Posts Tagged Market Structure

On the afternoon of 15 September the Senate declined to begin debating the CLARITY Act. The result was on the wire within minutes of the vote, and the result is the least interesting thing in the record. What is interesting sits in the roll call, and the roll call only means something next to a second one taken the same afternoon and a third taken fourteen months earlier. The vote was cloture on the motion to proceed, which decides whether the Senate may begin debating a bill. It is not passage and it enacts nothing. A bill that fails it has not been voted down on its merits. It has failed to reach the point at which its merits get debated. The threshold is three-fifths of senators sworn, which is sixty. The 7 September piece argued that the question of whether Kalshi's sports contracts are federally regulated derivatives or unlicensed gambling had three live routes to an answer, judicial, legislative and administrative. This is what the legislative test produced, and it produced more than a number.

For years the standard defense of private markets ran like this: illiquidity is a feature rather than a bug, lock-ups force discipline, and the absence of a daily price is what lets managers think long-term. If an investor cannot sell for ten years, that is the price of admission to the best returns in finance. It was always a convenient story, and the people telling it were the ones who benefited from investors being unable to leave. This year the people who built that system started dismantling it. Morgan Stanley, with roughly $8 trillion under management, is building blockchain settlement infrastructure in-house rather than renting it. At an industry summit in March, its head of digital asset strategy said the firm needs to build this internally because it cannot simply rent the technology. The bank is preparing an institutional digital wallet for tokenized assets, support for tokenized equities on its own trading venue and, most tellingly, it is advancing tokenized private equity secondary markets. That last item deserves a second reading. A bulge-bracket bank is building secondary markets for private equity. The entire point of a secondary market is to let people sell something before it matures. That is liquidity, the thing private markets spent a generation insisting investors did not need. Morgan Stanley is not alone, and none of this is new in principle. Hamilton Lane and KKR have offered tokenized feeder funds through Securitize for several years, cutting minimums on institutional-only funds from millions to tens of thousands. What changed in 2026 is that the work stopped being a fintech experiment at the edge and became core infrastructure strategy at the center of Wall Street. When the incumbents start building the exit that investors were told they did not need, the original argument is finished.

Putting an asset on-chain is no longer the hard problem. Anyone can mint a token. The harder problem, and the one the rest of the industry is now racing to solve, is telling the chain what that token is actually worth. The distinction gets lost in most tokenization coverage, and it is worth being precise about, because it is also the problem Tessera is working on. There are two separate data problems for any tokenized real-world asset, and they are not the same problem. The first is proving the asset exists. Does the token have something real behind it, and are the reserves backing it actually there? This is what Chainlink Proof of Reserve does. Tessera's Proof of Reserve feed is live on Solana mainnet, verifying on-chain that the reserves backing T-Tokens exist. That is the integrity layer, and it answers the question of whether the thing is real. The second problem is pricing the asset. What is it worth right now? What net asset value does a lending protocol use to compute a loan-to-value ratio? What number does a perpetual futures exchange reference to mark a position? This is a net asset value and price-feed problem, and it is a fundamentally different piece of infrastructure from Proof of Reserve. Proof of Reserve tells you the backing is there. It says nothing about what the asset is worth. Those are two different oracles answering two different questions, and conflating them is one of the most common mistakes in this space. For most of tokenization's history the industry has concentrated on the first problem, meaning issuance and backing. The last few weeks have made it clear that the frontier has moved to the second. In May, DTCC, the backbone of US securities settlement, said it would use Chainlink for a tokenized collateral platform that automates pricing, valuation and settlement, building on an earlier net asset value pilot run with JPMorgan and BNY Mellon. That is the plumbing of traditional finance treating on-chain valuation as a problem worth solving at scale. It is already in production elsewhere. VanEck and Securitize's tokenized Treasury fund became one of the first assets to qualify as collateral on a major decentralized finance lending market, using a verified net asset value feed to price it. A tokenized asset cannot be used as collateral until a protocol can trust what it is worth. The feed is the precondition: no feed, no collateral. That is the whole story in one line. The valuation layer is what turns a token from something a holder can keep into something a holder can use.

