We are thrilled to announce that Morgan Stanley is among the first banks to tokenize real-world assets following the launch of the @The_DTCC Tokenization Service (DTS), converting U.S. Equity and U.S. Treasuries to tokenized form. Launched on October 28, DTS creates tokenized representations of DTC-custodied securities to support greater liquidity, collateral mobility and capital efficiency.

1/ Objecting to tokenization under the @SECGov's Innovation Exemption is fundamentally irresponsible. 50 pubcos did it, blocking the only regulated tokenized stock with full shareholder rights.

The SEC just released a helpful new FAQ to clarify its token taxonomy further. 🔹Q 1.4 - Establishes that systems can maintain decentralized governance and make use of legal entities like DUNAs. 🔹Q 1.5 - Distinguishes between permissioned and permissionless systems. 🔹Q 1.6 - Clarifies the distinction between "functional" and "decentralized" systems.

Today, @a16zfrontier, @fund_defi, and @uniswap stepped into the fight against the Illinois Digital Asset Tax Act. The law is already one of the most anti-innovation bills in the country—a tax on transactions just because they're digital. Now, it's being made worse through politicized rulemaking that goes well beyond what the law approved—the draft rules would treat many decentralized exchanges (DEXs) as tax-collecting brokers. That approach isn't possible to comply with: autonomous software is not a person that can collect a tax. The approach also conflicts with the U.S. Treasury Dept’s classification of DEXs and Illinois’ own Digital Assets and Consumer Protection Act. The rules also tax Illinois resident's when there isn't even a transaction. That’s like being taxed for moving money from your checking account to your savings account. Consumers and entrepreneurs in Illinois deserve better. Fortunately, @CCI and @BlockchainAssn are also challenging the Act in court and will have the entire law thrown out. Until then, we must press Illinois to stop playing politics and to follow its own laws.

New markets often live or die based on this chicken-or-the-egg problem — They need quality assets to attract users, but they need users to attract issuers' assets. Permissionless markets can more easily overcome the cold start because they face fewer supply constraints.

1/ The @SECGov issued a call to better understand crypto vaults. CCI’s Vault Coalition answered. We submitted “Under Control: A Framework for Applying the Federal Securities Laws to Crypto Vaults,” 200+ pages of technical and legal analysis.

Huge. ICE is going to run a regulated exchange on top of Hyperliquid's protocol. This is the right approach––regulate the apps serving U.S. customers, not the protocols underneath.

Idk who needs to hear this, but formal verification of software (mathematically checking that software is correct) is by no means done, even now that we have LLMs and the proof tedium is gone. Instead, having LLMs lets us focus on the spec, where humans remain in the loop, and where people were often sloppy in the past. By sloppy I mean they often touted “formally verified!!11”, without even mentioning the spec. And upon closer inspection, the spec often turned out to miss critical guarantees you would naturally expect. Formal verification IS hard. First, you need to figure out what behavior you even want to check: the spec. Then, you need to go through the tedium of writing a proof that your program indeed satisfies the spec. LLMs massively speed up the second step. That’s because the proof can automatically be checked by a compiler. If the compiler is happy, the LLM did its job and you can trust the result, namely that your program satisfies the spec, without reading the proof yourself. (Ofc assuming you don't hit a compiler bug.) But the first step is still there: What’s the spec? Writing the spec is still tedious and error-prone, and while LLMs help, a human needs to remain in the loop, at least to some extent, to assess whether the spec matches with the programmer's intention and the user's expectation. If you vibe that part, that’s where the bugs will creep back in. Also: not all specs are equal. Don't trust "formally verified" without checking the spec. If the spec only says "the program doesn't crash", that is much less useful than a spec that reflects in detail the intended and expected functionality of the program. So, humans are not leaving the loop, we're just moving up a level. With the proof tedium gone, we can finally focus our attention on the spec!

This isn't surprising. The incentive for issuers to consent to tokenization of their stock under the SEC's Innovation Exemption are weak –– they may get 24/7 trading, but that trading occurs on US venues rather than in new global markets, so there's no net new demand. But issuer objections aren't going to stop this train. There are many legal pathways to bring securities onchain that don't require consent and that aren't subject to the SEC's jurisdiction. Someone could even build a permissionless protocol that does so. So, if the SEC wants to maintain oversight of US securities markets, it needs to create an approach for tokenization that delivers the full benefits of onchain markets –– atomic settlement, 24/7 trading, global liquidity, etc. Supporting permissionless trading of securities through DeFi systems would accomplish that goal, and doing so would create the incentives for issuers that the innovation exemption lacks.

Utah makes 10. Fifty states applying their own laws to the same markets is madness. Congress gave the CFTC exclusive jurisdiction over contracts traded on registered exchanges. Good on the CFTC for defending its territory.

Great piece on @databricks and our history w them. @alighodsi is the original Technical Terminator. @bhorowitz's take on Ali: "We see great entrepreneurs but their market opportunity is limited, and then we see companies that have a great market opportunity but the entrepreneur is not big enough to fulfill that. But this was a case where we had both... Last month, Databricks crossed a $7 billion revenue run rate, growing 80% year over year, and was valued at $190 billion. The entrepreneur, it turned out, is big enough."

The financial system is moving onchain, whether legacy finance likes it or not. @Ripple just joined @circle, @BitGo and @DigitalAssets with a national trust charter. And the OCC opened the door to rewards on stablecoins far wider than CLARITY.