We've had some major innovations in the blockchain space and the regulatory environment in the last 24 hours, and I'm going to tell you about it right here. If you're hyped about crypto and are looking to stocks and the future, the SEC just opened the door to stocks on blockchain. Even though the Clarity Act failed to pass 49 to 50 in the Senate, the SEC was like, all right, well, let's start letting people trade stocks and give some clear terms for that on the blockchain.
This is very exciting, especially if you're on Robinhood right now, where tokenized stocks are huge. Coinbase is starting to add them on a layer two. And this is going to bring a whole bunch more volume and legitimacy into crypto. Now, ICP is uniquely positioned for this as well, if we can actually get something big on it.
So let's go through and talk about what just happened, because I'm in the middle of this right now with my MaxFi liquidity positions and with what I'm planning for the future. I am planning something really cool soon for insiders. If you want to go to jerrybanfield.com and join that chat or the Skool community, I'll be talking about what I'm planning there privately before it's available to the public, and I'll be asking for your opinions and your feedback there.
The SEC Created a Temporary Framework for Tokenized US Stocks
So let's take a look. The SEC just created a temporary framework allowing certain tokenized US stocks to trade through the blockchain. These have been blowing up on Robinhood. I've shown some of them in my MaxFi positions, and you can join me on MaxFi. In my experience there's some great money available right now, especially like 100%, 200% APRs, just pairing stablecoins and wrapped ETH against stocks. It's crazy. For me so far, it's been so much better than holding stocks. And I'll have more about that on my Jerry Banfield Money channel soon, although on X, it's Money and Tech combined.
As I mentioned already about the Clarity Act, here's something to separate from that. The SEC didn't pass the Clarity Act, but they are dealing with certain tokenized publicly traded stocks.
Public Smart Contracts, Permissioned Trading
What caught my attention, though, is the technology, especially in regards to ICP, because the smart contracts have to be public and auditable, deployed on a public, permissionless distributed ledger. At the same time, the trading itself is permissioned. Only participants meeting the venue's access requirements can actually trade through these liquidity pools. It's kind of crazy where the blockchain itself is open, but then there's this regulated and permissioned financial activity on top. The current system is not very well set up for that, but ICP actually is better set up to create that entire environment, if it would actually be built on ICP.
What's cool is the DeFi-style infrastructure that's being used right now in trading real-world stocks, where automated market makers and liquidity pools aren't just concepts for random crypto tokens. These are tokens that are actually paired with stocks, which for providing liquidity and making money in liquidity pools, like with MaxFi, is absolutely outstanding.
Real Stock, Not Debt Tokens That Track the Price
These are not just supposed to be casino chips tracking the prices, though. And right now, Robinhood has a bit of an issue with this, because the tokenized stock has to be legitimately stock and not just a debt-based token that is supposed to track the price. So this is where the regulatory environment's getting interesting. Robinhood's probably going to have to make some changes as to how they're issuing these going forward. And then the companies themselves can also say, no, you're not going to trade some unaffiliated third party's token and call that officially our token. So this is very good overall for the market, to give clear guidelines as to how you can trade these.
Liquidity Providers Get an Important Exemption
And here's the liquidity providers getting an important exemption too. This is very nice, because I've been wondering with liquidity on MaxFi, like, are we cool? And this looks like, yes, you can sit there and make awesome money off of providing liquidity, which has been my experience so far. If you want to set all that up in real time with me, I can have a call with you and go over it step by step. You can also just go on MaxFi and do it yourself if you are pretty well versed in these things.
So this is just a temporary measure while the law catches up to it. And I don't think of this the way some of crypto is really hyped today, like, oh, we defeated Wall Street. Prices are going up, including ICP. But to me, this is good in that the regulatory agencies are actually trying to not make things difficult and to allow innovation, which is awesome. Stocks are in position to go along with the blockchain very well in this current environment.
What ICP's Architecture Is Set Up For
I'm not saying the SEC endorsed ICP or anything, but what ICP's architecture is set up nicely for is that it could provide everything perfectly for this environment. Because right now, with all the demands that the SEC wants, and likely regulation will carry over in the future, they're going to want the actual infrastructure to be as decentralized, and as able to be permissioned, as possible. So ICP has a very nice technology stack to build all this stuff on. And right now, we don't see any public alternatives.
You've got things like ckBTC and ckETH. So in theory, you could start building out some ck things on ICP as well, and then trading all of them on something like Multidex. And having all of it in an on-chain environment is absolutely ideal, so that there are not breaches and bridge issues and exploits from getting in on front ends and things that aren't actually hosted on the blockchain.
And this comes into it with stocks: just having a token is not enough, because you need all these other things. This is an excellent use case for why we need ICP to be able to deliver all the things that the current regulatory environment is indicating are necessary.
An Infrastructure Competition Between Blockchains
So this means, ideally, there will be an infrastructure competition between which blockchains can actually give the most on the actual blockchain itself, and give users the highest quality tokens that give them actual shares. This is an important shift from what we've seen in the past to looking forward. It's like, okay, we are going to embrace this, and you need to build this out properly, not take little shortcuts and offer these things that are not really stocks but debt tokens. And then you've got to control how these are accessed.
So I'm thinking the more interesting outcome that's likely is that all these stocks and Wall Street are absorbing the technology and embracing crypto as much as possible. I see an ideal design for this going forward is going to be the legal ownership with the blockchain execution. ICP is the perfect environment, if you can actually get the real building happening on the chain instead of people just building all the stuff up in centralized infrastructure.
Now, what would be interesting to see: right now, the centralized infrastructure like Coinbase and Robinhood have every incentive to build almost everything they can in house and then put little parts of it on blockchain. But the more decentralized you can make something like the actual infrastructure behind this, the better theoretical product you could give to the people, and in theory, give people real ownership over it and allow people a truly decentralized way to own stocks. To me, that is potentially very exciting.
Why Crypto Is Pumping Today, and Who Actually Gets the Fees
So this is one of the big reasons that crypto is pumping today: because of this positivity. And yet, that doesn't really change the theme for almost all the tokens and the blockchains underneath it. It's not very bullish for most things except Ethereum at this point. But really, Robinhood and Coinbase are absorbing most of the fees. And if ICP's tech can get in there, it would certainly be bullish. Perhaps some things would be built up on other blockchains. But right now, it looks like most of the money is coming in on Ethereum layer twos, which aren't even adding that much value to Ethereum itself. So we'll see where this goes.
The Shirt I Wore Filming This Is on eBay
If you enjoyed this and want to be on the inside and see everything that's going on, jerrybanfield.com is where it's at. For example, if you go to jerrybanfield.com right now, you'll see the actual shirt I wore filming this, that I wore on Who Are These Podcasts, and that I've worn in a number of my other videos, which I paid $100 for at Atlas. This shirt is actually on eBay right now. We've got five days left and the current bid is up to $100 on this already, which is awesome. Which means I've broken even. I've broken even buying this shirt. So I actually could finance this to some degree just by breaking even buying and selling clothes.
But I think it's cool. This is just an online thing we're doing, and I think it's really cool to see what I can give you that could translate to having something in real life. And if you followed the Queen story, I'm also selling the shirt I met her in on the first date, which also says Jerry Banfield on it as well.
I am here to serve you fully on jerrybanfield.com. And if you want to see what I'm planning before I talk and share about it publicly, and be in on it, but, you know, don't leak it, then that'll be in the chat on jerrybanfield.com and in the Skool community. I'm working on that soon.
Thank you for being here, and I hope to see you again soon. You can find more like this in my Tech playlist. I'm Jerry Banfield Tech.