Blockchain & Digital Assets Weekly Briefing - Week 51
- danae317
- Dec 19, 2025
- 13 min read
Week ending 19th December 2025
U.S. regulators have granted conditional FDIC deposit insurance to Erebor Bank, a Thiel-backed crypto lender. JPMorgan launches an Ethereum-based tokenized money fund, while the main U.S. clearinghouse begins tokenizing Treasuries. Coinbase expands beyond crypto into stocks, prediction markets, and AI tools. Meanwhile, the FDIC proposes clear rules for bank-linked stablecoin issuance.
U.S. regulators grant conditional FDIC deposit insurance to Peter Thiel’s Erebor Bank.
JPMorgan launches tokenized money fund on Ethereum for qualified investors.
DTCC, the company that clears nearly all U.S. trades, is tokenizing U.S. treasuries.
Coinbase expands platform beyond crypto into stocks, prediction markets, AI tools and more.
FDIC proposes clear rules for bank-linked stablecoin issuance in the U.S. banking system.
U.S. regulators grant conditional FDIC deposit insurance to Peter Thiel’s Erebor Bank
On December 16, 2025, the Federal Deposit Insurance Corporation (FDIC) voted to conditionally approve deposit insurance for Erebor Bank N.A., a new national bank with significant backing from Silicon Valley investors including Peter Thiel’s Founders Fund, co-founder Palmer Luckey, and Joe Lonsdale’s 8VC.
This decision marks a critical milestone in the application process for Erebor, which also received preliminary conditional approval for its national bank charter from the Office of the Comptroller of the Currency (OCC) in October 2025.
Under the FDIC’s terms, the bank must meet several regulatory conditions before it can operate. These include:
Maintaining at least $276 million in initial paid-in capital.
Sustaining a Tier 1 leverage ratio of at least 12 % for its first three years.
Implementing procedures to comply with FDIC rules for processing deposit accounts in the event of failure.
Should Erebor fall below capital thresholds, it must enforce its Capital Call Agreement to restore adequate capital.
A Capital Call Agreement is a contractual provision or agreement that obliges investors to contribute additional funds when requested by an investment entity, up to the amount they have committed. It specifies when, how, and under what conditions those additional capital contributions must be made. |
If Erebor does not formally open and establish the bank within 12 months, the FDIC’s conditional approval automatically expires unless extended by the agency.
Context and Industry Significance
Erebor aims to serve clients in technology, payments, investment, defense sectors, and virtual-currency markets, bridging traditional banking functions with digital-asset-related services — including potentially stablecoin-related activities.
The FDIC’s and OCC’s actions come at a time of notable regulatory activity around digital assets and financial innovation. For instance, the OCC has also issued conditional national trust bank charters to 5 other crypto-related firms (Circle, Fidelity, Paxos, BitGo & Ripple), though those charters do not include FDIC insurance.
Critical Observations
Regulatory Prudence vs. Innovation: The FDIC’s conditional approach — imposing capital and governance requirements — reflects a cautious posture toward novel banking models involving digital assets and crypto-native customers.
Timing and Scrutiny: Erebor’s progress through both charter and insurance stages has occurred relatively quickly compared with traditional de novo bank applications, which can take significantly longer to clear regulatory thresholds; this speed has drawn commentary from industry observers.
Risk Considerations: The requirement for a high leverage ratio and detailed compliance plans suggests regulators are sensitive to risks, including those highlighted by past industry failures (such as Silicon Valley Bank’s collapse in 2023).
In sum, the FDIC’s conditional approval for deposit insurance for Erebor Bank represents a tentative regulatory embrace of a new type of banking institution — one that blends traditional banking safeguards with the demands and risks of digital assets. Final operational approval will depend on Erebor satisfying the conditions set by regulators and securing full charter authorization.
JPMorgan launches tokenized money fund on Ethereum for qualified investors
JPMorgan Asset Management is taking a significant step into digital assets by introducing its first tokenized money fund, My OnChain Net Yield Fund (MONY). The $4 trillion asset manager plans to seed the fund with $100 million of its own capital before opening it to qualified external investors, including individuals with at least $5 million in assets and institutions with a minimum of $25 million. The fund requires a $1 million minimum investment.
