The Last Rebels Just Got Killed

Arthur Hayes, the founder of BitMEX, one of the most influential crypto exchanges ever built, announced last week that the exchange is winding down.

His response was "Fuck TradFi. Fuck the Banks. Fuck the man. Satoshi for life."

I actually respect the hell out of Arthur because he built a product that changed how the entire crypto market worked. BitMEX invented the perpetual futures contract, which is now the most successful instrument in crypto.

But he still doesn't get it.

The same week BitMEX announced it was shutting down, so did BitMart and a handful of Bitcoin-treasury companies whose entire model was holding Bitcoin on a balance sheet quietly started unwinding too.

These are companies that simply became irrelevant because the world no longer needs them.

And the world that moved on is the part I want to talk about.

Like a lot of you, I first got into crypto because it was a middle finger to the system. You could become "bankless." Nobody could confiscate money from you, nobody could freeze it, or tell you when you were allowed to use your own money.

It was a great story that got us all hooked.

Then 2022 happened.

The bear market that year was a body count of companies blowing up, peaking with the real black swan of FTX. Sam Bankman-Fried was revealed to be the Bernie Madoff of his generation.

And when the dust settled, nobody trusted any of it. The entire promise of "you don't need banks" collapsed when the alternatives turned out to be worse than the thing they were replacing.

What happened next is the part that Arthur Hayes refuses to accept.

Wall Street walked in.

Coinbase emerged as the primary exchange in the United States precisely because it was regulated and audited like a Wall Street firm. The very things that crypto was supposed to make obsolete, regulation, auditing, institutional oversight, turned out to be the things that made Coinbase the last exchange standing.

Then BlackRock launched the Bitcoin ETF. The world's largest asset manager, managing $11.5 trillion, created a wrapper that let regular investors buy Bitcoin in their everyday brokerage account without the risk of a Sam Bankman-Fried stealing their money. It collected over $50 billion in assets faster than any ETF launch in history.

Then every other institution followed.

Virtually every major bank, asset manager, and financial institution in the world now has a crypto or digital asset offering of some kind.

And despite what Arthur Hayes would argue, that's what winning actually looks like.

Crypto was never going to dissolve Wall Street or the American financial system. The banks have $23 trillion in assets, armies of lobbyists, and 200 years of regulatory infrastructure behind them. The idea that a bunch of anonymous developers were going to dismantle that with code was always a fantasy.

What actually happened is far more interesting. The technology survived but the ideology did not.

The blockchain, the distributed ledger, the smart contract, the ability to record and transfer value on a shared ledger without reconciliation, that technology found genuine product-market fit inside the existing system.

That's the part Arthur still doesn't understand. When he says "fuck TradFi," he's raging against the exact institutions that validated his technology. BitMEX invented perps, now the CME offers 24/7 crypto futures and the CFTC has approved perps for US retail.

Arthur's product won. His ideology lost.

And this is why the exchanges and companies dying off right now are dying; because crypto succeeded in a way they didn't want it to.

BitMEX is shutting down because regulated alternatives do everything it did, better, with less risk, and with the backing of the US government. Bitcoin-treasury companies are unwinding because BlackRock's ETF holds more Bitcoin at lower fees with zero counterparty risk.

We're going to see more of these shutdowns. In ten years, there will be just ten relevant crypto tokens. But there will be dozens, potentially hundreds, of regulated companies, stocks, and funds built on this technology that didn't exist three years ago.

Because the real value of crypto was never decentralisation, it was something much more fundamental.

Recording and transferring data.

A shared ledger that multiple institutions can write to and read from without needing to reconcile after the fact. That's the whole prize. We never needed a hundred blockchains to do that, we need one or maybe two.

The DTCC is running its tokenization pilot right now across multiple blockchains. Ethereum, Solana, Avalanche, and several others are all being tested. While that sounds like a diverse ecosystem, it's not. It's a politically safe position to hold during a pilot. The same way a company might interview ten candidates for a job knowing full well they're going to hire one.

When the full service launches in October, the number of blockchains will start to shrink. Because composability, the ability for securities, cash, and rules to interact on the same layer, only works when everything is on the same network.

You can't settle a repo atomically if the Treasury is on one chain and the cash is on another. Interoperability is the diplomatic answer, but consolidation is the practical one.

The companies that end up owning the winning network, the custody, the settlement technology, and the transfer agent infrastructure are going to compound for decades. The same way BlackRock compounded 75x after the ETF era began. The same way CME compounded 66x after exchanges went public. The same way MSCI compounded 33x by licensing the indexes that ETFs tracked.

The companies that build the infrastructure for each new generation of financial markets are where the generational returns come from.

Arthur Hayes is still screaming into the void about decentralisation while the institutions he hates are building the next financial system using his technology.

The rebels lost, but the technology won.

And the companies building the infrastructure are what I spend every waking hour researching.

I cover all of them in the Tokenization Report.

If you want to know which companies are building the next generation of financial infrastructure and where I'm putting my own money, you can join here.

I'm currently running a major sale, where my annual plan is down from $1,999 to $745. And for free, for every dollar you spend we'll gift you a free store credit for every All Star Charts purchase you make.

Simply, spend $745 and you'll get $745 of credits you can put towards another purchase.

That deal is coming to a close today, so click here to join along for the ride.

Cheers!