Editor | Wu Blockchain

Verified as of August 30, 2026 | Coverage period: August 31–September 6, 2026, ET

The key events to watch this week:

Tuesday, September 1, 10:00 a.m. ET | July JOLTS and August ISM Manufacturing PMI

The two releases will test U.S. labor demand and manufacturing momentum at the same time. Job openings, hiring activity, and the ISM employment and prices components could shift expectations for the Fed’s September rate path.

Tuesday, September 1, 4:30 p.m. ET | Dell Technologies Q2 FY2027 Earnings Call

Dell will release its results before the call. The key variables are AI server orders, backlog conversion, Infrastructure Solutions Group margins, and whether rising memory and supply-chain costs are beginning to pressure profitability.

Wednesday, September 2, 2:00 p.m. ET | Federal Reserve Beige Book

The report will provide fresh regional evidence on employment, wages, prices and business demand. Markets will use it to assess whether the slowdown is broadening and how much room the Fed has to tighten policy again in September.

Wednesday, September 2, 5:00 p.m. ET | Broadcom Q3 FY2026 Earnings Call

Investors will focus on growth in custom AI accelerators, AI networking and related semiconductor revenue, as well as new orders, customer concentration, supply capacity and the outlook for AI-related demand.

Thursday, September 3, 10:00 a.m. ET | August ISM Services PMI

Services remain a major source of U.S. employment and inflation pressure. The employment, new orders and prices paid components will show whether economic resilience can continue to support a restrictive rate environment.

Friday, September 4, 8:30 a.m. ET | August U.S. Employment Report

This is the week’s most important macro release. Payroll growth, unemployment, average hourly earnings and revisions to prior months will shape the market’s assessment of labor-market strength and the Fed’s September decision.

Also on the calendar are the G20 Finance Ministers and Central Bank Governors Meeting on August 31 and September 1, euro-area August flash CPI and July unemployment at 5:00 a.m. ET on September 1, and Fed Governor Christopher Waller’s economic outlook interview at 8:30 a.m. ET on September 3. The G20 meeting could provide new signals on currencies, global imbalances and digital-asset policy. Euro-area inflation and Waller’s remarks may separately shift expectations for the ECB and Fed policy decisions later in September.

Bottom line:

The week comes down to two questions — will U.S. labor data, euro-area inflation and central-bank signals push global rate expectations higher, and can Dell and Broadcom show that elevated AI CapEx is still converting into revenue and profit?

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Complied by | WuBlockchain

Original Link：

https://www.wublock123.com/articles/microstrategy-death-spiral-risk-macro-outlook-h2-2026-59118

In this episode of the WuBlockchain Podcast, we are joined by frontier technology investor Didier Zheng to discuss the recent Bitcoin downturn, changes to the financial strategy of Strategy (formerly MicroStrategy), the AI-driven rally in U.S. equities, crypto exchanges expanding into U.S. stock trading, and the macroeconomic outlook.

Didier argues that Bitcoin’s recent decline cannot be attributed solely to macroeconomic conditions or ETF redemptions. A key factor is that the market has begun pricing in the possibility that Strategy may continue making small, recurring Bitcoin sales to fund preferred stock dividends while adhering to its principle of maintaining a neutral amount of Bitcoin per share. Meanwhile, AI is reshaping the structure of the labor market, with tokens emerging as a new factor of production and supporting continued gains across the AI value chain in U.S. equities. The crypto industry, in turn, may gradually move beyond speculation in crypto-native altcoins toward real-world assets onchain, an onchain machine economy, and a more mature, industrialized stage of development.

Strategy’s Bitcoin-Selling Experiment: Expectations of Sustained Selling Pressure Versus Market Absorption

Maodi: Bitcoin has fallen sharply recently, and the market has offered many explanations. Some attribute it to Strategy selling Bitcoin, others to ETF redemptions, and still others to macroeconomic changes or leveraged liquidations. Which factor do you think has been the most important?

didier: I think Strategy remains the key factor. However, what is really weighing on the market is not the sale itself, but the growing expectation that Strategy will continue selling Bitcoin.

At its earnings call in May, Strategy said it intended to keep its Bitcoin holdings per share neutral. As preferred shares and debt instruments such as STRC, STRZ, STRD, and STRF continue to accumulate, Bitcoin is no longer an asset solely attributable to common shareholders. It must first cover the claims of creditors and preferred shareholders. As a result, maintaining BPS neutrality has become more costly.

The market previously believed that Strategy would primarily fund its preferred stock dividends by issuing common shares, which placed little pressure on Bitcoin. However, the threshold for raising capital through new share issuance has now risen, shifting some of that pressure onto Bitcoin. As long as MMV remains below the neutral threshold, Strategy is more likely to cover its cash flow needs through small, recurring Bitcoin sales. If the frequency of dividend payments increases further, the market will naturally expect Strategy not to sell only occasionally, but to sell a small amount at regular intervals.

The key issue behind this downturn, therefore, is not “how much has been sold,” but “whether the selling will continue.” Under this logic, ETF selling is more of a consequence than a cause. Once the market concludes that Strategy is likely to keep selling Bitcoin, related capital will begin withdrawing in advance.

Maodi: You just described Michael Saylor as conducting a financial experiment. What is the purpose of this experiment?

didier: Essentially, he is testing the market’s capacity to absorb small, recurring Bitcoin sales.

From a financial perspective, when the MMV premium is not particularly high, selling a small amount of Bitcoin does less damage to Bitcoin holdings per share than issuing additional stock. That makes it the first-order optimal solution. The problem is that, following the large-scale issuance of STRC since March, interest and dividend expenses associated with preferred shares and perpetual instruments have increased significantly. Cash flow management has therefore become unavoidable. The key question is no longer whether to manage cash flow, but how to manage it.

If the market can absorb the impact of these small, recurring Bitcoin sales, the system can continue operating. However, if this approach instead depresses the share price, pushes down MMV, widens the divergence, and further reinforces expectations of continued Bitcoin sales, Strategy may have to make a gradual pivot. It could once again rely more heavily on issuing stock, or adopt a combination of stock issuance and Bitcoin sales. Although this would sacrifice some Bitcoin holdings per share, it would reduce the pressure on both Bitcoin and Strategy’s share price, making it the second-order optimal solution.

What we are seeing, therefore, is essentially a contest between Michael Saylor and the market. He is watching to see at what level sufficiently strong buying demand will emerge, while the market is waiting for a lower and more certain price before stepping in.

Maodi: Could this eventually cause Strategy and Bitcoin to enter a “death spiral” together?

didier: I do not think this alone would be enough to cause that. For the situation to reach that point, it would usually require an additional macroeconomic shock or a larger systemic disruption.

As long as Strategy eventually makes a gradual pivot and stops selling Bitcoin rigidly, dip buyers will most likely return. The question is not whether buying demand exists, but at what price it will emerge. It could be $62,000, or it could be lower. The market is now waiting for that level.

My view therefore remains cautiously optimistic. This downturn is driven more by structural pressure arising from changes in Strategy’s financial structure than by a simple tightening of macro liquidity. Unless another major negative catalyst emerges, the situation will most likely be reversible and is unlikely to develop directly into a genuine “death spiral.”

Tokens as the Labor Force of a New Era

Maodi: Although the crypto industry is currently struggling, AI is booming. U.S. stocks related to optical modules, semiconductors, and data centers have performed particularly well. What do you think is the main force driving this trend?

didier: The core logic is actually quite simple. Tokens are essentially becoming the labor force of a new era.

In the past, people were the primary factor of production for companies. Whether the work involved physical or intellectual labor, it was performed by humans. Now, however, AI and tokens are replacing many of the execution tasks previously handled by people. In the future, the truly scarce talent may be limited to a small number of people capable of completing the entire loop: setting objectives, designing solutions, driving execution, and ultimately solving problems. These people, combined with large volumes of tokens, will form a new labor system.

This will directly transform corporate structures. Companies traditionally had multiple layers because information had to be passed from one person to another. In the AI era, however, many middle-management, assistant, IT, and execution roles will be reduced. What matters will no longer be execution ability alone, but influence, decision-making ability, and imagination.

Essentially, companies used to pay employees, but in the future, they will increasingly pay for tokens, models, and computing power. Model companies will then invest that money upstream to purchase chips, energy, optical modules, and data center capacity. Expansion in these upstream sectors is limited, and supply cannot keep pace with demand. They will therefore be among the most consistent beneficiaries across the AI value chain. This is the main reason related U.S. stocks have continued to rise.

The service sector will be affected first because knowledge-based services such as accounting, law, consulting, and data analysis are among the easiest for AI to replace. Companies will become increasingly automated internally, while an onchain machine economy may also emerge between them. At that point, many transactions, collaborative processes, and even payments will be handled by machines.

Maodi: Are you saying that this rally is not merely short-term speculation, but has the potential to continue over the medium to long term, and that we may still be at a very early stage?

didier: Yes. I think the machine economy era has only just begun.

Many people also misunderstand the concept of a “one-person company.” It does not mean one person working entirely alone. It means one person operating with a dozen or even dozens of intelligent agents, which together may achieve the same level of productivity that once required hundreds of employees. A one-person company therefore depends on a large number of intelligent agents providing labor behind the scenes.

This is why I have consistently argued that tokens are the new labor force. Companies used to spend money hiring people, but they are now allocating an increasing share of their budgets to tokens. As long as tokens can continue to amplify revenue, corporate profit margins will rise significantly. This is the central logic behind the market’s bullish outlook on the AI value chain.

The expectation currently reflected in the U.S. stock market is that more companies will become AI-native businesses, replacing human labor with tokens and increasing automation to significantly improve profit margins. This is also the most fundamental and rational driver of the current rally.

Exchanges Pivot to U.S. Stocks, but Users Do Not Need to Rewrite Their Trading Playbooks

Maodi: As U.S. stocks continue to rise, many crypto exchanges have also begun offering access to them. How do you view this development? Is it because the crypto industry itself lacks compelling narratives, forcing exchanges to actively create demand, or are there deeper reasons? Could this also accelerate capital outflows from the crypto industry?

didier: I have actually said for some time that offshore CEXs ultimately have only two paths.

The first is to become prediction markets, but that path is extremely difficult. The leading players have largely established their positions, and most existing CEXs will struggle to transform themselves into the next generation of “everything exchanges.”

The second path is to become distribution channels for real-world assets. At present, the most important real-world assets are U.S. stocks and U.S. Treasuries, while gold is another major opportunity.

The more fundamental reason is that, after all these years, there are actually very few genuinely valuable crypto-native assets. Bitcoin is one of them, as are a small number of DeFi infrastructure projects and public blockchains. Beyond those, however, most native assets lack sustainable intrinsic value and cash flow support. Given this reality, the trading infrastructure built around these assets will inevitably begin searching for new and more valuable instruments.

It is therefore entirely natural for CEXs to pivot toward U.S. stocks. I do not really see this as crowding out crypto assets. It is more a case of the industry returning to reality: there have never been that many genuinely valuable assets, and exchanges are simply moving toward instruments capable of supporting greater liquidity.

In the long run, however, this may not be a bad thing. The fundamental value of blockchain has never been limited to issuing native assets. It also lies in providing a decentralized alternative and enabling more efficient, lower-cost settlement and trading. Bringing real-world assets onchain is itself a meaningful direction.

From an even longer-term perspective, blockchain is actually a technology better suited to machines. Over the next five to ten years, a more likely scenario is that humans interact with agents, while agents complete payments, transactions, and collaborative tasks with one another onchain. The onchain infrastructure being built today can then be used directly by machines.

From a long-term perspective, I therefore see this as positive for Bitcoin. Whether it is more people or more machines entering the system, they will ultimately gain exposure to onchain assets.

Maodi: Ordinary users may previously have focused on trading altcoins, Bitcoin, or public blockchain assets in the crypto market. Moving into U.S. stocks involves a rather different framework, with major differences in earnings cycles, valuation systems, and regulatory rules. If you could offer one key piece of advice to users or traders who have spent years in the crypto world, what would it be?

didier: I do not think they need to deliberately change that much.

U.S. stocks and onchain assets are fundamentally quite similar. The U.S. stock market includes value stocks and growth stocks, as well as many assets with meme-like characteristics. One of the main reasons the latest onchain meme rally has weakened is that the most compelling meme assets have effectively moved into the U.S. stock market.

At their core, these assets are still telling stories about “changing the world.” That narrative once belonged to blockchain, but stronger versions of it can now be found in U.S. equities, including quantum computing, nuclear fusion, and small modular reactors, or SMRs. In many cases, these themes are also difficult to explain through earnings reports, cash flows, or discounted cash flow models alone. They are similarly driven by strong meme-like characteristics.

People who previously enjoyed chasing altcoins and meme coins can therefore pursue these long-term speculative themes in the U.S. stock market using essentially the same logic. They may not find the transition particularly difficult. Those who already focus on cash flow, fundamentals, and underlying value can likewise find corresponding value and growth stocks in the U.S. market.

What I mean is that nearly every trading style found in crypto has a corresponding place in the U.S. stock market. Most people can find familiar types of assets without forcing themselves to change their trading approach.

If I had to offer one piece of advice, it would be this: do not change your methods simply because you are moving into a different market. People who have survived this long usually have a proven way of operating. Continuing to follow the parts of that approach that have worked is more important.

The 10/11 Event Devastated Crypto Liquidity, Leaving Little Chance of an Altcoin Market Recovery

Maodi: Listening to your analysis, a rather dramatic picture came to mind. It feels as though the period of altcoin speculation has effectively come to an end, because nearly all the assets people used to speculate on can now be found in the U.S. stock market, often with greater real-world relevance. Is that a fair interpretation?

didier: Yes, that is a fair way to understand it.

The main reason the altcoin market has largely ended is that liquidity in the crypto market has been severely damaged. The 10/11 event dealt an enormous blow to the industry. Reports cited $19 billion in liquidations, but the actual figure was probably much higher. Market rumors put the losses at $40 billion to $50 billion, which I think may be closer to the truth.

It is also important to recognize that these losses were not merely a decline in market capitalization. They represented real cash. The crypto industry’s total market capitalization was not particularly large to begin with, and a significant portion of it consisted of locked or inflated valuations. The amount of genuinely liquid capital was far smaller than it appeared. Under these circumstances, the disappearance of tens of billions of dollars in cash within a single day dealt a devastating blow to both market confidence and industry liquidity.

I therefore believe that the 10/11 event was the final straw that brought the altcoin market down.

As for why “meme assets” in the U.S. stock market can continue attracting speculation, the reason is simple: the U.S. stock market currently has the deepest liquidity in the world. When liquidity in your own market dries up, capital naturally migrates to a more liquid market.

From the U.S. perspective, there are also strategic considerations behind its support for Bitcoin and blockchain. The U.S. strategy is to turn blockchain, onchain markets, and CEXs into channels through which American assets can attract global capital and speculative money. Its effort to bring the U.S. financial system onchain is therefore essentially an expansion of the global financing and distribution capabilities of American assets.

Of course, this is only how the U.S. government understands and uses the technology. Whether blockchain and the crypto world will ultimately be shaped entirely by this form of state power is another question. A more realistic outcome may be that the onchain world and sovereign states remain locked in a complex, long-term relationship involving cooperation, mutual exploitation, and competition.

At least for now, however, the U.S. vision is indeed becoming a reality step by step.

More Cautious on the Macro Outlook for the Second Half, but Still Bullish on AI and Web3 Over the Long Term

Maodi: What is your macro outlook for the next six months through the end of this year? What policies might the newly appointed Federal Reserve Chair, Kevin Warsh, pursue, and how could they affect the broader market?

didier: I think market uncertainty is increasing.

On the one hand, the market has already risen considerably. On the other, several enormous companies, including SpaceX, OpenAI, and Anthropic, may go public later. The real pressure would not come only from these listings absorbing liquidity. If trillion-dollar companies are rapidly added to major indexes while overall liquidity remains limited, institutions may be forced to sell other heavily weighted stocks to rebalance their portfolios. That would place pressure on the broader market. I will therefore become more cautious after June.

Another key variable is the midterm elections. If the Democrats ultimately take control of both chambers of Congress, it could be negative for both Web3 and AI because they place greater emphasis on labor rights, regulation, and oversight than on allowing frontier technologies to continue expanding rapidly.

From a fundamental perspective, however, I believe the market may be underestimating AI’s actual contribution to the economy. AI has already penetrated many parts of the economy, but existing statistical methods may not fully capture its impact. Over the long term, its ability to improve productivity remains extremely powerful.

The real issue is not only growth, but also distribution. If the distribution mechanism is not properly adjusted, the future could become extremely polarized. A small number of people capable of mastering AI could capture most of the gains, while large parts of the middle class are squeezed or even displaced from their jobs. In that scenario, productivity would increase, but society’s overall capacity for consumption would decline. This is also why I am more inclined to expect long-term deflation rather than long-term inflation.

Distribution mechanisms will therefore be critical over the next several years. I think measures such as an AI tax will most likely be introduced within three to five years because, without new sources of tax revenue, many future social programs will lack a financial foundation.

Looking only at the second half of this year and next year, I do not want to make an overly definitive prediction. Short-term pressure for a correction is clearly increasing and may become particularly pronounced around SpaceX’s potential listing. However, I see this more as a correction than a definitive market top. As long as major technology companies can sustain their capital expenditure, the broader rally is not over.

Over the longer term, I remain bullish on AI and on the convergence of AI and blockchain. Companies will become increasingly automated internally, while an onchain machine economy may emerge between them. That broader direction has not changed.

I therefore continue to believe that blockchain and Web3 have considerable potential, although the way people participate will become more mature. The period of rushing in and making easy money without much thought may already be over. The future will look more like an era of industrialization and institutionalization.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. Japan’s FSA Warns Against Overseas Single‑Stock Leveraged ETF Sales, Deems Them Contrary to Public Interest link

Japan’s Financial Services Agency (FSA) revised its Q&A guidelines for financial‑instruments business on August 27. It explicitly states that selling overseas‑listed leveraged ETFs tracking Japanese individual stocks within Japan is “inappropriate from a public‑interest perspective”. The move aims to curb the de‑facto distribution of products not approved in Japan, and prevent excessive capital concentration that could distort pricing of specific stocks and trigger sharp market swings. Japan does not yet permit the listing of single‑stock leveraged ETFs. Previously, market participants were concerned that overseas issuances of such products might be sold back into Japan via the “foreign investment trust” channel.

2. Five Vietnamese Firms Pass Initial Crypto Exchange Assessment; No Licenses Yet Issued link

According to Vietnam News Agency, Vietnam has yet to issue its first crypto‑asset exchange license, though five firms have passed the first‑round evaluation. They must next meet Level‑4 information‑system security requirements and deploy minimum capital of 10 trillion Vietnamese dong (approximately $383 million). Meanwhile, new regulations imposing penalties for crypto‑asset‑market violations will take effect on September 1. Experts cited in the report note domestic investors will not face immediate penalties for using unlicensed platforms upon the effective date. Under the current pilot framework, domestic investors are required to trade solely via licensed platforms only six months after the Ministry of Finance grants the first service‑provider license.

3. Shanghai Police Dismantle Virtual‑Currency‑Facilitated Underground Banking Ring Involved in $28‑Billion‑Equivalent Cross‑Border Remittances link

According to a notice from the Shanghai Public Security Bureau, Shanghai police have recently cracked a major underground‑banking case involving illegal cross‑border foreign‑exchange transactions via virtual currencies, arresting 19 suspects with case‑related funds reaching nearly 20 billion yuan. Police stated that starting from August 2024, the gang conducted cross‑border currency exchange through the path of “Renminbi‑virtual currency‑foreign currency”. They first purchased virtual currencies with domestic funds, then sold them via overseas channels for foreign currencies which were transferred to accounts designated by clients, and collected service fees for the operations. Five key suspects have been approved for arrest on suspicion of illegal business operations and aiding information‑network criminal activities. The case remains under further investigation.

