Macro Perspective on US Re-industrialization
To start, things need to be put into perspective. Crypto opportunities is often thought of as some isolated thing off to the side, but it is really part of a bigger thing happening at a macro scale. Ever since Trump got into office, he has been focusing on re-industrializing the US. The question is how that is going to be done, and the short answer is that it needs to be done by the government spending more money. The only problem is that the US government has already been spending so much that the bond markets are not willing to accept more. For example, if the Trump administration were to say they are going to spend another trillion dollars to re-industrialize the US, that is not going to work.
Challenges of Funding Fiscal Spending
What Trump did instead was introduce tariffs, which have kind of worked and kind of not worked. In theory, these tariffs will bring in revenue for the government, with which the government can then spend on re-industrialization. But the problem is that tariffs actually seem to slow the economy, and that does not help either. Re-industrialization is being attempted while the economy is slowing — not a good combination. This is why a bill was floated in US Congress to tax foreign inflows, because what investors want most out of the US is access to US assets — stocks, bonds, and the US dollar.
Global Demand for US Market Access
What basically happens is that all the capital flows overseas. For example, the US buys a whole bunch of stuff from China, China ends up with all these US dollars from exporting to the US, and then in theory China invests in US dollar assets as a means of saving. Because everyone is keeping their money in the US, the US stock market and financial markets become a larger and larger part of the US economy and kind of become like its main export. It ties into Triffin’s dilemma, but the key takeaway is simply that the one thing everyone wants from the US is access to US markets.
Stablecoins as the Strategic Solution
The Trump administration noticed this, and some officials said why not tax all the money coming in — some 5% tax or whatever — and then use that money instead of tariffs. A portion of these foreign inflows could then be used to fund re-industrialization. But this is also concerning. Wall Street does not like that, and foreigners would probably not like that very much either. This brings the topic to stablecoins. Stablecoins are backed primarily by US government debt.
How Stablecoins Support Government Debt
This means that every single time someone buys a stablecoin, some percentage — depending on the stablecoin, around 80 to 85% — will go to invest in US debt. For example, when USDC or USDT is purchased, around 80% of that dollar goes behind the scenes to buying US debt. Logically, the question becomes how demand for stablecoins can be increased. The main demand driver for stablecoins right now is crypto speculation — whether it is leverage trading, DeFi borrowing, lending, or whatever. Stablecoins are basically just being used in crypto for now.
Tokenization and Mainstream Integration
The question is how stablecoins can be brought out of this crypto bubble and into the mainstream economy. How can stablecoins be inserted into foreign capital flows to make it possible for the US to re-industrialize? The answer is tokenization. This is part of why BlackRock, JP Morgan, and all these different institutions have been focusing so much on tokenization. At first glance, tokenization seems unimpressive — but the difference is that tokenized assets will trade against stablecoins. To buy a tokenized stock, a stablecoin must first be purchased.
Changing US Market Structure
Behind the scenes, a portion of those flows goes into US bonds. That gives the US government more wiggle room to spend money on re-industrialization. This mechanism, previously more implicit, has become very explicit in recent weeks. BlackRock is essentially saying this is going to change the structure of the US market. The SEC has been giving approval to different financial institutions to do settlement on chain, and JP Morgan has been launching more things on Ethereum and on Base. A tokenized money market fund has recently been announced. The amount of real world assets on crypto chains has been growing basically exponentially over the last year or two. This is not a coincidence. It is a means of shifting the structure of the US market so that people are buying stocks using a stable coin through some platform on Ethereum, rather than buying on the NASDAQ.
Identifying the 1000x Opportunity
The chains that are supporting these tokenized RWAs — Ethereum, BNB chain, Solana, Arbitrum, Stellar, Avalanche — are already quite large.
The Limits of Large Cap Altcoins
No criticism toward these cryptos, but they are probably not going to 10,000x. Maybe tokenized speculation will cause a 5x, 10x, or even a 20x. In the case of some of the smaller ones, but a thousandx is not going to happen from these altcoins. So where exactly is a 1,000x opportunity coming from? The first potential candidate — and this really depends on what happens with the stock of Circle and other stablecoin issuers. Since most tokenized RWAs will be traded against stablecoins, the companies issuing these stablecoins are the ones that will reap the biggest benefits. Because they will be the ones earning the yield on these reserves.