MONY will utilize the Ethereum blockchain to record and manage investor transactions, marking a shift from traditional money market fund operations. By leveraging blockchain technology, JPMorgan aims to streamline processes, enhance transparency, and reduce reliance on conventional intermediaries.
In a tokenized fund like MONY, key participants remain in place: the fund manager (JPMorgan), custodian bank (such as BNY Mellon for BlackRock's BUIDL), and the platform issuing and managing the digital tokens (Kinexys or Securitize for BUIDL). However, blockchain technology automates several functions previously handled manually, including ownership records, transfers, and dividend payments through smart contracts.
The tokenization model reduces or eliminates the need for several middlemen:
Transfer agents: Replaced by an immutable, automated ledger, lowering recordkeeping costs.
Distributors/brokers: On-chain peer-to-peer transfers minimize reliance on intermediaries, enabling 24/7 transactions.
Fund administrators: Smart contracts streamline net asset value (NAV) calculations, redemptions, and dividend distributions.
Clearing houses/wire systems: Transactions settle instantly on-chain, eliminating traditional T+1 delays.
Beyond operational efficiency, tokenization could expand the scope of investor access and liquidity. The on-chain infrastructure provides faster reconciliation, reduces errors, and could lower overall management costs, potentially increasing returns for investors. It also allows greater flexibility in reporting and auditing, as blockchain records are transparent and immutable.
JPMorgan’s move mirrors broader trends in institutional finance, where traditional asset managers are exploring blockchain to modernize back-office operations. Funds such as BlackRock's BUIDL have already started experimenting with similar structures on Ethereum, highlighting a shift towards on-chain asset management solutions. If successful, these tokenized funds could redefine how money market funds operate, offering a blend of traditional financial security and digital asset efficiency.
By adopting Ethereum, JPMorgan and other financial institutions exploring tokenized funds aim to enhance efficiency, reduce operational costs, and modernize the infrastructure for traditional asset management products.
DTCC, the company that clears nearly all U.S. trades, is tokenizing U.S. treasuries
The company that sits at the center of U.S. financial market plumbing is taking a concrete step toward blockchain-based securities.
DTCC, the post-trade infrastructure that clears and settles the vast majority of U.S. securities transactions, has announced a partnership with Digital Asset Holdings to begin tokenizing U.S. Treasury securities held in its custody. The initiative will use distributed ledger technology to represent ownership of Treasuries on a blockchain network, while keeping the underlying assets within the existing regulated custody and settlement framework.
Crucially, the move follows a recent No-Action Letter (NAL ) from the U.S. Securities and Exchange Commission (SEC), which allows one of DTCC's subsidiary, The Depository Trust Company (“DTC”), to run a tokenization pilot without facing enforcement action, provided specific conditions are met. Together, the announcement and regulatory clearance mark one of the most significant steps to date toward bringing blockchain technology into the core of traditional financial markets.
What DTCC and Digital Asset Plan to Do
Under the new collaboration:
DTCC and Digital Asset will initially use the Canton Network to issue digital tokens representing certain DTC-custodied securities, starting with a subset of U.S. Treasury securities.
The first minimum viable product (MVP) is targeted for a controlled production environment in the first half of 2026.
The project aims to broaden over time, potentially covering more asset types (SEC's authorization given for major ETFs and Russell 1000 stocks) and increasing participation based on market demand.
DTCC plans to use its ComposerX technology suite to support the tokenization, integrating traditional trade-processing infrastructure with distributed ledger technology (DLT).
Strategic Intent
According to DTCC’s leadership, the partnership is intended to bridge traditional markets with digital models, improve operational efficiency and transparency, and unlock new liquidity and product innovation pathways. The phased approach prioritises regulatory compliance and market readiness rather than immediate broad rollout.