4. Security Flaw Exposes Users’ Crypto Assets on Dubai‑Based Chinese‑Focused Food‑Delivery App ComeCome link

Major security vulnerabilities have been exposed in ComeCome, a leading Chinese‑language food‑delivery app based in Dubai. Independent security analysis reveals that version 2.9.3 of the application available on the App Store embedded malicious statistical code dubbed “DKStatistics”. Upon user launch, it attempts to escape the iOS sandbox and read directories of commonly‑used crypto wallets, notes apps, WhatsApp and other applications in the background. On‑chain data shows more than 50,000 USDT was stolen from users starting August 22. The hacker’s aggregation address received approximately 1.3 million USDT in illicit funds within four days, all of which were converted into Ethereum and routed through Tornado Cash for money‑laundering purposes by August 25. Back in February 2025, Kaspersky named ComeCome when disclosing SparkCat, an espionage campaign targeting crypto users. Though the app was updated to version 2.9.5 on August 27, full removal of the malicious component remains pending further verification.

5. Pakistan Orders Crypto Platforms to Secure Licenses by Sep 5 or Cease Operations link

Pakistan Virtual Assets Regulatory Authority (PVARA) has opened licensing applications for crypto platforms. Exchanges, custodians and other service providers already operating locally prior to the March 5 effective date of the Virtual Assets Act must submit No‑Objection Certificate (NOC) applications by September 5, or cease relevant services. Platforms that submit complete applications on time may continue operations during review, yet PVARA may impose restrictions on new‑user registration, product offerings, trading volumes or custodial services. An NOC represents only preliminary regulatory clearance and is not equivalent to a formal license. Continued operations without submitting an application will constitute an offence. Binance and HTX obtained NOCs in December 2025 and may proceed directly to apply for full formal licenses.

Sponsored by FinTax

6. South Korea’s 2027 Crypto‑Tax Implementation Faces Petition with Over 10,000 Signatures for Delay link

South Korea’s government and the ruling Democratic Party of Korea still plan to enforce the virtual‑asset income tax starting January 1, 2027. A combined 22‑percent tax rate will apply to portions of annual gains from trading or lending virtual assets exceeding 2.5 million won. South Korea’s National Tax Service held an expert meeting this week to discuss concrete enforcement guidelines. Meanwhile, a parliamentary petition seeking a further two‑year delay of the crypto tax has garnered more than 10,000 signatures. Should it reach 50,000 signatures by September 20, it will go for formal review by a National Assembly committee. A lawmaker from the main opposition party has also tabled a bill pushing the enforcement date to 2030.

7. Karakalpakstan, Uzbekistan, Plans Six Mining and Data‑Center Projects Worth $5.11‑Billion Total Investment link

Amanbay Orynbayev, Chairman of the Parliament of Karakalpakstan, Uzbekistan, stated that three cryptocurrency‑mining hubs and three data centers are under local construction with a total project investment of 5.11 billion US dollars. In April this year, the entire territory of Karakalpakstan was designated as Besqala Mining Valley, a special mining zone. Under Uzbekistan’s regulations, cryptocurrency mining is permitted only for legal entities and should predominantly run on renewable‑energy sources. Power drawn from the national unified grid incurs double‑rate electricity tariffs. The country’s National Agency for Perspective Projects is in charge of issuing mining licenses.

8. Standard Chartered Becomes First Distributor of Hong Kong‑Regulated HKD‑Pegged Stablecoin HKDAP link

Standard Chartered has become the first bank to distribute HKDAP, Hong Kong’s regulated Hong Kong‑dollar stablecoin. Standard Chartered plans to roll out tokenised money‑market fund subscription and settlement services with international and local asset managers in the fourth quarter. It will test intra‑group settlement using HKDAP across its network in the near term, while exploring application scenarios including cross‑border payments and treasury management. HKDAP is issued by Anchorpoint Financial, in which Standard Chartered holds an equity stake.

9. Russia’s Sberbank to Expand Crypto‑Backed Mortgages Accepting BTC, ETH and USDT link

Anatoly Popov, Deputy Chairman of Sberbank, Russia’s largest bank, stated that the bank intends to further develop lending secured by digital‑asset collateral. Beyond Bitcoin, it plans to accept Ethereum and stablecoin USDT as collateral in the future. Popov noted Sberbank already has hands‑on experience with digital‑asset operations. Upon the full entry into force of the new regulatory framework, the bank will revise its existing offerings and gradually expand its product lineup. The plan remains subject to regulatory approval. Popov emphasised that assets such as ETH and USDT can only be adopted as collateral once the Central Bank of Russia permits their public circulation.

10. Abu Dhabi Royal Tahnoon and Co‑Investors Hold 49% Stake in World Liberty’s New Bank‑Holding Entity link

Tahnoon bin Zayed al Nahyan, member of Abu Dhabi’s royal family and UAE National Security Advisor, together with co‑investors holds a 49‑percent stake in WLTC Holdings, the holding entity for World Liberty Financial’s new banking business, making them its largest shareholder. Entities affiliated with the Trump family hold approximately 38‑percent equity. The US Office of the Comptroller of the Currency (OCC) granted preliminary conditional approval this month for World Liberty to establish a national trust bank to issue, redeem and custody its stablecoin USD1. Last year, Tahnoon also invested 500 million US dollars into World Liberty via another entity to secure a 49‑percent stake, of which around 263 million US dollars flowed to Trump‑family‑related entities.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. LayerZero Plans Institutional‑Focused Blockchain Exchange Launch This Fall link

LayerZero plans to launch a blockchain‑based exchange primarily for financial institutions this fall. LayerZero has previously announced that Zero, its new Layer 1 blockchain, will go live this fall, with partnerships with institutions including Citadel Securities, the Depository Trust & Clearing Corporation (DTCC), and Intercontinental Exchange (ICE), parent company of the New York Stock Exchange. LayerZero has stated that Zero is built for scenarios such as 24/7 capital markets, institutional clearing and stablecoin payments, and features a dedicated trading environment.

2. Grayscale Debuts ZCSH, America’s First Zcash ETF, on NYSE Arca link

Grayscale launched the Zcash ETF (ZCSH) on August 25, listed on NYSE Arca. Converted from the former Grayscale Zcash Trust, it is the first US‑listed exchange‑traded product focused on ZEC. According to official Grayscale data, as of August 24, ZCSH had assets under management of approximately $314 million, holding around 387,200 ZEC with an expense ratio of 2.5%. Grayscale stated that for up to 12 months following the effectiveness of its registration statement, ZCSH management‑fee revenue will support Zcash ecosystem development and product marketing. The Block data shows ZEC has risen roughly 45% over recent days.

3. Ethena Foundation Unveils Four Key Ecosystem Updates link

The Ethena Foundation announced four major ecosystem updates. First, the foundation has completed the buyback of all remaining locked tokens from specific major seed‑round investors that sold any ENA over the past nine months. Second, it has entered into a master framework agreement with development entity Ethena Labs, under which protocol intellectual property and all value accrual will exclusively belong to the foundation and be governed by token holders, with Labs equity investors no longer entitled to any protocol cash‑flow proceeds. Third, a governance vote for the fee‑switch proposal has been launched, aiming to programmatically use net revenue generated across all Ethena business lines to buy back ENA on the secondary market. Fourth, an agreement has been reached with lead investors to release unvested tokens and fully eliminate future monthly sell‑pressure from VC entities, while team tokens remain subject to the original vesting and lock‑up schedule.

4. Lido Revamps EarnETH Fee Structure: Lower Base Fee, Higher Performance‑Linked Payout link

Lido announced adjustments to the fee structure of the EarnETH Vault, cutting the fixed management fee and raising the component tied to the vault’s actual yield performance. Previously, EarnETH operated under a fixed fee model of a 1% AUM management fee plus a 10% performance fee. The updated framework becomes performance‑oriented and variable, capped at 0.5% AUM management fee plus 20% performance fee, with initial terms set at a 0.2% AUM management fee and 15% performance fee. Lido stated that the initial reduction of the AUM‑based management fee from 1% to 0.2% effectively lowers fixed holding costs for EarnETH during low‑yield cycles, while the higher performance‑fee percentage aligns protocol revenues more closely with users’ real investment returns.

5. Flop Labs Releases FLOP Tokenomics Draft: 51.2% for Miners, 20.4% for Airdrops link

Flop Labs has unveiled a draft of the FLOP tokenomics, stating there will be no VC allocation and no presale. Airdrops are targeted at network participants including miners, validators, agents and early‑community members. According to charts in the draft, the total supply of FLOP is projected to reach 17.2 billion tokens by Year 10, with a terminal annual inflation rate of 0.6%. Of the total supply allocation, miners account for the largest share at 51.2% (8.8 billion tokens); airdrops make up 20.4% (3.5 billion tokens, including 1.2 billion for miners, 310 million for validators, 1.2 billion for agents, and 790 million for reserves/incentives); teams and foundations hold 11.4% (2 billion tokens); validators receive 6.8% (1.2 billion tokens); brokers‑agents get 6.8% (1.2 billion tokens); and staking rewards represent 3.4% (600 million tokens).

In a video interview on the Altcoin Daily podcast, Arthur Hayes, co‑founder of BitMEX, introduced the new Flop Network project. He bets on FLOP becoming the native currency for AI agents to purchase computing power, store memories and conduct economic activities, describing it as another “binary bet” following perpetual‑contract instruments.

Sponsored by FinTax

6. Coinbase Launches Tokenized Stocks on Base for 24/7 On‑Chain Trading link

Base announced that Coinbase‑issued tokenized stocks have natively launched on the Base network under the B20 standard. These tokens represent real‑world stocks held 1:1 by a regulated custodian. Users in eligible jurisdictions may hold tokenized stocks of companies such as Apple and NVIDIA via self‑custody wallets, and engage in trading, lending and other DeFi applications within the Base ecosystem. Base stated that tokenized stocks introduce a new asset class for on‑chain finance, supporting 24/7 trading, collateral usage, and composability with decentralized protocols. The relevant assets are administered by Alpaca acting as the regulated broker and custodian, with additional Coinbase tokenized stocks slated for future launch.

7. World Liberty Secures Conditional OCC Approval for National Trust Bank to Expand USD1 link

World Liberty Financial, owned by the Trump family, has received conditional approval from the US Office of the Comptroller of the Currency (OCC) to establish a national trust bank. One major objective is to expand the adoption of USD1 and house reserve assets backing the stablecoin within its own banking system to cut costs while bolstering compliance and market credibility. Data shows that within the first 19 months of Trump’s second term, the OCC has approved 22 bank‑license applications, exceeding the total figure of the preceding five‑year period, with many submissions coming from fintech and digital‑asset firms. World Liberty’s review took roughly 220 days, above the median of 126 days under the current administration. The firm still needs to satisfy requirements including external audits and adequate capitalization before securing final approval.

8. Lisk Proposes DAO Dissolution and 100‑Million‑LSK Burn; Total Supply to Drop to 300 Million link

The Lisk team has put forward a governance proposal to terminate the Lisk DAO. It plans to shut down the DAO and its associated governance infrastructure and burn 100 million LSK originally scheduled to vest to the DAO Treasury from 2027 to 2033, reducing the total supply from 400 million to 300 million LSK. Approximately 47 million LSK that have vested or become available by 2026 would be transferred to Lisk Ltd. The proposal also enables stakers to exit without penalty via an emergency unlock after a three‑day waiting period. Lisk has previously announced that Lisk Chain will shut down on October 31. All these measures remain subject to the passage of the governance proposal for implementation.

9. The Sandbox Commits 1:1 Compensation for SAND Holders Affected by Bridge Exploit link

The Sandbox announced it will compensate SAND holders affected by the bridge exploit on a 1:1 basis. The Sandbox revealed that on August 21, attackers exploited configuration flaws in contracts on Base and BNB Chain, draining approximately 14.744 million SAND worth around $700,000 from the Ethereum vault. The project stated users who legitimately held bridged SAND on Base or BNB Smart Chain prior to the attack will receive equivalent Ethereum‑based SAND compensation from the project’s vault with no new token minting. Claim applications are expected to open within two weeks. The Sandbox also noted that the unbacked SAND minted during the exploit has been isolated and cannot be bridged or redeemed, and the compromised bridge contracts will be permanently disabled.

10. Ethena’s USDe Hits $320‑Million Volume on Robinhood Chain in 8 Weeks, Accounting for 42% of Chain’s Stablecoin Circulation link

Eight weeks following its launch on Robinhood Chain, Ethena USDe has surpassed $320 million, accounting for 42 % of the chain’s circulating stable‑coin supply. This makes it the largest external dollar‑denominated asset on the network, second only to Robinhood Chain’s native USDG. Analyst Mesh attributes this growth to infrastructure design. Steakhouse Financial selected Ethena as the primary collateral issuer for the launch of Robinhood Earn, and 62‑65 % of liquidity allocated by the Steakhouse USDG Vault flows into the USDe/USDG Morpho market. Borrowers deposit USDe into this market as it represents the deepest collateral slot within the vault.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. Arthur Hayes: US Treasury to Keep Injecting Liquidity; New Bitcoin Bull Market Has Started link

Arthur Hayes has published his latest article “Same Old Wine in New Bottles”. US Treasury Secretary Scott Bessent is suppressing yields by expanding long‑term US Treasury buybacks and other measures, essentially creating more US dollar liquidity for the market, with Bitcoin set to benefit first. Hayes argues that in the most aggressive scenario, the Treasury Department may even implement quasi‑yield curve control when the 10‑year US Treasury yield breaks above 5%. A more probable path is to gradually scale up buybacks and deploy around $1 trillion in TGA funds. He believes Bitcoin has entered a new bull market with substantially heightened volatility, noting that Maelstrom is currently at “maximum risk exposure”, with major bets on BTC, ETH, ENA and ETHFI.

GSR’s latest weekly report shows that Bitcoin broke out of its seven‑week $60,000‑$70,000 range last week, peaking at approximately $79,000 and surging roughly 25% for the week, marking its strongest weekly performance of the year. Total market short liquidations reached around $4.6 billion from Wednesday to Friday. GSR states that this rally is driven by fresh external capital re‑entering the market rather than capital rotation within the crypto space, with funds heavily skewed toward BTC and ETH. Only 33% of the top‑100 altcoins outperformed BTC during the period, indicating a full‑blown “altcoin season” has not yet arrived. Markets will keep a close eye on US PCE data, NVIDIA earnings and Jackson Hole. Relative strength in BTC and ETH could persist should long‑end Treasury yields remain subject to policy intervention and inflows into ETFs and stablecoins hold steady.

In its market update, Wintermute says its outlook has turned moderately optimistic as BTC broke out of its six‑week trading range, with spot ETFs for BTC and ETH recording net inflows of approximately $1.92 billion and $693 million respectively over the past week. Nevertheless, the rally came alongside around $2.7 billion in short liquidations, and sustained ETF inflows will prove critical going forward. Wintermute notes it will revert to a cautious stance should BTC ETFs post a weekly net outflow and BTC closes back below its former range of $67,000. Wintermute also cites the US Treasury’s announcement to raise the per‑operation buyback size for 10‑ to 30‑year Treasuries from a maximum of $2 billion to at least $4 billion effective September 9 as a key backdrop for shifting market liquidity expectations.

2. BlackRock: US Debt Tops $40 Trillion; Bitcoin’s Fiscal‑Risk Hedge Thesis Strengthens link

Robbie Mitchnick, Head of Digital Assets at BlackRock, states that US debt and fiscal deficits have re‑emerged as core market risks, driving some investors toward alternative store‑of‑value assets such as Bitcoin and gold. As of August 18, US federal debt stood at approximately $40.05 trillion. Mitchnick argues that fiscal sustainability matters more for Bitcoin’s long‑term pricing than the ongoing CLARITY Act, while regulatory clarity will exert a greater impact on other crypto segments including DeFi. BlackRock has previously noted that rising government debt and persistent fiscal deficits could reinforce Bitcoin’s long‑term allocation thesis as a hedge against fiat currency debasement.

3. US Treasury Mulls Using $950 Billion TGA Funds for Long‑Term Treasury Buybacks link

According to CNBC citing two senior US Treasury officials, the Treasury is considering deploying approximately $950 billion from the Treasury General Account (TGA) to support expanded long‑term US Treasury buybacks. The US Treasury has recently raised the per‑operation buyback size for 10‑ to 30‑year Treasuries from $2 billion to at least $4 billion, and Treasury Secretary Scott Bessent has stated that actual volumes could expand further. Deploying TGA funds would furnish the Treasury with a larger funding pool for buybacks, though officials have not disclosed specific usage amounts or timelines.

4. Coinbase Outlines Its Agent‑Driven Finance (AiFi) Ecosystem Roadmap link

Coinbase published an article outlining its “Agentic Finance (AiFi)” ecosystem layout, pointing out that constrained by business hours, legal identity verification and human intervention, the traditional financial system cannot meet the economic demands of 24/7 autonomously‑running AI agents. Cryptocurrencies and stablecoins, featuring round‑the‑clock availability, programmability and low‑cost micropayments, are emerging as the core underlying infrastructure for AiFi. Coinbase states that its current AiFi product suite includes Coinbase Advisor, an SEC‑registered investment advisory tool for agent‑led trading; Coinbase for Agents, which enables sandbox operations for Claude, ChatGPT, Cursor and other models; x402, an open micropayment protocol; and Coinbase Business, which allows enterprises to collect USDC directly from AI agents.

5. Solana Inflation Proposal Seeks Lower Token Issuance; Staking Rewards May Halve in Two Years link

Solana is advancing two governance proposals, SIMD‑550 and SIMD‑553. SIMD‑550 seeks to raise the annual deflation rate from ‑15% to ‑30%, bringing forward Solana’s timeline for reaching its terminal inflation rate of 1.5% from around 2032 to the first half of 2029, with nominal staking yields projected to drop to roughly 2.25% in the third year. SIMD‑553 was approved and merged on July 20. It introduces burn fees for compute units consumed by financial‑activity requests. Based on current network activity estimates, daily SOL burns will rise from approximately 600‑800 SOL to 7,500‑9,000 SOL. The two proposals are expected to reduce issuance by about $1.4‑1.5 billion over six years; actual impacts remain contingent on the SIMD‑550 vote outcome and the validator fee design of SIMD‑553.

Eugene Chen, CEO of Ellipsis Labs, has criticized Solana’s SGP‑0003 fee‑reform proposal, arguing it could significantly harm Solana applications reliant on market microstructure. He contends that altering the on‑chain cost model without sufficient input from application developers would erode developer confidence in deploying businesses on Solana. Solana co‑founder Anatoly Yakovenko subsequently suggested switching signature fees to compute‑unit‑based charging while keeping average fees roughly unchanged. Chen expressed in‑principle support but noted further evaluation of the mechanism is required.

Sponsored by FinTax

6. Hayden Adams, Uniswap Founder: AMMs Are on a Clear Path to Dominate Global Finance link

Hayden Adams, founder of Uniswap, published an article stating that amid the advancing real‑world‑asset (RWA) tokenization wave, automated market makers (AMMs) are presented with a clear path toward dominating global financial markets. Adams points out that traditional market makers secure high‑profit margins via vertical integration and pursue costly delta‑neutral hedging, while blockchains decouple execution, custody and settlement, drastically lowering market‑making barriers. Within the on‑chain ecosystem, liquidity naturally gravitates toward correlated pairs, with only a small number of highly‑liquid bridge pairs such as SPY/USD and ETH/USDC required to connect to fiat‑dollar channels. Since market makers holding correlated assets bear lower inventory risk, passive AMMs can displace expensive traditional market‑making strategies at extremely low capital costs.

