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This week Simon Taylor & Cuy Sheffield are joined by:
Nikhil Chandhok, Chief Product & Technology Officer, Circle
Simone Maini, Chief Executive Officer, Elliptic
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We Cover:
The SEC opens tokenized stocks to permissioned AMMs while allowing RFQs alongside them
Institutional execution requirements limit where AMM liquidity fits
Circle’s Arc puts open pools and StableFX on one chain
S&P Global puts OpenZeppelin under its ratings president
Elliptic prepares compliance agents for machine-generated finance
BlackRock adds a yield layer to Hong Kong’s tokenized cash market
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The SEC Opened an AMM-Shaped Door, With an RFQ Side Entrance
On September 17, the SEC granted five years of conditional relief for Tokenized Securities Venues trading tokenized US-listed stocks. The exchange exemption covers permissioned automated market makers and liquidity pools, while separate dealer relief covers qualifying firms supplying those pools with tokenized shares. Venues may also offer requests for quotes and indications of interest alongside the pools. The order excludes synthetic and linked securities. It covers the share itself onchain, with the same rights as its conventional equivalent and permissioned access, which Cuy Sheffield noted could be enforced through tools such as Uniswap v4 hooks.
Cuy asked whether AMMs have product-market fit in capital markets, or whether they were built for crypto’s fragmented long tail. Simon Taylor focused on the institutional buyer.
“You want more privacy, and you definitely want SLAs, and you want uptime guarantees, and you want a whole bunch of different requirements for how custody works, and you’re probably regulated yourself. You want to know who your counterparties are. You probably have a bilateral deal with them.”
Nikhil Chandhok drew the boundary around order size and liquidity discovery.
“AMMs work well when you have a long tail, a million tokens. Somebody’s got to provide liquidity against them. There’s got to be a place to discover that liquidity, and you’ve got to price it out. These are smaller orders too. For these large orders, AMMs just don’t work.”
Nikhil described institutional markets as dark pools and RFQ systems with strict requirements on quotes and data handling, none of which carries over to an AMM. Simon saw the AMM's value elsewhere - spreading tokenized stocks into markets outside the US and combining them with lending, securities lending and yield products. Neither treated AMMs as a replacement for existing institutional execution.
Simone Maini viewed the order as a sandbox, but one whose transparency creates an operational obligation.
“There’s a huge upside to how much they’re going to be able to see onchain now, but also a big burden of having to look at that activity in real time.”
Circle’s Arc Runs Open Pools and RFQs on the Same Chain
Circle launched Arc’s public mainnet on September 16 with USDC transaction fees, known validators and more than 100 day-one builders. Nikhil said Circle’s first-day data showed roughly half-second finality and 16+ stablecoins live on Arc.
Applications can be deployed permissionlessly, while opt-in privacy and view keys restrict transaction details to authorised parties. That gives institutions confidentiality without removing the audit trail needed by compliance teams.
“Having a way for there to be view keys, as it is on Arc, for the right participants to be able to see what’s recorded onchain without that being universally public.”
Arc launched with Uniswap, Aero and fomo as trading infrastructure alongside StableFX, which Nikhil described as an RFQ protocol where a quote goes onchain and both sides' funds sit in escrow until the swap settles. His longer view is that within three to five years, local stablecoins with their own onchain FX markets should be the norm, not the exception.
S&P Global’s OpenZeppelin Deal Meets the Limits of Human Review
S&P Global agreed on September 17 to acquire OpenZeppelin, subject to closing, with no price disclosed. According to the companies, OpenZeppelin Contracts have underpinned more than $37 trillion in transferred value and the firm has completed over 900 security engagements. OpenZeppelin will operate as a separate unit, with CEO Demian Brener reporting to Yann Le Pallec, president of S&P Global Ratings, though S&P has said nothing yet about audits feeding credit ratings.
The deal fits large funds and standardised contracts. Investors need diligence on both the asset and the code governing issuance, transfer and redemption. Cuy captured the institutional threshold.
“When I think about DeFi and just how Wild West it has been for so long, where there’s some smart contract bug, oops, all the money’s gone… That doesn’t work in traditional capital markets… You have to kind of rebuild this trust stack.”
Nikhil’s generative-contract argument exposes the scaling limit. Agents could create bespoke agreements even for splitting travel costs.
“We’re going to move from these few thousand contracts, a few tens of thousands of contracts, to tens of millions of contracts because all contracts can be generative now. You and I, your agent and my agent, can have a generative contract for a custom exchange of value.”
Cuy described today's audit as close to a consulting engagement - a team builds, gets reviewed, and publishes the badge. Nikhil expects contracts at agent scale to need automated auditing.
“What we know is that we cannot wait for the regulators to write those rules for us. Otherwise, we’ll be waiting another 10 years.”
Elliptic is working with Circle and others on risk-management agents designed around auditability, explainability and human oversight. Nikhil argued blockchains leave compliance better placed than older systems, with audit trails that automated monitoring can watch and cryptographic proof of who an actor is and what work it has done before.
BlackRock Prepares a Yield Layer for Hong Kong’s Tokenized Cash
BlackRock received regulatory approval on 10 September for its HKD Liquidity Fund, a tokenized Hong Kong dollar money-market fund, ahead of launch. Standard Chartered will serve as custodian, administrator and trustee. Subscriptions and redemptions are planned through conventional money, tokenized deposits and regulated stablecoins, including HKDAP, issued by Standard Chartered-backed Anchorpoint.
Cuy pushed the discussion from fund distribution into balance-sheet infrastructure.
“When you think about what stablecoins will look like in the 2030s, shouldn’t the entire reserve management just be onchain and just be able to have money-market funds, tokenized deposits, and be able to move much more efficiently between the stablecoin kind of digital cash with the underlying assets that are backing it?”
Nikhil kept to the working example. USDC serves as payment money, while USYC gives eligible non-US customers 24/7 access to a yield-bearing asset. Even there, he noted, not everything is onchain yet, so matching redemptions with enough USDC is still a liquidity-management job.
The Road Ahead
Simon closed the discussion from London. USYC can offer 24/7 redemption against USDC even though, as Nikhil noted, not every part of the underlying liquidity management is onchain today. The UK's DIGIT pilot goes a step further by issuing gilts directly onchain, which Simon argued could extend 24/7 settlement further up the stack, potentially all the way to government debt.
For Nikhil, the nearer milestone is GENIUS. He put 18 January 2027 as the date he is working towards. Simon cast the UK as the tortoise in the race: frustratingly slow, but perhaps finally moving next year.
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