LayerZero's Zero: When Citadel and the DTCC Show Up to Build a Chain

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast Simon Taylor of Fintech Brainfood, Pet Berisha of Sporting Crypto, and Shwetabh Sameer of Molten Ventures.

We are the newsletter for institutions that need help preparing for a Tokenized future.

We run through the headlines every week, what it means for you and a market readout. Always with an institutional, business-focused perspective. 

Join us every week as we meet your Tokenization needs.

In This Week's Edition:

🚀 LayerZero launches Zero - A new Layer 1 blockchain backed by Citadel Securities, DTCC, ICE, ARK Invest, Tether, and Google Cloud. Wall Street isn't being pitched blockchain infrastructure anymore. It's co-designing it.

💸 Deel adds MoonPay for stablecoin salary payouts - The $17.3 billion global payroll platform extends stablecoin payments from contractors to employees, joining a market where every major distributed workforce platform now offers stablecoin settlement.

🏛️ CFTC fixes a gap that could have sidelined crypto's biggest custodians - A one-word revision to the collateral pilot ensures stablecoins issued by national trust banks (Paxos, BitGo, Ripple, Fidelity, Circle) are eligible as margin in derivatives markets.

Stories You Can't Miss 📰

 🚀 LayerZero Launches Its Own Blockchain. And the Backers Are the Real Story

The company behind crypto's most widely used interoperability protocol just made a sharp pivot. LayerZero Labs unveiled Zero, a new Layer 1 blockchain built specifically for institutional finance. But the chain itself isn’t what is fascinating - it’s the group of backers standing behind it.

Citadel Securities. The DTCC. Intercontinental Exchange (parent company of the New York Stock Exchange). ARK Invest. Tether. Google Cloud. All alongside existing investors a16z and Sequoia.

That’s not a crypto investment round. That’s a convergence of the entities that actually run financial markets teaming up with the entities trying to rebuild them.

Key Points:

• Citadel Securities is making a strategic investment through a ZRO token purchase and is exploring how Zero could be used across trading, clearing, and settlement workflows. Citadel handles roughly 35% of U.S. retail stock trades.

• DTCC and ICE are named as partners, not just investors - signaling real exploration of blockchain rails for securities settlement and exchange operations. This includes the DTCC, which processes $3.7 quadrillion in annual securities volume and custodies $99 trillion in assets. Google Cloud joins as an infrastructure partner.

• ARK Invest is taking both equity and token exposure. Cathie Wood joins an advisory board with current and former executives from ICE and BNY Mellon.

• Tether announced its own strategic investment, calling LayerZero critical infrastructure for USDt0, which has facilitated more than $70 billion in cross‑chain value transfers in under twelve months.

• Zero launches with three “zones”:

  • a general‑purpose EVM zone

  • a privacy‑focused payments zone

  • trading zone for multiple asset classes

The chain is set to launch in the fall of 2026, with a public demo this week.

• The performance claims are bold: LayerZero says Zero’s target is to hit 2 million transactions per second at negligible cost, driven by a new approach to zero‑knowledge proofs. For context, Solana’s prior peak was ~100-110k TPS (in August 2025). a16z also purchased $55M in additional ZRO tokens last year.

• ZRO price movement: The token fell about 15% during the rumor window ahead of the announcement (per CryptoBriefing) and then recovered once Zero was officially unveiled. Today, ZRO’s market cap sits in the mid-hundred millions

The Tokenized Take:

The investor coalition matters more than the technology. Plenty of projects have claimed institutional‑grade throughput. What they haven’t had is Citadel exploring their chain for clearing workflows - or the DTCC, the invisible backbone of U.S. markets, signing on as a partner. LayerZero isn’t pitching Wall Street. Wall Street is at the table co‑designing it. That distinction matters.

