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RWA Track Deep Dive Report: The Path to Convergence of Traditional Finance and the Crypto Market
Original Article Title: "Huobi Growth Academy: RWA Track In-Depth Research Report: The Road to Integration of Traditional Finance and the Crypto Market"
Original Source: Huobi Growth Academy
1. In-Depth Analysis of RWA Track: The Growth Engine of the 2025 Crypto Market
Over the past few years, Decentralized Finance (DeFi) has rapidly emerged, creating a financial ecosystem that can operate without the traditional banking system. However, a key issue facing the DeFi space is that the entire market's operation still heavily relies on crypto assets (such as BTC, ETH, and stablecoins), lacking sufficient support from real-world assets (RWAs), which has constrained DeFi's development to the volatility of the crypto market itself.
The emergence of the RWA track is breaking this limitation. It combines real-world financial assets with blockchain technology, not only enhancing the stability of on-chain financial products but also bringing significant liquidity growth to the entire market. This track is becoming a key bridge for institutional investors and mainstream financial institutions to enter the crypto industry and may even drive the entire blockchain industry into a new growth cycle.
The core concept of RWA is to digitize various types of assets from the traditional financial markets (such as bonds, real estate, stocks, art, private equity, etc.) and transform them into tokenized assets that can be traded, collateralized, or lent on-chain through blockchain technology. This process not only enhances asset liquidity but also reduces the friction costs in the traditional financial markets, such as long transaction settlement times, high intermediary costs, and limited liquidity.
Take the bond market as an example. Traditional bond trading often involves multiple financial institutions and regulatory bodies, with cumbersome intermediary steps, leading to high transaction costs. Meanwhile, RWA tokenization can achieve real-time on-chain settlement, greatly improving transaction efficiency and reducing transaction costs. Additionally, due to the transparency and traceability of the blockchain, the management of RWA assets is more transparent, effectively reducing fraud and malpractice in the market.
With the maturity of blockchain technology and the growing market demand, the RWA track is attracting more and more institutional participation. For example, BlackRock, one of the world's largest asset management companies, recently launched a blockchain-based tokenized fund called BUIDL, which mainly holds stable assets such as U.S. Treasuries and provides a more efficient trading method through blockchain.
In addition, traditional financial giants like Franklin Templeton are also actively attempting to tokenize some of their fund products, allowing investors to more easily participate in the market. These examples indicate that the RWA track is no longer just a part of the "crypto narrative" but is becoming a core trend in the global financial market's digitization.
From a technical perspective, the development of RWAs relies on the support of multiple key infrastructures, including the blockchain underlying network, smart contracts, oracle, decentralized identity (DID), and compliance management, among others. Firstly, the public chain, as the carrier of RWA assets, determines the security and operability of the assets. Currently, Ethereum remains the preferred network for RWA tokenization, with many institutions deploying smart contracts on Ethereum to manage RWA assets. Additionally, L2 solutions (such as Arbitrum, Optimism) are also becoming popular choices for RWA asset transactions to reduce transaction costs and increase throughput. Furthermore, public chains like Solana, Avalanche, Polkadot, among others, are also exploring applications of RWA assets, striving to capture market share in this field.
From the market perspective, the RWA track has tremendous potential. According to Boston Consulting Group (BCG) research, it is expected that by 2030, the market size of the RWA track will reach $160 trillion, far exceeding the total market capitalization of the current entire crypto market. Currently, the global real estate market is valued at approximately $300 trillion, but most real estate investments require high capital and have low liquidity. If 1% of these assets are tokenized, it could create a $3 trillion RWA market. Similarly, the global bond market exceeds $120 trillion, and if 1% enters the blockchain, it will form a $1.2 trillion emerging market.
Institutional funds are rapidly flowing into the RWA track, indicating that this track is no longer just a pure "crypto experiment" but is becoming an integral part of the global financial system. By 2025, with the unprecedented support of the Trump administration for the crypto industry, this trend will continue and develop.
For investors, the RWA track not only provides a new market opportunity but may also become a crucial bridge between the crypto market and the traditional financial market. In the coming years, with more infrastructure improvements, the implementation of regulatory frameworks, and further deployment by mainstream financial institutions, the RWA track is poised to become a new growth engine for the blockchain industry, potentially driving the digital transformation of the entire financial market.
Overall, the rise of the RWA track represents not only the maturity of blockchain technology and the expansion of application scenarios but also signifies that the global financial market is entering a new stage of decentralization and efficiency. For market participants, seizing the opportunity of RWA asset tokenization, laying out infrastructure, and key protocols will be the core proposition for the development of the crypto industry in the coming years.
2. Current Market Environment: Macroeconomics and RWA Development Catalysts
In the current global economic environment marked by heightened uncertainty, liquidity cycle changes, and the vibrant growth of the digital asset market, the Real-World Assets (RWA) track is becoming one of the key growth areas in the crypto industry. With the Federal Reserve's monetary policy adjustments, persistent inflationary pressures, debt market volatility, and increased institutional participation in the crypto market, RWA development is experiencing an unprecedented opportunity.
Simultaneously, the shortcomings of the traditional financial system and the maturation of DeFi (Decentralized Finance) have been driving the migration of real-world assets to the blockchain. This article will deeply explore the development catalysts of the RWA track from five aspects: global macroeconomic conditions, liquidity environment, policy regulatory trends, institutional entry situation, and DeFi ecosystem maturity.
2.1 Global Macroeconomic Conditions: Inflation, Interest Rates, and Market Risk Sentiment Changes
The global macroeconomic environment is one of the most core variables influencing RWA development. In recent years, factors such as weak economic recovery post-COVID, escalating geopolitical conflicts, supply chain issues, and central bank policy adjustments have contributed to significant uncertainty in global economic growth. Among these, changes in inflation and interest rate policies directly affect liquidity and investor asset allocation strategies, indirectly propelling the RWA track's development.