7. Zhou Guren, Top Backer of Trump‑Family Tokens, Listed as Dishonest Debtor with Millions in Liabilities Across Six Cases link

UAE‑based investment institution Aqua 1 Foundation previously spent $100 million purchasing tokens of World Liberty Financial (WLFI), the crypto project backed by the Trump family. It surpassed Justin Sun, whose cumulative investment stood at $75 million, to become WLFI’s largest mystery buyer. Investigations reveal that the long‑enigmatic beneficial owner behind Aqua 1 is Guren Zhou, born in Shanghai in 1984, drawing widespread scrutiny over the source of his capital. Reports indicate that Guren Zhou remains listed as a dishonest person subject to enforcement on China’s Judgment Enforcement Information Disclosure Network, involved in six cases with total outstanding debts amounting to tens of millions of Chinese yuan. Furthermore, indictments released by the UK Crown Prosecution Service (CPS) show that Guren Zhou is also implicated in a money‑laundering case originating in the United Kingdom.

8. US Expands New Iran Sanctions to Digital Assets, Warns of Risks for Related Businesses link

The US Treasury Department announced expanded sanctions against Iran, imposing secondary sanctions covering five sectors: digital assets, technology, aviation, gold and shipping, to target Iran’s overseas revenue streams. It warned foreign institutions continuing business with Iranian‑related entities may face US sanctions. Treasury Secretary Scott Bessent stated the new measures would heighten sanction‑related risks for such engagements. Previously, the United States had sanctioned Nobitex, Iran’s largest crypto exchange, alleging its involvement in sanctions evasion, terrorist financing and transactions linked to the Islamic Revolutionary Guard Corps. US authorities said they had seized nearly $1 billion in Iran‑related crypto assets as of May this year. The latest round of sanctions also targets multiple digital‑asset addresses, including a Bitcoin wallet identified by the US Treasury as controlled by Arman Kahzadian.

9. Trump‑Linked Crypto Businesses Inflict at Least $4.7 Billion Losses on Investors link

Public Citizen, a US consumer‑advocacy organization, released a report on August 27 stating that crypto‑related businesses tied to Donald Trump and his family have inflicted at least $4.7 billion in investor losses since 2022, mostly unrealized losses stemming from NFT trading cards, WLFI, TRUMP, USD1, and Trump Media’s crypto‑asset‑holding strategy. According to the report, TRUMP accounts for the largest share of estimated losses at $3.2 billion. Nansen data shows that roughly 1 million out of about 1.6 million Solana wallets that purchased TRUMP are sitting on unrealized losses. Public Citizen further estimates that WLFI generated at least $1 billion in losses, and Trump Media’s holding of 9,477 BTC carried approximately $450 million in unrealized losses as of the end of June 2026. Trump reported earning at least $1.4 billion from these crypto‑related ventures in his 2025 financial disclosure.

10. On‑Chain RWA Market Capitalization Hits $44.9 Billion, a New All‑Time High link

The on‑chain market capitalization of RWA (excluding stablecoins) has hit an all‑time high of $44.9 billion. Tokenized US Treasuries represent the largest asset category at $15.3 billion, followed by yield/active strategies worth $8.8 billion and credit funds at $6.3 billion.

Fundraising

• Crypto tax‑and‑accounting infrastructure provider FinTax has closed its Seed round led by YZi Labs at a $40‑million valuation. link

• Sui co‑founder Kostas Kryptos is co‑building compliant trading platform Havenex, with its Series A financing nearing completion. link

• City Protocol announced combined seed and Pre‑A round financing totaling $11 million. link

• Hivemind secured $17 million in strategic financing led by M&G Investments. link

Learn more, check out crypto-fundraising.info.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Complied by | WuBlockchain

Original Link:

https://www.wublock123.com/articles/interview-ndv-founder-jason-microstrategy-overleveraged-wait-panic-sell-for-dip-59136

In this episode of the WuBlockchain Podcast, NDV founder Jason Huang discusses the recent decline in Bitcoin, Strategy’s Bitcoin sales, macroeconomic risks, and opportunities in the crypto industry. Jason believes that the first half of the current crypto downturn was driven primarily by residual selling pressure from Bitcoin’s four-year cycle, while the recent decline has also been compounded by a pullback in U.S. equities, tightening liquidity, and debt pressure at Strategy. In his view, the market has not yet reached a true bottom. Bear market bottoms often require a defining event on the scale of the FTX collapse, pushing the market into a state of widespread despair in which almost no one is still discussing crypto.

Regarding investment strategy, Jason says NDV’s second fund has returned more than 20% this year and has traded commodities including oil, gold, and silver in addition to crypto assets. He remains cautious about AI stocks, noting that although he is a heavy user of AI, he does not believe he has an edge in trading the sector. He is also concerned about crowded positioning and bubble risks in U.S. equities, semiconductors, and the enthusiasm surrounding a potential SpaceX IPO. Despite his bearish short-term outlook, he remains optimistic about the long-term value of stablecoins, which he considers one of the clearest crypto innovations with genuine real-world utility and significant room for further adoption.

Strategy’s Bitcoin Sale Triggers Preemptive Selling as BTC Enters a Liquidity Squeeze

Mao Di: In the previous episode, you predicted that the crypto market could undergo a significant correction in 2026. Bitcoin has continued to fall recently. Is this decline consistent with what you expected at the time? And how do you view the market at its current level? I saw that you mentioned around $48,000 on X.

Jason: Even $48,000 may not be the bottom. I did not go into much detail at the time because every downturn has a different underlying logic. It was only recently, especially over the past two days, that I began to feel this decline was truly unfolding in line with what I expected last September.

The first half looked more like concentrated selling driven by Bitcoin’s four-year cycle. Many long-term traders tend to exit around these cyclical turning points, which can trigger a rush for the exits. At the same time, U.S. stocks remained resilient for much longer than I expected, but I think their correction is only now beginning. Against that backdrop, investors who also hold BTC or IBIT will often choose to raise liquidity first.

I also did not expect MSTR to hold up for this long. Its flywheel mechanism only really began to break down recently. That is why I think this decline could be larger than the market expects.

Mao Di: Bitcoin’s sharp decline over the past two days was, to some extent, triggered by Strategy itself. It actually sold only 32 BTC, but the market reaction was significant. Some analysts believe this was more like a test of market resilience and that the situation remains under Strategy’s control. What do you think?

Jason: I disagree. People often assume founders are more powerful than they really are, as though they can control everything. But that is not the case. When facing an uncertain future, entrepreneurs often have no choice but to make judgments under uncertainty.

Strategy’s original model was to borrow money, issue preferred stock, and then raise additional equity to buy Bitcoin. During an upcycle, this model works because rising Bitcoin prices can cover interest and dividend payments, while the company’s shares trade at a premium, creating a positive flywheel.

But when Bitcoin falls rapidly, the stock moves from a premium to a discount, and the company still has to make real interest and dividend payments, that mechanism turns into a negative feedback loop.

I think Strategy has overplayed its hand to some extent. It originally held around $2 billion in cash to cover preferred-stock dividends for the next two years. But it later dealt early with a convertible bond due in 2029, consuming about $1.2 billion in one go. As a result, what had been a two-year buffer was reduced to just four months.

Under those circumstances, it has three options: default on its bonds, default on its preferred stock, or sell Bitcoin. The sale of those 32 BTC already shows which option it chose. It will protect creditors first, shareholders second, and Bitcoin holders last.

What the market is really worried about is not those 32 BTC, but the more than 800,000 BTC Strategy holds in total. The concern is the much greater potential selling pressure that could follow.

And Strategy is not the only seller. Some other large holders have also been selling recently because everyone knows that MSTR represents the largest source of potential selling pressure. Rather than wait for it to sell, they would rather exit first. In essence, this downturn is being driven by the market selling in anticipation of MSTR.

The key question over the next four months is how Strategy will deal with its debt obligations and preferred-stock dividends. It has to address them, although the method remains uncertain. If someone is later willing to acquire a large block of Bitcoin at a discount, preventing Strategy from continuing to sell into the market, I think that level would most likely be close to a short-term bottom because the company would have regained its ability to meet its payment obligations.

Mao Di: But if it had already decided to sell Bitcoin to cover preferred-stock dividends, why did it not sell a larger amount at once? Why sell such a small amount and send a signal to the market, only to let everyone else sell ahead of it?

Jason: That comes down to a founder’s judgment at a critical moment. He may have believed that selling too much at once would cause even greater panic, so it would be better to sell a small amount first. That would send a signal to the market while also reassuring preferred-stock investors. But ultimately, that judgment spiraled out of control.

This was never something he could have discussed widely beforehand. He could only anticipate how the market might interpret the move and then make what he believed was the best decision at the time.

Even today, we cannot prove whether the market would have reacted better if he had sold more at once. The market’s interpretation of information changes dynamically. He could make only one choice, not run the same experiment repeatedly.

Fund Returns, Commodity Positions, and the Inflation Trade

Mao Di: When we first started talking, you mentioned that you had recently been taking short positions. Bitcoin’s decline must have generated fairly strong returns for you. How is your second fund performing overall?

Jason: Our returns this year certainly cannot compare with those made by trading semiconductor or AI stocks. We are up a little over 20%, which is still respectable. Bitcoin has fallen by more than 30% overall this year, while we have generated a positive return of around 20%, so we have outperformed Bitcoin by roughly 50 to 60 percentage points. Our first fund also outperformed Bitcoin by around 60 to 70 percentage points. At this point, we have a chance of surpassing that figure.

Mao Di: So the strategy for this fund is broadly similar to that of the first fund. You are still focused on Bitcoin and crypto-related assets without investing in AI-related products or stocks, correct?

Jason: We did not invest in AI at all. To be honest, I regret that a little. I am a heavy AI user and pay for nearly every good product that offers a paid subscription, but I ultimately did not buy any related assets. To some extent, my actions did not align with my convictions.

However, we have traded some other assets this year, including oil, gold, and silver. For example, part of yesterday’s return came from shorting silver. I think precious metals and crypto assets follow similar trading dynamics. Both are driven by supply and demand as well as major events, and both involve high leverage. The difference is that precious metals move more slowly and are easier to analyze.

We have therefore allocated some of our attention to commodities this year. Overall, I think commodities are entering a particularly interesting phase. In addition to precious metals, inflation has been another major theme this year. Oil may represent the first wave, with the effects gradually spreading to other categories.

Mao Di: I have also been discussing inflation with others recently. One view is that the productivity gains created by AI could exert a deflationary effect to some extent. What do you think?

Jason: At least for now, prices are not showing any clear signs of deflation. I agree that AI has offset some inflationary pressure, but many forms of real-world consumption will not disappear simply because of AI.

For example, rising oil prices directly increase logistics and production costs. Fuel surcharges on airline tickets are a straightforward example, and that pressure will continue to spread into more areas.

I also think the “deflation” created by AI is more evident in employment. In other words, it may create unemployment. The reality may not be that AI makes life easier for everyone. Instead, wealthy people may earn more through AI-related assets, while ordinary people continue to bear the pressure of inflation and rising living costs.

The U.S. political system will most likely eventually respond to this problem, perhaps by using redistribution to ease the tensions. But if it reaches that point, inflation could become even more pronounced.

That is the contradiction the market is essentially trading right now: whether inflation arrives first, or AI first delivers on its promise of improving efficiency and lowering costs. For now, the AI trade remains stronger, but events such as a SpaceX IPO could also drain further liquidity from the market.

Many of these themes may ultimately play out, but in trading, the hardest part is never identifying the direction. It is deciding when to enter, which instrument to use, and how to structure the position.

World Cup Trading Cards: Turning “Investing in a Person” Into a Standardized Trade

Mao Di: In addition to the fund, I saw that you are working on a project involving sports trading cards. I previously listened to a podcast in which you discussed the subject, but I did not fully understand it. I do not really follow football or basketball, and I do not collect cards, so could you briefly explain what this market is and how it works?

Jason: Put simply, sports trading cards offer a highly standardized way to “invest in a person” or “invest in an IP.” They follow a fixed issuance mechanism and cannot be issued without limit, because excessive supply would destroy their value. At its core, this is a market built around limited supply and long-term operation.

I have always believed that sports and anime IP are consumer products for this generation. Young people grow up admiring particular athletes or anime characters, and once they have spending power, they are willing to spend money on those idols. Sports trading cards emerged from that dynamic. They have both collectible and investment value, which is tied to an athlete’s performance, development, and personal appeal.

Mao Di: So the athletes authorize companies to issue these cards?

Jason: Yes. Today, sports card companies generally obtain licenses from the relevant leagues and then handle issuance. The industry has experienced overproduction in the past, which made cards from certain years nearly worthless. As a result, everyone now understands that supply has to be controlled.

Mao Di: Do the issuing companies mainly earn money from the initial sales, with little involvement in subsequent trading?

Jason: The secondary market is already highly developed. There are trading platforms, auction houses, and grading companies. Grading is crucial because a card’s condition directly affects its price. The market has therefore developed a complete division of labor, with issuance, circulation, and grading handled independently.

Mao Di: So your project is mainly focused on the trading layer?

Jason: Yes, but our approach differs from that of a typical platform. Because I come from a financial background, I view sports cards primarily as investment assets. We focus on the rarest cards, such as “1-of-1” cards, of which only one exists in the world. Their value ultimately depends on how the athlete develops, including their performance, achievements, and market popularity.

Mao Di: You have mentioned the card’s “year” several times. Does that mean that once the cards for a particular year have been issued, no more can ever be added?

Jason: Correct. A card’s value is closely tied to its year. Once that year has passed, the edition is fixed and its supply cannot increase. In that sense, the logic is somewhat similar to that of baijiu or other aged spirits.

Mao Di: But from an outsider’s perspective, this still sounds somewhat similar to NFTs, particularly in terms of IP and fractional trading. What is the biggest difference between sports cards and NFTs?

Jason: The difference is substantial. Many NFT projects handled both issuance and trading. They made money too quickly and consequently had little incentive to continue developing the IP. Sports trading cards are different because they are backed by established IP and real sports leagues that operate over the long term. Those leagues continuously generate attention, so the market rests on a completely different foundation.

Stablecoins, the AI Bubble, and Assessing Crypto’s Bear Market Bottom

Mao Di: Why do you think so many exchanges are now entering prediction markets? Many people also believe prediction markets could become one of the most important areas in crypto over the coming period. What is your view?

Jason: On the surface, it is because prediction markets offer a trading model that people are willing to participate in. But the deeper reason is that the widespread adoption of stablecoins and wallets has significantly lowered the barriers to launching new types of exchanges.

Operating a centralized exchange requires handling KYC, user management, asset custody, hacking risks, regulation, and a whole range of other costly issues. On a platform such as Polymarket, however, funds remain in users’ own wallets, while the platform only matches trades. This represents more than the rise of prediction markets. It signals the emergence of an entirely new category of exchanges. Following that logic, centralized exchanges could face considerable disruption in the future.

Mao Di: You are a heavy AI user, but neither you personally nor your fund has invested in AI-related stocks. Why?

Jason: For one thing, many of the products I actually use regularly are not yet publicly listed. For another, I generally avoid areas in which I do not have a trading edge. I understand software better, but the most heavily traded part of the market has been the hardware supply chain, including optical modules and semiconductors. I have not researched those areas enough or made a dedicated effort to catch up, so I did not participate.

Mao Di: AI hardware stocks have fallen sharply recently. Do you think this is just a normal correction, or is the bubble still in its early stages?

Jason: I do not want to make a judgment because I have not researched it enough. But after such a large rise over a short period, a correction is perfectly normal. How deep it will be is difficult to say. Generally, the faster something rises, the faster it falls, because a lot of speculative capital is inevitably involved.

Mao Di: You previously mentioned several highly crowded trades in the market. How do you view them now?

Jason: Semiconductors are what I have been watching most closely recently. The trade has become extremely crowded, and I think this phase of the rally is almost over. It is difficult to say whether the correction will be 20% or 30%, but crowded trades like this often shift from unanimous bullishness to a rush for the exits.

Mao Di: Between crypto and AI, which currently offers the better risk-reward profile?

Jason: I do not think the crypto market has completed its shakeout, and it will be difficult for it to stage a genuine recovery in the short term. Many people look for optimistic explanations whenever prices fall, but based on supply, demand, and the level of panic, I still do not see a true bottom. We may not be far from the bottom in terms of time, but I do not think prices have fallen far enough. At the very least, $60,000 may not hold.

Mao Di: So we have not yet reached a stage comparable to the FTX collapse?

Jason: Not at all. A true bear market bottom usually requires a defining event that creates a sense that “crypto is finished.” It does not necessarily have to be an exchange collapsing, but a player of comparable significance probably needs to run into serious trouble. Right now, people have simply become numb to the losses. They have not reached genuine despair.

A true bottom usually arrives when you and everyone around you are in extreme pain and no longer want to look at the market.

Mao Di: Many people are also deeply pessimistic about the crypto industry itself. They feel that after all these years, it has failed to produce anything genuinely new.

Jason: I disagree. Stablecoins are a very clear achievement. They have genuinely made something “faster and better,” which, in my view, makes them the clearest area of innovation in crypto. I am also very optimistic about the sector because its penetration remains low. As long as the market remains far from its full potential, it would not be surprising to see several new players emerge.

Mao Di: You also mentioned that you are bearish on U.S. stocks. Is that because you are generally pessimistic about the macroeconomic environment?

Jason: I simply think it is unreasonable for a market to rise continuously without falling. Sentiment has become somewhat overheated. When even ordinary people start thinking they might as well speculate in stocks, that is usually a dangerous stage. It is not limited to U.S. equities. Hong Kong stocks have also become extremely speculative under the AI narrative.

Some time ago, I heard an investor say that after carefully reviewing SpaceX’s listing materials, he thought it looked like a company on the verge of bankruptcy. The more I thought about it, the more I felt the argument was not entirely unreasonable. Musk has told an enormous story around SpaceX, even suggesting that much of its future revenue will come from AI. If that is the case, investors might as well buy OpenAI directly. So I think the bubble component is fairly obvious.

An IPO is often the last major opportunity for founders and their teams to raise the largest possible amount of money from the market within a short period. Naturally, they will try to list when the market is at its hottest. Musk is also one of the people who understands capital markets best, and he never enters a deal in which he expects to lose money. So I do not really believe that an IPO would leave substantial profits in the secondary market for ordinary investors.

Mao Di: People have indeed become somewhat dependent on the assumption that the same strategy will keep working.

Jason: Exactly. It is as though all you have to do is buy and hold, and you will make money. I simply think that this inertia has itself become dangerous.

Market Outlook: Wait for a True Panic Washout Before Buying the Dip

Mao Di: Finally, could you share your outlook for Bitcoin and Ethereum over the next year? After all, your prediction last year was fairly accurate.

Jason: I am extremely bearish on Ethereum. I cannot even see where its bottom might be. As for Bitcoin, over a one-year horizon, I think the price may ultimately end up close to where it is now, but it will most likely fall sharply first and then rebound significantly.

In other words, we may not be far from the bear market bottom in terms of time, but prices may not have fallen far enough. Even $48,000 may not hold.

Mao Di: So you are more inclined to wait for a bottom triggered by a major event?

Jason: Yes. A true bottom is usually accompanied by a defining event. When it happens, you will not need to check the charts or read the news. You will know that something has gone wrong because your social feeds will be flooded with posts and angry reactions. The FTX collapse was an event of that magnitude.

We are not there yet. Prices are falling, but people are more numb than genuinely panicked. A true bear market bottom usually appears only after the panic has been fully released and nobody wants to look at the market anymore. In hindsight, that kind of bottom is obvious, but at the time, you usually have no desire to buy.

Mao Di: When nobody wants to buy, how do you convince yourself to take action?