Two things happened in capital markets this week that look like routine news taken separately. Taken together they are the same story told from opposite ends. On 14 April, Deutsche Börse, operator of the Frankfurt Stock Exchange and one of the oldest and most systemically important financial market infrastructures in the world, invested $200 million in the crypto exchange Kraken. The stated purpose was to build shared infrastructure spanning trading, custody, settlement, collateral management and tokenized assets. Not a hedge, and not an experiment. A strategic commitment to operating across both worlds at once. On the same day, the US Senate moved materially closer to passing the CLARITY Act, the most significant piece of crypto market structure legislation so far, after a compromise on the stablecoin yield provisions that had blocked it for nearly a year. A Banking Committee markup is expected in the final weeks of April and a Senate floor vote in May. Senator Lummis, the bill's most prominent champion, has described this as the last realistic window before at least 2030. One institution is building the infrastructure without waiting for the rules. The other is finalizing rules for infrastructure that is already being built. That is not a contradiction. It is what a structural shift looks like from the inside. Understanding why this week matters requires going back further than 2026. The regulatory architecture of capital markets, meaning mandatory disclosure, accredited investor restrictions, anti-money-laundering obligations and the public and private market distinction, was not designed in the abstract. It was designed for a world in which every financial transaction required intermediaries, and in which those intermediaries introduced counterparty credit risk at every step. Before electronic clearing, share transactions moved through physical certificates, multiple brokers, clearinghouses and correspondent banks. Each link was a point of counterparty exposure, and the longer the settlement chain the greater the systemic risk. Public market regulation, meaning listing standards, audited accounts and mandatory disclosure, developed specifically to manage the risks created when thousands of anonymous investors transact through intermediaries they cannot individually assess. The private market carve-out follows directly from that problem. The accredited investor framework says that if access is restricted to those sophisticated and well capitalized enough to absorb losses and conduct their own diligence, the disclosure burden can be relaxed. The access restriction is itself the risk management tool. It exists not because ordinary investors deserve returns less, but because the settlement infrastructure assumed they needed protection from intermediaries they could not evaluate. Know-your-customer and anti-money-laundering rules followed the same logic. The global framework placed compliance obligations on financial intermediaries, meaning banks, brokers and exchanges, because those were the natural chokepoints in the flow of capital. Regulating every transacting party is impractical. Regulating the infrastructure they transact through is not. All of that was rational, and all of it was designed for a world of intermediated, paper-based settlement with significant information gaps between counterparties. That is not the world now being built in.

On 21 April, SpaceX ended seven years of financial silence. For the first time the company disclosed actual numbers publicly. The Analyst Day sessions at Starbase, together with the simultaneous release of the IPO prospectus, gave investors a first look at the financial shape of the business. The headline is Starlink. The combined launch and Starlink businesses generated $15 billion to $16 billion in revenue in 2025, with profits of approximately $8 billion. Starlink alone ended 2025 with roughly 9.2 million subscribers and over $10 billion in revenue. That is a business with disclosed unit economics rather than a projection, and it is the first time those figures have been public. Analysts project Starlink revenue reaching $24 billion by the end of 2026, which is a projection rather than a disclosure. Starlink passed 10 million active subscribers globally in early 2026, adding customers faster than any telecom network has. SpaceX acquired xAI in February 2026 in an all-stock transaction valuing the combined entity at $1.25 trillion, with xAI at approximately $250 billion and SpaceX at $1 trillion at the time. The xAI numbers remain the opaque part. Grok's monetization, compute costs and the capital committed to AI infrastructure have not been fully broken out, and that is what the full S-1 still needs to provide. The governance structure is now confirmed. Musk holds approximately 42% of SpaceX's equity and controls roughly 79% of the votes through super-voting shares. Public investors will hold standard voting shares. This is a founder-controlled company at the ballot box regardless of how many shares trade on Nasdaq.

Six days ago these pages argued that SpaceX's Analyst Day on 21 April was the most consequential scheduled event of the month for anyone trying to understand where this listing is headed. It happens tomorrow, and several things have changed since. When the 14 April piece was written, the working target was $1.75 trillion. That figure has since been revised upward, and SpaceX is reported to be testing a valuation above $2 trillion in conversations with prospective investors. At that level the company would list at a valuation no company has carried from its first day of trading. The questions Analyst Day needs to answer have become correspondingly harder. At $2 trillion, SpaceX would trade at roughly 125 times 2025 revenue. What management says tomorrow about Starlink's subscriber economics, the xAI merger's contribution and Starship's commercial timeline has to support a number with no public market comparable. Reported valuation targets in advance of a filing are expectations rather than prices, and they move.

