Hey Degens 👋

How's everything going with you all?

This week's been like a battle royale, with the SEC vs. Coinbase drama heating up even more. Ethereum's been snagging some of the spotlight from Bitcoin, but Bitcoin's still the reigning champ.

No need to wait any longer, let's jump in.

DeFi Cheers as Coinbase Wallet dodges broker label 🏷️

Crypto advocates are celebrating a major win for self-custody wallets and DeFi apps. 

Yesterday, a US District judge, Judge Katherine Polk Failla, dismissed the SEC's claim that Coinbase Wallet acted as a broker.  

The judge pointed out that offering users token prices doesn't constitute brokerage activity. This ruling paves the way for similar DeFi apps facing similar accusations.

Coinbase takes a hit on staking program

However, Coinbase isn't completely clear. Judge Failla allowed the SEC's claim that Coinbase's staking program offered unregistered securities to proceed. This is a significant blow to Coinbase and highlights the ongoing debate over crypto regulation.

In June, SEC Chair Gary Gebnsler said that Coinbase calls itself an exchange but is ‘commingling a number of functions.’ 

The case heats up

This is just the first round. The case will now enter the discovery phase, where both sides gather evidence. While the win for Coinbase Wallet is a positive sign for DeFi, the fight between Coinbase and the SEC is far from over.

Coinbase's chief legal officer, Paul Grewal, tweeted the company’s position on X.  

Fidelity files for Ethereum ETF, But approval faces hurdles 

Fidelity files for Ethereum ETFs after BlackRock

Fidelity Investments, a major player with $4.5 trillion under management, has filed an S-1 form with the SEC for a spot Ethereum exchange-traded fund (ETF).

This comes on the heels of their successful Bitcoin ETF launch earlier this year.

The proposed Ethereum ETF would trade on the Chicago Board Options Exchange (CBOE) and even offer staking capabilities, a potential first for a US crypto ETF.

Following Bitcoin's footsteps

Fidelity's move isn't unexpected. In January, the SEC's green light for Bitcoin ETFs marked a turning point, opening doors for wider institutional investment in cryptocurrencies. 

Ethereum, the second-largest cryptocurrency by market cap, was a natural next step for the industry.

Uncertainty clouds the approval process

Despite the positive outlook, the path to approval for this Ethereum ETF isn't clear. The SEC reportedly takes legal actions that could designate Ethereum as a security, which would add complexities to the ETF approval process.  

Furthermore, market sentiment seems to be shifting. Crypto market makers have significantly lowered their estimations for a May launch of a spot Ether ETF from a previous high of 75% to a mere 20%.

Wait and see for Ethereum ETF investors

While Fidelity's filing is a positive sign for Ethereum and the DeFi space in general, the timeline for approval remains uncertain.

Investors hoping to gain exposure to Ethereum through an ETF will likely need to wait and see how the SEC's legal actions and the broader market environment play out

Over $1 Billion in US Treasurys Now Tokenized on Blockchains ⛓️

The market for tokenized U.S. Treasuries is booming! 

More than $1 billion worth of these government securities now exists on various blockchains, including Ethereum, Polygon, and Solana.

This milestone was recently reached after the launch of BlackRock's first tokenized security fund, BUIDL.

BlackRock joins the game with BUIDL

BlackRock's BUIDL fund, launched on Ethereum in March, has quickly grown to become the second-largest tokenized government securities fund.

With a market cap of $244.8 million, BUIDL trails only Franklin Templeton's FOBXX fund, which has been around for 11 months and holds $360.2 million in tokenized Treasurys.

Instant settlements with Ondo Finance

A significant contributor to BUIDL's growth is Ondo Finance, a real-world asset tokenization firm.

Ondo recently deposited $79.3 million into BUIDL, bringing its total share to 38%. This partnership allows Ondo to offer instant settlements for its own U.S. Treasury-backed token, OUSG.

Benefits of tokenized treasuries

Tokenized Treasuries are seen as an attractive option in today's high-interest-rate environment.

According to 21.co, they offer better returns than stablecoin yields while potentially carrying lower risks compared to other investments. 

BUIDL itself is pegged 1:1 to the US dollar and pays out daily accrued dividends directly to investors.

The future of tokenized assets

The tokenization of U.S. Treasurys is just the beginning. 

BlackRock CEO Larry Fink believes that blockchain technology can significantly improve capital market efficiency.  Analysts at Boston Consulting Group predict the tokenized asset market will reach a staggering $16 trillion by 2030. 

This market extends beyond Treasuries and can encompass a wide range of assets, including stocks and real estate.

Ethereum leads the way; others follow

While other blockchains like Stellar and Polygon host tokenized government securities, Ethereum currently dominates the space with $700 million worth of real-world assets tokenized on its network. 

Several traditional asset management firms like WisdomTree are entering the tokenized asset game alongside blockchain-native players like Ondo Finance and Maple Finance.

Some other snapshots 📷

• Cathie Wood’s ETF sees record inflows: The ARK 21Shares Bitcoin ETF saw a record inflow of $201.8 million on Wednesday, almost five times its daily average since launch. This is because Bitcoin has nearly reached $72,000. (Link)

• Ethereum reaches 1M validators: Ethereum surpassed 1 million validators, staking 26% of total supply ($114 billion) for strong network security.  However, some community members worry too many validators could cause issues. (Link)

• XRP price-to-sales ratio (P/S) is double that of Nvidia: XRP's price-to-sales ratio is 61.69, nearly double Nvidia's 37, despite generating significantly less revenue (XRP: $583k, Nvidia: $26.97 billion). (Link)

Not to miss degen stuff

• Vitalik Buterin is looking to decentralize Ethereum staking in a new way

• The Bitcoin options expiry is approaching - What you must know

• BlackRock’s BUIDL fund draws $245 weekly inflows 

Quick Tip 💡

What is a P/S ratio? 

The price-to-sales ratio, often abbreviated as P/S ratio, is a valuation metric used to compare a company's stock price to its sales (or revenue). It essentially tells you how much investors are willing to pay for every dollar of a company's sales.

A lower P/S ratio generally indicates a potentially undervalued company.

Degen of the week 🤠

It’s @ZachXBT!

The online crypto detective unearthed so many memecoin scams and rug pulls on Solana in the past week. 

It’s not new for him. But we’d still like to honor him in our newsletter.

Thanks for standing by the degens, Zach! 

Tweet of the week 🐥

Meme of the week 🤡

That’s a wrap. See you next week!