The Breakdown - Friday Five: SEC Turns Pro-Crypto, Tokenization Race Heats Up, Gemini IPO

Episode Date: September 13, 2025

This week’s Friday Five dives into the accelerating cryptoization of finance. SEC Chair Paul Atkins signaled a new era of pro-innovation policy, extending beyond crypto to AI and agentic trading. Senate Democrats introduced their own market structure framework, opening the door to bipartisan progress. Meanwhile, NASDAQ seeks approval for tokenized securities, and BlackRock is moving to tokenize ETFs, underscoring the tokenization race among financial giants. We also cover Gemini’s IPO debut on NASDAQ and what it signals about investor appetite, plus the Fed’s looming rate cuts as weak jobs data clashes with sticky inflation. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Friday, September 12th, and that means it's time for the Friday 5. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly. slash breakdown pod. All right, friends, back with another Friday 5. Today, I think the big thing is that we are very clearly shifting into another gear when it comes

to the cryptoization of the financial system. We have it on display today in comments from the SEC chair in policy, in new actions from BlackRock and NASDAQ. So lots to discuss. Let's dive in. Good morning, everybody. Happy Friday. And welcome to the Friday 5. We've got a lot to talk about here. Not the biggest week, but still, you know, that's all relative because every week we get news it would blow your mind. Yeah, yeah. I think we are firmly in the transitional period between summer and fall. It's like, you know, I think we talked about this last week. I always expect September 1 hits, you know, our Labor Day is over and we're back, you know, zero to 90 overnight.

But it really does take a lot of this month to get rolling. But there's a lot that happened this week that suggests we are rolling right into it. So lots to talk about. Absolutely. Yeah. let's start. We got SEC Chairman Paul Atkins saying crypto's time has come. It wasn't actually just about crypto. And since you obviously have both crypto and AI podcast, you're the perfect person to discuss this because he also really dove into agentic trading and how AI would impact markets

and the technology that we use to run them. So this was really, I guess, a continuation of things we've heard from the SEC and Paul Atkins before, but really an affirmation that. that they're aware of what's coming in the future. Yep. It was also in Europe talking to the European Union as they were talking about how the European Union could be an important place for markets in the future. And Atkins was basically like, kicks down the podium

and is like, sorry, America's got this, plants an American flag in the middle of the thing. But look, I think you could chart the SEC's trajectory over the last year from where it started, which is like genuinely antagonistic and hostile to new things. And obviously, crypto was enemy number one. But if you looked at Gensler's comments about AI, he was frenetically scared of the idea that if

AI bots started trading, that basically everyone was going to do the same trades because they would all come to the same conclusion. Right. He was scared. His disposition was to be scared of new things. And then we get this new regime where crypto and sort of innovation more broadly are something to be encouraged, right? But then there's this new era, which we've really hit over the last few weeks.

And this speech is a further kind of encapsulation. of, which is not only are we going to create safe space for innovation, we are going to think about how that innovation can change the mechanisms by which we function and the way that we structure these markets. It's not just let crypto have its chance, let I have its chance. It's let's get out ahead of the opportunities that these things represent in a bigger way. And basically, every speech that Atkins does moves farther down that narrative path. We're not getting any more of the like rules of the road and sensible guidelines and stuff like that. It's all about what the future could be at this point.

It's incredible to have a forward-looking regulator on technology and especially on our beloved crypto technology. It's almost half to pinch yourself still. Yeah. Yeah, no. And as we've talked about before on the show, as we saw with Genzer, there's a lot of damage that these folks can do

and there's a lot of really powerful things that don't require Congress that can happen with someone who's forward-thinking like this. So hopefully we continue to see sort of action that backs up the rhetoric. Yeah, you literally just brought up Gensler, and I had to quickly grab this story because I saw it in passing yesterday,

but Coinbase seeks court order over SEC's alleged deletion of Gensler texts. Apparently, they have Gensler purposely deleting documents and texts. Oh, my God. Of course they do. Yeah, I missed that one. I totally, when you said his name, I thought there was news about this yesterday.

and I had to bring it up quickly, but we won't discuss that. Just show you how bad the Gary Gensler era really was. The next story here, Senate Democrats, layout framework for crypto market structure bill. This is sort of the usual suspects on the left side of the aisle, Kirsten Gillibrand, of course, Corey Booker, Gallego, Mark Warner. But laying out a substantive framework, as they call it, for what market structure should look like. I think a bit of surprise that it basically came from the Democrats rather than the Republicans. Is this meaningful?