Firstly, from an inflation perspective, the Federal Reserve's aggressive interest rate hikes in the past two years have had profound impacts on global markets. Since 2022, the Fed has hiked rates multiple times to curb high inflation rates, leading to global liquidity tightening. In a high-interest-rate environment, investors' risk appetite decreases, traditional financial markets are impacted, and capital flows tend to move towards low-risk, high-yield asset classes. This has prompted investors to focus on assets like government bonds, gold, real estate, among others, whose tokenization has become a significant growth area for the RWA track. For example, the tokenization of US Treasuries (such as the OUSG token provided by Ondo Finance) has become an important investment tool in the crypto market due to its high annualized yield (over 5%), attracting a significant inflow of DeFi funds.
Secondly, as the global debt crisis intensifies, the RWA track has become a critical option for capital hedging. By 2024, global debt has exceeded $300 trillion, with US national debt surpassing $34 trillion, reaching historic deficits. In this scenario, investor confidence in traditional financial markets has been shaken, leading them to seek more transparent and efficient financial infrastructure. The blockchain technology's characteristics of trustlessness, borderlessness, and low cost make on-chain RWA assetization the optimal solution.
In addition, in a high inflation environment, the demand for gold and commodities surged, and gold-backed tokens (such as PAXG, XAUT) also became popular assets in the crypto market. Overall, the increased global economic uncertainty has heightened investors' demand for safe-haven assets, and the innovation in the RWA track has made it easier for these assets to enter the crypto market, thus driving the explosive growth of this track.
2.2 Liquidity Environment: Fed Policy Shift and Market Risk Appetite Change
The rapid development of the RWA track is inseparable from changes in the global liquidity environment. In 2022-2023, the Fed implemented a significant rate hike, leading to severe global market liquidity tightening. However, since 2024, with the easing of inflation pressures, the Fed has reached the end of its rate hike cycle and may even begin a rate cut cycle. Market liquidity expectations have changed, which has had a significant driving force on the RWA track.
Firstly, the adjustment of the Fed's monetary policy has led to an increase in demand for stable income assets in the market. The DeFi ecosystem went through a high volatility and high-risk phase in 2021-2022, but current investors are more inclined towards low-risk, predictable income products, and the RWA track conveniently offers this solution. For example, bond tokenization and private market tokenization allow investors to enjoy a more stable and compliant income model within the DeFi ecosystem, which is also one of the key reasons for the explosion of RWA in 2024.
Secondly, from the perspective of the crypto market, BTC saw the approval of a spot ETF in 2024, with institutional capital continuing to flow in, expanding the overall crypto market liquidity pool. These funds, beyond BTC, also need to find more stable investment targets. RWA assets, due to their deep connection with the traditional financial market, have become an important allocation direction for institutional funds. For example, asset management giants such as BlackRock and Fidelity have begun to focus on the RWA field and have launched related investment products, which will further drive the growth of the RWA track.
Furthermore, as DeFi interest rates decline, the yield advantage of the RWA track becomes more apparent. In 2021-2022, the yield in the DeFi ecosystem was generally above 10%, but by 2024, the stablecoin yield in most DeFi protocols had dropped to between 2% and 4%, while the US Treasury bond yield in the RWA track still remains above 5%. This has made RWA assets the new cornerstone of DeFi yield, attracting a large influx of funds.
2.3 Policy Regulatory Trends: The Compliance Process of the RWA Track
Throughout the development of the cryptocurrency industry, regulatory issues have always been a focus of the market. The rise of the RWA track is due to its greater compliance compared to other DeFi tracks, making it able to meet the needs of institutional investors. Regulatory bodies around the world are gradually accepting the innovation of asset tokenization and exploring how to support the development of the RWA ecosystem through legal frameworks.
Firstly, the U.S. SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) have conducted research on security tokenization, bond tokenization, and other areas, and have allowed some institutions to issue tokenized assets within a compliance framework. For example, Securitize has obtained SEC approval to issue blockchain-based security tokens, providing a good example for the compliance of the RWA track.
Secondly, Europe, Japan, Singapore, and other regions have a relatively open attitude towards the RWA track. For instance, Switzerland's SIX Digital Exchange (SDX) and Germany's Boerse Stuttgart Digital Exchange (BSDEX) have both supported tokenized stock trading, and the Singapore government is actively promoting the on-chain development of RWA assets. These favorable policies have made institutional investors more willing to enter the RWA track, providing a solid foundation for its development.
2.4 Institutional Entry and DeFi Ecosystem Maturity
In addition to macroeconomics and policy regulation, institutional entry and the maturity of the DeFi ecosystem are also important driving factors for the growth of the RWA track. Traditional institutions are starting to pay attention to the integration of DeFi and TradFi (Traditional Finance), with many top asset management companies, banks, and hedge funds already researching how to issue and trade RWA assets on the blockchain.
At the same time, the DeFi ecosystem is gradually transitioning from "high volatility, high risk" to "stable income, compliant development," with the RWA track being a core beneficiary of this trend. More and more DeFi protocols (such as MakerDAO, Aave, Maple Finance) are deeply integrating with RWA assets, giving the growth of the RWA track a stronger sustainability.
In conclusion, the surge of the RWA track is not only the result of market demand but also a product of the combined effects of global macroeconomics, policy regulation, liquidity environment, and the evolution of the DeFi ecosystem. Driven by these catalytic factors, the RWA track is expected to become one of the most important engines of growth in the cryptocurrency market between 2024 and 2025.