“This collaboration creates a roadmap to bring real-world, high-value tokenization use cases to market, starting with U.S. Treasury securities and eventually expanding to a broad spectrum of DTC-eligible assets across network providers” said Frank La Salla, CEO of DTCC
SEC No-Action Letter Enables the Initiative
Critical to this development is the NAL issued by the SEC to DTC’s tokenization service. Under this letter:
The SEC’s Division of Trading and Markets agreed not to recommend enforcement action against DTC for launching a pilot (“Preliminary Base Version”) securities tokenization program on certain approved blockchains.
The pilot allows DTC participants to have their security entitlements recorded using DLT rather than only through the existing centralized ledger.
Participation is voluntary, requiring institutions to register blockchain wallet addresses on approved networks to hold tokenized entitlements.
Tokens can be transferred directly between participants’ wallets without reverting to traditional clearing each time, while DTC continues to maintain official records and oversight.
The letter effectively allows the pilot to operate within defined regulatory constraints—such as approved blockchain standards and ongoing reporting—without triggering enforcement under key securities laws like Regulation SCI or Exchange Act requirements.
In remarks accompanying the letter, SEC Commissioner Hester M. Peirce noted that this development is an incremental step toward on-chain markets and that it reflects a cautious, experimental approach by regulators to work with incumbent market infrastructures.
How DTCC Tokenization Actually Works
A) Legal & Official Record (Off-Chain)
DTCC / DTC
Holds the official record of ownership
Maintains participant accounts
Enforces securities law and market rules
Remains the system of record
➡️ Nothing changes here — this is the anchor of the system.
B) Tokenization Layer (DTCC-Operated)
DTC Tokenization Service
Issues tokens that represent DTC entitlements
Applies DTCC governance and transfer rules
Limits activity to approved market participants
Reconciles blockchain activity with DTC records
➡️ This layer bridges traditional finance and blockchains.
C) Blockchain Layer (Approved Networks)
Distributed Ledgers
Canton Network (initial integration)
Potential future public or private blockchains (only if approved)
What happens here:
Participants register approved wallets
Token transfers are executed
Blockchain provides transaction execution and synchronization
➡️ Blockchains act as rails — not as the legal authority.
DTCC’s model keeps legal ownership and regulatory control off-chain, uses a DTCC-governed token layer in the middle, and allows approved blockchains to act as controlled transaction rails rather than replacing the existing market infrastructure.
DTCC Tokenization vs “True” On-Chain Treasuries
DTCC Tokenized Treasuries
Legal record: DTCC / DTC
Access: Permissioned institutions only
Blockchain role: Execution and messaging
Settlement authority: DTCC rules
Composability*: Limited
Regulatory posture: SEC no-action relief
True On-Chain Treasuries
Legal record: Blockchain
Access: Often open or semi-open
Blockchain role: Issuance, settlement, record-keeping
Settlement authority: Network consensus
Composability*: High (DeFi-native)
Regulatory posture: Varies, often unclear
DTCC is not putting Treasuries on any blockchain in the DeFi sense. It is allowing blockchains to be used inside a tightly controlled, regulated framework, where DTCC remains in charge of ownership, compliance, and settlement.
*Composability Composability refers to the ability for a digital asset to be used automatically by other applications without permission, bilateral agreements, or manual integration. In practice, it means:
This concept originates from public smart-contract blockchains, especially Ethereum. Concrete example (Ethereum-style composability) If a Treasury token is natively on-chain and composable:
This is often called “money legos.” |
Why This Matters
Institutional Adoption Signal: DTCC settles an enormous volume of global transactions and is deeply embedded in traditional markets. Its move toward tokenization suggests institutional and regulatory willingness to explore blockchain integration rather than reject it.
Regulatory Precedent: The SEC’s no-action relief—though limited to a pilot—constitutes one of the most concrete forms of regulatory accommodation for tokenization within U.S. securities law to date.
Operational Impacts: Tokenizing assets at this level could eventually streamline settlement, enhance liquidity mobility, and support 24/7 markets, if broader adoption follows.
This partnership and SEC clearance mark a notable milestone in the evolution of digital assets in regulated markets. By enabling tokenization at the level of U.S. Treasury securities—arguably the most liquid and foundational global asset class—DTCC and Digital Asset are testing how blockchain technology can integrate with, rather than replace, core financial infrastructure. The real test will be whether the pilot leads to broader adoption and measurable efficiency or remains an experimental layer on the edge of traditional markets.