Is this just another small step in the process of getting to a market structure bill? How do you read this? It's a small step that is super meaningful, is the short of it. So the place that we have been is that the Republicans have proposed, we kind of have two Republican versions of this bill. We have a House version and then we have a Senate version. We've had tons of comments from leading Republicans in the Senate around how they think those things will be reconciled, right?

Recently, we had Senator Lummus saying that they were probably going to to take a lot of what came through the House bill as the core version, given how much sort of bipartisan support it had. And the thing they were waiting on was whether Democrats were even going to be willing to advance the conversation. A couple weeks ago, we had Tim Scott talking about how he was basically frenetically working behind the scenes to try to create some cloud cover where the Democrats who wanted sensible market structure legislation could actually go do it, right? And they were really trying to deal with, you know, it seemed like the big political sticking point, was the president and his family's crypto activities. So what's significant about this is two things.

One, it is now a Democrat version of this legislation that can be debated, reconciled, compromised on, negotiated around, which they didn't have before, right? If you don't have two versions of the thing from two different sides, you can't negotiate to find something in the middle. And that was not a guarantee that we were even going to get that, right? It could have just been obstinate and held it up. So that's very significant. Second, the read of basically every. is that it's a fairly, there's not so much space that it looks like it's dead in the water. Like there are absolutely things that are going to be debates and discussions, but it's workable to get to some legislation, at least the way that it looks.

I think that there is probably a lot of behind the scenes work. I think there's a behind the scenes triumph that we're not even really getting to enable this set of Democrats to come out and move this forward. It really hasn't been that long. We're not that delayed, actually. We're just back in session now. So there shows some serious intent. And also, yes, there were some of the usual suspects, Corey Booker and Kirsten Gillibrand,

but Mark Warner can go a lot of different ways on things. You know, these folks are not, they're not Richie Torres, let's put it that way. And so I think that it's very promising. And you can tell that because all of the comments from the Republican colleagues are basically like, yes, this is the spirit of bipartisanship. Let's go. This is good. You know, there's no quipping and, you know, sniping.

It's all positive sentiment around this, which is, you know, obviously the opposite of basically every legislation we get. So I think there's reason to be bullish and optimistic. Yeah. And speaking of positive sentiment, we have the two other stories here from the title. NASDAQ seeks SEC approval for tokenized trading. The exchange could start offering tokenization of securities, including exchange traded products and stocks next year.

And of course, if you're going to see NASDAQ making an announcement like that, BlackRock seeks to tokenize ETFs after Bitcoin Fund breakthrough. So a lot of talk of tokenization here. BlackRock obviously wanting to tokenize their. own ETFs, especially if we believe in a future where everything is tokenized and there's going to be incumbent like the NASDAQ competing. Yeah, you know, it's funny. The real world assets was the odds-on favorite for big key theme, you know, a few years ago. As we were speculating around what would be the next big thing. And it really feels like it's finally coming to fruition.

It's coming from all sides. I don't think we have it on the list, but you had a bunch of crack in X-stocks news, and that product is going super well for them in Europe. It is clearly sort of the moment where this next phase of moving towards tokenization of real world assets is coming to fruition. And by the way, going back to Akin's speech, he basically said everything's going to move on chain. Like all this infrastructure is going to move on chain. And so you're hearing it just from all sides. And certainly the big financial institutions are lining up to get their piece of the pie. Yeah, we knew it was going to come. BlackRock's been talking about the tokenization of equities and everything since before they even filed for the ETF, but it seems like the competition

is certainly heating up, and we know that this is coming. I mean, we've had countless stories about these real-old assets being tokenized over the past few weeks. Some are small, but even, you know, Galaxy tokenizing their own stock natively on Solana, not in a wrapped version, was a meaningful step. Yeah, this was always one of those things that was going to be, it didn't exist until it existed, and then it was insanely obvious, and people won't be able to imagine a time before it. Just from a sheer technology improvement and all the things that you get to do when these things are tokenized.