This also reshapes the L1 wars we’ve been tracking since August. When Circle launched Arc and Stripe launched Tempo, the story was payment companies vertically integrating into infrastructure. LayerZero’s move is different. They’re not an issuer, nor a payments firm. They’re the interoperability layer connecting 150+ chains - now trying to absorb the settlement layer too.

Zero’s architecture is tailored to the blockers we've heard from institutions for years. Privacy has always been the brick wall for banks evaluating public chains. Zero’s split‑zone design - isolating a private payments zone from a public EVM zone and a trading zone - allows institutions to dial in the exposure and visibility they’re comfortable with. Citadel doesn’t need to transact in the same environment as a DEX, and now it doesn’t have to.

There is still the fragmentation paradox. LayerZero built its business on the premise that there would be many chains needing to interoperate. Now they’re launching another one. Pellegrino is betting Zero becomes the gravitational center for institutional settlement rather than another chain competing for crypto-native flow. It’s a clear thesis - but it's also a tension worth watching.

For institutional decision‑makers, the signal is straightforward: the infrastructure layer of tokenized finance is no longer theoretical. It’s being contested in real time by serious players with serious capital. Zero has the strongest pitch yet - but fall 2026 is where the throughput claims and institutional ambitions meet reality.

💸 Deel Adds MoonPay for Stablecoin Salary Payouts. And Quietly Expands From Contractors to Employees

Deel, the $17.3 billion global payroll platform operating in 130+ countries, has partnered with MoonPay to enable stablecoin salary payouts - its second stablecoin infrastructure provider alongside BVNK.

Key Points:

• From contractors to employees: Deel's existing BVNK partnership (Spring 2024) focused on contractor payouts - 10,000 contractors in 100+ countries have opted for stablecoin payments, with 125,000+ successful payouts processed. The MoonPay partnership targets expanding stablecoin payouts to employees as well, a fundamentally different compliance challenge when payroll - not just withdrawals - runs through stablecoin rails.

• MoonPay provides the full stack: Conversion, wallet delivery, and off-ramp flexibility - payments go directly to non-custodial crypto wallets. MoonPay's enterprise stablecoin business (launched November 2025) is built on its Iron acquisition and M0 integration, covering issuance, ramps, swaps, and payments.

• Regulatory coverage matters here: MoonPay holds a New York BitLicense, NY Limited Purpose Trust Charter, money transmitter licenses across the US, and MiCA authorization in the EU - the kind of licensing depth that employee payroll demands.

• Geographic phasing: The rollout begins next month with workers based in the UK and EU, expanding to the US in a second phase.

The Tokenized Take:

Three weeks ago, we covered Gusto adding stablecoin payouts through ZeroHash for its 400,000+ small business employers. We noted that when the payroll platform serving Main Street small businesses adds stablecoin settlement, the capability has crossed from early adopter territory into baseline infrastructure. Deel isn't following that playbook - they're pushing past it. They added stablecoin payouts two years ago. Now they're extending them from contractors to employees.

That distinction matters more than it sounds. When a contractor decides to do stablecoin payouts on Deel, they're essentially choosing a withdrawal method. The money is already earned, already calculated, already theirs. The platform converts and sends. Employee payroll is a different animal entirely. Tax withholding, benefits deductions, pension contributions, regulatory reporting - all of that has to happen before the stablecoin conversion. The compliance surface area multiplies with every jurisdiction. Moving stablecoins into that workflow requires infrastructure that goes well beyond a fiat-to-crypto API call.

Which explains the multi-provider approach. Deel is running both BVNK (which processes $30+ billion annually and powers Worldpay, Flywire, and dLocal) and MoonPay (with its Iron-powered enterprise stack and broad US/EU licensing) in parallel. The way to interpret it? Different providers optimized for different corridors, different compliance regimes, different worker types. It's how large platforms already treat banking partners, and stablecoin infrastructure is now earning the same treatment.