Three, Main Classifications of the RWA Track and Analysis of Core Projects
Against the backdrop of a maturing crypto market and accelerating institutional inflows, the rise of the Real World Assets (RWA) track has become a major trend. The core goal of the RWA track is to tokenize traditional financial market assets such as bonds, real estate, commodities, private equity, etc., in a blockchain-native form for issuance, trading, and management, making them more liquid, more accessible, and able to integrate with the DeFi ecosystem. This not only brings the convenience of decentralized finance to traditional assets but also provides a more stable source of income for the DeFi ecosystem.
The RWA track has diverse use cases, with different types of real-world assets having various representations on-chain, usually falling into the following major categories: Bond-based RWA, Commodity and Bulk Asset RWA, Real Estate RWA, Equity and Private Markets RWA, Infrastructure and Supply Chain RWA. In this section, we will delve into the core logic of these categories and analyze representative projects in the current market to gain a deeper understanding of the RWA track's landscape.
3.1 Bond-based RWA: Tokenization of US Treasuries, Sovereign Bonds, Corporate Bonds
The bond market is one of the most important asset classes in the global financial market, with U.S. Treasury Bonds (UST) in particular being considered one of the safest assets globally, widely used for hedging and reserve purposes. With the maturation of the DeFi ecosystem, more and more institutions are attempting to bring bond assets onto the blockchain to achieve transparent yield, increased liquidity, and the possibility of globalized trading.
Currently, the global debt market exceeds $300 trillion, with U.S. debt holding a significant share, while the total market capitalization of the crypto market is only $2-3 trillion. If bond-based RWA assets can be smoothly introduced into the DeFi ecosystem, it will greatly alter the market landscape. The liquidity of the traditional bond market is limited by factors such as trading hours, market access barriers, settlement cycles, etc., while on-chain bonds can provide 24/7 trading, borderless access, instant settlement, and other advantages, making them an important addition to the DeFi ecosystem.
Representative Project Analysis: Currently, in the RWA track, the key participants in the bond tokenization field include Ondo Finance, Maple Finance, Backed Finance, etc.
Ondo Finance: It is currently one of the most active bond tokenization projects, focusing on U.S. Treasury bond tokenization, offering the OUSG (Ondo Short-Term US Government Bond Fund), allowing DeFi users to earn returns similar to a short-term U.S. Treasury ETF on-chain, with an annualized return rate exceeding 5%. Ondo's tokenized bonds are custody by compliant institutions, comply with U.S. securities laws, and can freely circulate on-chain.
Maple Finance: Initially focused on the DeFi lending market, later expanded to the RWA track, providing on-chain debt financing services. Maple allows institutional investors to issue bonds in the DeFi ecosystem, providing a stable source of income for the crypto market.
Backed Finance: Introduced various bond ETF tokenization products, such as $bIB01 (corresponding to iShares Short-Term Treasury Bond ETF), providing investors with on-chain versions of mainstream bond ETFs in the traditional financial market, reducing the trading threshold and increasing accessibility.
The rise of bond-related RWA has not only met the needs of traditional institutions but also brought new revenue streams to the DeFi ecosystem, further driving the growth of RWA assets.
3.2 Commodity and Bulk Asset RWA: Tokenization of Gold, Oil, and Other Commodities
The commodity market is another important RWA track, especially for gold, which, due to its long-standing role as a store of value, became one of the earliest assets to be tokenized on the blockchain. The tokenization of commodities allows investors to trade more conveniently and integrate directly with the DeFi ecosystem, enhancing asset liquidity.
Gold has long been used as an inflation hedge, and as global economic uncertainty increases, the market's demand for gold continues to rise. However, the traditional gold market has high trading costs and complex settlement processes. Tokenized gold assets (such as PAXG, XAUT) provide seamless cross-border transactions, smart contract management, and DeFi staking functionalities, making it a significant asset class in the crypto market.
Representative Project Analysis:
PAXG (Paxos Gold): A gold token issued by Paxos, where each PAXG represents one ounce of physical gold in the London vault, exchangeable for physical gold at any time. PAXG is currently the highest-trading-volume gold token on-chain and is widely used for DeFi staking and trading.
XAUT (Tether Gold): A gold token issued by Tether, also pegged to physical gold, allowing users to engage in seamless global trading and participate in the DeFi ecosystem.
Commodities DAO: Explores the possibility of more commodities (such as oil, copper, soybeans, etc.) being tokenized on-chain, enabling the bulk commodity market to operate more transparently and efficiently.
The tokenization of gold and other commodities is changing the way the commodity market operates, making it more open and bringing a stronger inflation-resistant asset class to the crypto market.
3.3 Real Estate RWA: A Breakthrough in Asset Liquidity
The real estate market is one of the world's largest real estate markets. However, due to high transaction costs, low liquidity, and other issues, the traditional real estate market has struggled to integrate with the DeFi ecosystem. Real Estate tokenization in the RWA track allows global investors to participate in the real estate market through blockchain, breaking down geographical and financial barriers.
Representative Project Analysis:
RealT: Tokenizes U.S. real estate assets, with each token representing partial ownership of the real estate asset. Investors can receive rental income by holding the tokens.
LABS Group: Focuses on the Asian real estate tokenization market, allowing individual investors to participate in high-end real estate investments at a very low threshold.
The development of real estate in the RWA track has significantly increased the liquidity of the real estate market, while also providing DeFi with new collateral assets, promoting the overall growth of the ecosystem.
3.4 Private Equity and Fund RWA: Bringing Transparency to VC Investment
Traditional VC investment and private equity markets have long suffered from high barriers to entry and low transparency. Tokenization in the RWA track has made these assets more liquid. For example, well-known asset management company Hamilton Lane issued tokenized funds through blockchain, allowing investors to participate in the private equity market with a lower threshold.
Furthermore, compliance-focused tokenization platforms like Securitize are helping more traditional institutions put equity assets on-chain, enabling them to trade on secondary markets and improve liquidity.