Jason: I still focus on penetration and the spread of consensus. As long as something has network effects, remains accepted by only a small group of core users, and is still far from reaching its adoption ceiling, the story is not over. That applies to Bitcoin, and it also applies to sports trading cards.

So I first establish a fundamental anchor in my mind: Is this still at an early stage, and does it still have long-term room to grow? The specific questions of how to buy and how much of a drawdown I can tolerate belong to the trading side.

When pessimism truly reaches its peak, it is better not to keep staring at the market. I think one effective approach is to step away, perhaps by going on a trip. Set your target price in advance, buy when the market reaches it, and then stop looking again. Watching the market every day will inevitably affect your emotions and interfere with your judgment. For long-term holders, staying away from the noise is often more important.

Follow us

Twitter: https://twitter.com/WuBlockchain

Telegram: https://t.me/wublockchainenglish

Complied by | WuBlockchain

Original Link：

https://www.wublock123.com/articles/three-exchange-collapse-survivor-i-stayed-at-all-59185

The guest on this episode, Dougao, previously worked at WebSea, JuCoin, and CoinUP. Drawing on his experience at the three companies, the conversation examines the internal operating models of these highly controversial exchanges. Based on his account and publicly available information, the episode presents three distinct risk profiles: WebSea was previously reported to have frozen withdrawals and announced in May 2026 that it would gradually resume withdrawals in batches based on account snapshots; JuCoin became embroiled in controversy over withdrawal delays and reserve transparency in June 2026; and CoinUP drew public scrutiny following extreme volatility in its platform token, CPX, although the exchange maintained that deposits, withdrawals, and trading remained operational.

In Dougao’s view, these small and mid-sized platforms ostensibly attract users through rising platform-token prices, discounted token purchases, principal-protected copy trading, mining returns, and agent commissions. In practice, however, their greater priority is to keep user funds within the platform. This is often accompanied by opaque withdrawal reviews, disorderly access controls, complex agent hierarchies, and unequal treatment of ordinary users and insiders.

The podcast further notes that as market conditions deteriorate, some small and mid-sized exchanges are shifting away from conventional order-matching businesses toward models that rely more heavily on platform-token narratives, high-yield packaging, and user acquisition in lower-tier markets. Ordinary users should exercise heightened caution whenever they encounter claims involving “principal protection,” “high returns,” “discounted token purchases,” or “locked-token mining.”

Inside the WebSea Crisis: Frozen Withdrawals, Preferential Releases for Insiders, and Broken Access Controls at a Small Exchange

Host: You joined WebSea in the first half of 2024. What were your main responsibilities at the time? What happened when WebSea encountered problems for the first time?

Dougao: I mainly worked in operations, including user operations and community management, while also handling some customer service work. Because it was a small exchange, responsibilities were not divided very clearly. I was involved in almost everything, including risk control, deposits and withdrawals, KYC, customer service, community management, and user operations.

In the second half of 2024, WebSea experienced its first wave of users being unable to withdraw funds. The company suddenly informed us that withdrawals were unavailable. It later said that the company might be dissolved and was even close to being unable to pay salaries. Management did not explain the specific reason. They simply told employees to withdraw their own funds as quickly as possible. Employees could still withdraw their money, but ordinary users could no longer do so.

The company’s internal Lark and Telegram groups were then gradually disbanded. This was WebSea’s first major crisis, and it sparked some public controversy. However, the impact was relatively limited because WebSea had not yet conducted large-scale marketing, so few people knew about or discussed the exchange. I was surprised when WebSea later became active again through renewed promotion and marketing.

It was difficult to determine the size of WebSea’s team. Unlike many exchanges that primarily use Lark for internal communication, WebSea conducted most of its collaboration through Telegram. I was in contact with dozens of people, and the entire team may have consisted of anywhere from several dozen to more than 100 employees. Most were Chinese, although there may also have been some ethnic Chinese employees based in Southeast Asia.

WebSea had some overseas users in 2024, but the majority were Chinese. At the time, it was promoting GameFi, which still attracted some market interest, and WebSea had also experimented in that area. Both its promotional activities and its eventual user base were concentrated primarily in mainland China.

I first learned about the exchange through a mainland Chinese recruitment website. In their early stages, small exchanges like this often post vacancies on recruitment websites and Telegram job channels. They also hire through employee referrals and recruitment agencies. I had worked in the industry for three or four years, so I encountered opportunities through all kinds of channels.

WebSea probably had a physical office at the time, possibly in Malaysia, but I do not know how many people actually worked there. Based on the part of the team I knew, most employees worked remotely online.

Host: You just mentioned that WebSea suddenly stopped processing withdrawals toward the end of 2024. Were there any warning signs beforehand? Did you only realize that something was wrong after management told you to withdraw your funds as quickly as possible?

Dougao: It happened very suddenly, although there were some warning signs. Bitcoin had fallen sharply around that time, possibly by more than 10% or even 20% in a single day, although I cannot remember the exact figure. After that steep decline, the company suddenly told us to withdraw our funds as quickly as possible and finish whatever work remained. It then began disbanding its internal groups one after another.

There was some discussion in both Telegram communities and on X. Telegram communities were relatively easy to control because administrators could suppress those discussions. There was little the platform could do about X, however. Many news accounts reposted the story, and the exchange essentially had no choice but to let the controversy continue spreading.

Some users who could not withdraw their funds later attempted to defend their rights and reported the matter to the police. From an employee’s perspective, however, we were already effectively on the verge of leaving the company. The company might not have been able to pay salaries, and management seemed to be telling everyone to cut their losses while they still could. Even if we continued working, there was no guarantee that we would be paid. At best, the company might have settled the previous month’s salary. Management itself was unsure whether the work already completed during the current month would be paid.

Later, I tried to complete the formal resignation process and obtain proof of employment, but neither was possible. In practical terms, the company had almost ceased to exist.

Employees were still able to withdraw their funds because user funds could be manually blocked during the deposit, withdrawal, and risk-control processes. A separate list of employees was created, and withdrawals involving employee funds were approved. By the time employees had withdrawn as much as possible, the amount of money left in the platform’s accounts had continued to decline, while the remaining users’ funds were still frozen. Even if user withdrawals were approved later, the hot wallets might already have been empty.

Some outstanding salaries were eventually paid through internal transfers on exchanges such as Binance and OKX rather than through WebSea itself.

From the outside, on-chain records may sometimes show that an exchange continued processing withdrawals for an extended period. In my view, however, if large numbers of users were already unable to withdraw while transfers were still leaving the hot wallets, particularly transfers exceeding 1,000 USDT, those final transactions were likely conducted mainly by insiders moving funds belonging to management or employees back into their own accounts, rather than ordinary user withdrawals.

Access controls at small exchanges are often poorly managed. At a major exchange, a withdrawal may require several layers of approval. At a small exchange, funds may be transferred immediately once a withdrawal is approved. The same person may even manage the wallet and approve withdrawals. When an exchange reaches this stage, the final transfers are therefore often initiated by insiders for their own benefit.

Host: If a small exchange suddenly runs into trouble, could the people responsible for its wallets or risk controls transfer funds that do not belong to them? When a platform claims that it is “gradually resuming withdrawals,” how should we interpret the occasional withdrawals that still appear on-chain?

Dougao: I think that is possible. Small exchanges already tend to have disorderly access controls. Even under normal operating conditions, their management of wallets, risk controls, and withdrawal approvals is often insufficiently rigorous. Once the platform runs into trouble, the team has even less capacity to manage these details.

Some people offer to buy USDT at a steep discount from accounts whose owners cannot withdraw. For example, if the market exchange rate is RMB 6.8 per USDT, someone might offer only RMB 3. Many users feel that if they cannot withdraw their funds anyway, their account balances are no more useful than virtual game tokens, so they are willing to sell at a deep discount. But if the buyer is an insider with the necessary access, or someone connected to the exchange, they may be able to approve the withdrawal and transfer the funds out. In effect, they acquire users’ assets at a fraction of their value.

When people offer to buy trapped USDT at a steep discount, exchange personnel may therefore be involved, or at least individuals with the relevant access privileges. They can use those privileges to move the funds out and profit from the difference.

After running into trouble, many small exchanges issue statements claiming that withdrawals remain available or will be “gradually resumed.” But if large numbers of ordinary users remain unable to withdraw for an extended period while occasional withdrawals continue to appear on-chain, those transactions should not automatically be interpreted as evidence that the platform has returned to normal.

In my view, these withdrawals most likely belong to agents, market makers, employees, or senior managers with connections to the exchange. Ordinary users’ funds remain frozen, while the on-chain transfers that can still be observed often represent funds belonging to well-connected insiders being moved out.

JuCoin’s Model for Targeting Lower-Tier Users: Ponzi-Like Products and Withdrawal Restrictions

Host: Your second experience began when you joined JuCoin in 2025. How long did you stay there, and what were your main responsibilities?

Dougao: I joined JuCoin around the middle of 2025. I would rather not disclose exactly how long I stayed, mainly to avoid revealing too much personal information. Overall, I did not remain at any of these exchanges for particularly long, but I did experience quite a few things.

When I left JuCoin, the explanation I was given was that my position had been eliminated. The company was scaling back, and the role was no longer being retained, so I stopped working there.

My responsibilities at JuCoin were similar to those at WebSea, primarily involving operations and customer service.

JuCoin’s team was much larger than WebSea’s. As I recall, there may have been around 300 group employees on Lark, with the entire team numbering approximately 300 to 500 people. Including external agents and offline promoters, the total would have been even higher.

JuCoin’s user base was also unusual compared with that of many other crypto exchanges. Its users were mainly middle-aged people between approximately 35 and 55 years old from mainland China. Overseas users accounted for a very small proportion, and I rarely encountered foreign users in my daily work.

These users generally had limited knowledge of the crypto industry and exchanges. Many did not use X and primarily communicated through WeChat or other messaging platforms. Therefore, when people on X discussed issues such as the collapse of platform-token prices or potential exit scams, relatively few of the affected users actually participated in those discussions. JuCoin’s larger user base consisted of people who did not use X and only encountered the platform through WeChat and similar channels.

Host: What did these users mainly do after joining JuCoin?

Dougao: JuCoin primarily targeted users in lower-tier markets, and its model was relatively similar to a traditional Ponzi-like investment scheme. Put simply, users were encouraged to keep their money on the platform in exchange for so-called points or computing power. They could then use that computing power for mining, potentially earning a particular token or JuCoin’s platform token, which they could supposedly sell afterward.

However, these rewards usually came with lock-up periods. Users could not necessarily sell them immediately after mining them, which kept their funds inside the platform for longer.

JuCoin’s app was also unusual because it integrated numerous third-party mini-apps, most of which were essentially built around different Ponzi-like schemes. They used different names to encourage users to deposit funds and then promised certain returns. In the early stages, while the platform still had sufficient funds, users might indeed have been able to withdraw. But during the middle and later stages, more and more rules would be introduced. For example, mining rewards might be released only after 7, 14, or 21 days, or become subject to other restrictions.

At a later stage, the platform token might be deliberately dumped, while some projects might simply shut down. Although these products appeared to have many different rules, their underlying purpose was the same: to lock users’ money into the platform and use interest or promised returns to persuade them to keep it there.

I did not examine the specific rules behind the discounted token purchases that appeared later. However, based on the other products and user groups I encountered, JuCoin was not targeting experienced users who had spent years trading on major exchanges such as Binance or OKX. It was more focused on users in lower-tier markets who had limited knowledge of the crypto industry.

Host: Did JuCoin’s business model affect the direction of your work? For example, did the platform ask employees to restrict user withdrawals as much as possible?

Dougao: That did happen. Risk controls at small exchanges are generally less rigorous, although some users still conduct actual trades on these platforms. But if a user deposited 1,000 USDT, earned another 500 USDT through trading, and then attempted to withdraw the full 1,500 USDT at once, the platform would probably block the withdrawal.

The key criterion was whether “withdrawals exceeded deposits.” If the amount a user attempted to withdraw was greater than the amount they had deposited, the platform was less likely to approve it and might even deduct the user’s profits. The platform could provide many different explanations, but the result was that users could not withdraw their money smoothly.

The backend system could generally identify these situations. A platform such as JuCoin had a dedicated internal system that displayed users’ deposits, profits, and withdrawals. As I recall, JuCoin’s backend code and templates may have come from XT, or XT.com, meaning that it may have purchased an exchange system template or codebase from XT.

Inside CoinUp: Position Cuts, Low Pay, and Token-Purchase Requirements for Team Leaders

Host: Did you encounter any salary payment issues while working at JuCoin? When did you subsequently join CoinUp?

Dougao: I was informed that I would be laid off before JuCoin ran into trouble, so in that sense, I narrowly avoided the crisis. All of my previous salary was paid normally when I left, and the handover process went relatively smoothly. By the time JuCoin encountered problems later, I was no longer there.

I left CoinUp for a similar reason. My position was suddenly eliminated. In my view, one of the biggest problems with these scheme-driven exchanges is that the owner and senior management have absolute authority. If a particular business or operation does not align with the views of the owner or a powerful executive, the relevant positions may be restructured or eliminated.

They also lay off employees in the name of cutting costs and improving efficiency. Even though salaries are already relatively low, they continue trying to reduce expenses.

Host: What salary levels do employees at these exchanges typically receive? What are the workload and geographic distribution of their teams like?

Dougao: Using Gate as a familiar point of comparison, salaries at these exchanges might be around 80% of what Gate pays. Outsiders may assume that these exchanges offer high salaries, but that is not actually the case. Even if a candidate requests only slightly more than Gate would pay, the exchange may still try to negotiate the salary down.

Salaries for non-technical positions generally range from RMB 10,000 to RMB 15,000 per month. They are not particularly high.

The workload depends on the stage of the business. Employees can be quite busy when the platform is running campaigns, conducting offline promotions, or pursuing a major marketing push. If there are no campaigns, or if offline promotions and marketing fail to produce significant growth, the daily workload is not especially heavy.

CoinUp’s workforce was also geographically dispersed. In addition to employees in mainland China, it included many ethnic Chinese employees based in Southeast Asia, including Malaysia and Singapore.

Many team leaders did purchase CoinUp’s platform token, CPX. However, I do not know much about the exact relationship between CPX and earlier tokens associated with the platform, or how those tokens evolved over time.

How the Three Exchanges Operated: JuCoin’s Agent Commissions, CoinUp’s Platform Token, and WebSea’s Principal-Protected Copy Trading

Host: You mentioned that withdrawals were more likely to be restricted when the amount withdrawn exceeded the amount deposited. Did all three exchanges have similar problems?

Dougao: The situation differed from one exchange to another. WebSea did not initially operate this way and was more like a conventional exchange. Later, possibly because its development was not going well, it began shifting toward Ponzi-like products and using various methods to attract user funds.

The latter two exchanges displayed more obvious characteristics of Ponzi-like schemes and market manipulation, and they had relatively few genuine traders. If users attempted to profit from an early rise in a platform token and then withdraw their money, the platform would generally refuse to approve the withdrawal and might even deduct the profits directly. In other words, users who traded genuinely and attempted to make money often encountered obstacles when withdrawing their funds.

Agents and leaders of larger teams generally found it easier to withdraw. At JuCoin, these people were usually called “team leaders,” similar to major agents or brokers at other exchanges. When ordinary users encountered withdrawal problems, the platform often told them to contact their respective team leaders to coordinate the matter.

These cases may have involved commission rates and internal allocations across different levels of the agent hierarchy. As a result, the platform usually did not handle ordinary users’ problems directly. Instead, team leaders were responsible for negotiating how much could be withdrawn and how the withdrawal would be processed.

Host: How high are the agent commission rates at these small exchanges? Some people claim that team leaders can receive as much as 50% of the deposits made by the users they refer. Did JuCoin operate similarly?

Dougao: The rate was roughly in that range, and 50% may even be a conservative estimate. Some agents may have received a higher percentage, depending on what they negotiated.

JuCoin’s agent system had a highly complex hierarchy and could theoretically extend through an unlimited number of levels. One person might have 20 to 30 layers of agents beneath them. Whenever a lower-level user made a deposit, part of the money could be distributed to the agent above them and then continue flowing to agents at higher levels. In other words, a single deposit might be divided among multiple layers of agents.

This is also why, when ordinary users or lower-level agents encountered problems involving rebates, commission rates, or withdrawals, the platform generally told them to contact their team leader. These issues often involved internal contracts, terms, and revenue-sharing arrangements between the users or agents and their team leaders.

However, the three exchanges did not operate in exactly the same way. WebSea did not use this type of unlimited multi-level agent structure, while CoinUp’s agent system was also different. CoinUp and JuCoin had similar user demographics and Ponzi-like operating models, but their agent rules still differed.

Host: How did the agent systems at WebSea and CoinUp operate?

Dougao: I had relatively limited exposure to WebSea’s early agent model. From what I understood, it was closer to the conventional agent system used by exchanges, with upper-level and lower-level agents across perhaps only a few tiers. The system mainly relied on trading-fee rebates and did not have a particularly complex hierarchy.

CoinUp also had a team-leader system, but it had fewer layers than JuCoin. One unusual feature was that some team leaders or agents were required to purchase CPX, the platform token. CPX later suffered a severe price collapse, essentially because many agents and users had bought the token. The platform effectively controlled the market and then used the platform token to profit at their expense.

Host: Some exchanges profit from customer trading losses, making it inherently difficult for users to earn money on the platform. Even when individual users record profits on paper, do they still struggle to withdraw those profits?

Dougao: Yes. However, these exchanges were not typical platforms that primarily profited from customer trading losses, because almost no one used their spot or derivatives markets. Most users participated in the Ponzi-like products offered within the platforms.

In its later stages, WebSea adopted another model called “principal-protected copy trading.” On the surface, any losses generated through copy trading were supposedly covered by the lead trader, which attracted many users to deposit funds. In reality, however, the users still bore the losses. The arrangement was simply packaged differently.

WebSea had offered copy trading for some time, but it had not been particularly successful. After it introduced “principal-protected copy trading,” many users were attracted back because they believed someone else would cover any losses. In reality, most of these lead traders were neither genuine external traders nor popular trading influencers on X. They were accounts developed internally by WebSea, and many were operated by company insiders.

From the platform’s perspective, whether these lead traders recorded profits or losses on paper did not matter, because the funds in their accounts were essentially just numbers within the platform’s internal system. Unless the money was actually withdrawn, those balances could not be realized. The platform’s real objective was to attract user funds and keep them circulating within the platform.

This is also why, when WebSea encountered another crisis later, the inability of users to withdraw their funds generated much greater public controversy than the first incident.

Beware the High-Yield Narratives of Small Exchanges: Withdrawal Risks Behind Principal Protection, Copy Trading, and Discounted Token Sales

Host: The platform tokens of these three exchanges, including JuCoin’s JU, WebSea’s WBS, and CoinUp’s CPX, appear to have followed similar price patterns: an initial rally followed by a sudden collapse. Do exchanges like these frequently use this model?

Dougao: Yes. They usually present their platform tokens as highly valuable and promote various supposed utilities. Some offline promoters even promise users returns of several times their initial investment to attract middle-aged and elderly buyers.

After buying the token and watching its price chart continue rising, users believe they made the right decision. But when the platform is ready to profit at their expense, the token price may suddenly collapse. Users not only suffer losses, but also find it difficult to withdraw their remaining funds.

These exchanges also organize offline events in mainland China, but doing so carries significant risks. They primarily target individual users in the country, and their businesses have clear characteristics of Ponzi-like schemes. If someone reports them or large groups of affected users gather to demand compensation, the personnel running these offline activities can easily be arrested.