Potential of Stablecoin Issuer Stocks
The Circle stock has basically completely collapsed, and with some luck it may fall even lower. In personal opinion — not financial advice — one way to play the RWA narrative on a more traditional or quote unquote safer front is to find the stablecoins that are being used and invest in the issuers. Circle is currently the only one that is publicly traded, though more are expected in the future. Circle is one stock that could unironically go up a thousandx. USDC’s market cap is only in the tens of billions, and if tokenization results in hundreds of billions or trillions of dollars being tokenized.
Future Value of Companies like Circle
Hundreds of billions or trillions of dollars of stablecoin market cap will be needed. If a Circle is managing, say, a trillion dollars in US bonds to back their stablecoin and earning tens of billions of dollars in yield, that company is going to be worth a lot more than it is today. Whether that is going to be 100x or thousandx is up for debate. Maybe it will be closer to something like 100x. Circle will probably fall lower in the short term potentially.
The Shift Toward Native RWAs
This tokenization narrative is not something that is going to really strike until 2025. But there is one missing piece of the equation when talking about these 1000x opportunities. It is probably not going to be in the chains. Maybe it will be in the stablecoin issuers, but it is actually more likely to be in newly issued tokens. When tokenized RWAs are considered, everyone just assumes that a stock will be taken and tokenized and put on a chain. People do not think about the possibility — or rather the likelihood — that companies will begin issuing their stocks natively on chain. This means they are not just taking a stock that is on the NASDAQ and wrapping it and putting it on Ethereum.
Native Issuance vs. Wrapping Existing Stocks
They are natively putting the stock on Ethereum. As a fun fact, the first company that did this was Exodus. In 2021, they tokenized their stock on Algorand, and then it became a stock on the NASDAQ — the first time that had ever happened. A wave of companies issuing their stocks natively on these platforms is beginning to be seen. Coinbase recently started allowing the Monad ICO. A future can be envisioned where Coinbase is basically doing ICOs not just for crypto projects, but for companies that are issuing stocks.
ICO Boom 2.0 and the Future of Fundraising
In a tokenized form natively, rather than launching on a centralized stock exchange. That is where the 1000x opportunities are going to be. On RWA.xyz — a great platform to track real world assets — accounts have personally been made on many of these platforms, especially the ones that are basically saying they are going to start offering the issuance of tokenized RWAs, not just the trading of tokenized RWAs. The trading part is less interesting. The more interesting question is which platforms are going to allow for the issuance of new RWAs. Because that will allow for getting in early or even, depending on the conditions, actually being an early stage investor.
Creating a Speculative Bubble to Bootstrap RWAs
In these new ICO-style RWAs that are going to come. There needs to be some big incentive because logically the question is why would anyone switch to investing in tokenized RWAs instead of just using the NASDAQ. In this view, some new kind of speculative bubble, some new speculative wave, needs to be created to attract capital on chain and facilitate all this tokenized trading. The best way to do that is through the issuance of these native RWAs. That wave is expected to look very similar to what was seen with the ICO boom in 2017. Whether this boom in tokenized RWAs starts next year or the year after is uncertain.
The Role of Regulation and Stablecoins
In terms of exact timing, what is known is that the Clarity Act will need to be passed first. But once that happens, these platforms should be watched closely, particularly the new tokenized RWAs being issued. Especially the ones issued natively that do not already have a stock trading somewhere — these are the ones where 1000x opportunities are unironically expected to be found. It is expected to be almost identical to the ICO boom. The difference this time is that it will be more regulated. KYC will be required to participate, and a stablecoin will be used to invest in these RWAs instead of ETH, SOL, or whatever. It is a fascinating development.
Resources and Final Thoughts
Deep dives into altcoins are done every single week. Tokenized platforms and related topics are also being looked into in the coming months. Members are allowed to vote on the altcoins that are reviewed. A research feed shares these types of insights. A team portfolio page shows which cryptos are held and which ones are being considered for investment. An exclusive deals page offers discounts on crypto research platforms. A members-only Discord allows questions to be asked and topics like tokenized RWAs and ICOs 2.0 to be discussed.
