and derivatives.

Strategic Conclusion: This episode underscores a dynamic crypto market: regulatory winds may be shifting favorably in the US for on-chain innovation, while M&A activity like Stripe's Privy acquisition signals strong interest in foundational Web3 infrastructure. Crypto AI investors and researchers should monitor these trends, as they directly impact the viability, funding, and operational environment for decentralized AI solutions.