However, many offline events are actually organized by local promoters who may not be formal employees of the exchange group. Their supervisors generally use Telegram, Lark, and similar tools to arrange budgets and activities and verify the results. These supervisors are often based overseas in places such as Thailand, Malaysia, and Indonesia rather than in mainland China. In JuCoin’s case, the people operating inside the country were generally only frontline promoters or business development staff.

As a result, even if the people running offline activities are arrested, they can provide only limited information, perhaps no more than the contact details of their supervisors. The actual senior managers and core teams are generally based overseas, and frontline staff in mainland China are unlikely to possess more useful information.

While working at these three exchanges, I did not encounter any cases in which an offline office or one of my colleagues was raided or arrested. However, I did experience similar incidents at other exchanges.

Host: Before joining these exchanges, you already had a general understanding of their business models. Were you not concerned about the risks? What were you considering at the time?

Dougao: This is certainly a controversial point. From an ethical perspective, these businesses are inherently problematic. However, I was primarily interested in understanding how they operated: how they packaged their projects, attracted users, extracted money from them, and which groups they mainly targeted.

After these platforms ran into trouble, I considered writing about my observations and views, but I never developed them into a more complete account.

I believe exchanges like these will become increasingly common in a bear market. Since last year, the broader crypto market has continued to decline, making it extremely difficult for conventional small exchanges to grow. Major exchanges have captured most trading volume as well as both existing and new users, while other sources of new demand have been diverted to the U.S. stock market and other markets.

Under these conditions, many small exchanges may shift toward operating models similar to those of WebSea, JuCoin, and CoinUp. This may be particularly true of exchanges ranked outside the top 20 or 30 on CoinMarketCap, although some higher-ranked platforms may also be experimenting with similar models. Based on what I have encountered and learned, these models may become increasingly common during a bear market.

Host: Small exchanges like these often attract users through rising platform-token prices, discounted token sales, principal-protected copy trading, and various high-yield promotions. What should ordinary users be most cautious about?

Dougao: The key is to avoid participating in these small exchanges without carefully considering the risks. They use rising platform-token prices, discounted token sales, copy trading, promised returns, or high annualized yields to persuade users to deposit their principal. The returns may appear attractive, but once the platform’s cash flow encounters problems, users will find it extremely difficult to withdraw their funds.

Many exchanges currently ranked outside the top 20 or 30 on CoinMarketCap use similar Ponzi-like models. The high returns shown to users are often simply packaging designed to attract deposits.

Host: How are these exchanges managed internally? Can employees interact with the real owners?

Dougao: Most employees communicate primarily with their direct supervisors and have no access to the actual owners. Some platforms have visible public-facing managers. At CoinUp, for example, internal operations were mainly overseen by someone known as “Sister Q,” who recently also spoke publicly on X.

However, these public-facing managers are not necessarily the true owners behind the platforms. Ordinary employees generally do not know who actually provides the capital, controls the movement of funds, and oversees the exchange’s overall operations. WebSea and CoinUp likely both have actual financial backers or owners behind the scenes, but their identities are unclear.

After WebSea’s first crisis, I heard a claim that an investor behind the platform may have suddenly withdrawn their funding. However, I do not know what actually happened or who that investor may have been.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Complied by | WuBlockchain

Original Link:

https://www.wublock123.com/articles/microstrategy-death-spiral-risk-macro-outlook-h2-2026-59118

This article is based on remarks made by Bocai, co-founder and CEO of Unified Labs, on the WuBlockchain Podcast. Bocai believes that the RWA sector is currently marked by a clear divide: traditional financial institutions such as BlackRock are accelerating their entry into the market and bringing products to market, while the crypto side remains rife with disorder and Ponzi-like schemes.

In Bocai’s view, RWA is fundamentally an onchain upgrade of the traditional financial system. It is an institutional game that relies heavily on regulatory and compliance endorsement, and issuers without the necessary licenses have very little credibility. The primary purpose of bringing assets onchain is not speculation, but to overcome geographical restrictions, promote financial inclusion, and use DeFi to remove traditional financial intermediaries. This can enable more efficient and lower-cost onchain financial applications, such as collateralized lending. Bocai said that DeFi’s decentralized structure provides certainty in code execution, while the centralized nature of RWA addresses asset ownership verification and investor protection. Combining the two can significantly improve efficiency.

Discussing risk management for onchain assets, he noted that RWA products are currently often issued through offshore special purpose vehicles (SPVs). If problems arise with the underlying assets, ordinary users may face extremely high costs when pursuing cross-border claims or litigation, while local regulators may also find it difficult to intervene directly. On the regulatory front, he highlighted the legislative progress of bills such as the U.S. CLARITY Act. He expects the RWA market to experience exponential growth between 2027 and 2030 as regulatory frameworks in the United States, Japan, Singapore, and other jurisdictions are substantively implemented.

In practice, Unified Labs aims to serve as an “onchain fund manager” for RWA assets. By providing lending pools and decentralized vaults built on Morpho’s architecture, it seeks to meet demand for liquidity in derivative financial services after assets are brought onchain. Bocai advised ordinary investors to remain cautious and continue observing the market until clear federal-level legislation is enacted.

Sector Outlook: RWA Is an Institutional Game, and Combining Onchain Assets with DeFi Is the Key to Breaking Through

Bocai: I am the co-founder and CEO of Unified Labs, as well as a content creator. I am pleased to join the WuBlockchain Podcast to discuss RWA. I entered the crypto industry in 2021 and was deeply involved in founding and conducting investment research for several well-known DAOs. I also wrote numerous long-form research reports on DeFi, the EVM ecosystem, smart contract security, and oracles, which helped me build a comprehensive knowledge base.

When I went to Australia to study in 2023, I had the opportunity to participate in the Reserve Bank of Australia’s onchain CBDC pilot. We were one of the few startup teams selected at the time and explored a range of innovations in supply chain finance, including ways to address document fraud and accounts receivable financing. Because the project was highly innovative, we later worked with the Monetary Authority of Singapore and the Bank of Ghana on an international trade pilot, exploring cross-border programmable payments and trade finance. This experience gave me the opportunity to work with central bank regulators and traditional financial institutions. It taught me how to integrate onchain and offchain systems in practice, rather than simply speculating on concepts without substance.

At the time, I was closely following regulatory developments and saw major institutions, including the IMF, the BIS, the Monetary Authority of Singapore, and the Bank of England, frequently introducing tokenization policies and innovation initiatives between 2023 and 2024. This convinced me that the RWA sector would eventually experience significant growth, driven primarily by regulatory support and the removal of policy barriers.

During this period, I also co-organized an RWA incubator, which allowed me to continuously observe the business models and development of different projects. However, I found that many startups ultimately failed to survive.

I began to realize that RWA issuance is largely an institutional game, with very limited entry points for startups. However, as the regulatory and legal environment became much more open after Trump took office, particularly with the recent major progress on the CLARITY Act, I decided to enter the market myself at the end of last year and founded Unified Labs, which focuses on combining RWA with DeFi.

The opportunity I see is that although issuing RWA assets is difficult, bringing these assets onchain creates enormous demand for derivative financial services, with collateralized lending representing the largest market. As the first Chinese team in Asia to receive Morpho’s whitelist approval with a focus on RWA + DeFi, we are committed to addressing liquidity challenges for RWA assets. We build customized lending pools on Morpho for RWA issuers and provide a Vault where onchain yield users can deposit funds and earn returns generated by lending against the underlying RWA assets. By directing liquidity into these lending pools, we enable RWA assets to be used as collateral for onchain loans and expand their utility. That is what we are currently building.

Current State of the Sector: RWA Remains Deeply Divided, With Compliance and Regulation as the Foundation for Bringing Assets Onchain

Maodi: Ordinary users are still fairly uncertain about the current state of RWA. Could you explain the sector’s progress and its overall structure?

Bocai: Perceptions of the RWA sector within the industry are highly divided. In 2023, Citibank published an RWA report predicting that the market would reach trillions of dollars by 2030. That report truly ignited the sector. Everyone began discussing the idea of bringing everything onchain, and new startups emerged one after another. However, from 2024 to the present, there has been substantial progress in RWA within traditional finance, while the crypto sector has yet to produce any projects that have truly gained traction.

Maodi: What progress has been made?

Bocai: First, Citibank’s 2024 report encouraged many institutions to begin exploring the sector. People in crypto rarely pay attention to these developments, but many leading traditional financial institutions began establishing digital asset divisions, conducting internal pilots on consortium chains or within regulatory sandboxes, and gradually bringing assets onchain. When I read their research reports, I felt that traditional finance professionals understood crypto better than we did. Their work was highly professional. Institutions such as BlackRock, Franklin Templeton, OCBC, and BNY had not yet launched products at the time, but now almost all major financial institutions have entered the market and have either issued or are preparing to issue RWA assets.

Second, there has also been significant regulatory progress. After Trump took office, he personally advanced several bills and detailed rules. I frequently write about the SEC’s latest statements and guidance, and you can see regulators effectively teaching the market how to issue RWA assets by clearly defining the relevant frameworks and boundaries. Development has been extremely rapid over the past two years. Some countries may even begin lifting certain restrictions on retail access to RWA products this year or next year.

From the perspective of traditional finance, institutions are entering the market at scale, products are being launched, and new regulations are being introduced. On the crypto side, however, the market was initially filled with disorder. Various questionable RWA issuers emerged, tokenizing unusual assets such as wine and Hainan rosewood to raise money fraudulently. There were also numerous Ponzi-like schemes organizing large conferences under the RWA banner to exploit retail investors.

The teams that have successfully launched RWA products and survived generally have backgrounds in traditional finance, including Securitize and several projects founded by Chinese teams. Very few teams with purely crypto backgrounds have managed to gain traction. This reflects the deep divide between the two fields. The builders still working on RWA are generally advancing their projects quietly and rarely promote themselves publicly. That is the sector’s current state.

Maodi: In the crypto and AI industries, products or demand usually emerge first, with regulation catching up afterward. Why does the RWA sector appear to work in the opposite direction, with products only emerging after regulation is established?

Bocai: RWA development does not wait for regulation to be fully implemented. Once regulators provide a clear indication of where the rules are heading, market participants begin building. In 2024, before Trump took office and before the CLARITY Act made any breakthrough, institutions had already entered the market because they knew this was the direction of the future. Trump’s return to office served as a catalyst that accelerated the process. Once regulators clarified their position, institutions began entering the market at scale.

Why is regulation so important? Because RWA differs from most crypto sectors. In crypto, projects often issue tokens and rely on speculation to drive up prices and generate profits. RWA, by contrast, brings traditional assets onchain and upgrades the broader traditional financial system. This process does not create new assets. It uses new infrastructure to rebuild the traditional financial system in a different environment. The underlying logic is different. Assets brought onchain are difficult to treat as purely speculative instruments, and because they represent actual assets, compliance is essential.

First, these assets are held by financial institutions. To sell them onchain, their ownership must be legally recognized and verified. Without legal protection for ownership rights, what exactly are users buying? Could anyone simply issue an asset and disappear with the proceeds? That would clearly be unreasonable and would never pass an institution’s risk controls.

Second, investors must be protected. People who buy tokens for speculative purposes understand that they are accepting the associated risks. People who buy assets, however, do so to earn annualized returns, not to speculate on rising prices. In this context, legal oversight, regulation, and compliance are essential.

Redefining Value: Combining RWA with DeFi Will Replace Traditional Financial Intermediaries, Reduce Costs, and Improve Efficiency

Maodi: Does RWA genuinely offer value to blockchain users? People seeking relatively stable but low-yield assets are usually high-net-worth individuals who can already purchase them through traditional financial channels. Why would they need to access these assets onchain? Is there really demand within the crypto industry for a distribution channel offering relatively stable returns?

Bocai: If you are an onchain user seeking high returns, that is a different matter. However, when considering the significance of RWA for global investors and ordinary people, the first benefit is that it lowers barriers to access and promotes global financial inclusion.

U.S. dollar stablecoins are actually the most successful form of RWA. They have expanded the distribution of the U.S. dollar globally, allowing people in regions underserved by financial institutions to hold digital dollars onchain. These people may previously have had no access to local banking services, but now they only need a wallet to hold digital dollars and gain access to assets that were previously beyond their reach. Once they have digital dollars, they can purchase high-quality U.S. assets.

Second, why would high-net-worth professional investors who can already purchase assets through traditional channels choose to buy them onchain? The key is that onchain infrastructure can provide capabilities that traditional finance cannot.

One example is collateralized lending through DeFi. For certain assets, collateralized lending is almost unavailable in traditional finance. Take gold as an example. It is difficult to use gold directly as collateral for a loan in traditional finance. Banks and brokerages generally do not provide this service because transportation, custody, and valuation make the process extremely complicated, and there is no central clearinghouse. This type of service is generally available only to private banking clients with more than 50 million in assets.

Borrowing against traditional fund holdings is similarly difficult. Such services are generally available only for high-quality funds, the process can take one or two weeks, ownership transfers must be registered through a transfer agent, and the interest rates are often unattractive. Onchain, however, anyone in the world who owns the asset can borrow cash directly from a DeFi pool. This removes all intermediaries, provides immediate liquidity, and offers more favorable interest rates than traditional finance.

Professional investors can therefore use onchain infrastructure to generate higher returns or access DeFi innovations such as PT and YT, which are unavailable in traditional finance. RWA creates a globally accessible channel through which people can obtain high-quality assets at any time and use onchain infrastructure to enhance returns. This is the real significance of RWA for most people. It is not simply about speculating on assets for profit, which is a common misunderstanding of RWA.

Maodi: Do investors need to establish legal ownership of RWA assets and complete KYC verification? Otherwise, they may violate restrictions imposed by regulators such as the SEC or CFTC, making it impossible to integrate these assets with DeFi. But if users must satisfy these requirements, does that not simply lead back to the traditional financial system? Is this a paradox?

Bocai: I do not think it is a paradox. It is an ideological question. If you are a crypto-native fundamentalist who pursues absolute decentralization and the complete absence of regulation, then you may see it that way. From a practical perspective, however, decentralization does not mean completely eliminating every intermediary and centralized mechanism. That is unrealistic. What belongs to God belongs to God, and what belongs to Caesar belongs to Caesar. Decentralized and centralized mechanisms each address different problems.

DeFi removes intermediaries and legal enforcement processes from traditional finance and replaces them with automated code execution. However, DeFi is not completely decentralized. Many smart contracts still retain owner privileges, and some project teams have even misappropriated funds and disappeared. What is truly decentralized is the consensus around rules established through distributed nodes and code. The code executes exactly as written, providing certainty of execution.

The centralized nature of RWA, meanwhile, addresses the issue of trust. These assets are originally issued within traditional finance. Without institutional backing and legal protections, how would RWA assets differ from meme coins? Investors will only feel confident purchasing them when institutions bring the assets onchain themselves and investors’ rights are protected by law. Combining the two means using blockchain infrastructure to conduct traditional financial business.

When RWA assets use DeFi services onchain, they can completely bypass the intermediaries in the traditional financial system, resulting in greater efficiency and lower costs. This is central to our understanding of RWA. It should not simply be viewed as a paradox from the perspective of decentralization.

RWA returns to users the layers of fees and profits traditionally extracted by financial intermediaries. For traditional institutions, doing this amounts to disrupting their own businesses, but they have no alternative. If they do not adapt, they will be eliminated. They must therefore enter the market proactively and compete for influence. This is the primary motivation I currently see behind their entry into the sector.

Risk Management: RWA Product Categories, Return Expectations, and DeFi Integration Strategies

Maodi: Could repeated collateralization onchain amplify risks within the financial system? How should the RWA sector approach risk management in the future?

Bocai: I previously worked on related innovations during a central bank pilot project, where we used the ERC-3525 standard to tokenize a CDO. The 2008 financial crisis occurred because real estate derivatives contained too many layers of underlying assets. Investors had no idea what those underlying assets actually were. Once the products had been distributed throughout the market and the underlying assets failed, they triggered a chain reaction.

Blockchain can address this problem effectively because its most important feature is transparency. Suppose MBS and CDO products were structured entirely onchain. A tokenized MBS or CDO would allow investors to see which assets it contained. That information is unavailable in traditional finance, but it can be visible onchain.

If those products from 2008 had been issued on a blockchain, the crisis might not have occurred. The key issue, however, lies in the offchain component. If a product is packaged onchain, investors can trace the origin of every underlying asset. But if it is packaged offchain before being brought onchain, that information remains invisible. The real problem that needs to be addressed is offchain transparency.

Maodi: What are the main product categories in the RWA sector today? Are there any other products particularly relevant to ordinary users?

Bocai: On the asset side, the viable categories are relatively limited. They include standardized assets such as U.S. dollars, U.S. Treasuries, money market funds, fixed-income funds, private credit, and gold. Many issues involving non-standardized assets remain unresolved.

U.S. equities are a particularly interesting asset category. Many tokenized U.S. equity products have recently appeared, but their underlying assets are not actual U.S. stocks. Instead, they are derivative contracts pegged to U.S. stock prices, so they are not technically securities.

The SEC recently issued regulatory guidance for tokenized assets, establishing rules for the tokenized U.S. equity sector. The SEC examines the substance of the asset. If the underlying asset is a stock, it is regulated as a security. If it is a derivative, it is regulated under the rules applicable to derivatives.

Previously, many tokenized U.S. equity products may not have fallen within any regulatory framework. Now that the SEC has introduced new rules and major institutions such as the New York Stock Exchange and Nasdaq are entering the market, their tokenized equity products will be backed by actual stocks. This also demonstrates that RWA issuance is fundamentally an institutional game.

Maodi: What exactly does your RWA project do? Could you explain it in plain language?

Bocai: Let me briefly explain what Unified Labs does. The professional term for our role is “Risk Curator,” but in simpler terms, we can be viewed as an onchain fund manager. We operate an onchain financial business and are authorized to perform two functions on Morpho.

First, after RWA assets are brought onchain, we can create lending pools for them. This allows the assets to be used as collateral for loans and creates demand for them.

Second, we will create a Vault on Morpho that functions like an onchain savings product similar to Yu’e Bao. It is non-custodial and allows users to deposit or withdraw funds at any time. Users can deposit stablecoins and earn stable annualized returns. These returns come from lending the stablecoins to borrowers who hold RWA assets.

In simple terms, we allow asset holders to borrow money while enabling depositors to earn returns. The entire process operates through Morpho’s architecture. We have no authority to custody or misappropriate users’ assets.

Maodi: What annualized returns do relatively credible RWA products generally offer?

Bocai: It depends on the underlying assets. There are currently approximately three return ranges in the market.

The first category is relatively safe and stable. Products backed by U.S. dollar money market funds, U.S. Treasuries, or low-risk fixed-income funds may offer returns of around 3% to 5%.

The second category offers approximately 8% to 9%. The underlying assets may include relatively secure accounts receivable from supply chain finance or bridge loans for cross-border payments.

At the higher end, private credit products may offer approximately 12% to 13%. Their underlying assets may include consumer credit in Southeast Asia or private credit issued to small and medium-sized companies. Their redemption periods may be around one month.

The yield alone can only indicate the general level of risk. To determine whether a product is credible, investors must also examine the issuer and the composition of the underlying assets. For private credit, for example, investors need to know which industries the loans are being extended to.

BlackRock recently encountered liquidity issues in private credit because AI severely disrupted certain software companies, causing their cash flows to decline sharply and affecting the overall health of the portfolio. Users therefore need to examine both the issuer’s background and the composition of the underlying assets when assessing a product’s credibility.

Maodi: Through which channels can investors generally purchase these RWA yield products?

Bocai: Ordinary users generally encounter them through distribution channels such as centralized exchanges. Many retail investors do not purchase RWA assets directly, but they are very interested when the assets are packaged as yield-bearing stablecoins. It is an interesting phenomenon.

The second option is to purchase them directly through the project’s official website, although KYC is generally required.

