Getting Hyper About Tokenization
May extended the Fund’s strong momentum, generating a return of 14.49% and bringing year-to-date performance to 19.44% (NAV; see standardized performance). These results were achieved despite weakness in Bitcoin, which declined approximately 4% during the month and remains down roughly 16% year-to-date.
Our direct digital asset exposure increased modestly during May and stood at approximately 9.11% at month-end. This allocation includes spot Bitcoin and Ethereum ETFs, as well as Digital Asset Treasury (“DAT”) companies focused on Bitcoin, Ethereum, and, more recently, Hyperliquid.
As a reminder, we introduced the RAC acronym framework in January to evaluate the development of blockchain infrastructure:
On May 14, the Senate Banking Committee voted 15-9 to advance digital asset market structure legislation, commonly referred to as the Clarity Act, for further mark-up. While legislative negotiations remain ongoing, we view continued engagement by policymakers, regulators, and industry participants as an important step towards establishing a durable framework for digital assets in the United States.
We remain optimistic that the President will have an acceptable bill to sign in the July-August timeframe. Regulatory progress is rarely linear. Compromise often produces outcomes that satisfy few participants completely, but it remains the mechanism through which long-term policy frameworks are built.
Importantly, the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have also continued efforts to provide greater guidance to market participants. We believe that, regardless of whether the Clarity Act is approved, our policymakers have made real meaningful progress in furthering institutional adoption of blockchain technology and digital assets.
We continue to believe progress across all three dimensions supports the long-term investment opportunity.
The performance data quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For most recent month-end performance, visit BLOKETF.com.
The adoption case for blockchain infrastructure continues to strengthen.
| DTCC and Tokenized Securities On May 4, the Depository Trust & Clearing Corporation (DTCC) announced plans to begin tokenizing securities as early as July, with broader rollout expected in October 2026. (CITI Report, Tokenization 2030 Wall Street On-Chain, June 1, 2026). While implementation details remain limited, more than 50 major financial institutions are participating in the initiative. DTCC currently supports approximately $114 trillion of assets, making this one of the most significant tokenization efforts announced to date. |
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| Mastercard and On-Chain Payments The convergence of blockchain infrastructure and artificial intelligence continues to accelerate. Payment networks increasingly view tokenization, smart contracts, and AI-driven automation as tools to improve security, efficiency, and settlement speed. Mastercard has indicated that approximately 30% of its transaction volume is already tokenized and has stated an objective of migrating all transaction volume to tokenized infrastructure by 2030. On May 27, the company also secured a New York BitLicense, further expanding its ability to support digital asset and tokenized deposit infrastructure. |
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| The Convergence of TradFi and DeFi Although we do not own shares of Bullish (BLSH), its agreement to acquire a global transfer agent, Equiniti (aka the American Stock Transfer and Trust Company), for $4.2 billion highlights the growing convergence between traditional finance (TradFi) and decentralized finance (DeFi). The transaction is particularly notable because Equiniti services approximately 3,000 public companies globally. Bullish CEO Tom Farley, formerly President of the NYSE, has spoken publicly about the potential for tokenization to modernize capital market infrastructure. We view transactions such as this as further evidence that blockchain technology is increasingly being integrated into existing financial systems rather than competing against them. |
We expect investor attention during June to remain focused on potential initial public offering (IPO) activity involving companies such as SpaceX, OpenAI, and Anthropic. However, enthusiasm surrounding artificial intelligence should not overshadow the capital formation occurring across blockchain infrastructure.
As we anticipated in late 2025, blockchain-related companies continue to access both equity and debt markets to fund growth. HUT 8 (HUT), IREN Ltd (IREN), TeraWulf (WULF), Core Scientific (CORZ), Applied Digital (APLD) and HIVE Digital Technologies (HIVE) have collectively raised billions of dollars through debt issuance, demonstrating increasing access to institutional capital.
We also expect consolidation activity to remain an important component of industry development. Earlier this year, Mastercard agreed to acquire BVNK for approximately $1.8 billion to help bridge traditional payment infrastructure with emerging stablecoin payment rails. We believe similar transactions are likely to continue as established financial institutions seek to expand their digital asset capabilities.
According to Citi’s report, titled Tokenization 2030 Wall Street On-Chain, tokenized assets could represent between $2.7 trillion and $18.9 trillion of market value by 2030 (see page 20 of the Citi report).
As with any major infrastructure buildout, foundational layers must be established before the full economic benefits can be realized. Stablecoins, tokenized deposits, tokenized securities, and interoperable blockchain networks are increasingly becoming the digital highway of a more automated financial system. To this point, in building out the future highways, we expect toll booths, as AI agents will offer benefits and features that generate revenues and return on invested capital for those building out such “roads, bridges, and tunnels.”
We think that tokenization adoption will become ubiquitous, and features and benefits will be programmed as smart contracts running on blockchain rails. We believe adoption follows a flywheel effect. As more assets move on-chain, utility increases. Increased utility drives additional adoption, which attracts further capital and innovation. Combined with advances in artificial intelligence, blockchain networks have the potential to create more transparency.
Our view remains that when total addressable markets are measured in tens or hundreds of trillions of dollars, even modest improvements in efficiency can generate substantial economic value. As assets become increasingly tokenized and interconnected, we expect new revenue opportunities to emerge across financial services, software, payments, compliance, and AI-enabled automation.
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Transactions New to the portfolio during May was a starting position in Hyperliquid Strategies (PURR). As a Digital Asset Treasury (DAT) company, Hyperliquid is led by Bob Diamond, former CEO of Barclays, and David Schamis, formerly with J.C. Flowers. Hyperliquid has been a fast-appreciating token that offers a decentralized exchange platform for offshore trading activity focused on perpetual futures. In 2025, Hyperliquid, as a decentralized exchange, generated revenue of nearly $800 million. Trading activity recently hit a milestone of $4.5 trillion in cumulative perpetual volume.1 It has a market cap value of about $16-$18 billion, which puts it as the 9th largest token/protocol. PURR, which trades close to mNAV2, has a market value of $1.6-$1.9 billion, which represents a significant ownership stake in the token.1 Ownership of the token is reported every week, not on a daily basis. Today, many DAT companies trade closer to their underlying values than they did during prior periods of market enthusiasm. In some cases, they trade at meaningful discounts. For example, both Sharplink (SBET) and Metaplanet currently trade at discounts of approximately 25% to 30% relative to modified net asset value (NAV). We believe stronger digital asset market conditions could narrow these discounts over time and enhance shareholder returns. We added incrementally to our position in Figure Technology Solutions (FIGR), Metaplanet (3350 JP), Bitgo Holdings (BTGO), and Webull Corp (BULL), while trimming back on HUT 8 (HUT). |
1 DefiLlama. Hyperliquid TVL, Fees, Revenue & Volume. Pluang. Hyperliquid hits $4.5T perp volume with $10.1B open interest, launches staking ETF via Grayscale. June 3, 2026. CoinMarketCap.