There's just so much obvious benefit. Again, I think we've talked about before, the fact that that doesn't necessarily mean that value accrues to the base layer chains in the way that sort of our bag pumping desires have always wanted. But if you are just interested in crypto infrastructure, infiltrating the wider world,

this, I think, will be, in retrospect, incredibly inevitable. Yeah, now we've got to talk about IPOs because it's a big day. The story we had pulled up was figure markets, figure stock pops after IPO, but Klarna Circle bullish crash call for caution. But I think the bigger story, obviously, is a Gemini's going public today. Yep.

Speaking of NASDAQ, so Gemini is an interesting one. There's a few things going on. One is, broadly speaking, I think everyone is using the IPO windows or the IPOs to try to get a sense of where market enthusiasm slash media is, We're on that spectrum, from enthusiasm to mania we are, right? For me, bullish was the one that seemed to sort of indicate maybe more mania than some of the others. Circle was really instructive in the sense that it let us know how significant the stable coin theme was to markets. Eitoro was the one that sort of signaled that there was more excitement in the markets than we maybe had thought.

And now we are kind of on the other side of that hump where it's like, is there still enthusiasm? And, you know, things have been a little bit more skeptical, cautious, you know, worried about bubbles, all that sort of stuff. That's kind of been more of the dominant narrative on Wall Street over the past month. And so it's a really good bellwether to understand what the state of play is. Now, it's a really mixed story right now. I mean, the article that you just pulled up kind of tells that mixed story. These things had big pops. They went up for a while.

They're down from that. But it's not like they're cratered or anything like that. They've moved back down to sort of reasonable valuations, relative. to where they started, by and large, if you kind of take them as a whole, figure had a big pop. And now the Gemini, I think, is as a more interesting question for folks because there's a bunch of different ways to read it. You know, Gemini's financials were not exciting to people, right? They actually had a loss in the first six months of the year.

They were down from 2024 in terms of revenue. But NASDAQ is in the process of making something like a $50 million in strategic investment into them. They're going to work with Gemini on custody and infrastructure. NASDAQ, meanwhile, as we just saw, is also trying to get into the tokenization game and trying to sort of line up based on the guidance that we've had from the SEC and the CFTC recently about where different types of crypto assets could trade. And so Gemini has this counter narrative of, you know, potentially sort of big alliances

and providing infrastructure for some other big players. So we'll see because let's put it this way. If Gemini pops, it's going to be some combination of an indication of continued and for anything crypto, continued enthusiasm for anything innovative, continued enthusiasm for anything IPO right now, but also potentially excitement about this theme of sort of tokenization and collaborations with the financial system. Yeah, I think everybody anticipates that it will pop, if E Toro and bullish and figure markets. I had the CEO of figure markets on a week ago. They went public. I mean, this is incredible, but they raised $787 million for their IPO.

Gemini is actually much smaller. I think they raised $425 million. So you've got to assume Gemini and the Winklevite twins have extreme name brand power. Regardless of numbers and earnings, we know that we are in a post-data environment here for IPOs, right? Because bullish would not have gone absolutely nuts. So I guess the key question is what that first article is asking is that, is this just a cautionary tale? Are we now in the old ICO alt season of crypto public stocks where you get this first initial pump and then everything sort of diminishes back to zero?

I mean, have you been looking at these treasury stocks? I mean, the minute they announce when they don't own anything, they go up a few hundred percent and then all the way back in a matter of days. It really looks like the all coin charts of like the late cycle in 2021. Yeah, it certainly does. I mean, there's a lot of reasons. I think they're fairly substantively different still than a lot of these things going public, although bullish is the weird exception where I think a lot of the justification for

bullish was their big fat stack of Bitcoin that they still have, you know, as sort of a backstop. But, you know, who knows? Again, it is a bellwether for something exactly what the signal will be is going to be hard to tell. It's probably going to take some number of weeks to really get a full sense of the picture. But I still do think that there will be a vibe around it that will give us a sense of whether, whether things are as enthusiastic as they were even a few weeks ago. Yeah, the final sort of topic we have here, not necessarily a story in and of itself, but it's obviously the economic situation and the odds of Fed cuts and the odds of how large Fed cuts will be, which obviously wraps in an entire narrative of what data are they using,

is it lagging, are they looking forward and is the data even real? Bad Jobs Report raises new alarms among Republicans over Trump's tariff policies. Okay. But those same bad jobs reports have the markets excited because it means we're going to get rate cuts. There's a whole conversation about AI and whether that's the reason for these job reports. And, of course, we had PPI come in hot and CPI come in sort of hot. So much of back. Yeah, I mean, this is a classically difficult situation for the Fed.