Maodi: If users do not pass or cannot complete KYC, can they only purchase the assets through an onchain DEX?

Bocai: They generally cannot purchase them on a DEX.

Maodi: Is that because doing so would not meet regulatory requirements?

Bocai: Yes. If KYC is required, transfers must be restricted to whitelisted addresses, so there is generally no liquidity on DEXs. The current solution is for some projects to package the assets as yield-bearing stablecoins to attract retail investors.

Maodi: Do retail investors prefer these products because their access channels are limited and this is their only practical option?

Bocai: Limited access is one reason. Another is that crypto-native users are very comfortable with these products. Yield-bearing stablecoins have long existed in the industry and can be used for airdrop farming and DeFi strategies. Crypto-native users are more familiar with these types of products.

Regulatory Framework: The U.S. CLARITY Act Will Be a Key Milestone for RWA Growth in 2027

Maodi: If problems arise with the assets underlying an RWA product, how can asset holders protect their rights? Must they simply wait for regulators to intervene or pursue complicated legal proceedings that may take years before they can recover their assets?

Bocai: You have identified a major pain point in the RWA sector. Many RWA assets issued onchain today do not represent the underlying assets themselves. Instead, they represent claims against an SPV. An SPV, or special purpose vehicle, is a legal entity established for a specific purpose and is usually incorporated in the Cayman Islands or the British Virgin Islands.

For example, an SPV may be established in the BVI to hold the underlying assets, after which interests in the SPV are tokenized. What users purchase is effectively a claim against the SPV. When redeeming the tokens, users are legally requesting that the SPV redeem the assets it holds. SPVs are generally structured to provide bankruptcy remoteness. If an SPV becomes insolvent, investors can theoretically recover their assets through legal proceedings.

In practice, however, this is extremely complicated because it involves numerous cross-border legal issues. The underlying assets may be located in the United States or another country, while the entity being sued is incorporated in the BVI. Investors would therefore need to bring a case before a BVI court. The process can be extremely expensive and lengthy, potentially requiring several years and hundreds of thousands of dollars in legal fees.

Regulators may also be unable to assist because investors hold interests issued in the BVI rather than assets issued within the regulatory jurisdiction of Hong Kong or the United States. Local regulators cannot intervene directly. This is a major industry-wide pain point for which there is currently no standardized solution. The underlying reason is that comprehensive regulatory frameworks are still being developed, leaving the industry reliant on this transitional structure.

Once future legal frameworks are implemented, assets could be issued within local regulatory jurisdictions and directly represent the underlying assets themselves. If problems arise, local regulators would then be able to help investors protect their rights.

For now, investors must accept these risks and try to select reputable tokenization issuers, or Wrappers. Securitize, for example, is backed by BlackRock, while DigiFT has obtained a license after participating in Singapore’s regulatory sandbox. Issuers backed by major institutions and regulatory licenses are relatively credible. Unlicensed teams with no established background have very little credibility and present a much higher risk of misappropriating funds and disappearing.

Maodi: Are there any important timelines or legal frameworks worth monitoring? When will investors have formal channels through which to protect their rights?

Bocai: Regarding RWA regulation, I strongly recommend focusing on the U.S. CLARITY Act, or Digital Asset Market Clarity Act, which has recently made significant progress. Once the United States passes it, other countries are likely to follow quickly. The bill clearly defines whether security tokens and commodity tokens fall under the jurisdiction of the SEC or the CFTC.

In the past, regulatory boundaries in the United States were unclear, and the SEC and CFTC repeatedly competed for jurisdiction over Ether. Until this issue is resolved, institutions will be reluctant to issue securities directly because a change in administration could leave them exposed to regulatory scrutiny. Only federal legislation can provide a clear framework for RWA. Once the CLARITY Act is passed, it will become a catalyst for faster regulatory development worldwide.

The bill has now addressed a major point of contention between the banking and crypto industries, primarily concerning whether stablecoins can generate yield. The final compromise is that simply holding a stablecoin cannot entitle users to returns generated by its underlying assets. Users may earn returns only by using the stablecoin to participate in actual activities.

With this dispute now resolved, the legislative process is expected to move forward. If everything proceeds smoothly, the bill could be enacted within the next few months, with implementation likely beginning in 2027. I have also been monitoring other countries. The Monetary Authority of Singapore already provides highly detailed guidance on RWA issuance on its website. Japan is also expected to implement substantive legislation in 2027, opening its stablecoin and RWA markets. I therefore expect the RWA market to experience exponential growth between 2027 and 2030.

Maodi: Do institutions have specific preferences when choosing blockchains on which to issue RWA assets?

Bocai: Most major assets are currently issued on Ethereum or Solana, although some are also issued on Arbitrum, Avalanche, and Monad. Blockchains with strong institutional relationships tend to attract more RWA issuance. Avalanche, for example, has implemented projects through direct partnerships with major Japanese companies. Many Wall Street institutions are also likely to issue RWA assets on Monad because it has a strong institutional background. Ultimately, the choice depends on each blockchain’s underlying characteristics and institutional pedigree.

Sector Outlook: RWA Startups Face High Barriers, and the U.S. CLARITY Act Will Shape the Next Four to Five Years

Maodi: What advice or potential entry points would you suggest for ordinary users who want to participate in the RWA sector?

Bocai: RWA is fundamentally an onchain upgrade of traditional financial services. For ordinary people, investing in assets is not the only option. Entrepreneurship is another possible direction. The real opportunities lie in addressing the derivative financial needs and pain points that emerge after assets are brought onchain. Providing services to institutions during their transition to onchain finance is currently one of the few entrepreneurial opportunities available to ordinary people. However, there is now very limited room for projects focused solely on issuing tokens.

Maodi: But this type of entrepreneurship also requires specific qualifications or experience, so the barriers to entry are quite high, correct?

Bocai: Building an RWA startup generally requires a team with combined experience in traditional finance and Web3. Founders must either be able to navigate and work across both sectors or address specific pain points through technical expertise. The industry’s barriers to entry continue to rise. The days when a team could raise tens of millions with nothing more than a pitch deck are over, and private market fundraising is currently in a deep freeze.

Many sectors, including perpetual DEXs and prediction markets, have become intensely competitive, while others have ultimately failed to prove viable. RWA represents one of the few remaining growth opportunities for the industry.

Maodi: Despite the considerable market attention, RWA is still at an early stage. Is the best advice for ordinary users to remain cautious and wait for regulatory frameworks to be implemented before investing?

Bocai: There is still considerable policy uncertainty. For example, will the U.S. CLARITY Act ultimately be enacted? If it is not enacted, a change in administration could reverse all existing policies and force the industry to start over. Although stablecoin legislation has already been enacted and cannot simply be reversed, it would be relatively easy for the next administration to restrict the development of the RWA sector.

Maodi: From a pessimistic perspective, if the bill does not pass, could the sector remain unable to establish itself in the near term and require several more years of exploration?

Bocai: That is correct. Under the U.S. legal system, the SEC’s regulatory plans, rules, guidance, and even presidential executive orders are not permanent. They can be reversed by a future administration at any time. Only legislation enacted at the federal level can provide lasting certainty.

Whether the CLARITY Act is ultimately enacted will directly determine the trajectory of the entire RWA sector over the next four to five years. It is therefore critically important.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Editor | Wu Blockchain

Verified as of August 23, 2026 (ET) — — Coverage period: August 24–30, 2026 (ET)

The key events to watch this week:

Tuesday, August 25, 10:00 AM ET | U.S. Consumer Confidence

The release will show whether high interest rates and persistent inflation are further weakening U.S. consumers — and whether household expectations still support the soft-landing narrative.

Wednesday, August 26, 8:30 AM ET | July PCE, Second-Quarter GDP Revision and Durable Goods Orders

This is the week’s most concentrated macro data window. PCE will shape expectations for the Fed’s rate path, while GDP and durable goods orders will test the strength of economic growth and business investment.

Wednesday, August 26, 4:20 PM ET | Nvidia Q2 FY2027 Earnings

Nvidia is expected to release results at approximately 4:20 PM ET, followed by its earnings call at 5:00 PM ET. The key variables are AI compute demand, hyperscaler CapEx, the Blackwell ramp and whether higher memory and supply-chain costs are beginning to pressure margins.

Thursday, August 27, 4:45 PM ET | Marvell Q2 FY2027 Earnings Call

Watch whether demand for custom AI silicon, data center networking and memory infrastructure is translating into stronger revenue growth — and whether the company raises its forward guidance.

August 27–29 | Jackson Hole Economic Policy Symposium

This year’s theme is “Financial Innovation: Implications for Payments and Policy.” Fed Chair Kevin Warsh will deliver the keynote address on Friday, August 28 at 10:00 AM ET, with markets focused on his assessment of inflation and the path of monetary policy.

Friday, August 28, 10:00 AM ET | Preliminary Annual Benchmark Revision to U.S. Payroll Employment

The Bureau of Labor Statistics will use broader administrative employment records to reassess payroll growth through March 2026. A substantial downward revision could change the market’s view of U.S. labor-market strength and shift expectations for the Fed’s next moves.

Bottom line:

This week comes down to two questions — will the Fed lean more hawkish, and how much runway is left for AI demand?

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Author | @agintender

Complied by | WuBlockchain

Original Link：

If the crypto world from 2016 to the present were compressed into a single sentence, it would read something like this: over the course of a decade, the industry went from “I do not need anyone’s permission” to “I must obtain a license” — and it traveled that road through a succession of settlements, criminal charges, court rulings, and several major collapses.

Prologue: Compliance Was Not Imposed on the Industry; It Became the Price of Admission

Every time the industry thought it had won, another wave of regulation followed. Every time regulators thought they had brought the industry under control, it moved into the next uncharted territory. This is a classic system of cat-and-mouse evolution, but a more precise description would be a compliance flywheel: crises, enforcement, and legislation take turns driving the cycle forward. With each rotation, regulation becomes more granular and another part of the industry’s “gray area” disappears.

I divide this decade into five stages. Each stage has a defining compliance paradigm, a set of landmark cases, and a previous generation of “gray areas” that was forced out of existence.

Stage One (2016–2018): The Era of Industry Self-Regulation. Amid the ICO frenzy, the industry created its own compliance tools — SAFTs, foundation structures, and allowlist-based KYC. The Howey test returned to prominence, while the SEC used the DAO Report to declare that tokens could also constitute securities.

Stage Two (2019–2021): The Era of Licensing. The FATF Travel Rule was introduced, countries began rolling out licensing regimes, and regulators started pulling crypto into the traditional banking framework. BitMEX became the first major “offshore” exchange to face criminal prosecution. (This article covers only the first two stages.)

Stage Three (2022): The Year of Collapse. Terra, Tornado Cash, and FTX delivered three successive shocks. OFAC sanctioned a piece of code for the first time, and the regulatory debate shifted decisively from “whether to regulate” to “how to regulate comprehensively.”

Stage Four (2023–2024): The Era of Enforcement Reckoning. Binance and CZ paid $4.3 billion, offshore exchanges collectively entered an “era of settlements,” and the SEC pursued cases against Coinbase, Kraken, and Binance on three parallel fronts. Proof of Reserves was rolled out with great fanfare during this period, yet regulators remained largely unmoved — a phenomenon that itself merits closer examination.

Stage Five (2024–2026): The Era of Legislative Codification. The GENIUS Act, the CLARITY Act, the repeal of SAB 121, the wave of SEC case dismissals, and the approval of crypto ETFs marked a shift from “hostile enforcement” to rules set out in black and white. The industry moved from “winning in court” to “finally getting the rules it had been waiting for.”

Four underlying threads run through all five stages:

The scope of regulation kept expanding — from project teams to exchanges, protocol code, and eventually the entire ecosystem.

Compliance tools continued to evolve — from registration and disclosure to licensing, cross-border standards, sanctions, and legislation.

The driving force kept changing — from industry self-regulation to regulatory agencies, crisis-driven intervention, and ultimately lawmakers.

The offshore–onshore dynamic repeatedly reversed itself — from moving offshore to escape regulation, to regulators penetrating offshore structures, and finally to a selective return onshore.

We now turn to the main discussion.

Stage One (2016–2018): The Era of Industry Self-Regulation

1.1 The ICO Frenzy and the Birth of “Pseudo-Compliance” Tools

The year 2017 marked crypto’s first real collision with U.S. securities law. Global ICO fundraising surged from less than $100 million in 2016 to approximately $6.5 billion in 2017, then doubled again in the first half of 2018. Filecoin raised $257 million in a single offering, while EOS raised $4.1 billion through a year-long ICO — the latter remains the fundraising record for a single project.

But how was all this money raised? The answer is that the vast majority of projects had never seriously considered that they might be selling securities. The compliance narrative surrounding early ICOs could be reduced to a single sentence: “We are selling a utility token, not a security.” The legal basis for that narrative was extremely weak. The four-prong investment contract test established by the U.S. Supreme Court in SEC v. W.J. Howey Co., 328 U.S. 293 (1946) — an investment of money, in a common enterprise, with an expectation of profits, derived from the efforts of others — was already broad enough to bring most ICOs within the reach of securities law. Yet few market participants cared about that in 2017.

Lawyers were among the first within the industry to recognize the risk. In the second half of 2017, Marco Santori of Cooley LLP proposed the SAFT, or Simple Agreement for Future Tokens, framework. The idea was to treat the presale to accredited investors as a securities offering conducted under the Rule 506(c) exemption of Regulation D, then allow the tokens to circulate publicly once they had acquired genuine utility. The framework attempted to create a transitional path to compliance for ICOs.

From the outset, however, the SAFT was a legally contentious design. Legal scholars argued that its attempt to divide the Howey analysis into two stages was untenable. An issuer could not sell a promise of “future tokens” during the fundraising stage — which was plainly a security — and then declare that the tokens were “no longer securities” once they launched. An asset’s legal character should be determined by its economic substance, not by an issuer’s decision to divide the transaction into two time periods. In retrospect, this was precisely the reasoning the SEC later used in the Telegram case to defeat Telegram’s SAFT structure.

Developing alongside the SAFT was the offshore foundation structure. Beginning in the second half of 2017, new projects increasingly stopped incorporating in Delaware and instead turned to three jurisdictions:

Zug, Switzerland, or “Crypto Valley”: The Ethereum Foundation and the Tezos Foundation established themselves there. In February 2018, the Swiss Financial Market Supervisory Authority, or FINMA, issued its ICO guidelines, classifying tokens into utility, payment, and asset tokens and providing comparatively favorable room for interpretation.

Singapore: The Monetary Authority of Singapore, or MAS, issued its guide to digital token offerings in November 2017. Its pragmatic approach made Singapore foundations a preferred option for Asian projects.

The Cayman Islands: Tether, BitMEX, FTX, and numerous other “operating entities” were incorporated there, attracted by the absence of income tax and relatively permissive entity-formation requirements.

Together, these three jurisdictions formed the “standard compliance template” for ICO projects in 2017 and 2018: a Singaporean or Swiss foundation would issue the tokens, a Cayman Islands company would hold the operating assets, and a U.S. entity would handle marketing or development. The central idea was to separate legal liability from economic benefits geographically. This structure later became a recurring target for the SEC and the DOJ. One of the key arguments used by the DOJ in the FTX, Binance, and Tether cases was that where an entity was incorporated mattered less than whether it was providing services to U.S. users.

1.2 The DAO Report: The First Major Regulatory Blow

On July 25, 2017, the SEC released a historic document: Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO (Release №81207). The report examined The DAO, a decentralized venture capital fund built on Ethereum that raised approximately $150 million in 2016 before losing around $60 million in a hack. The incident indirectly led to the Ethereum hard fork and the creation of Ethereum Classic.

The report did not initiate an enforcement action. Instead, the SEC issued it as a Section 21(a) “report of investigation,” effectively making it a public warning. Its conclusions were nevertheless groundbreaking: the SEC expressly stated that DAO Tokens constituted securities and that both issuers and trading platforms could violate federal securities laws. It was the first time a U.S. regulator had applied the Howey test comprehensively to a crypto token.

Following the DAO Report, the SEC accelerated its enforcement activity. On December 11, 2017, In the Matter of Munchee Inc. (Securities Act Release №10445) became the first ICO to face direct SEC enforcement. Munchee, a restaurant-review app, launched its ICO in October 2017. The SEC intervened the following month, prompting the company to halt the offering and return all funds raised.

The SEC’s order made the principle clear: even if an issuer claimed that its token had utility, it could still constitute a security if purchasers had an “expectation of profits” based on the “efforts of others.” The speed of the Munchee action — from the launch of the ICO to its termination in just one month — sent the industry an unambiguous message: regulators had awakened.

1.3 Landmark Cases: SEC v. Telegram and SEC v. Kik

If Munchee was the SEC’s warning shot against smaller ICOs, SEC v. Telegram and SEC v. Kik between 2018 and 2020 represented its reckoning with the SAFT framework itself.

In SEC v. Telegram Group Inc., 448 F. Supp. 3d 352 (S.D.N.Y. 2020), Telegram sold approximately $1.7 billion worth of Gram Token Purchase Agreements to accredited investors in 2018 through a private placement under Regulation D, Rule 506(c), promising to deliver Gram tokens after the TON mainnet launched. It was a textbook SAFT structure. The SEC filed suit in October 2019, arguing that the purportedly “two-stage” transaction constituted a single securities offering when viewed as a whole.

On March 24, 2020, presiding Judge P. Kevin Castel issued a preliminary injunction preventing Telegram from distributing Gram tokens to both U.S. and non-U.S. investors. The ruling contained a crucial conclusion: the SAFT agreements and the tokens formed an economically integrated arrangement, and SAFT purchasers had expected from the outset to resell the tokens on secondary markets for a profit. In other words, these were not two independent transactions but a single, integrated securities offering.

Telegram formally abandoned the TON project in May 2020, returned approximately $1.2 billion to investors, and paid an $18.5 million civil penalty to the SEC.

The same reasoning appeared in SEC v. Kik Interactive Inc., 492 F. Supp. 3d 169 (S.D.N.Y. 2020). In September 2017, Kik raised $50 million through a private SAFT sale, followed by approximately another $50 million through the public sale of Kin tokens. In a summary judgment issued on September 30, 2020, Judge Alvin K. Hellerstein accepted the SEC’s argument in full: the private SAFT sale and the public offering constituted a “single integrated offering,” which, taken as a whole, was an offering of securities. Kik ultimately paid $5 million to settle the case.

Together, the two rulings effectively brought the SAFT framework to an end. From the second half of 2020 onward, almost no project was willing to rely solely on a SAFT structure to raise funds in the U.S. market.

1.4 USDT’s “Unregulated Era”: The First Chapter of Stablecoins

Another thread was quietly emerging during the first turn of the compliance flywheel: stablecoins.

USDT was launched in 2014 by Tether Limited, formerly known as Realcoin, and was effectively controlled by the team behind Bitfinex through iFinex Inc. Its original promise was exceptionally simple: “Every USDT is backed by one real U.S. dollar held in reserve.” Between 2014 and 2018, however, this claim was never verified through an independent audit.

In 2017, Tether engaged Friedman LLP to conduct a “comfort letter”-style review of its reserves. The resulting document did not constitute an audit opinion, and Friedman and Tether ended their relationship soon afterward.

During the second half of 2018, the circulating supply of USDT grew from less than $1.5 billion at the beginning of the year to nearly $2.8 billion. Rumors that USDT was not fully backed repeatedly circulated through the market. In October 2018, USDT briefly fell to around $0.85 on secondary markets — the first large-scale depegging event in stablecoin history.

At this stage, the stablecoin market was essentially a private monetary experiment conducted without any regulatory involvement. Tether injected liquidity through Bitfinex and distributed it across the broader ecosystem through centralized exchanges, particularly in Asian markets. No one could verify whether its reserves were genuine, and no legal framework required it to disclose them.