IV. Challenges and Potential Breakthroughs in the RWA Track
Over the past few years, the RWA track has gradually attracted the attention of many in the blockchain industry. RWA aims to digitize real-world assets such as real estate, bonds, stocks, commodities, etc., and incorporate them into the blockchain ecosystem, allowing them to be traded, staked, borrowed, etc., on decentralized finance (DeFi) platforms. This track holds enormous potential but also faces numerous challenges. Overcoming these challenges will be key to determining its ongoing development.
First and foremost, one of the most significant challenges is the issue of legal compliance. Traditional assets are typically subject to national laws and regulatory frameworks, and digitizing these assets and introducing them into a blockchain environment may face scrutiny from regulatory bodies and issues of policy adaptability. Many countries' current financial regulatory policies do not explicitly address crypto assets and blockchain technology, especially when it comes to cross-border asset transfers, legal uncertainty further increases enterprise risk.
For example, how to legally transfer traditional assets such as real estate or bonds to the blockchain on a global scale and ensure compliance in different jurisdictions requires not only deep involvement of legal experts but may also necessitate revisions to relevant countries' legal frameworks. In addition, the issue of managing digital assets and transferring ownership may pose complex regulatory challenges, involving how to verify the actual existence of assets and the legitimacy of their owners.
Furthermore, the technological challenges are also significant. Although blockchain technology has clear advantages in data immutability, decentralization, and others, transforming real-world assets into digital form effectively remains a complex problem. This involves not only how to tokenize physical assets (i.e., convert them into digital tokens) but also ensuring that these tokens accurately reflect the value and liquidity of the assets.
Currently, the digitalization of assets often relies on traditional third-party intermediaries for assessment and endorsement, such as banks or legal institutions, which creates a contradiction between the decentralized concept and traditional centralized institutions. Additionally, the custodianship and management of assets are also major technological challenges. While blockchain can provide transparency and automation, ensuring the security and compliance of assets, especially without centralized intermediaries, is a crucial issue to address. Smart contracts on the blockchain can significantly streamline asset transactions, but in case of bugs or errors, substantial asset losses may occur, making the security and auditing of smart contracts extremely important.
For innovators in the RWA track, effectively combining the advantages of blockchain with real-world requirements is key. Particularly regarding asset liquidity issues, the decentralization features of blockchain can make assets more liquid, but real-world assets often face liquidity problems. For example, real estate, a high-value asset, has a long transaction cycle and limited market participants.
How to leverage blockchain to overcome the liquidity bottlenecks of traditional assets, allowing these assets to flow globally, becoming the liquidity assets of DeFi platforms, is one of the potential breakthroughs in the RWA track. By introducing asset tokenization, a real estate project, a bond, and other assets can be divided into multiple smaller shares, reducing the transaction threshold, attracting more investors, and making assets more liquid. Furthermore, asset tokenization can enhance market transparency, as investors can track asset movements through the blockchain's public ledger, reducing issues of market information asymmetry.
In addition to the legal and technical challenges, market acceptance is also a key obstacle faced by the RWA track. While blockchain has made significant achievements in the cryptocurrency and DeFi fields, for traditional investors, blockchain and digital assets are still a relatively unfamiliar concept. Especially for those accustomed to the traditional financial system and asset classes, digital assets may not immediately gain their trust.
To overcome this barrier, the RWA track needs to establish closer partnerships with traditional financial institutions. A potential breakthrough is that as more and more traditional financial institutions begin to accept blockchain technology and explore collaboration with crypto assets, the RWA track also has the opportunity to receive support from the resources and reputation of these institutions. For example, banks and asset management companies can help drive market acceptance of RWA by endorsing digital assets or collaborating with blockchain platforms.
Furthermore, potential breakthroughs for the RWA track also include multi-chain interoperability and liquidity innovation. Currently, many RWA projects rely on Ethereum or other mainstream blockchains, but interoperability between different blockchains still faces significant challenges. If RWA can achieve multi-chain interoperability, cross-chain asset transfers will become smoother, and the flow of asset value will be greatly enhanced. To achieve this, cross-chain protocols and bridging technologies will be crucial breakthroughs in the RWA track. This will not only enhance asset liquidity but also expand RWA's market share, attracting more investors and users.
Five, RWA Future Outlook and Investment Strategy
As blockchain technology continues to mature and develop, the RWA track is undergoing a subtle transformation. The integration of traditional assets with the crypto world will not only complement digital assets but may also reshape the global financial system. The future of RWA holds enormous market opportunities, but it also comes with complex challenges. To succeed in this field, investors need a deep understanding of industry trends and develop sound investment strategies.
The future outlook for RWA is full of potential, especially as the bridging role between blockchain technology and the traditional financial system becomes increasingly apparent. As blockchain technology is gradually adopted by financial institutions, the tokenization of traditional assets will become more common. It is expected that asset tokenization will become mainstream in the coming years, especially in real estate, bonds, equities, and commodities.
The increasing openness of the traditional financial market to digital assets will also accelerate the growth of RWA. Institutions such as banks, insurance companies, and asset management firms are exploring how to leverage blockchain technology to achieve automation and transparency in asset management while reducing operating costs and increasing efficiency. Particularly in capital-intensive industries, the market potential of RWA will be more significant, as digitized assets can transcend geographical restrictions, providing unprecedented investment opportunities for global investors.
The future outlook of RWA is closely related to the overall digitalization process of the financial system. As the financial market increasingly shifts towards digitalization and automation, RWA will gradually become a key part of the global capital market. With technological advancement and market maturity, the future RWA landscape may see more industry consolidation and merger opportunities, with some leading RWA platforms and projects potentially becoming unicorns in the blockchain industry.
