Maybe being able to literally buy access to the President is a bad idea?

Imagine this: I hand you a paper stock certificate, and you hand me a wad of cash. No broker, no exchange—just two people, in-person, one security, one transaction. Under U.S. federal securities laws, this peer-to-peer (P2P) transaction is entirely lawful. There is no need to have it transacted through an intermediary, registered with the SEC, reported, or surveilled.

Now imagine that same transaction, but done digitally. Instead of paper, I send you a tokenized version of that stock via a smart contract on a decentralized blockchain network. No third parties, no clearinghouse, just software facilitating the trade. Functionally, nothing has changed — the transaction is still P2P. In theory, this should mean it receives the same hands-off treatment from regulators. But is that the case in practice?

The answer carries profound implications, and not just for crypto. The legal status of P2P digital transactions also matters for privacy, individual autonomy, technological innovation, and the limits of government oversight in a digital world.

The SEC’s Expanding Perimeter

Federal securities laws are primarily concerned with intermediaries, public offerings, and fraud. The SEC’s jurisdiction hinges not just on what is being transacted, but how and by whom. Most notably, anyone that handles securities transactions can potentially be designated an exchange or a broker, while offering securities to the public may require you to register those assets with the SEC.

Historically, this meant that purely bilateral exchanges between individuals—especially those that occur outside of the public markets—generally fall outside the SEC’s jurisdiction.

Decentralized finance technology, or DeFi, challenges that paradigm by enabling P2P securities transactions to occur at scale and with unprecedented automation. Users can now transfer crypto assets, and potentially tokenized equities, directly to one another via smart contracts, sometimes with the click of a button. This can take the form of an automated market maker, where users trade against a pool of liquidity governed by a pricing algorithm; a peer-matching protocol, which enables users to create and fill signed orders off-chain and settle them on-chain; or smart contract-based escrow and atomic swaps, which implement smart contracts that allow conditional execution.

These DeFi tools offer the promise of marvelous new trading efficiencies coupled with unprecedented transparency and record-keeping. But at their foundation, transactions using these tools are simply a high tech version of me handing you a stock certificate in return for cash.

Despite this parallel, the SEC has moved to treat DeFi transactions as though they belong to the legal regime of exchanges and brokers. This would be a mistake.

When it comes to figuring out rules for these platforms, the guiding principle should be one of technological neutrality. Regulation should focus on function, not form. If the same economic activity is permissible in the physical world, then the use of new tools to facilitate that activity should not, by itself, trigger additional regulatory burdens.

This is not to say that all DeFi activity is beyond the reach of securities law. If a platform intermediates trades, pools liquidity, has control or discretion over assets, or plays a role akin to a traditional financial institution, then there may well be a legal basis for oversight. But when two individuals use software to exchange digital representations of securities in a direct, automated, and non-custodial way, the SEC's legal basis becomes far more tenuous.

A Broader Question of Government Reach

This isn’t just about securities law. As technology empowers individuals to transact and communicate in increasingly decentralized ways, these new tools raise familiar legal questions about how to balance government power and individual freedom.

Consider the "third-party doctrine" in privacy law, which holds that individuals lose their expectation of privacy when information is voluntarily shared with third parties (like banks or telecom providers). This once-narrow exception has ballooned in the digital age, where people's lives increasingly move online, and nearly all online activity involves intermediaries. As a result, courts have struggled to reconcile the doctrine with modern expectations of privacy and constitutional protections under the Fourth Amendment.

A similar tension is playing out in financial regulation. DeFi challenges the assumption that financial activity must always be routed through a gatekeeper. If technology now enables parties to engage in direct financial transactions without intermediaries in the middle, does the state retain the same justification—and authority—to regulate that activity as if those institutions were still involved?

What we need is a principled framework—one that respects individual autonomy, preserves market integrity, and draws clear lines about where government power begins and ends. We must recognize that, while it may be tempting, just because new technology makes it possible to regulate private activity doesn’t mean it is appropriate to do so. A principled framework should also not pick winners and losers—if DeFi potentially represents a superior model that could replace, or supplement, key components of our existing financial system, that should not be a reason to regulate it out of fear. 

Crypto didn’t invent peer-to-peer finance; it just removes the friction. Instead of automatically trying to fit innovative technologies into legacy frameworks, regulation should adapt.

This story was originally featured on Fortune.com

The crypto industry has been fighting to get a piece of the red-hot artificial intelligence sector, but despite some hefty investments, blockchain companies have struggled to break through. That might finally be changing with Nous Research, a decentralized AI startup using the Solana blockchain as a key component in the process it uses to train its open-source models. 

After operating mostly under the radar for two years, Nous is bursting on the scene with a $50 million Series A round, financed almost entirely by the crypto venture giant Paradigm, which confirmed the funding amount to Fortune.