So the competitive landscape in stablecoin payroll now reads: Deel has two providers (BVNK + MoonPay). Remote uses Stripe. Gusto uses ZeroHash. Every major global EOR and distributed workforce platform now offers stablecoin settlement. The legacy payroll incumbents - ADP, Paylocity, Paycom, Papaya Global - haven't. That gap won't last.

For enterprise HR and treasury teams: if your payroll provider doesn't offer stablecoin settlement options today, ask why. The three largest distributed workforce platforms now do. That window for competitive differentiation is closing fast.

Two years ago, stablecoin payout was a differentiator. Now it's a procurement checkbox.

🏛️ CFTC Fixes a Gap That Could Have Sidelined Crypto's Biggest Custodians from Derivatives Markets

Back in December, the CFTC launched its crypto collateral time-boxed no-action framework (effectively a pilot). This finally let Futures Commission Merchants (FCMs) accept stablecoins and digital assets as margin in derivatives markets. We covered it in detail. It was a foundational move.

But there was a problem nobody caught until after the ink dried. The original Staff Letter 25-40 defined "payment stablecoin" in a way that unintentionally excluded stablecoins issued by national trust banks. That meant firms like Paxos, Ripple, BitGo, and Fidelity Digital Assets - all of which received conditional OCC national trust charters just days after the letter dropped - were technically not eligible.

On February 6, the CFTC fixed it. The Market Participants Division reissued the letter with an expanded definition that explicitly includes national trust banks as permitted stablecoin issuers for the purposes of the collateral pilot.

Key Points:

• The revision is narrow but consequential. The CFTC reissued Staff Letter 25-40 (now Letter 26-05) with a single change: national trust banks are now explicitly included as eligible issuers of payment stablecoins that FCMs can accept as margin collateral and hold in segregated customer accounts.

• Five newly conditionally approved institutions stand to benefit immediately. The OCC conditionally approved national trust charters for Ripple, BitGo, Fidelity Digital Assets, Paxos and First National Digital Currency Bank (Circle) in December 2025. Anchorage Digital, which received its conditional charter back in January 2021, has been operating under OCC supervision for nearly five years and had its BSA/AML consent order lifted in August 2025 - making it the most seasoned federally chartered crypto bank in the country.

• Chairman Selig traced the lineage directly. His statement pointed back to Trump's first term, when the OCC "made history by chartering the first national trust banks with authority to custody and issue payment stablecoins" - a reference to the original Anchorage charter in 2021. He added that he was "pleased that the CFTC staff is amending its previously issued no-action letter to expand the list of eligible tokenized collateral to include payment stablecoins issued by these institutions."

• The turnaround was fast. Two months from the original letter to the revision. The CFTC acknowledged the gap wasn't intentional - staff simply "became aware that payment stablecoins that otherwise meet the definition in the letter may be issued by a national trust bank" - and moved to correct it.

The Tokenized Take:

On the surface, this is a one-word fix to a staff letter. But it closes the last gap in a three-part regulatory circuit that's been assembling since July.

The December pilot changed how derivatives markets think about collateral. For the first time, FCMs could accept stablecoins as margin instead of requiring firms to liquidate digital holdings to cash. But if the stablecoins your clients actually hold - say, Paxos Trust Company's PYUSD or a future Ripple-issued token - don't qualify because the issuer happens to hold a national trust charter rather than a state charter, the pilot has a hole in it. Institutional clients don't want to hear "your stablecoin doesn't count here." They want issuer-agnostic infrastructure.

That's what this revision delivers. The collateral stack is now charter-neutral across state-chartered issuers, GENIUS Act-compliant issuers, and national trust banks. For FCMs building out their digital asset collateral workflows, the vendor selection just got simpler - they don't need to restrict which stablecoins they accept based on the issuer's charter type.

And how the CFTC got here matters as much as where they landed. They identified a gap, acknowledged it publicly, and corrected it in ~8 weeks. Compare that with the years-long enforcement-first posture under previous leadership. This is a regulator that's actively iterating alongside the market rather than waiting for perfect policy. For institutions weighing whether to invest in derivatives infrastructure that touches digital assets, that kind of responsiveness matters - it reduces the risk that regulatory ambiguity will strand your operational investments.