Holding aside all of the intense political pressure surrounding them, this is sort of like the first. nudging indicators towards stagflation in some ways, right? Where you have inflation that is thorny and persistent, or at least more thorny and persistent than you like, but also the labor market really weakening. And, you know, it's very difficult in those situations to obviously decide where you're going to place your chips. And then you add to that all of the complication around not being real clear

or sure of what the data is actually telling you, particularly on jobs, and also just the intense political pressure surrounding it. The market is still totally convinced, though. What they saw in the CPI was not enough to overcome what they saw in jobs reports, which has been pretty universally bad. It's like, you know, we have one sort of, you know, a few mildly higher than we'd like CPI prints versus a whole set of stories of real weakness in the job market. It's very clear that the market believes that between the comparative intensity of

those signals as well as political pressure that we are headed towards a rate cut. In fact, right now the market is pricing in a 0% chance of no cuts, a 92 and a half percent chance of one cut and a 7.5% chance now of two cuts, of a double cut at this meeting. So it's not impossible that they get it wrong, but this far out, I mean, this is next week to be this far off when all the kind of main data is in would be pretty abnormal. I guess the question then becomes do they just give us the 25? He kind of remains hawkish. We're going to be data driven moving forward.

We've made this decision based on what we now. We have no commitment to future cuts. Yeah, it's going to be a hawkish time. Yeah, I think that there is enough pointing in that direction that it gives Powell Cloud Cover to succumb a little bit to political pressure is sort of the thing. You know, like it is a reasonable in this. I don't think that there is anyone who could screamingly argue based on what we're seeing, especially with jobs, that a cut isn't justified at all, right?

Like, there's reasonable people can disagree about this, but it's not a clear cut. You know, if he's doing it, he's just coutowing to political pressure. And so, you know, at this stage, why not? You've basically spent all year kind of bucking against that pressure and betting on slowness, you know, like I don't think anyone's going to accuse him of moving too fast if this ends up not being the right decision. You can always back up. And he's, you know, Powell always reserves the right to shift his opinion again.

What's crazy is so many people are saying it could be 50 points now, obviously, because of the job revisions and how weak it is. I think that would scare that crap out of the market, actually. Yeah, Powell would never do that. People would panic so bad. Everything's broken and sell everything. Yeah. Yeah. There's no way.

There's no way. The way that Powell would give us the double cut is by indicating that they're likely to cut again, you know, that this is not a one-time thing. Look, everything with this one is going to be about what he's saying. says, you know, sometimes the press conference and the, you know, the commentary after is less significant than the decision. Sometimes it's more significant. I think that this is likely to be one of those times that it's more significant because everyone's assuming 25. I'm pretty sure we're going to get 25. What they'll be watching for and you will see wild volatility, you know, while he's actually up there at the podium is what he says about what comes next,

you know, and that's where the market's going to be trying to figure it out. Totally agree. Well, as Matt Hogan said, it seems that recessions and bear markets have become illegal. So I'm just going to default to that setting and ride the bullish wave of insane euphoria and FOMO while I can't. Yep. Because why not? And Bitcoin's going to a million dollars by October. You heard it here first. No, I'm just kidding.

But, you know, we still have people saying things like that. All right. I think we actually discussed at all. Is there anything else we missed? No. No. Although, if anyone ever wants to talk about why I think there's a strong, counter narrative that people aren't bullish enough about the stock market.

Come over to my show because I'm talking about that. Go to his show because I have no opinion on that right now. Dude, check out at LW. Check out the breakdown. And we will see you next week for the next Friday 5. Thank you, man. Later, guys.