Weekly Top Stories - 5/16
This week in the newsletter, we discuss pathways opening for tokenization, the accelerating trend of Bitcoin treasury companies, and Robinhood’s acquisition of WonderFi.
SEC Holds Tokenization Roundtable, Rescinds B/D Crypto Statement
The SEC held a tokenization roundtable on Monday, and on Thursday, withdrew a 2019 statement that made it nearly impossible for broker/dealers to touch digital asset securities. The Monday roundtable included personnel from Fidelity, Nasdaq, Invesco, BlackRock, Superstate, and more, and included discussion on the evolution of finance (“Capital Markets 2.0”) and the future of tokenization.
On Thursday, the SEC withdrew a 2019 guidance that had effectively blocked broker/dealers from touching or offering digital asset securities. Former President Biden’s SEC had also alleged that the vast majority of crypto tokens were unregistered securities, a classification which, when combined with this 2019 statement, made it essentially impossible for broker/dealers to interact with any digital assets.
OUR TAKE:
The pathways to tokenized securities are opening. Some have argued that tokenizing equities doesn’t have a lot of benefits, because the benefits of decentralization offered by systems like Bitcoin and Ethereum are obviated when you have a centralized issuer. It's true that tokenized securities are not permissionless – indeed, token movement will be limited to permissioned sets of KYC’d persons. Tokenized securities will not flow permissionlessly like Bitcoin. But that doesn’t mean there aren’t enormous pieces of the securities markets stack that can be disintermediated by public blockchains to the great benefit of issuers and investors alike. Compliance costs are also likely to be reduced, given that huge swaths of regulations exist to protect market participants from the malfeasance of centralized actors. The transparency and efficiency of public blockchains can be a great benefit to market participants, even if the assets being held, traded, and moved are issued by off-chain entities, as stablecoins show.
As the attendee list at this week’s SEC tokenization roundtable shows, there is enormous interest in upgrading U.S. capital markets with public blockchains. While we don’t yet know the exact form these tokens will take, or when they will trade on blockchains, it’s clear that the race is on to be the first U.S.-listed equity that trades in DeFi. – Alex Thorn
Crypto Treasuries, Soo Hot Right Now
The hottest trend in digital assets is reorganizing your corporate treasury away from fiat to cryptocurrency, it can breathe new life into a company or spell its disaster. The poster child of this movement, MicroStrategy (now rebranded as Strategy), has issued billions in convertible debt and at-the-market (ATM) equity to amass over 300,000 BTC, transforming itself into a levered Bitcoin proxy. This model has proven wildly successful for early entrants, Strategy stock has soared more than ~12,000% since early 2023, outpacing Bitcoin’s impressive 300% return over the same period by nearly 4x. But what began as a bold treasury strategy by one firm has quickly turned into a crowded trade.
MicroStrategy pioneered the idea of using a corporate balance sheet as a Bitcoin accumulation vehicle, selling debt and equity into the market, and converting the proceeds into BTC. This strategy is now being emulated by a growing list of companies. Firms like Metaplanet in Japan, Upexi in the U.S., and The Blockchain Group in Europe have all raised funds (often through zero-coupon convertible bonds) to build cryptocurrency treasuries, touting shareholder value creation through exposure to a superior store of value. Backing this trend are bullish assumptions: that their treasury asset of choice will continue to appreciate and that these companies can issue capital at a premium to their net asset value (NAV), essentially creating a form of "crypto yield" by financial alchemy.
For all the hype, there is a fundamental weakness: a mismatch between assets and liabilities. These companies’ liabilities, interest payments, salaries, and operating expenses are in fiat currencies. Their primary asset? Bitcoin, a notoriously volatile cryptocurrency. This misalignment creates liquidity and solvency risk. Should Bitcoin drop for an extended period, firms may find themselves unable to meet obligations, forced to liquidate Bitcoin at a loss, or issue even more dilutive financing. The trade is profitable only so long as the firm can issue shares or debt at a premium to NAV and buy BTC that appreciates.
But as more companies copy the model, the edge diminishes. Issuing stock at a premium to NAV is a market inefficiency that can only last for so long. This trend is accelerating as more small- and mid-cap firms attempt to emulate Strategy, targeting not only BTC treasuries, but SOL, XRP, and even TRUMP memecoin-based corporate coffers. These smaller firms are late to the party, relying heavily on premium-priced equity raises without a strong core business to fall back on if the market turns against them.
OUR TAKE:
While MicroStrategy and the upcoming public company Twenty One (via SPAC CEP) can absorb volatility through size, liquidity, and investor interest, smaller imitators have less room for error. If they can no longer raise at a premium, or if their debt comes due while their crypto treasury asset of choice is down, the consequences could be severe: mass dilution, default, or distressed sales at the bottom of a cycle.
The resemblance to the dot-com era is uncomfortably similar. Then, startups used IPO proceeds to buy Super Bowl ads and dot-com domains. Now, firms use debt raises to buy crypto, pitching themselves as "Bitcoin treasuries" to chase valuation multiples. But, when the music stops, when the BTC price stalls, interest rates rise, or credit markets tighten, this new crop of crypto balance-sheet companies may find themselves overleveraged, overexposed, and illiquid.
Using Bitcoin as a treasury asset may make sense for digital-native businesses with high margins, long-duration balance sheets, and investors aligned with crypto exposure. But for most companies, the risk-reward profile is skewed. As more firms pile into this trade, the marginal benefit decreases while systemic risk increases, more and more of the bitcoin supply will be held by levered traders, a recipe for trouble in any market, doubly so in crypto.
