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Paul Grewal, chief legal officer at Coinbase, recently disclosed to Reuters that they are in discussions with the SEC about tokenized equities and this was a huge priority for the exchange.
This follows Kraken’s announcement that they will be offering tokenized stocks to non-US customers. While no timelines or technical details are in place it seems clear that we are moving towards a world where we can buy tokenized stocks & bonds on centralized exchanges. This is a first step in the right direction, the end goal would be:
In theory you could have a TESLA token on Base, bridge it to wherever, deposit a synthetic bridged token to AAVE, take out a loan in USDC and leverage up the equity position… or something less degen. Demand for this product is going to open some eyes across traditional finance in the same way the Bitcoin ETF did when it became the fastest growing ETF ever launched. Let’s look at some numbers to guesstimate potential TVL in decentralized equities. US Currency in circulation - $2.4T Stablecoin market cap - $250B It’s worth noting that a lot of tradfi market cap is tied up with massive financial conglomerates like Blackrock, Vanguard etc. and they aren’t going to be moving their holdings to our favourite blockchains any time soon. However if I could buy tokenized stocks I would. There is value in diversification for the big crypto native funds as well. There is probably money sitting on the sidelines that would find a home in a SP500 tracker. It also opens up the possibility for a balanced portfolio of crypto/stocks/bonds which could become a 21st century staple like the 60/40 portfolio. The beauty of these types of portfolios is we can rebalance them at regular intervals which over enough time semi-automates the process of buying low and selling high. Knock On EffectsThere are knock on effects of this seismic shift in the industry.
We wait, it’s what we do. Markets are ranging after a strong recovery from the move down to $74k in April. Expecting a summer lull to set in at some point but hopeful we will get a new all time high and one more big run up before the stagnation sets in. September-October could be a critical time where we decide if we are going to break out and put in an exponential curve, or settle back down into a slow grind supercycle, or set everything on fire for another 4 years. I’m hoping for a big blow off top, expectant of a slower grind up and terrified of another long brutal bear market. The US stock market is still below ATH and there’s room for 10-15% growth there if Trump allows it. Given that I think it’s reasonable to hold with expectations of continued outperformance for digital assets. We wait, it’s what we do. If markets move back down I don’t think there will be any panic selling unless Bitcoin get’s to a 50%+ drop. We’ve had a 30% drop in April so a second time around should see less forced or emotional selling, reducing the downside risk in my opinion. Upside potential is still significant with Saylor and friends buying up all the Bitcoin, Stablecoins gaining some limelight and the potential for DeFi and altcoins to make a come back… one day, one day #hopium Social links are below and if you enjoyed this newsletter I would appreciate it if you could share this content
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