That regulatory vacuum would be filled during the second stage by the New York Attorney General, or NYAG, and the CFTC. The price, however, would be the largest compliance crisis in USDT’s history.

Stage Two (2019–2021): The Era of Licensing and Integration with Traditional Finance

2.1 The FATF Travel Rule: Bringing Crypto into the Banking Framework

On June 21, 2019, the Financial Action Task Force, or FATF, issued an updated interpretation of Recommendation 15, formally bringing “virtual asset service providers,” or VASPs, within the anti-money laundering and counter-terrorist financing framework. The provision with the greatest practical impact was the Travel Rule:

For any virtual asset transfer exceeding the equivalent of $1,000 or EUR 1,000, VASPs must collect and transmit identifying information about the originator and beneficiary at the time of the transfer. This includes the originator’s name, account number, and address, as well as the beneficiary’s name and account number. The information must “travel” with the transaction between VASPs.

The Travel Rule was not created by FATF from scratch. It was directly adapted from the rules governing bank wire transfers that took effect in 1996, including Title 31 CFR 1010.410(f) under the U.S. Bank Secrecy Act. In essence, FATF’s action in 2019 declared that the rules governing crypto asset transfers should be aligned with those governing traditional bank wires.

The rule had profound and painful consequences.

In the traditional banking system, the Travel Rule is implemented through closed, standardized, and permissioned infrastructure such as the SWIFT network. In crypto, however, transfers occur on public blockchains, and no standardized protocol exists for transmitting identity information between VASPs. The industry was therefore forced to build its own “Travel Rule solutions,” resulting in multiple incompatible protocols, including TRP, Sygna, Notabene, and TRUST, an alliance led by Coinbase.

Self-hosted wallets became a gray area. Subsequent FATF guidance allowed VASPs to transact with “unhosted wallets,” but required them to conduct due diligence using a “risk-based approach.” This effectively shifted responsibility onto exchanges, and national regulators diverged in how they implemented the rule. South Korea and Switzerland adopted some of the strictest approaches, requiring additional verification for self-hosted wallets. The U.S. Financial Crimes Enforcement Network, or FinCEN, attempted to introduce stricter rules in late 2020 but ultimately put them on hold, while the European Union adopted a comparatively intermediate approach under the MiCA framework.

The Travel Rule represented a paradigm shift in the compliance flywheel. It marked the point at which regulators stopped treating crypto as a “novel phenomenon” requiring special treatment and began applying established rules from traditional finance directly to the industry. The difficulties created by this process would repeatedly surface in the subsequent Binance, Bitzlato, and Tornado Cash cases.

2.2 The Global Expansion of Licensing Regimes

Between 2019 and 2021, major jurisdictions established or further developed licensing frameworks for crypto exchanges:

Japan’s FSA: Following the 2017 amendment to the Payment Services Act, Japan became one of the first countries to legally recognize “virtual currency exchanges.” After Coincheck lost $530 million worth of NEM in a hack in January 2018, the Financial Services Agency tightened its licensing reviews. By 2021, it had issued approximately 30 full licenses.

Singapore’s MAS: The Payment Services Act, or PSA, took effect in January 2020, requiring all digital payment token service providers to apply for licenses. Large numbers of crypto projects initially moved into Singapore, but MAS tightened its approach significantly beginning in the second half of 2021. Over a three-year period, it issued Major Payment Institution licenses to only a small number of firms, including DBS Vickers, Independent Reserve, and Crypto.com, while rejecting many other applications. Binance voluntarily withdrew its Singapore license application in December 2021, marking Singapore’s shift from relatively open entry to strict licensing approval.

The U.S. NYDFS BitLicense: The BitLicense regime had already taken effect in 2015, but implementation was slow. By the end of 2021, the New York State Department of Financial Services had issued approximately 30 BitLicenses and limited-purpose trust charters. Coinbase, Gemini, Paxos, and Circle all obtained important New York licenses during this period.

The EU’s 5AMLD: The Fifth Anti-Money Laundering Directive, which took effect in January 2020, brought crypto service providers within the EU’s AML framework for the first time. It laid the groundwork for MiCA’s full implementation in 2024.

Hong Kong’s SFC: In December 2020, the Securities and Futures Commission introduced a voluntary licensing framework for virtual asset trading platforms, or VATPs. Only OSL and HashKey obtained licenses during the second stage. The landscape changed again after Hong Kong moved to a mandatory licensing regime in 2023.

The essence of a licensing regime is that market access is determined by regulators rather than the market. Before 2018, launching an exchange required little more than a domain name, a matching engine, and a hot wallet. From 2020 onward, legally operating without a license became nearly impossible in major markets.

This pushed the industry toward two extremes: either fully embrace licensing, as Coinbase, Gemini, and Kraken did, or move entirely offshore, as Binance, FTX, BitMEX, and OKX did. The latter group soon encountered its first direct regulatory blow.

2.3 A License Is Not a Passport; It Reflects Local Priorities

The greatest danger in applying for licenses is path dependence.

Many crypto companies made the same mistake in their early years: they assumed that obtaining one license meant they had mastered a compliance template that could be replicated globally. They would begin in Singapore, then move to Dubai, Abu Dhabi, and Europe, before eventually attempting to find a route back into the United States. On the surface, this appeared to be a “global compliance strategy.” In practice, it often involved presenting the same documents, the same governance narrative, and the same legal language repeatedly to different regulators.

Yet licensing is one of the clearest expressions of local priorities.

The logic of Singapore’s MAS places the reputation of the financial center first. Singapore does not reject crypto outright, but it does not want crypto to turn the country into a casino for Asian retail investors. After the Payment Services Act took effect in 2020, Singapore received approximately 170 applications from digital payment token service providers. By mid-2021, 30 applications had been withdrawn, two had been rejected, and approximately 90 firms were still operating under temporary exemptions while awaiting review. MAS stated at the time that its assessments focused on AML and counter-terrorist financing risks, as well as controls for technological risks.

By 2022, MAS had gone further, instructing DPT service providers not to promote crypto services extensively to the general public. The restrictions extended to advertisements in subway stations and other public spaces, as well as promotional campaigns involving social media influencers. (MAS PS-G02)

MAS therefore cannot be described simply as “friendly” or “unfriendly.” It welcomes custody, payments, institutional services, and stablecoin infrastructure, while remaining wary of exchange businesses built around retail customers, high leverage, and aggressive marketing. Obtaining a Singapore license is not about proving that “we can grow.” It is about proving that “we will not damage Singapore’s reputation as a financial center.”

Dubai’s Virtual Assets Regulatory Authority, or VARA, has a very different character. VARA is a regulator established specifically for virtual assets, and its approach resembles a combination of industrial development and conduct regulation: companies are welcome to enter, but they must maintain a local legal entity, responsible personnel, an office, and an operational presence that regulators can oversee.

VARA’s public register specifies each VASP’s authorized activities, permitted customer types, and licensing status. Recent public records show approximately 49 entries. An in-principle approval, or IPA, does not authorize a company to begin operating. Only a firm holding a full VASP license may provide services to customers. (VARA Public Register)

VARA’s fee structure is equally revealing. The application fee for advisory services is approximately AED 40,000, while applications covering core activities such as exchange services, custody, broker-dealer services, and lending and borrowing generally cost AED 100,000. The corresponding annual supervision fee can reach AED 200,000. Applying for additional activities also incurs an extension fee. (VARA Fee Schedule)

These high thresholds send a clear message: a license is not a logo but a set of continuing costs. The more complex the business, the more expensive its supervision becomes. The more activities a company wants to cover, the greater the compliance budget, staffing, and local commitment it must provide.

The Abu Dhabi Global Market, or ADGM, represents another model. Its Financial Services Regulatory Authority, or FSRA, resembles a Middle Eastern version of an Anglo-American financial regulator. Rather than merely asking whether a company is a “crypto company,” it breaks the business down into conventional financial activities. Is the company operating a multilateral trading facility, providing custody, dealing in assets, or managing funds? Virtual assets are treated as the underlying assets, while the regulator focuses on the financial functions being performed.

ADGM’s virtual asset guidance brings trading venues, custodians, intermediaries, and the use of stablecoins within its framework. Capital requirements are adjusted according to risk and business complexity. A virtual asset MTF is generally required to maintain regulatory capital equivalent to 12 months of operating expenses, while other virtual asset businesses are typically required to maintain capital equivalent to six months of operating expenses. Higher-risk institutions may also be required to hold additional capital buffers. (ADGM FSRA Guidance)

This illustrates ADGM’s regulatory preferences. It favors institutional businesses with clear governance, well-defined director responsibilities, and transparent capital and custody arrangements. It is less receptive to growth narratives based on “acquiring users first and adding compliance later.”

MiCA reflects European priorities: rather than relying on isolated licensing decisions, it turns crypto into a regulated product within a single market. MiCA’s rules for stablecoins, including asset-referenced tokens, or ARTs, and electronic money tokens, or EMTs, began applying on June 30, 2024. The full MiCA framework became applicable on December 30, 2024. Existing crypto asset service providers, or CASPs, may remain subject to transitional arrangements until July 1, 2026, or until their authorization is granted or refused.

Europe’s objective is not to give a particular exchange a “green light,” but to codify issuance, reserves, white papers, market abuse, consumer protection, and cross-border passporting within a unified framework. Stablecoins that reach a certain scale may also be classified as “significant,” triggering direct or joint supervision by the European Banking Authority, or EBA. The associated supervisory fees may be calculated according to the size of reserve assets or the scale of issuance. (EBA MiCA Role)

The U.S. SEC has an entirely different disposition. The central question in the United States is not simply whether a “crypto license” exists, but whether a company has spent the past decade unlawfully offering securities, operating an unregistered exchange, or providing brokerage or clearing services without registration. U.S. regulators are often less focused on approving future activity than on judging past conduct.

In fiscal year 2024, the SEC brought 583 enforcement actions and obtained $8.2 billion in monetary remedies, the highest amount in its history. Binance’s $4.3 billion settlement was an especially prominent example. The DOJ stated that Binance had deliberately profited from the U.S. market in pursuit of growth, market share, and profits without implementing the controls required under U.S. law. (DOJ Binance Case)

Regulators therefore tailor their treatment to the company before them. The larger the company, the more stringent the requirements. The more it earns, the larger the potential penalties. The closer its activities are to retail customers, leverage, stablecoins, fiat on- and off-ramps, and cross-border users, the less likely regulators are to treat it as an ordinary technology company.

This is the most frequently misunderstood feature of the licensing era. The industry believed it was searching for the “friendliest regulator,” while regulators were screening for the companies best suited to their local policy narratives. Singapore prioritizes reputation, Dubai seeks industrial development, Abu Dhabi favors institutional finance, Europe wants uniform rules, and the United States focuses on retrospective accountability.

A license is not the end point but a form of mutual adaptation: companies are reshaped by local rules, while those rules are, in turn, shaped by the companies’ scale, employment, tax contributions, risks, and effects on international reputation.

2.4 Landmark Case: BitMEX — The First Signal That “Offshore” Was No Longer Safe

On October 1, 2020, the CFTC and the U.S. Attorney’s Office for the Southern District of New York, or SDNY, took simultaneous action against BitMEX and its three founders, Arthur Hayes, Benjamin Delo, and Samuel Reed, filing both civil and criminal cases.

Civil case: CFTC v. HDR Global Trading Limited et al., №1:20-cv-08132 (S.D.N.Y. 2020). The CFTC alleged that BitMEX had operated an unregistered futures exchange, failed to implement effective AML and KYC programs, and offered margined derivatives to U.S. users. In August 2021, BitMEX reached a $100 million settlement with the CFTC and FinCEN.

Criminal case: United States v. Arthur Hayes, Benjamin Delo, and Samuel Reed, №1:20-cr-00500 (S.D.N.Y.). The three founders were charged with violating the Bank Secrecy Act by willfully failing to establish an anti-money laundering program at the exchange. Hayes pleaded guilty on February 24, 2022, and was sentenced in May 2022 to six months of home detention and two years of probation. Delo and Reed also pleaded guilty separately.

The significance of the BitMEX case lay not in the size of the penalties, which were relatively modest by later standards, but in the three enforcement principles it established:

An “offshore” structure does not provide an exemption from the BSA. BitMEX was incorporated in the Seychelles and operated from Hong Kong, but the DOJ used the presence of “U.S. users” as the jurisdictional connection that brought it within the reach of U.S. law.

Liability extended to individuals, not only the company. All three founders faced criminal prosecution in their personal capacities. This laid the groundwork for the later cases against SBF and CZ.

The absence of an AML program could itself constitute a crime. Before BitMEX, AML failures were often treated as procedural violations resolved through civil penalties. The BitMEX case established that such failures could constitute criminal violations of the Bank Secrecy Act.

These three conclusions would later be applied to Binance on a scale roughly ten times greater.

2.5 China’s September 24 Crackdown: The Great Retreat and the Reset of Global Crypto Geography

If the logic of Western regulation during the second stage was to “bring crypto into the traditional financial framework,” China took the opposite approach during the same period: complete separation.

The final expression of this separation, the “September 24 Notice” issued on September 24, 2021, was a geographic paradigm shift within the compliance flywheel. Rather than attempting to reshape the industry, it moved the industry elsewhere on the map.

The Timeline of the Two-Stage Separation

China’s removal of crypto activity was completed in two decisive stages.

The first separation, September 4, 2017: The People’s Bank of China, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission jointly issued the Announcement on Preventing Risks from Token Offering and Financing. It became known within the industry as the “September 4 Announcement.”

It contained two central provisions: no organization or individual could engage in token offering and financing activities, meaning ICOs, and virtual currency trading platforms could not provide exchange services between fiat currencies and tokens within China.

The immediate result was the collective migration of China-based exchanges overseas. OKCoin became OKEx, registered in Malta, and later moved to the Seychelles. Huobi incorporated in the Seychelles. Binance was already operating through a multi-entity structure spanning the Cayman Islands, Hong Kong, and Japan, and subsequently excluded mainland China entirely from its business scope, at least in formal compliance terms.

Chinese-speaking users nevertheless remained a core customer base for these exchanges. They had simply moved from “opening accounts domestically” to “using VPNs to open accounts with offshore platforms.”

The second separation, September 24, 2021: The People’s Bank of China, the Cyberspace Administration of China, the Supreme People’s Court, the Supreme People’s Procuratorate, and six other authorities jointly issued the Notice on Further Preventing and Addressing the Risks of Speculation in Virtual Currency Trading.

On the same day, the National Development and Reform Commission and ten other authorities issued the Notice on Regulating Virtual Currency “Mining” Activities. Together, the two documents became known as the “September 24 Notices.”

The September 24 measures went significantly further than the September 4 Announcement in three respects:

A stronger legal characterization: The authorities expressly stated that “virtual currency-related business activities constitute illegal financial activities.” This was no longer merely a “risk warning”; it classified the entire industry as unlawful.

Cross-border coverage: The measures expressly provided that overseas virtual currency exchanges offering services online to residents in China were also engaging in illegal financial activities. This closed the largest gap left by the September 4 Announcement. Offshore exchanges had previously operated in a gray area by serving mainland users through Chinese-language interfaces. After September 24, that route was formally closed at the legal level.

A comprehensive mining ban: The NDRC document released on the same day classified virtual currency mining as an “eliminated industry” and required its removal nationwide.

The Chain Reaction That Reset Global Crypto Geography

The September 24 measures triggered the largest geographic redistribution in the history of the crypto industry.

The migration of mining: Before May 2021, mainland China accounted for approximately 65–75% of global Bitcoin hash rate. By the end of 2021, the officially recorded figure had fallen to nearly zero.

Hash rate migrated primarily to the United States, particularly Texas, Wyoming, and Georgia, where miners were attracted by inexpensive electricity and favorable policies, as well as to Kazakhstan and Russia. The United States subsequently became the world’s largest Bitcoin mining jurisdiction and continued to account for approximately 35–40% of global hash rate through 2025.

The compliance implications of this migration became visible during the fourth stage. The regulatory obligations of publicly listed U.S. mining companies, including Marathon, Riot, and CleanSpark, brought the mining industry within the SEC’s regulatory perimeter.

The offshore migration of exchanges’ Chinese-language operations: Binance, Huobi, OKX, and Gate.io had already incorporated in offshore jurisdictions beginning in 2017. After September 24, however, their Chinese-language operating teams also began moving overseas on a large scale. Key employees relocated from Beijing, Shanghai, and Shenzhen to Singapore, Dubai, Seoul, and Tokyo.

This produced an unusual industry structure: incorporation in the Seychelles, operations in Dubai, users across the Chinese-speaking world, and compliance in Malta. These overlapping mismatches became a central target of U.S. enforcement during the fourth stage. In the plea documents involving Binance and OKX, regulators focused specifically on the conflict between “substantive ties to China” and “nominal offshore structures.”

Hong Kong as a “safety valve”: While the September 24 measures closed the mainland route, Hong Kong began moving in the opposite direction. In late 2022, the Hong Kong Special Administrative Region government issued its Policy Statement on Development of Virtual Assets in Hong Kong. It introduced a mandatory VATP licensing regime in June 2023 and approved Asia’s first spot BTC and ETH ETFs in April 2024.

Together, these measures made Hong Kong a major regulated channel through which mainland capital could access crypto between 2023 and 2025. In a sense, this was a concrete expression of “one country, two systems” within the crypto sector.

The Compliance Implications of the September 24 Measures

Placed within the broader narrative of the compliance flywheel, the September 24 measures carried at least three implications.

They helped create the “offshore exchange problem.” A significant part of the reason BitMEX, Binance, OKX, Huobi, KuCoin, and HTX adopted offshore structures can be traced to Chinese regulation. Had China not severed ties with the industry, these exchanges might have continued operating primarily from China and remained subject to Chinese supervision.

When the U.S. later used the Bank Secrecy Act and the International Emergency Economic Powers Act, or IEEPA, to pursue these offshore entities, it was, in one sense, dealing with the global aftermath of China’s removal of the industry.

They demonstrated a compliance path fundamentally different from the Western model. Western regulators pursued a path of incorporation: using enforcement, settlements, and legislation to bring crypto within the traditional financial framework. China pursued a path of separation: declaring crypto activity broadly unlawful while developing a central bank digital currency, the digital yuan or e-CNY, as an alternative.

These two paths became opposing dimensions of the deeper competition over stablecoins in 2024 and 2025. The underlying purpose of the GENIUS Act was to bring dollar-denominated stablecoins within a U.S. regulatory framework and reinforce the dollar’s position. China, meanwhile, sought to use the e-CNY and mBridge, the multi-CBDC platform, to reduce reliance on the dollar-based system.

Hong Kong’s stablecoin legislation and its pilot programs for Hong Kong dollar stablecoins, including HKDR and HKDG, represented a concrete expression of this deeper competition within the crypto market.

They represented the only successful “expulsion-based” turn of the compliance flywheel. From a purely regulatory perspective, the September 24 measures were effective: financial risks within mainland China were largely removed. The cost, however, was that the opportunities associated with developing the industry shifted to other jurisdictions.

This trade-off began to reemerge in the policy rebalancing between Hong Kong and mainland China in 2025. The mainland began quietly exploring “allowlist” mechanisms and digital asset pilot programs, although it remained far from returning to the degree of openness that existed before 2021.

2.6 Blockchain Analytics Companies: The Invisible Infrastructure of Enforcement

The least discussed but most influential participants in the compliance evolution of the second stage were not regulators, but a group of private blockchain analytics companies: Chainalysis, Elliptic, TRM Labs, CipherTrace, which was acquired by Mastercard, and Crystal Blockchain.

They formed the “invisible infrastructure layer” of the compliance flywheel. Without them, the FATF Travel Rule could not be implemented, OFAC could not identify sanctions targets, the FBI could not trace Silk Road funds, and the DOJ could not build cases against BitMEX and Binance.