The current wave of debt-financed Bitcoin treasury strategies is a double-edged sword. On the one hand, it reflects a growing institutional market in cryptocurrencies as an asset class. On the other hand, it reveals the most emergent and arguably riskiest form of leverage in the entire crypto ecosystem. This isn’t financial innovation, it’s a trade. Like all crowded trades, it works until it doesn’t. – Thad Pinakiewicz
Robinhood Agrees to Acquire Canadian-based WonderFi in $179m Deal
This week, Robinhood agreed to acquire WonderFi, a Canadian-based company offering crypto-centric products and services. WonderFi operates two of Canada’s longest-standing regulated crypto platforms, Bitbuy and Coinsquare, which combine for more than C$2.1 billion in assets under custody and offer trading, staking, and custody services. These capabilities align with Robinhood Crypto’s existing product set and give the company an instant, licensed foothold in the Canadian crypto market.
Beyond its core exchanges and services, WonderFi launched two onchain products in February 2025. WonderFi Labs debuted WonderFi’s zero-knowledge (ZK) chain—an Ethereum layer 2 (L2) built with zkSync’s Elastic Network—and a freemium, gas-less wallet that uses native account abstraction to give retail users fee-free entry to DeFi. The stack unlocks lending, borrowing, staking, and dex trading while shielding newcomers from gas logistics and other user experience (UX) complexities of using DeFi, all while doubling as a developer sandbox for building onchain products and services compatible with WonderFi.
Post-close, WonderFi will keep its brands and products, while its leadership and employees join Robinhood employees based in Canada. The integration is expected to accelerate Robinhood’s plan to build a global, low-cost financial ecosystem. The transaction, executed through a statutory plan of arrangement under British Columbia law, is slated to close in the second half of 2025, pending court, regulatory, and shareholder approvals. The deal between Robinhood and Wonderfi is just one of many crypto-centric acquisitions that have unfolded over the last couple of months.
OUR TAKE:
A good portion of the discussion on X has been centered around the ZKsync-based Ethereum L2 component of Robinhood’s acquisition, with some saying that the company “acquired an Ethereum L2.” While it is true that Robinhood will take ownership of the WonderFi developed rollup and wallet once the deal closes, they appear to be a secondary element of the motivation for the acquisition. Not once did Robinhood mention the chain or wallet in the blog announcing the deal. Instead, based on the contents of the blog, Robinhood’s impetus was largely around expanding into the Canadian crypto market by acquiring established, regulated rails that have already achieved substantial scale. Nevertheless, the rollup and wallet included in the deal present unique opportunities for Robinhood to experiment with and continue their past efforts of introducing users to DeFi.
This is an important distinction to make because Robinhood has been one of the more publicly vocal proponents of blockchain and the potential impact it can have on its business. The chain or stack the company ultimately lands on is highly anticipated, and when (or if) it happens, can have significant consequences for what the future of regulated onchain finance looks like. While they have partnered with Arbitrum in the past to give users access to DeFi, the company has not yet announced the development of its own chain. However, the WonderFi acquisition gives them an outlet to experiment with doing so. Recent speculation points to Arbitrum and Solana as possible front-runners, but Robinhood has yet to confirm anything. The WonderFi acquisition all but confirms that Robinhood will be married to using an Ethereum L2, ZKsync, or any of the components of WonderFi’s chain as the base for its larger plan of moving its business onchain, which still remains an unanswered question. – Zack Pokorny
Charts of the Week
Last Wednesday (May 7, 2025), Ethereum’s Pectra upgrade went live on mainnet. In the collection of Ethereum Improvement Proposals (EIPs) that were implemented was an increase in the target and maximum blobs per block via EIP-7691. Blobs were introduced through EIP-4844 (proto-danksharding) in last year’s Dencun upgrade to offer a designated space for rollups to post data to. The network maintained a target amount of 3 blobs per block and a maximum of 6 from the time Dencun went live; at 128kb per blob, this represented about 5.5GB of data capacity per day through blobs. After Pectra, the target and maximum number of blobs per block increased to 6 and 9, respectively, increasing blob data capacity to about 8.15GB daily.
Since Pectra went live on May 7, 2025, rollups have been purchasing 22.2% more blobs daily than they were pre-upgrade. In the 60 days leading into Pectra, rollups purchased 21,200 blobs per day. In the seven full days following the upgrade, they have been purchasing an average of 25,900 blobs daily. This represents a difference of purchasing 2.7 gigabytes (GB) of data capacity daily pre-upgrade against 3.4GB today. Despite the increase in blobs purchased, only two-thirds of the new target blob limit per block has been used on average each day since Pectra went live. So, while the average number of blobs per block was consistently at the target rate before Pectra’s increase, rollups have not yet reached a level of demand to consistently hit the new target rate.
As a result of the target blob rate not being met, blobs have been virtually free. This is the first time since mid-April 2025 that blobs have been consistently this cheap. The median cost per blob object since Pectra went live is just $0.00000000032 (nine zeros). This has resulted in rollups paying no more than $0.0000092 (five zeros) daily since Pectra was activated; just $0.00003 in blob object fees have been paid total in the seven full days following Pectra’s activation. This has benefited the economics of Ethereum rollups, which have seen improved relative and absolute margins after onchain costs (blob object fees and type-3 transaction fees).
Other News
BlackRock, Fidelity among firms meeting with SEC Chair Adkins on tokenization
Animoca Brands eyes public listing in New York
Anchorage Digital agrees to acquire stablecoin issuer Mountain Protocol
VanEck introduces VBILL tokenized US Treasuries fund
Wisconsin Investment Board liquidates $300M stake in BlackRock's bitcoin ETF
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