The round values Nous at a token valuation of $1 billion, according to a person familiar with the matter, who spoke with Fortune on the condition of anonymity to discuss confidential fundraising details. Nous previously raised seed rounds totaling around $20 million from investors including Distributed Global, North Island Ventures, and Delphi Digital. 

While most projects at the intersection of blockchain and AI have come from crypto-focused startups and struggled to find traction, Nous was founded by a group of AI researchers who decided to use blockchain technology for its coordination and incentive capabilities. The company aims to develop its own open-source models that would compete with the likes of OpenAI and DeepSeek, though Nous is at a much earlier—and more experimental—stage. The other major difference is that Nous seeks to train its models not in a central data center, but in a completely distributed way, harnessing spare computing capacity from people around the world.

“We very much came from a mentality that we want to create and serve the world’s best AI,” said cofounder Karan Malhotra in an interview with Fortune. 

Decentralized AI

Malhotra described Nous as an open-source research organization, created in 2022 as a group of volunteers who met on social media and software platforms including Discord, GitHub, and Twitter. They started to tinker with existing AI large language models such as Meta’s Llama and Mistral to create their own versions, releasing a series of models under the name Hermes that gained popularity in the open-source community. 

They also began to release research papers around extending the memory of models, which have been cited by Meta and DeepSeek, as well as proposals for training models with GPUs, or graphics processing units, the kind of computer processors used for AI applications, that are not colocated. Nous collaborated with Diederik P. Kingma, a member of the OpenAI founding team, on the research. 

The breakthrough enabled Nous to create a method for training open-source AI models that would allow people to contribute their own idle computing power—a potential boon for the costly and resource-intensive process. Nous’s method works with both industrial and consumer-grade GPUs, though it will start with only allowing people who can tap into data centers to participate. 

Nous is turning to blockchain technology to drive participation. “We think of the incentive mechanism behind crypto to push people to actually utilize their idle compute less as a donation but more as a transaction,” Malhotra said. 

He added that the crypto layer is necessary to de-incentivize bad actors in a distributed training approach, where users could send back inappropriate data that could poison the process. That’s because of blockchain’s intrinsic features like Byzantine fault tolerance, which allows systems to continue functioning correctly even if specific components are faulty, though questions remain whether Nous's method can fully prevent data poisoning while staying as efficient as training models from a single data center. “We see crypto as the method that allows us to perform this in a safe way,” Malhotra told Fortune.

He acknowledged that the AI community has been broadly skeptical of crypto, largely because there’s “a lot of room for grift,” as he put it. Still, Malhotra described Nous’s founding team as “crypto native,” though he said they were hesitant about adding a blockchain element before their research breakthrough of distributed training. 

“We don't want to get kind of bogged down by the traditional view of how crypto operates when we're a very serious research lab and an academic lab,” he told Fortune. “[But] this is really the only way in which we can make such a massive training run and such a democratic thing possible.”

Paradigm’s AI bet

Founded by Coinbase’s Fred Ehrsam and Sequoia’s Matt Huang, Paradigm is one of the largest crypto-native venture firms, with a new fund of $850 million closed last year. Still, after the collapse of its portfolio company FTX in late 2022 and the ensuing crypto downturn, the firm indicated that it would pivot to making more AI-focused investments, drawing scrutiny from crypto entrepreneurs and its own backers. Haung clarified in a 2023 post on Twitter that Paradigm would continue to invest in crypto, though it was exploring the intersection with AI. 

Nous represents Paradigm’s largest bet in the field, though the firm also wrote a much smaller check last year for the startup Vana, which allows users to pool training data through DAOs, or decentralized autonomous organizations. 

“This open, community-oriented approach is a powerful contrast to the closed, centralized efforts from incumbent labs,” said Paradigm partner Arjun Balaji in a statement shared with Fortune. 

Nous will launch its decentralized training system on the blockchain Solana. Malhotra said the team is actively building the product, though he declined to share a timeline for when it will go live. He said Nous is still deciding whether users will be rewarded with a proprietary token created by the startup or Solana’s native cryptocurrency. 

Nous currently has a 20-odd-person team, with much of the new funding going to compute power, as well as expanding its research capabilities. 

As the AI industry hurtles forward, Nous is one of the first serious projects to embrace blockchain. “It's quite clear to me that the ideals of open source and the crypto ethos are extremely aligned in having total transparency, recognizing the importance of the individual, and treating people as a node in themselves,” Malhotra said. 

This story was originally featured on Fortune.com

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Abhi Pingle is a savvy trader. For a year and a half, he worked at Optiver, one of the top high-frequency trading firms. HFT shops employ traders known as quants who are highly skilled in programming and quantitative analysis. Mom-and-pop investors can’t hope to compete with quants’ trading know-how, but Pingle wants to change this. He and his two cofounders, brother Arijit Pingle and TK Kwon, have raised $20 million across two funding rounds to launch Theo, a trading platform that lets users earn money from strategies usually reserved for top-tier HFT firms. 