Throughout this process, investors may not only receive direct asset returns but also participate in the "dividend" of blockchain financial innovation. Therefore, investment opportunities in the RWA space will continue to grow, requiring investors to timely grasp market trends, flexibly adjust investment strategies, in order to maximize returns in this innovative market.
This article is a contributed piece and does not represent the views of BlockBeats.
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
Arthur Hayes: Why I'm Betting on ETH While the Market Is Obsessed with SOL
CryptoPunks Changes Hands Twice, Did the Originator of NFTs Finally Find Its "Forever Home" This Time?
May 16 Key Market Information Gap, A Must-Read! | Alpha Morning Report
Key Market Intelligence on May 14th, how much did you miss out on?
1.Binance Alpha Launches HIPPO, BLUE, and Other Tokens
2.Believe Ecosystem Tokens See General Rise, LAUNCHCOIN Surges Over 250% in 24 Hours
3.Tiger Securities Introduces Cryptocurrency Deposit and Withdrawal Service, Supports Mainstream Cryptocurrencies such as BTC and ETH
4.Current Bitcoin Rally Possibly Driven by Institutions, Retail Traders Yet to Join
5.Binance Wallet's New TGE Privasea AI Participation Requires a 198 Point Threshold, with a Point Consumption of 15
Source: Overheard on CT (tg: @overheardonct), Kaito
PUMP: Today's discussions about PUMP focus on its new creator revenue-sharing model: the platform will allocate 50% of PumpSwap revenue to token creators, sparking varied reactions from users. Some criticize the move as insufficient or even misleading, while others view it as a positive step the platform is taking to reward creators. Meanwhile, PUMP faces market pressure from emerging competitors like LetsBONKfun and Raydium, which are rapidly gaining market share. Users also express concerns about PUMP's sustainability and potential regulatory risks in the U.S., with discussions extending to the platform's impact on the entire memecoin ecosystem.
COINBASE: Today, Coinbase became the first crypto company to join the S&P 500 Index, replacing Discover Financial Services, sparking widespread industry attention. The entire crypto community views this milestone as a significant development, signaling that crypto assets are further integrating into the mainstream financial system. The news has sparked lively discussions on Twitter, with many users pointing out that this may attract more institutional investors to enter the Bitcoin and other cryptocurrency markets.
XRP: XRP became the focal point of today's crypto discussion, with its significant market movements and strategic advances drawing attention. XRP has surpassed USDT to become the third-largest cryptocurrency by market capitalization, sparking market excitement and discussions about its future potential. The surge in market capitalization and price is believed to be related to increasing institutional interest, deepening strategic partnerships, and its role in the crypto ecosystem. Additionally, XRP's integration into multiple financial systems and its potential as a macro asset class are also seen as key factors driving the current market sentiment.
DYDX: Today's discussions about DYDX mainly focused on the dYdX Yapper Leaderboard launched by KaitoAI. The leaderboard aims to identify the most active community participants, with a total of $150,000 in rewards to be distributed over the first three seasons. This initiative has sparked broad community participation, with many users discussing the potential rewards and the incentive effect on the DYDX ecosystem. Meanwhile, progress on the ethDYDX to dYdX native chain migration and historical airdrop events have also been topics of discussion.
1. "What Is 'ICM'? Holding Up the $4 Billion Market Cap Solana's New Narrative"
Overnight, the hottest narrative in the crypto space has become "Internet Capital Markets," with a host of crypto projects and founders, led by the Solana ecosystem's new Launchpad platform Believe, releasing this phrase. Together with "Believe in something," it has become the new slogan heralding the onset of a bull market. What exactly is the so-called "Internet Capital Market," will it become a short-lived hype phrase like the Base ecosystem's previous Content Coin, and what related targets are available for selection?2.《LaunchCoin Surges 20x in One Day, How Did Believe Create a $200M Market Cap Shiba Inu After Going to Zero?｜100x Retrospective》
LAUNCHCOIN broke through a $200 million market cap today, with the long-lost liquidity and such a high market cap "Memecoin" almost bringing half of the on-chain crypto community CT into the fray. The community is crazily discussing this token, with half of it being FOMO and the other half being FUD. This token, originally issued by Believe founder Ben Pasternak under his personal identity, transformed into a new platform token after a renaming. From once going to zero to a $200 million market cap, what happened in between?May 14 On-chain Fund Flow
After Surging 40%, Has Ethereum Price Peaked Upon Exiting the Craze?
Whether you are an insider or an outsider, these days you must be familiar with the news about Ethereum. The reason is simple, causing Ethereum enthusiasts to sigh with emotion and almost throwing off-guard those who defend Ethereum, Ethereum, with a "3-day surge of 40%," climbed to the top of the Douyin Hot List.
As we all know, Ethereum launched the Pectra upgrade on May 7th. This most significant network upgrade since early 2024 integrates the Prague execution layer hard fork and the Electra consensus layer upgrade, significantly improving Ethereum's performance through 11 improvement proposals. The account abstraction feature (EIP-7702) allows users to flexibly manage wallets through social media accounts or multi-signature schemes, reducing the user threshold, attracting more users and developers. The staking mechanism optimization increases the validator ETH cap from 32ETH to 2048ETH and introduces a flexible withdrawal method, making it easier for institutions and individuals to participate in network security, enhancing the market's confidence in Ethereum's long-term value.
At the same time, Pectra optimized the interaction efficiency of Layer 2 networks such as Arbitrum and Optimism, making transactions faster and cheaper, leading to a surge in on-chain activity. As a crucial step for Ethereum's transition from "2G" to "5G," the Pectra upgrade not only enhances network vitality but also "recharges confidence" in the market, directly driving the price increase.
Related Reading: "Ethereum Skyrockets 22% in One Day, E Enthusiasts Rejoice"
It's not just Ethereum itself, as Wall Street also brought important bullish news.