One more angle: this quietly strengthens the competitive position of the national trust charter itself. The OCC received 14 de novo charter applications last year - nearly as many as the previous four years combined. If those charters come with full eligibility across CFTC, SEC and banking frameworks, the national trust path becomes the default institutional playbook. Anchorage has operated under a federal charter for nearly five years. Circle, Paxos, BitGo, Ripple, and Fidelity received conditional approval in December. Coinbase is still in the application queue. The CFTC just removed one of the remaining friction points for all of them.

Meanwhile, stablecoin issuers without a U.S. charter or GENIUS Act compliance remain locked out of this collateral framework entirely - widening the structural gap between regulated and unregulated tokens in institutional markets.

📰 Some More News:

🏦 Tokenization & Finance

• BlackRock offers DeFi trading for the first time, buys Uniswap tokens (Read more here)

• Interactive Brokers Taps Coinbase for 'Perpetual-Style' Crypto Futures (Read more here) 

• Stripe adds x402 integration for USDC agent payments on Base (Read more here)

• Franklin Templeton, Binance roll out program letting institutions use tokenized money funds as trading collateral (Read more here)

• EU Parliament Gives Digital Euro Its Blessing (Read more here)

• Curql Funds Stablecore to Secure Credit Union Deposits (Read more here)

• UK Central Bank taps firms to test elements of distributed-ledger settlement infrastructure (Read more here)

• Bastion CEO Says Stablecoin Adoption Depends on Enterprise-Grade Financial Infrastructure (Read more here) 

• LMAX unveils new exchange to break the wall down between crypto and FX (Read more here)

• Fintechs Back Fed Payments Account That Could Open Rails to Crypto Firms (Read more here) 

• CME Group to Launch Futures for Cardano, Chainlink, and Stellar (Read more here) 

• Ripple expands institutional custody stack with staking and security integrations (Read more here).

• Tether's gold stash tops $23 billion as buying outpaces nation states, Jefferies says (Read more here) 

🤑 Funding and M&A

• Anchorage Digital secures $100m Tether investment (Read more here) 

• Backpack exchange reaches $1 billion unicorn valuation on tokenization push: Axios (Read more here)

• Circle Ventures invests in edgeX ahead of token launch, plans USDC on EDGE Chain (Read more here) - 

• Jump Trading to take small stakes in Polymarket, Kalshi: Bloomberg (Read more here) 

• Farcaster founders join stablecoin startup Tempo after Neynar acquires social protocol (Read more here) 

• MrBeast buys Gen Z bank just weeks after BitMine's $200M bet (Read more here) 

• Crypto.com founder buys ai.com for record $70 million: FT (Read more here) 

💼 Government & Policy

• Blockchain.com Secures FCA Registration in UK (Read more here) 

• Gemini exit a 'blow for policymakers' with UK crypto hub ambitions (Read more here) 

• Federal Reserve to roll out 'skinny master accounts' this year as broader crypto rules remain in limbo, Fed Gov. Waller says (Read more here) 

• McHenry predicts fast crypto deal as Witt brokers talks (Read more here) 

• White House meeting could unfreeze the crypto CLARITY Act this week, but crypto rewards likely to be the price (Read more here) 

• China Extends Crypto Ban to Stablecoins and Tokenized Assets (Read more here) 

• Israel crypto industry pushes regulatory changes amid strong public support (Read more here)

• European Union considering a ban on crypto transactions with Russia to tighten sanctions evasion: FT (Read more here)

• Fed's Waller says crypto hype 'fading' with TradFi tie-ins (Read more here) - 

• South Korea launches probe into Bithumb over $43 billion fat-finger incident (Read more here) 

• UK regulator takes High Court action against HTX over crypto promotions (Read more here)

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