The trio drummed up $4.5 million in March 2024 in a seed round led by Manifold Trading, a quantitative investment firm. And, one year later, the three raised $15.5 million in a second round led by crypto investor Hack VC and Anthos Capital. Other investors in their company include Flowdesk and Selini Capital, as well as individuals from firms like Citadel, JPMorgan, Jane Street, and Optiver.

The two rounds were for token warrants, or promised allocations of a yet-to-be-released cryptocurrency. Abhi Pingle, who’s 26, declined to specify his startup’s most recent valuation.

Theo, whose name is inspired by the trading term “theoretical price,” is part of the broader DeFi, or decentralized finance, ecosystem. DeFi apps promise users access to financial services like loans or crypto trading without the need to engage with centralized institutions like banks or brokerages. Investors and traders have parked $95 billion into DeFi protocols and apps as of Thursday, according to DefiLlama. Pingle, however, told Fortune that Theo plans to branch out beyond just DeFi.

He and his other two cofounders went to Northwestern University, where they studied computer science. The trio then went on to work at both Optiver and IMC Trading and left their HFT firms in 2022 to work on a DeFi-focused blockchain called Canto, which notched initial success before flagging during the depths of crypto’s most recent bear market.

In late 2023, the three decided to become founders themselves and start Theo. “We're trying to minimize the actual decision-making or interactivity so that it’s as simple as just depositing—kind of like how you might deposit into your money market fund,” Pingle said.

The cofounders launched their trading platform in June and have let users deposit about $50 million into their protocol. Pingle said that, over the past three months, the average yield users have accrued is between 7% and 8%. And when measured over the last year, users, which include family offices and funds, have accrued between 18% and 20%.

The team plans to uncap the amount of funds investors can deposit by the end of April. And while their protocol has mainly interfaced with other popular DeFi apps like Aave and Hyperliquid, they plan to try out their trading strategies on centralized exchanges like Binance and Bybit. “I think longer term for us, we actually want to get integrated with more traditional markets as well,” he said.

This story was originally featured on Fortune.com

© Courtesy of Theo

President Trump’s endorsed memecoin soared in value on Wednesday after the token’s founders promised that top holders would be able to have dinner with America’s first “crypto president.” 

The price of $Trump, skyrocketed 58% within one hour $14.70 on Wednesday after the token’s website announced that the top 220 holders will be invited to meet the president at his golf club near Washington, DC, on May 22. The “intimate private dinner” will include a speech from Trump about the future of crypto. The top 25 holders will be invited to a “VIP reception” and given a White House tour. 

The guest list for the “black-tie optional” event will be determined by a leaderboard that will keep track of investors’ average $Trump holdings between April 23 and May 12. The current top holder owns 400,005 tokens, worth $5.2 million at its current price of $13.01. 

“The competition is fierce,” the website says. “Let the President know how many $TRUMP coins YOU own!”

Trump token unlock

Late last week, 40 million additional $Trump tokens were set to be released to the memecoin’s creators and CIC Digital, a company affiliated with Trump, in what’s called a token unlock. Unlocks have been known to reduce the value of a token by increasing its available supply, and often leading to major sell-offs as token insiders dump their holdings for profit. 

Despite fears that the Trump team would opt to sell, there were no large-scale sales over the weekend, according to blockchain data firm Chainalysis, leading to increased investor confidence in the longevity of the token and a 10% bump in value. In fact, the tokens that were scheduled to be released last week will remain locked for an additional 90 days, the Trump memecoin account wrote on X on Wednesday. 

Trump-linked companies stand to hold 80% of the token’s supply after they are all released by 2028. Considering that $Trump’s value had fallen 90% since its initial launch, the dinner may be an effort to prop up the token’s price and maximize the value for holders of any future sales, Dylan Bane, an analyst at research firm Messari, told Fortune. 

“Given the token’s significant drop since launch, they likely want to avoid setting a precedent of aggressive sell-offs, especially with the majority of tokens still locked for the next 24 months,” he said.

Conflicts of interest

The dinner also highlights a conflict of interest created by a presidential memecoin. During Trump's first presidency, ethics organizations criticized the use of the president’s various hotels by people—both domestic and foreign—with matters before the government. This time around, Trump’s array of crypto ventures, including his memecoin and DeFi company World Liberty Financial, present an easier and more anonymous way to potentially bribe or influence the president. 

The legality of Trump’s memecoin remains a gray area. “There isn’t a lot of precedent for the president to be the owner of a publicly traded asset, and especially a meme asset,” Jordan Libowitz, a vice president at the watchdog Citizens for Responsibility and Ethics in Washington, previously told Fortune. 

However, the White House denies the memecoin presents an ethical issue. “President Trump’s assets are in a trust managed by his children,” Anna Kelly, the White House’s deputy press secretary, told Fortune. “There are no conflicts of interest.”

This story was originally featured on Fortune.com

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