The world's largest asset management company, BlackRock, proposed to the SEC allowing Ethereum ETFs for staking. This proposal is expected to elevate Ethereum ETFs from a mere investment tool to a bond-like "interest-bearing asset," bringing investors both capital appreciation and passive income, igniting market optimism about Ethereum's future potential.
Specifically, BlackRock has proposed to amend its S-1 filing to allow investors to create and redeem ETF shares directly with Ethereum instead of the U.S. dollar (i.e., in-kind redemption). This move, combined with its $2.9 billion BUIDL Fund launched in March 2024, aims to deepen the integration of traditional finance with blockchain. The BUIDL Fund is a tokenized fund operating on the Ethereum network, investing in traditional assets such as U.S. Treasury bonds. This setup is highly attractive to institutional investors, as they can not only benefit from Ethereum's price appreciation but also earn stable cash flow through staking.
Robert Mitchnick, BlackRock's Head of Digital Assets, stated in a CNBC interview in March 2025 that the addition of staking functionality will significantly enhance the appeal of the Ethereum ETF. He admitted that when the Ethereum spot ETF was launched in July 2024 without staking functionality, the market demand was lackluster, and staking could be the key to reversing this trend.
Meanwhile, the SEC's shifting stance on cryptocurrency regulation has also fueled this upward trend. During the tenure of the previous SEC chairman, the regulatory approach was tough, and staking was strictly viewed through the Howey test as a potential unregistered security. Therefore, when approving the Ethereum spot ETF in May 2024, staking functionality was explicitly prohibited.
However, with Trump back in the White House and Paul Atkins taking over the SEC, there has been a noticeable relaxation in crypto regulation. Apart from BlackRock, ETF issuers such as Invesco Galaxy, VanEck, WisdomTree, and 21Shares have also submitted applications for similar staking and in-kind redemption.
Related reading: "New Chairman Takes Office, SEC Transforms into 'Crypto Daddy' Within 48 Hours"
If staking ETFs are approved, the benefits are likely to go beyond price appreciation. The introduction of staking functionality could redefine the role of crypto assets, making them more similar to traditional financial products that provide returns and value appreciation, thereby driving Ethereum closer to mainstream finance.
Currently, the SEC still needs to address several decisions related to crypto ETFs, including whether to approve ETFs for Solana, XRP, Litecoin, and even Dogecoin. With the calls for an "altcoin season" growing louder, Ethereum's strong performance may just be the beginning of a larger crypto market frenzy.
In addition, the Trump family-related DeFi project WLFI is also bullish on this wave of rise, with frequent on-chain activities. According to on-chain data analyst @ai_9684xtpa's monitoring, a WLFI-related address is currently borrowing coins to go long on ETH, borrowing 4 million U from Aave to buy 1590 ETH at an average price of $2515 per ETH.
For this epic surge of Ethereum after half a year of silence, the community has indeed gained more confidence and hope, which has also led to a revival of the entire altcoin market. However, amidst the joy, there are also voices of pessimism. Below is a summary conducted by BlockBeats based on community discussions.
The optimists point out that the current market structure is similar to the eve of the bull markets in 2016 and 2020, predicting a life-changing surge in the next 3-6 months, where some altcoins may even achieve astonishing single-day gains of up to 40%.
@liuwei16602825 stated that this surge signifies the return of the bull market as a sure thing. There is no need to worry about a pullback. The driving force behind the surge uses a high-cost isolated operation, fearing a drop more than any retail investor and will definitely do everything to support the price.
Related Reading: "Ethereum Leads the Surge Triggering the 'Altcoin Season' Speculation, How Do Traders View the Future Market?"
The bears mainly believe that this surge is different from the bull market of 2021, as the current market lacks the confidence of large-scale retail investors entering and holding positions for the long term, with funds rotating too quickly.
@market_beggar observed that a Bitfinex E/B whale has started to close positions and believes that if this whale maintains its high-speed position-closing operation for the next few days, it can be inferred that the whale no longer sees the upside potential of ETH, preparing to take profits and exit. The closing time will be a key focus going forward.
@FLS_OTC stated that there are still many uncertainties at the macro level, and the liquidity cannot support a major bull market. At this stage, it is a "last hurrah," not a complete reversal, and will continue to remain in a short position.
@off_thetarget believes that after ETH transitioned from POW to POS, it lost the "gold standard" of mining machine power cost support. The staking economic model led to a breakdown in value anchoring. Additionally, the L2 ecosystem (such as Starknet, zkSync, etc.) suffered from liquidity fragmentation, failing to establish an effective capital inflow mechanism, causing the collapse of the split disc pattern. Furthermore, the ETH community's excessive pursuit of technical narratives divorced from real-world needs resulted in a weak ecosystem growth. Therefore, he believes that ETH's intrinsic value system has crumbled, and the price is bound to plummet to the 800-1200 range, with a decisive short position at 1800.
@Airdrop_Guard, based on the core logic of the "High Probability Trading Strategy," where three sets of underlying logic different trading systems (such as volume depletion, price supply-demand, long/short position funding rate, etc.) simultaneously issue a short signal at the same point (2580), creating a high-probability trading opportunity. He emphasizes that these systems must be based on different algorithms and logics (rather than mere technical indicator overlays). The current ETH trend aligns with the short conditions in multiple independent dimensions of his trading system, hence the decision to short.
Overall, Bitcoin still maintains over 54% market dominance, and institutional funds' continued preference for it may limit the altcoin's upward potential. The market's future direction will depend on multiple factors, such as Bitcoin's price trend, global macroeconomic conditions, and whether funds can effectively rotate from Bitcoin to the altcoin sector.