Coinbase expands platform beyond crypto into stocks, prediction markets, AI tools and more
On 17 December 2025, Coinbase published a major System Update outlining a broad expansion of its platform that goes well beyond traditional cryptocurrency trading and aims to position the company as a comprehensive financial services ecosystem. The announcement details new features including stock trading, prediction markets, futures access, decentralised exchange (DEX) integrations, business services, AI financial advice, and global rollout of a social‑oriented app (Base App).
Diversifying Assets: Stocks, Futures and Prediction Markets
Coinbase is beginning to roll out stock trading in the United States within its main app, enabling users to buy and sell stocks and ETFs alongside cryptocurrencies using USD or USDC. This integrates traditional financial instruments into the same account and interface used for digital assets with zero‑commission trading and extended trading hours. Coinbase also plans to expand this to tokenised stocks — tradable on‑chain with 24/7 access and on‑chain utility — over time.
The platform is introducing prediction markets, allowing users to place contracts on real‑world outcomes such as elections, sports results or economic indicators, using data from Kalshi at launch. This notably broadens the types of markets users can participate in directly through Coinbase.
Coinbase has also simplified access to futures and perpetual futures trading within its standard app, expanding beyond the advanced trading platform it previously offered.
On‑Chain & Decentralised Integration
Coinbase is expanding Solana DEX trading by integrating Jupiter (Solana’s DEX aggregator, a tool that finds the best prices across multiple Solana-based DEXs) into the main app, enabling users to swap millions of tokens without leaving Coinbase. This deepens Coinbase’s connection with on‑chain liquidity and decentralised finance infrastructure.
Business Tools and AI Advisory
The update introduces Coinbase Business, an all‑in‑one financial platform for startups and small businesses in the U.S. and Singapore, offering payments, invoices, asset management, rewards on USDC holdings, and soon access to the same trading experience as retail users.
A new AI‑powered Coinbase Advisor is also being rolled out to a limited set of users in beta. This tool aims to provide personalised financial guidance and recommendations based on user goals and Coinbase product data.
Global Social and Payments Expansion
Coinbase announced the global availability of the Base App in over 140 countries. This on‑chain “everything app” combines social features with trading, payments, app discovery and earnings, with tokenised content and creator value flows directly integrated.
Additionally, Coinbase’s developer platform now supports stablecoin payments and custom branded stablecoin issuance, along with the launch of an open internet standard (x402) that allows AI agents and applications to execute stablecoin payments.
Critical Perspective
The update clearly signals Coinbase’s strategic shift from a pure crypto exchange into a diversified financial ecosystem. By integrating traditional assets, prediction markets, decentralised trading, business financial tools and AI guidance, Coinbase aims to compete more directly with platforms like Robinhood and SoFi that offer multi‑asset trading services.
However, significant risks and complexities accompany this expansion. The integration of prediction markets and futures trading pushes Coinbase into areas with increased regulatory scrutiny and different risk profiles than spot crypto trading. Meanwhile, the reliance on tokenised assets and new on‑chain functionality will demand robust security, regulatory compliance and user education — areas in which crypto platforms have previously faced criticism and user‑reported issues. (I don’t know the exact outcomes of these risks; verifiable data post‑launch is needed.)
FDIC proposes clear rules for bank-linked stablecoin issuance in the U.S. banking system
The Federal Deposit Insurance Corporation (FDIC) has published a proposed rule to establish how banks it supervises can obtain regulatory approval to issue payment stablecoins through subsidiaries, formalizing the implementation of new U.S. stablecoin law.
Background: Regulatory Context and New Stablecoin Law
In July 2025, the GENIUS Act was enacted, creating a federal framework for regulating payment stablecoins — digital assets designed to hold a stable value and used for payments or settlement.
Under this law, only specially approved issuers can legally issue stablecoins in the United States. One category of such issuers is a subsidiary of an FDIC-supervised insured depository institution that has received regulatory approval.