Most people assume traditional finance and decentralized finance are incompatible. One world of compliance, gatekeeping and custody; the other of permissionless composability and open access. Years spent operating across both, on Wall Street and on-chain, suggest a different reading. The core legal primitives of traditional finance often work better on-chain than the assumption allows. Start with the loan. In traditional finance, loan syndication distributes risk. Participants take economic exposure without doing origination work, which produces a creditor relationship rather than an ownership one. That is close to what decentralized lending protocols already do. Users lend assets to a pool and receive a claim on repayment plus yield. The economic structure is the same one, automated on-chain. The loan structure is composable in a way equity is not. It can be tokenized, transferred, used as collateral and integrated into yield strategies without triggering securities law in many jurisdictions, though the analysis is jurisdiction-specific and no structure is exempt everywhere. Equity-like tokens do none of that easily, because securities carry friction by design and removing the friction changes the instrument. T-SpaceX is a loan participation right. Token holders lend stablecoins, and the issuing subsidiary acquires economic exposure to SpaceX valuations through a Cayman SPC. There is no ownership, no voting right and no direct shareholder status. Redemption opens only once a Redemption Start Date is announced, which is a condition rather than an event that follows automatically from any transaction in the underlying. The instrument carries a non-security legal opinion and is natively composable on Solana. Two things belong next to that description rather than after it. A legal opinion is an opinion, obtained in a particular jurisdiction on particular facts, and it binds no regulator anywhere. And T-Tokens are not available in the US or other restricted territories, so the open access described here is bounded by an eligibility map that excludes a large share of the investors for whom the access argument is usually made. The comparison that matters is structural rather than competitive. An instrument that conveys direct equity faces constraints that a participation right does not: securities generally cannot sit unrestricted in a lending protocol, and they cannot be provided as liquidity on a decentralized exchange without the compliance apparatus that made them securities in the first place. That is a statement about what the instruments permit, and not a prediction about which projects succeed.

An earlier piece traced the evolution of tokenized private equity and the structures that might make it liquid. That leaves a question behind it. If private equity exposure can be structured as a non-security bearer instrument, who actually trades it? The answer shapes what kind of market this becomes, and it is the question Tessera works on. The thesis here is that retail investors rather than institutions will dominate trading demand in on-chain private equity, while institutional participants serve mainly as suppliers of the underlying assets through off-chain arrangements. If that holds, the resulting market looks structurally different from traditional private equity, with tokenization acting as both a price discovery mechanism and a source of exit liquidity. Momentum behind that idea has built through 2025. The Blockworks Research analyst Carlos Gonzalez Campo has predicted that shares of private companies including SpaceX and OpenAI will be tokenized over the following four years, and the tokenized asset market is projected to grow from $40 billion to $317 billion by 2028. The regulatory environment has turned more accommodating this year, and several major platforms are preparing tokenized private equity offerings. Robinhood is working on tokenization technology to give retail investors fractionalized ownership of US private assets, though it remains constrained by current accredited investor definitions. As of May 2025 the Security Token Market reports 826 tokenized projects totaling $63 billion in value, with large institutions actively tokenizing traditional financial assets. McKinsey projects the underlying value of tokenized assets reaching $2 trillion by 2030, with private equity among the more promising categories. Projections of that kind are estimates, and the gap between $317 billion and $2 trillion in overlapping forecasts is a reminder of how wide the uncertainty is.

Private equity has delivered strong long-run returns to the investors able to reach it. Cliffwater, studying the private equity allocations of 94 state pension systems, found that over the twenty-one fiscal years ending 30 June 2021 those allocations returned 11.0% annualized net of fees, exceeding by 4.1 percentage points the 6.9% the same pensions would otherwise have earned in public stocks. The cohort in that study is worth noticing: the long-run record belongs to large institutions because large institutions are the ones who could get in. Everyone else has been held back by high minimums, long lock-ups and thin options for selling early. The gap between the returns and the access is the area in which Tessera works, and it is worth setting out how the industry has tried to close it, what blockchain-based tokenization adds, and what still stands in the way. The constraints are structural rather than incidental. Capital is typically committed for eight to twelve years. Minimums often start at $1 million. Exits before the end of a fund's life have historically been scarce, transfers require cumbersome paperwork and general partner approval, and investors see limited detail about the underlying assets in the meantime. Those conditions keep most investors out altogether. They also create problems for the institutions that are already in, since a pension fund or endowment that needs to rebalance cannot simply sell a fund interest the way it sells a listed security.

On 12 September the chief executive of Anthropic published an essay arguing that the industry should slow the rate at which it improves model capabilities. The heads of OpenAI, xAI and Google DeepMind all responded in public within a day, and the coverage has treated that as three rivals agreeing. Agreement on the direction is not agreement on the mechanism, and on the mechanism they do not agree. This piece does not judge whether the argument is right. It examines the first of the three proposed steps, because that step is a disclosure mechanism, and disclosure mechanisms are readable from here. Each frontier company would give ongoing, employee-like access to a team of embedded third-party evaluators, covering not just finished models but training pipelines and processes. Strip the subject matter away and the shape is familiar. This is a proposal to install an independent party inside the building, with standing access and the right to publish what it finds.