Although Ethereum's recent leadership in the market has brought about optimistic sentiment, investors still need to remain rational as different sectors of altcoins are likely to show divergence in trends. Whether this round of Ethereum's rise will usher in a true altcoin frenzy may require more time and conducive conditions.
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
Arthur Hayes: Why I'm Betting on ETH While the Market Is Obsessed with SOL
CryptoPunks Changes Hands Twice, Did the Originator of NFTs Finally Find Its "Forever Home" This Time?
May 16 Key Market Information Gap, A Must-Read! | Alpha Morning Report
Key Market Intelligence on May 14th, how much did you miss out on?
1.Binance Alpha Launches HIPPO, BLUE, and Other Tokens
2.Believe Ecosystem Tokens See General Rise, LAUNCHCOIN Surges Over 250% in 24 Hours
3.Tiger Securities Introduces Cryptocurrency Deposit and Withdrawal Service, Supports Mainstream Cryptocurrencies such as BTC and ETH
4.Current Bitcoin Rally Possibly Driven by Institutions, Retail Traders Yet to Join
5.Binance Wallet's New TGE Privasea AI Participation Requires a 198 Point Threshold, with a Point Consumption of 15
Source: Overheard on CT (tg: @overheardonct), Kaito
PUMP: Today's discussions about PUMP focus on its new creator revenue-sharing model: the platform will allocate 50% of PumpSwap revenue to token creators, sparking varied reactions from users. Some criticize the move as insufficient or even misleading, while others view it as a positive step the platform is taking to reward creators. Meanwhile, PUMP faces market pressure from emerging competitors like LetsBONKfun and Raydium, which are rapidly gaining market share. Users also express concerns about PUMP's sustainability and potential regulatory risks in the U.S., with discussions extending to the platform's impact on the entire memecoin ecosystem.
COINBASE: Today, Coinbase became the first crypto company to join the S&P 500 Index, replacing Discover Financial Services, sparking widespread industry attention. The entire crypto community views this milestone as a significant development, signaling that crypto assets are further integrating into the mainstream financial system. The news has sparked lively discussions on Twitter, with many users pointing out that this may attract more institutional investors to enter the Bitcoin and other cryptocurrency markets.
XRP: XRP became the focal point of today's crypto discussion, with its significant market movements and strategic advances drawing attention. XRP has surpassed USDT to become the third-largest cryptocurrency by market capitalization, sparking market excitement and discussions about its future potential. The surge in market capitalization and price is believed to be related to increasing institutional interest, deepening strategic partnerships, and its role in the crypto ecosystem. Additionally, XRP's integration into multiple financial systems and its potential as a macro asset class are also seen as key factors driving the current market sentiment.
DYDX: Today's discussions about DYDX mainly focused on the dYdX Yapper Leaderboard launched by KaitoAI. The leaderboard aims to identify the most active community participants, with a total of $150,000 in rewards to be distributed over the first three seasons. This initiative has sparked broad community participation, with many users discussing the potential rewards and the incentive effect on the DYDX ecosystem. Meanwhile, progress on the ethDYDX to dYdX native chain migration and historical airdrop events have also been topics of discussion.
1. "What Is 'ICM'? Holding Up the $4 Billion Market Cap Solana's New Narrative"
Overnight, the hottest narrative in the crypto space has become "Internet Capital Markets," with a host of crypto projects and founders, led by the Solana ecosystem's new Launchpad platform Believe, releasing this phrase. Together with "Believe in something," it has become the new slogan heralding the onset of a bull market. What exactly is the so-called "Internet Capital Market," will it become a short-lived hype phrase like the Base ecosystem's previous Content Coin, and what related targets are available for selection?2.《LaunchCoin Surges 20x in One Day, How Did Believe Create a $200M Market Cap Shiba Inu After Going to Zero?｜100x Retrospective》
LAUNCHCOIN broke through a $200 million market cap today, with the long-lost liquidity and such a high market cap "Memecoin" almost bringing half of the on-chain crypto community CT into the fray. The community is crazily discussing this token, with half of it being FOMO and the other half being FUD. This token, originally issued by Believe founder Ben Pasternak under his personal identity, transformed into a new platform token after a renaming. From once going to zero to a $200 million market cap, what happened in between?May 14 On-chain Fund Flow
After Surging 40%, Has Ethereum Price Peaked Upon Exiting the Craze?
Whether you are an insider or an outsider, these days you must be familiar with the news about Ethereum. The reason is simple, causing Ethereum enthusiasts to sigh with emotion and almost throwing off-guard those who defend Ethereum, Ethereum, with a "3-day surge of 40%," climbed to the top of the Douyin Hot List.
As we all know, Ethereum launched the Pectra upgrade on May 7th. This most significant network upgrade since early 2024 integrates the Prague execution layer hard fork and the Electra consensus layer upgrade, significantly improving Ethereum's performance through 11 improvement proposals. The account abstraction feature (EIP-7702) allows users to flexibly manage wallets through social media accounts or multi-signature schemes, reducing the user threshold, attracting more users and developers. The staking mechanism optimization increases the validator ETH cap from 32ETH to 2048ETH and introduces a flexible withdrawal method, making it easier for institutions and individuals to participate in network security, enhancing the market's confidence in Ethereum's long-term value.
At the same time, Pectra optimized the interaction efficiency of Layer 2 networks such as Arbitrum and Optimism, making transactions faster and cheaper, leading to a surge in on-chain activity. As a crucial step for Ethereum's transition from "2G" to "5G," the Pectra upgrade not only enhances network vitality but also "recharges confidence" in the market, directly driving the price increase.
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It's not just Ethereum itself, as Wall Street also brought important bullish news.
