Charles Schwab Explores Direct Crypto Offering, Onchain FX On Solana & More

Welcome back!

This is J264G and this week I’ve got these titbits for you:

• Stablecoin Rails: Squads Labs launches new API for modern banking.

• Onchain FX: Solana is poised to redefine the future of foreign exchange. 

• Solana Spot ETFs: Four major asset managers have already filed applications.

Charles Schwab, one of the most iconic brands in the financial industry, is exploring offering direct crypto exposure to its customers — a watershed moment.

Now, let’s jump right into this week’s newsletter!

Click on any underlined heading/hyperlink to learn more.

Spotlight

Onchain FX

Foreign exchange (FX) is the world’s largest financial market, with daily trading volumes exceeding $7.5 trillion. 

Despite its immense scale and long-standing role as the backbone of international trade and finance, the FX market is riddled by inefficiencies, and these shortcomings are becoming increasingly evident.

Blockchain networks such as Solana offer a compelling alternative, poised to redefine the future of foreign exchange by addressing the inefficiencies and risks inherent in traditional systems.

Here's how: 

• Accessibility: On weekdays, the traditional FX market operates 24 hours, but suffers from poor liquidity during key transitional periods — such as between the New York close and Sydney open. Additionally, there is no trading or settlement on weekends, leading to further inefficiencies. Onchain FX markets on Solana, in contrast, operate 24/7 — leveraging automated market makers (AMMs) such as Raydium, Orca, and Lifinity to provide liquidity around the clock.

• Fragmentation: Liquidity fragmentation is another critical issue. This issue arises primarily because liquidity in conventional FX markets is scattered across various venues — including bank-operated systems and regional exchanges — limiting access to larger liquidity pools and diminishing price transparency, ultimately lowering overall market efficiency. Aggregators such as Jupiter and Titan, however, enable direct liquidity aggregation from multiple AMM platforms, creating unified liquidity pools and fostering competitive pricing.

• Settlement: One of the most glaring inefficiencies in traditional FX markets is settlement time. Transactions can take 2 business days to settle, and this can stretch to multiple calendar days during weekends or holidays. These delays introduce operational complexities and increase counterparty risks. Solana-based FX markets — accessible on Jupiter and Titan — eliminate these issues by offering near-instantaneous settlements, typically completed within seconds.

• Transparency: Transparency has long been a pain point in the conventional FX market — where reporting can be limited and non-standardised across jurisdictions. Also, scandals such as the LIBOR rigging have highlighted the vulnerabilities of traditional systems. Jupiter and Titan address this issue by recording transactions on Solana in real time. This enables participants to verify trades and audit transaction histories with ease, ensuring accountability and fostering trust within the ecosystem.

That said, there’s still a long road ahead.

At present, Solana lacks the liquidity depth and robustness to provide competitive rates capable of challenging the traditional FX market.

Additionally, available stablecoin trading pairs are limited, with USD/EUR trading primarily enabled through USDC/EURC. However, promising developments are underway. For instance, Quantoz Payments has partnered with Kraken, Tether, and Fabric Ventures to launch MiCA-compliant USD and EUR stablecoins in the EU, offering greater variety. 

Yet, critical stablecoin trading pairs such as USD/JPY, USD/GBP, USD/AUD, USD/CHF, USD/CAD, and USD/NZD with deep and sustainable liquidity are still absent from the Solana ecosystem, leaving a significant gap.

Moreover, while Solana’s stablecoin market is growing, it remains a fraction of Ethereum’s. As of now, the total stablecoin market cap on Solana stands at $4.6 billion, compared to Ethereum’s $101 billion. 

Despite these hurdles, the potential for onchain FX platforms such as Jupiter and Titan is immense. As more institutions and individuals recognise the advantages of fast, low-cost onchain trading, demand for Solana-based FX solutions will surge — driving the growth of the stablecoin market to unprecedented levels.

The question is no longer whether Solana will disrupt FX markets, but how swiftly this transformation will unfold — keep a close watch!

Numbers Of The Week

As I’ve mentioned before, most countries urgently need a growth engine — and tapping into the potential of the onchain economy seems like an obvious path forward.

News Bites

Stablecoin Rails: Squads Labs has launched a new API enabling businesses to effortlessly integrate stablecoin rails into their products — empowering neobanks, payment service providers, payroll/remittance services, and e-commerce platforms to offer seamless self-custodial/managed custody solutions and fast, cost-effective global money transfers.

Bitcoin Options Trading: Last week, options trading for Bitcoin Spot ETFs went live. This marked another significant milestone for the crypto investment landscape, bringing advanced trading strategies to the table.

Bitcoin Treasury: A few weeks back, I wrote about Microsoft's SEC filing revealing that "Assessment of investing in Bitcoin" would be a voting item at their December shareholder meeting. Now, shareholder activists have secured a 3-minute slot at the meeting for Bitcoin bull Michael Saylor to make the case for adding Bitcoin to Microsoft's balance sheet.

Solana Spot ETFs: Four major asset managers — Bitwise, VanEck, Canary Capital, and 21Shares — have already filed applications with the SEC to launch Solana Spot ETFs, reflecting the growing institutional interest in diversifying cryptocurrency investment options beyond Bitcoin and Ethereum.

Redefining Security: Phantom has acquired Blowfish to further elevate the security of its self-custody solutions. With a track record of preventing 2.8 million scams, scanning 1.3 billion transactions, and safeguarding over $18 billion in assets, Blowfish has been a cornerstone of user protection.

Invalidator Team: Anza, the team behind Solana's primary validator client "Agave", has introduced the Invalidator Team — an in-house "red hat" unit focused on simulating extreme, real-world attack scenarios to identify and address vulnerabilities on the Solana network before malicious actors can exploit them. This initiative is especially crucial as the onchain economy enters a phase of accelerated growth.

Caught In 4K

Weekly Take

Keks & Giggles

And that's a wrap!

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Talk soon!

J264G

_{DISCLAIMER
None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research. Lastly, please be advised that we discuss products and services from our partners from which our team members may hold tokens/equity.}