IN TODAY'S ISSUE:
- Liquidity is becoming the defining characteristic in the intersection of Wall Street and crypto.
- We look at what assets and the process by which new ETFs could launch under the SEC’s new listing standards.
Premium Dreams and Lockup Reality for DATs
The intersection of traditional capital markets and crypto continues to be one of the most interesting facets of this cycle to us. The industry is poised to get more spot and futures ETFs (see section below) in the near future, plus capital markets events have resulted in more publicly traded operating companies (GEMI and BLSH most recently), plus a host of Digital Asset Treasury (DAT) company activity, with the launch of new DATs and activity from existing ones.
With all this activity, one of the things we’ve been thinking about is liquidity. While some of these investments are posting eyepopping returns, often right at the onset, many of these investments remain illiquid or locked for investors. This is true of IPOs, whereby employees typically have 180-day lockups, as well as of many DAT deals, which rely on share registration for investors to get liquidity without filing for exemption. When liquidity comes, investors in these deals are often clinging to gains, or in many cases, stuck with a loss once trading opens up. Realizing large gains in many of these examples has often been illusory.
That hasn’t deterred market activity, however. This week (plus), we saw a new SOL DAT Solmate (Brera Holdings - BREA) spring to life. ETH DAT Ether Machine (Dynamix – ETHM) filed to go public. SOL DAT Forward Industries (Forward Industries – FORD) filed for a $4B ATM. BTC DAT Strive (Strive – ASST) closed its merger and announced a $450 ATM. Nakamoto (Kindly MD – NAKA) registered the shares from its recent PIPE and convert offerings and announced it would buy UTXO Management and had an option to buy BTC Inc. These were just some of the DAT news items this week.
Discounted DAT Deals
The most interesting capital market news to us is the launch of the Solmate Solana (SOL) DAT under Brera Holdings PLC (BREA), an “Irish holding company focused on expanding social impact football by developing a global portfolio of emerging football clubs.” BREA pivoted to a SOL DAT Wednesday, helmed by Marco Santori, most recently of Pantera, but a well-known lawyer in the crypto industry. Economist Art Laffer joined the board.
The company announced an equity PIPE deal for $300M to buy discounted SOL tokens from the Solana Foundation, the non-profit that oversees the Solana ecosystem development and manages SOL reserve tokens granted to it by Solana Labs. The PIPE was priced at $4.50 per share (there were warrants too, struck at $6.75), but the stock closed the first day of trading at $29.90, up a whopping 6.6x from the deal price.
The interesting thing to us, outside of the trading activity just ahead of the deal, is the mechanism by which the DAT came to life – buying discounted SOL from the Solana Foundation (oddly, the pitch deck omits key names from the Solmate board, like the ones joining from the Solana Foundation).
While we don’t know the specifics of the deal, (the presentation discloses a non-binding LOI to buy 249,215 SOL at $170.54, a 15% discount to the 15 day TWAP – this accounts for $42.5M of the $300M raised) but given the facts of “discounted SOL” and pricing the deal at “1x mNAV”, this following table is a rough sketch of what doing a DAT transaction under those terms looks like. Investors are essentially purchasing the DAT shares at a discount to NAV, or an mNAV of 0.85x in this case.
The counterintuitive thing is that the main avenue of value creation for a DAT, the way most DATs grow their crypto/share or generate “yield”, is by issuing stock at a premium to NAV and buying the underlying crypto at NAV. Here, the DAT is immediately priced at a discount to NAV. If the DAT can then trade above the discount to the deal price, which equals 1x the fair market value (FMV) NAV of the underlying crypto, then it can harvest its premium to NAV. Here, in the case of Solmate, that is overwhelmingly the case with the stock trading at multiples of the NAV.
However, if recent liquidity unlocks are any guide, investors in this deal still have a long road ahead. Where the shares settle, and what premium this DAT can sustain, remains to be seen.
SEC Updates ETF Listing Standards, Paving the Way for Additional Crypto ETFs
On Wednesday afternoon, the SEC issued an order establishing generic listing standards for commodity-based trust shares (PDF Link). These trusts underlie ETFs that hold the actual commodities and, in the case of digital assets, the spot crypto tokens themselves (rather than derivatives like futures contracts). The move represents a significant milestone for the digital asset sector and is expected to open the door to spot ETFs across a wide range of digital assets.
The key to the generic listing standards is one of three criteria:
- ISG: The commodity trades on a market that is a member of the Intermarket Surveillance Group (ISG), and the listing exchange can obtain trading information from that ISG member.
- DCM: The commodity underlies a futures contract that has been listed for at least six months on a CFTC-regulated Designated Contract Market (DCM), and the listing exchange (e.g., Nasdaq, Cboe BZX, NYSE Arca) has a comprehensive surveillance sharing agreement (CSSA) with that DCM, either directly or via ISG.