The world's largest asset management company, BlackRock, proposed to the SEC allowing Ethereum ETFs for staking. This proposal is expected to elevate Ethereum ETFs from a mere investment tool to a bond-like "interest-bearing asset," bringing investors both capital appreciation and passive income, igniting market optimism about Ethereum's future potential.
Specifically, BlackRock has proposed to amend its S-1 filing to allow investors to create and redeem ETF shares directly with Ethereum instead of the U.S. dollar (i.e., in-kind redemption). This move, combined with its $2.9 billion BUIDL Fund launched in March 2024, aims to deepen the integration of traditional finance with blockchain. The BUIDL Fund is a tokenized fund operating on the Ethereum network, investing in traditional assets such as U.S. Treasury bonds. This setup is highly attractive to institutional investors, as they can not only benefit from Ethereum's price appreciation but also earn stable cash flow through staking.
Robert Mitchnick, BlackRock's Head of Digital Assets, stated in a CNBC interview in March 2025 that the addition of staking functionality will significantly enhance the appeal of the Ethereum ETF. He admitted that when the Ethereum spot ETF was launched in July 2024 without staking functionality, the market demand was lackluster, and staking could be the key to reversing this trend.
Meanwhile, the SEC's shifting stance on cryptocurrency regulation has also fueled this upward trend. During the tenure of the previous SEC chairman, the regulatory approach was tough, and staking was strictly viewed through the Howey test as a potential unregistered security. Therefore, when approving the Ethereum spot ETF in May 2024, staking functionality was explicitly prohibited.
However, with Trump back in the White House and Paul Atkins taking over the SEC, there has been a noticeable relaxation in crypto regulation. Apart from BlackRock, ETF issuers such as Invesco Galaxy, VanEck, WisdomTree, and 21Shares have also submitted applications for similar staking and in-kind redemption.
Related reading: "New Chairman Takes Office, SEC Transforms into 'Crypto Daddy' Within 48 Hours"
If staking ETFs are approved, the benefits are likely to go beyond price appreciation. The introduction of staking functionality could redefine the role of crypto assets, making them more similar to traditional financial products that provide returns and value appreciation, thereby driving Ethereum closer to mainstream finance.
Currently, the SEC still needs to address several decisions related to crypto ETFs, including whether to approve ETFs for Solana, XRP, Litecoin, and even Dogecoin. With the calls for an "altcoin season" growing louder, Ethereum's strong performance may just be the beginning of a larger crypto market frenzy.
In addition, the Trump family-related DeFi project WLFI is also bullish on this wave of rise, with frequent on-chain activities. According to on-chain data analyst @ai_9684xtpa's monitoring, a WLFI-related address is currently borrowing coins to go long on ETH, borrowing 4 million U from Aave to buy 1590 ETH at an average price of $2515 per ETH.
For this epic surge of Ethereum after half a year of silence, the community has indeed gained more confidence and hope, which has also led to a revival of the entire altcoin market. However, amidst the joy, there are also voices of pessimism. Below is a summary conducted by BlockBeats based on community discussions.
The optimists point out that the current market structure is similar to the eve of the bull markets in 2016 and 2020, predicting a life-changing surge in the next 3-6 months, where some altcoins may even achieve astonishing single-day gains of up to 40%.
@liuwei16602825 stated that this surge signifies the return of the bull market as a sure thing. There is no need to worry about a pullback. The driving force behind the surge uses a high-cost isolated operation, fearing a drop more than any retail investor and will definitely do everything to support the price.
Related Reading: "Ethereum Leads the Surge Triggering the 'Altcoin Season' Speculation, How Do Traders View the Future Market?"
The bears mainly believe that this surge is different from the bull market of 2021, as the current market lacks the confidence of large-scale retail investors entering and holding positions for the long term, with funds rotating too quickly.
@market_beggar observed that a Bitfinex E/B whale has started to close positions and believes that if this whale maintains its high-speed position-closing operation for the next few days, it can be inferred that the whale no longer sees the upside potential of ETH, preparing to take profits and exit. The closing time will be a key focus going forward.
@FLS_OTC stated that there are still many uncertainties at the macro level, and the liquidity cannot support a major bull market. At this stage, it is a "last hurrah," not a complete reversal, and will continue to remain in a short position.
@off_thetarget believes that after ETH transitioned from POW to POS, it lost the "gold standard" of mining machine power cost support. The staking economic model led to a breakdown in value anchoring. Additionally, the L2 ecosystem (such as Starknet, zkSync, etc.) suffered from liquidity fragmentation, failing to establish an effective capital inflow mechanism, causing the collapse of the split disc pattern. Furthermore, the ETH community's excessive pursuit of technical narratives divorced from real-world needs resulted in a weak ecosystem growth. Therefore, he believes that ETH's intrinsic value system has crumbled, and the price is bound to plummet to the 800-1200 range, with a decisive short position at 1800.
@Airdrop_Guard, based on the core logic of the "High Probability Trading Strategy," where three sets of underlying logic different trading systems (such as volume depletion, price supply-demand, long/short position funding rate, etc.) simultaneously issue a short signal at the same point (2580), creating a high-probability trading opportunity. He emphasizes that these systems must be based on different algorithms and logics (rather than mere technical indicator overlays). The current ETH trend aligns with the short conditions in multiple independent dimensions of his trading system, hence the decision to short.
Overall, Bitcoin still maintains over 54% market dominance, and institutional funds' continued preference for it may limit the altcoin's upward potential. The market's future direction will depend on multiple factors, such as Bitcoin's price trend, global macroeconomic conditions, and whether funds can effectively rotate from Bitcoin to the altcoin sector.
Although Ethereum's recent leadership in the market has brought about optimistic sentiment, investors still need to remain rational as different sectors of altcoins are likely to show divergence in trends. Whether this round of Ethereum's rise will usher in a true altcoin frenzy may require more time and conducive conditions.
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