What the FDIC Proposal Would Do
The FDIC’s proposal (published as a Federal Register notice) sets out a detailed application process for banks — specifically state-chartered banks and savings associations it supervises — to apply for authorization to issue payment stablecoins through their subsidiaries.
Key elements include:
Application Framework: Establishes how banks must submit their application for approval, including where to file and what documentation is required.
Required Information: Applicants must describe the structure and governance of the proposed stablecoin and subsidiary, plans for maintaining the stable value of the coin, financial projections, reserve assets and composition, capital and liquidity plans, and operational policies (such as anti-money-laundering procedures).
Reserve and Risk Compliance: The subsidiary must show it can comply with statutory standards — such as maintaining reserves backed at least 1:1 with stable assets and meeting detailed reporting and audit requirements — consistent with the GENIUS Act’s conditions.
Evaluation and Timelines: The FDIC will assess whether an application meets statutory safety and soundness criteria. The law requires that, once substantially complete, the application be approved or denied within 120 days — and if the FDIC fails to act in that period, the application is deemed approved.
Appeals Process: If denied, applicants can request a hearing and appeal the decision within defined timeframes.
Why This Matters
This proposed rule takes steps toward operationalizing federal stablecoin legislation by defining how traditional banks can enter the stablecoin market under supervision rather than operate in unregulated or offshore environments.
Supporters argue that bringing stablecoin issuance into the regulated banking framework enhances oversight, consumer protection, and integration with existing financial infrastructure. Critics, however, might raise concerns about compliance burden, possible undue regulatory privilege for banks compared with non-bank issuers, and whether the framework sufficiently addresses systemic financial risks.
The proposal is open for public comment, after which the FDIC may revise the rule before finalizing it.
Regulatory Approval Does Not Mean FDIC Insurance
A key point of potential confusion is that the GENIUS Act simultaneously creates a regulatory pathway for bank-linked stablecoin issuance while explicitly prohibiting these tokens from being treated as government-backed or FDIC-insured instruments. The statute states:
“Payment stablecoins shall not be backed by the full faith and credit of the United States, guaranteed by the United States Government, subject to deposit insurance by the Federal Deposit Insurance Corporation, or subject to share insurance by the National Credit Union Administration.” (U.S. Congress, GENIUS Act, 119th Congress, S.1582, 2025).
This distinction explains why the FDIC can require approval for a bank subsidiary to issue payment stablecoins without extending deposit insurance to those tokens. Under the GENIUS Act, the FDIC’s role is limited to supervisory oversight — evaluating whether a proposed subsidiary meets statutory standards on reserves, governance, risk management, and consumer protection. Even if approved, the stablecoins remain legally distinct from bank deposits and must not be marketed or perceived as FDIC-insured or backed by the U.S. government, preserving the Act’s core prohibition while still allowing regulated participation by banking institutions.
WHAT WE ARE READING (OR WATCHING)
The Stablecoin Standard
Kyrgyzstan Steps Up Market Push With Bond Sale Plans and Gold-Backed Token
Governance Watch
DTCC gets green light to offer blockchain-based securities service
Senate Confirms Pro-Crypto Mike Selig as CFTC Chair — What To Expect
The Nakamoto Engine
The Tokenized Economy
Brazil's main stock exchange plans to roll out tokenization platform and stablecoin in 2026
The Global Pulse
Bank of England cuts rates by quarter point to 3.75%
Beyond the Chain
State of Crypto Q4 2025: Younger investors are rewriting the investing playbook
Coinbase: Welcome to the Prime Brokerage Era for Institutional Crypto
MoonPay Says CFTC’s Caroline Pham Will Join Crypto Payments Firm
North Korea Stole $2 Billion of Crypto This Year, Report Says
Tether Launches PearPass, a Peer-to-Peer Password Manager to Eliminate Cloud Breach Risks
ICE eyes $5b bet on MoonPay as Wall Street dives deeper into crypto
This article is for informational purposes only and should not be considered financial advice. Please do your own research or consult a licensed financial advisor before making investment decisions.