- ETF: At the time of initial listing, there is already an ETF trading on a U.S. national securities exchange that invests at least 40% of its net assets in that commodity.
Although the new listing standards open the door for spot ETFs (we should see a lot of futures-based ETFs too), we are trying to remain practical about some of the more claims circulating around their impact. Each digital asset may soon attract multiple issuers competing for investor flows, but the real focus should remain on the underlying assets and, critically, on the central role of Coinbase Derivatives, which has emerged as the key enabler of this entire framework.
Most investors now are familiar with the CME’s futures offerings – BTC (Dec 2017), ETH (Feb 2021), SOL (March 2025), and XRP (May 2025). But Coinbase Derivatives, a regulated DCM Coinbase acquired as FairX, has been listing futures on other digital asset for many months now – LTC, BCH, DOGE, DOT, AVAX, SHIB, LINK, XLM, HBAR, and ADA, in addition to BTC, ETH, XRP, and SOL. All those altcoin futures have been trading for more than 6 months, and crucially, Coinbase Derivatives is an ISG member.
As a result, spot ETFs for additional digital assets could arrive soon. But how soon is an open question. Unlike the older wave of ’33 Act spot ETF filings (more than 20 of which are still pending – we stopped counting), the new generic listing standards don’t run on a formulaic 240-day clock, and existing applications also don’t automatically benefit. For example, the SEC’s approval of the Grayscale Digital Large Cap Fund (GDLC) conversion, which holds BTC, ETH, SOL, XRP, and ADA, was issued the same day but outside of these new standards. Going forward, we may see issuers refile to take advantage of the new framework. Instead of a statutory timer, the pace now depends on how quickly the SEC staff clears the S-1 registration statement, with fewer comments and cleaner responses meaning faster launches. Exchanges, for their part, only need to self-certify compliance with the generic standards, and that notice doesn’t even have to be filed until after trading begins.
In short, we’re likely to see a surge of both spot and futures-based ETFs in the near term. For now, eligible products will be limited to the assets with futures already trading on Coinbase Derivatives until additional contracts are listed elsewhere and meet the six-month seasoning requirement (futures-based ETFs will be limited to those trading on DCMs). This could spark a wave of new crypto futures launches in an effort to expand coverage, with the CME needing to catch up to the head start Coinbase Derivatives has established.
Market Update
Bitcoin rose 2.7% on the week as equities and oil advanced, bonds were mixed, and gold’s rally paused. Bitcoin continues to be rangebound, largely trading between $107.5K and $120K since July. Against this backdrop, bitcoin’s declining volatility has been highly topical with traders. Lack of catalysts, a growing number of vol sellers (call overwriting strategies), the maturity of the asset, as well as just a decline in volatility for assets across the board have weighed on volatility.
The week’s marquee event was the FOMC’s 25-bp rate cut, which whipsawed markets and participants in its wake. At his press conference, Chair Powell stressed a delicate balancing act: easing to cushion a slowing labor market while remaining alert to persistent inflation pressures. Reporters immediately zeroed in on questions of central-bank independence, with new FOMC member Stephen Miran’s concurrent White House role, highlighting the potential for political imperatives to affect monetary policy.
For bitcoin, that mix can be constructive. Easier policy and lower real-rate expectations tend to support risk assets and scarce, non-yielding stores of value, while doubts about institutional independence reinforce bitcoin’s narrative of an asset outside the system of traditional macroeconomics. The backdrop of softer growth, policy uncertainty, and political intrusion tilts the risk-reward more favorably for assets like bitcoin.
Important News This Week
Investing:
This Buffett Devotee Is Plowing Billions into Crypto - WSJ
Bitcoin Whale Deposits Another 1,176 BTC To HyperLiquid Following $4 Billion Rotation - The Block
Ray Dalio says Gold, Non-Fiat Currencies will be Stronger Stores of Value as U.S. Debt Mounts - CNBC
Regulation and Taxation:
SEC Makes Spot Crypto ETF Listing Process Easier, Approves Grayscale's Large-Cap Crypto Fund - CoinDesk
CME Group to Launch Options on Solana and XRP Futures - CME
Binance Nears Deal to Escape Compliance Monitor Imposed by DOJ - Bloomberg
Companies:
Strive Announces Board of Directors and Initial Bitcoin Strategy - Strive
Metaplanet Sets Up Miami Subsidiary for Bitcoin Derivatives Strategy - The Block
Nakamoto Shareholder Letter - Nakamoto
Upcoming Events
Sept 26 - CME expiry
Oct 3 - Jobs report
Oct 15 - CPI inflation data