Satoshi’s Paradox

The Bitcoin white paper offered an original promise: pseudonymity. Addresses did not correspond directly to identities, and blockchain data alone could not identify the specific individuals behind transactions. Between 2008 and 2014, this promise broadly held because effective analytical tools did not yet exist.

The rise of blockchain analytics companies effectively reversed that promise of “pseudonymity.” All data on a public blockchain is visible, permanent, and linkable. With sufficient computing power and engineering capabilities, combined with a limited amount of off-chain identifying information, such as exchange KYC data, IP addresses, and social media activity, almost any apparently anonymous address can be deanonymized.

What Chainalysis, Elliptic, and their peers did was conceptually simple: they turned something theoretically possible into an industrial-scale product.

Chainalysis was founded in New York in 2014 by former Kraken COO Michael Gronager and Jan Møller, with Jonathan Levin later joining as a co-founder. Its core products, Reactor for investigations and KYT, or Know Your Transaction, for real-time monitoring, now serve most leading global exchanges and law enforcement agencies in dozens of countries. The company was valued at $8.6 billion in May 2022.

Elliptic was founded in London in 2013 by James Smith, Tom Robinson, and others. It became deeply embedded in the enforcement infrastructure surrounding the U.K. Financial Conduct Authority and European regulators.

TRM Labs was founded in San Francisco in 2018 by Esteban Castaño and Rahul Raina and experienced the fastest rise of the group. It served as a key technical partner to the DOJ in the landmark BitMEX, Binance, and Tornado Cash cases.

Blockchain Analytics Behind Landmark Cases

Nearly every major enforcement case from the second through the fourth stages involved these companies in some capacity:

The continued tracing of Silk Road funds: Blockchain tracing supplied by Chainalysis became a central tool in the FBI’s continuing efforts to identify Silk Road fund flows. It was one of the company’s earliest landmark demonstrations of its capabilities.

The 2016 Bitfinex theft of 120,000 BTC: Chainalysis continued tracing the stolen funds for six years. On February 8, 2022, the DOJ arrested Ilya Lichtenstein and Heather Morgan in New York and seized approximately $3.6 billion. At the time, it was the largest single crypto asset seizure in DOJ history. The Department of Justice specifically described the tracing process in its press release.

The Colonial Pipeline ransomware attack in May 2021: After the DarkSide hacking group extorted 75 BTC, worth approximately $4.4 million, from Colonial Pipeline, the FBI recovered 63.7 BTC within 27 days. The recovery was supported by a combination of blockchain analytics and cooperation from crypto exchanges that helped identify the flow of funds.

The Tornado Cash sanctions in August 2022: OFAC expressly cited blockchain analysis in its announcement, stating that Tornado Cash had been used to launder more than $7 billion, including at least $455 million linked to the Lazarus Group. In the criminal case against Roman Storm, TRM Labs served as a principal technical expert for the prosecution.

The four-agency Binance settlement in November 2023: FinCEN’s documents detailed suspicious transactions conducted through the Binance platform. Those transactions were identified using blockchain analytics tools. The references to “Iranian users” and “Hamas-linked users” in the CFTC’s complaint against Samuel Lim were also initially based on address clustering supplied by blockchain analytics companies.

The Structural Problem of Private Companies as “Quasi-Enforcement Tools”

The rise of blockchain analytics companies introduced a compliance question that remained unanswered during the second stage: when a group of private companies effectively controls the determination of what funds are “clean” and what funds are “tainted,” does that itself represent a new form of centralization?

The issue appears at three levels.

Analytics companies determine exchanges’ preemptive screening decisions. Coinbase, Kraken, Binance, and other exchanges use tools such as Chainalysis KYT to monitor customer deposits in real time. If Chainalysis labels certain Bitcoin as “high risk” because it previously passed through Tornado Cash, a darknet market, or a sanctioned address, an exchange may automatically freeze the associated account.

This effectively outsources a form of “jurisdictional authority” to a private company. The affected user has no opportunity for a hearing because the freeze occurs within a private-law relationship governed by a user agreement, rather than through an act of public law.

The costs of incorrect labeling flow in only one direction. If a blockchain analytics company incorrectly labels an address as high risk, causing multiple exchanges to deny service to its owner, the user’s avenues for redress are extremely limited.

The user generally cannot sue the analytics company because no contractual relationship exists between them. It is also difficult to sue the exchange because user agreements typically grant exchanges broad discretion to refuse service. Similar forms of “labeling without effective redress” exist in traditional finance, including credit ratings and KYC blacklists, but blockchain analytics operates at a greater scale and speed.

The invisible expansion of cross-border jurisdiction: Address labels produced by a U.S. company such as Chainalysis can influence the operational behavior of exchanges worldwide. Even when a transaction takes place entirely between two non-U.S. parties, U.S. compliance standards may be applied automatically if either party uses Chainalysis tools.

This represents the “Americanization” of the FATF Travel Rule at the implementation level: FATF supplies the rule, U.S. companies supply the tools, and the rest of the world operates according to U.S. standards.

The significance of blockchain analytics companies is not that they replaced regulators, but that they made regulation enforceable. Without them, the FATF Travel Rule would remain a rule on paper. Without them, OFAC sanctions would remain names on a list.

These companies are the transmission mechanism that allows the compliance flywheel to turn in practice. At the same time, they exercise a new form of “private quasi-enforcement authority” that has yet to be clearly governed by any regulatory framework. This is an issue that the sixth turn of the compliance flywheel will inevitably have to address.

2.7 USDT’s Moment of Reckoning: Enforcement by the NYAG and CFTC

The two USDT settlements were the most important stablecoin events of the second stage.

In NYAG v. iFinex Inc., №450545/2019 (N.Y. Sup. Ct.), New York Attorney General Letitia James filed a case against Tether’s parent company, iFinex, in April 2019. The NYAG alleged that Tether had used its reserves in 2018 to cover an approximately $850 million shortfall at Bitfinex after funds held by the payment processor Crypto Capital Corp. were frozen.

In other words, Tether had used money that was supposed to back USDT to fill a hole at an affiliated exchange.

The parties reached a settlement on February 23, 2021. Tether and Bitfinex agreed to pay an $18.5 million penalty, cease providing services to residents of New York, and submit quarterly reports on their reserves to the NYAG.

The NYAG used exceptionally severe language in its investigation report:

“Tether’s claims that its virtual currency was at all times fully backed by U.S. dollars was a lie.” — New York Office of the Attorney General Press Release, February 23, 2021

That statement remains a legal anchor for the continuing controversy over the transparency of USDT’s reserves.

In CFTC v. Tether Holdings Limited et al., CFTC Docket №22–04, dated October 15, 2021, the CFTC followed the NYAG action by alleging that Tether had made “materially false or misleading statements” about its reserves between June 2016 and February 2019. According to the CFTC, Tether did not hold sufficient fiat currency reserves for most of that period.

Tether paid a $41 million penalty, while Bitfinex separately paid $1.5 million over related issues.

The compliance implications of the two enforcement actions were clear: stablecoins did not exist outside the law, and issuers’ representations about their reserves could be examined under the traditional standards governing misrepresentations in securities and commodities markets.

More notably, however, neither action classified USDT itself as a security. The CFTC treated it as an underlying asset within its commodities and derivatives jurisdiction, while the NYAG proceeded under consumer protection law and the Martin Act. This unresolved question of legal classification would receive a formal answer during the fifth stage through the GENIUS Act.

2.8 USDC’s Alternative Path: Working with Regulators

USDC offered a sharp contrast to USDT. Circle and Coinbase jointly launched USDC through the Centre Consortium in 2018 and adopted a fundamentally different approach from the outset:

Reserve transparency: USDC reserves were held by Circle, with an independent accounting firm, initially Grant Thornton and later Deloitte, issuing monthly reserve attestations. Although these attestations did not constitute full audits, they were considerably more rigorous than Tether’s early comfort letters.

A conservative reserve structure: The reserves consisted primarily of short-term U.S. Treasury securities and cash deposits at banks, with no holdings of commercial paper. Tether did not fully eliminate commercial paper from its reserves until the middle of 2022, and those holdings had been one of the market’s principal concerns that year.

An embrace of licensing: Circle obtained a NYDFS BitLicense in 2018, registered with the U.K. Financial Conduct Authority in 2020, and obtained a digital payment token service provider license from Singapore’s MAS in 2022.

During the second stage, this path appeared “burdensome but stable.” It would soon be tested under extreme conditions by the collapse of Silicon Valley Bank — but that belongs to the third stage.

Bitfinex Securities: It launched tokenized stocks as early as 2024, but remained limited in scale.

Offshore exchanges such as Bybit and Gate.io: These platforms successively launched tokenized stock products, with clear signs of regulatory arbitrage.

The compliance issue surrounding this wave of tokenized stocks was straightforward: they were almost certainly securities. What was more interesting, however, was that the SEC under Atkins did not take immediate enforcement action. Instead, it stated that it was “considering the possibility of an innovation exemption framework.” This stood in sharp contrast to the enforcement approach of the Gensler era.

The OpenAI and SpaceX Controversy in Cannes

On June 30, 2025, Robinhood made an additional announcement at an event in Cannes: it would offer EU users “tokenized equity” in OpenAI and SpaceX, with each eligible user receiving the equivalent of EUR 5. The announcement triggered a cascading legal and public relations crisis.

On July 2, OpenAI issued an official statement on X, explicitly denying that the tokens had any connection to the company:

“These ‘OpenAI tokens’ are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval — we did not approve any transfer.”

SpaceX did not respond publicly, although Elon Musk reportedly expressed his dissatisfaction in private.

Robinhood CEO Vlad Tenev responded that the “tokens” were effectively interests in a special purpose vehicle, or SPV, holding private shares in OpenAI or SpaceX, rather than interests directly tied to actual OpenAI or SpaceX equity.

This explanation made the situation even more complicated. It meant that users were acquiring “some form of derivative representing an on-chain interest in an SPV,” with highly ambiguous rights and obligations.

The Bank of Lithuania, where Robinhood’s EU license is based, subsequently announced that it had opened a “fact-finding review” into the offering.

The compliance implications of the controversy were significant. Once tokenization crosses the boundary from “publicly listed stocks” into “private equity,” it begins to challenge all the traditional securities law rules governing private placement exemptions, accredited investor verification, and transfer restrictions.

Private companies such as OpenAI have historically controlled their valuations and shareholder composition through strict shareholder agreements and transfer approvals. Tokenization bypassed all of those controls — but the cost of doing so could be broad compliance exposure for every party involved in the issuance.

Three Structural Problems

The tokenized stock wave exposed three issues that neither the GENIUS Act nor the CLARITY Act had fully resolved.

Who is the issuer? The issuer of a tokenized stock is not the company being tokenized. NVIDIA did not “issue” NVDAx. Instead, the issuer is an intermediary, such as Backed or a Robinhood SPV.

This type of “secondary securitization” structure is not unfamiliar under traditional securities law. ADRs, SPVs, and derivatives all use comparable structures. Cross-border on-chain arrangements, however, make it more difficult for regulators to trace responsibility.

How should cross-border circulation be regulated? Consider a tokenized Apple stock issued in Switzerland, circulating on Solana, and purchased by users around the world. Does the U.S. SEC have jurisdiction?

The answer is very likely yes, provided that U.S. users have access to it, but the cost of enforcement would be extremely high. This returns directly to the “U.S. user nexus” principle established in the BitMEX case during the second stage. The difference is that the principle must now be applied to a distributed token circulation network rather than a centralized offshore exchange.

How should voting rights and dividends be handled? Under the structures currently used by Backed and Robinhood, tokenholders receive equivalent economic rights, including dividends and buybacks, but do not receive voting rights.

This means that tokenized stocks are fundamentally stripped-down versions of shares. Under traditional securities law, they would be treated as “restricted securities” requiring explicit disclosure. Yet the disclosure documents for most tokenized stock products remain extremely limited.

Completing the Arc: From “Replacement” to “Wrapping”

Placing the ICOs of the first stage alongside the tokenized stocks of the fifth reveals the deepest narrative arc in crypto’s decade-long development.

The promise in 2017: Use tokens to replace stocks, with utility tokens taking the place of corporate equity; use DAOs to replace corporate governance; and use smart contracts to replace legal contracts.

The reality in 2025: Wrap stocks as tokens, including NVDAx and AAPLx; wrap private equity as SPV tokens, such as the “OpenAI token”; wrap U.S. Treasuries as stablecoins and tokenized products, including BUIDL and USYC; and wrap money market funds as “on-chain dollars.”

Tokenization did not replace traditional finance — it learned how to build wrappers for it.

This was the final form produced by the compliance flywheel: crypto became the next generation of infrastructure for TradFi rather than its replacement. This transition also meant that the regulation of crypto increasingly came to resemble the regulation of traditional financial infrastructure.

That, in itself, was the most complete “end state” produced by a decade of compliance evolution.

Conclusion: The Unfinished Evolution of Compliance

Viewed together, the five stages of crypto’s compliance evolution form a recurring spiral.

Each cycle begins with the failure of industry self-regulation. SAFTs failed after the Telegram case. Proof of Reserves failed after FTX and Genesis. Algorithmic stablecoins failed after Terra. Compliance theater failed after Samuel Lim.

The middle of each cycle consists of crisis-driven enforcement and reckoning, including the coordinated actions taken by the SEC, DOJ, CFTC, FinCEN, and OFAC in 2023 and 2024.

The cycle ends with legislative codification through measures such as the GENIUS Act, the CLARITY Act, and MiCA.

Every time the industry believes it has won, the next wave of regulation begins. Every time regulators believe they have brought the industry under control, it moves into another uncharted territory.

But the spiral is far from complete. The compliance questions of the sixth cycle are already visible on the horizon.

The compliance of DeFi. The CLARITY Act provided exemptions for non-custodial protocols, but the Tornado Cash criminal case — the Roman Storm case, in which a jury in the Southern District of New York found him guilty on multiple charges in August 2024 — demonstrated that personal liability for developers remained a sword hanging overhead.

Uniswap received an SEC Wells Notice in February 2024, which was withdrawn in February 2025, but no comprehensive compliance framework for DeFi has yet been established.

The convergence of AI agents and crypto. Autonomous AI trading agents began to be deployed at scale in 2025. Regulators have yet to establish rules governing KYC for “AI as a customer,” the allocation of liability, or market manipulation involving autonomous agents.

The next stage of cross-border regulatory coordination. Differences between MiCA and the GENIUS Act in their definitions of stablecoins, particularly their treatment of foreign issuers, are likely to become a major source of compliance friction over the next three years.

The fundamental tension between privacy and compliance. The principle established in the Van Loon ruling in the Tornado Cash case — that “code is not property” — gave privacy technology a degree of breathing room. Roman Storm’s conviction, however, shifted the boundary back toward individual developer liability.

Emerging technical approaches, including zero-knowledge proofs, Privacy Pools, and compliant mixing protocols, still lack corresponding legal frameworks.

Exactly ten years passed between the first ICO fundraising campaign completed on Ethereum in 2016 and the signing of the GENIUS Act at the White House in 2025.

Over that decade, the crypto industry paid a price of at least hundreds of billions of dollars through market collapses, personal bankruptcies, criminal imprisonment, penalties, and settlements. In return, it obtained a compliance framework that remains imperfect but is becoming increasingly clear.

In one sense, the first act of the story between crypto and regulation only came to an end in 2026.

The protagonists of the next act will not be crypto-native companies, but the traditional financial institutions entering crypto in earnest for the first time: BlackRock, Fidelity, JPMorgan, Goldman Sachs, and State Street.

They will enter with a decade of compliance experience and begin rewriting the rules.

That will be the beginning of another story.

Major Cases and Legislation Referenced in This Article:

SEC Report of Investigation (DAO), Release №81207 (2017); In the Matter of Munchee Inc., Securities Act Release №10445 (2017); SEC v. Telegram Group Inc., 448 F. Supp. 3d 352 (S.D.N.Y. 2020); SEC v. Kik Interactive Inc., 492 F. Supp. 3d 169 (S.D.N.Y. 2020); CFTC v. HDR Global Trading Limited, №1:20-cv-08132 (S.D.N.Y. 2020); United States v. Arthur Hayes et al., №1:20-cr-00500 (S.D.N.Y.); In the Matter of iFinex Inc., NYAG Settlement (2021); In the Matter of Tether Holdings Limited, CFTC Docket №22–04 (2021); SEC v. Terraform Labs Pte Ltd., №1:23-cv-01346 (S.D.N.Y. 2023); In re Three Arrows Capital Ltd., BVI Commercial Court (2022); United States v. Mashinsky, №1:23-cr-00347 (S.D.N.Y.); SEC v. Genesis Global Capital LLC and Gemini Trust Co., №1:23-cv-00287 (S.D.N.Y. 2023); People v. Digital Currency Group et al., NY Sup. Ct. (2023); CFTC v. Changpeng Zhao, Binance Holdings Ltd., and Samuel Lim, №1:23-cv-01887 (N.D. Ill. 2023); United States v. Roman Storm and Roman Semenov, №1:23-cr-00430 (S.D.N.Y. 2023); Van Loon v. Department of the Treasury, 122 F.4th 549 (5th Cir. 2024); United States v. Samuel Bankman-Fried, №1:22-cr-00673 (S.D.N.Y.); United States v. Binance Holdings Limited, №2:23-cr-00178 (W.D. Wash. 2023); SEC v. Binance Holdings Ltd., №1:23-cv-01599 (D.D.C. 2023); SEC v. Coinbase, Inc., №1:23-cv-04738 (S.D.N.Y. 2023); SEC v. Ripple Labs Inc., 682 F. Supp. 3d 308 (S.D.N.Y. 2023); Grayscale Investments, LLC v. SEC, 82 F.4th 1239 (D.C. Cir. 2023); NYDFS Order to Paxos Trust Co. (Feb 13, 2023); GENIUS Act, Pub. L. №119-XX (2025); MiCA, Regulation (EU) 2023/1114; FATF Updated Recommendation 15 (June 2019).

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. South Korea to Set Up Joint Virtual‑Asset Crime Investigation Unit Under New Serious Crimes Investigation Agency Launching in October link

South Korea’s Serious Crimes Investigation Agency is set to be formally established in October with a total staffing of 2,874, including 2,567 investigators. It will be in charge of seven categories of major cases such as corruption, economic offenses, narcotics‑related crimes and cybercrime. Its Seoul Regional Office will specifically set up a Joint Investigation Division for Voice Phishing, Financial and Virtual‑Asset Crimes to strengthen centralized probes into financial crimes involving crypto‑assets.

2. Korea Exchange to Open New‑Type Securities Market in November for Fractional Investment and STO Formalization link

According to South Korea’s financial‑investment industry sources, the Korea Exchange (KRX) is pushing to officially open its Novel Securities Market on November 16, 2026. The venue covers fractional‑investment and income‑generating securities backed by non‑traditional assets including artworks, real estate and music copyrights. A six‑week mock‑market trading session is scheduled from October 6 to November 13. Investors will be able to place limit‑order trades via brokerage accounts in a stock‑like fashion. Reportedly, the initial batch of listed securities in November will be issued and registered under conventional electronic‑securities frameworks. Meanwhile, the Token‑Securities Act, the STO‑related legislation leveraging blockchain distributed‑ledger technology, is slated to formally take effect on February 4, 2027.

3. Nomura‑Backed Laser Digital Secures Japan’s First Crypto‑Asset Service Provider License in Four Years link

Nomura‑backed Laser Digital Japan has obtained registration as a crypto‑asset exchange‑service provider in Japan, marking the first new entity to secure such registration in the country in four years. Laser Digital will first deliver liquidity services for domestic Japanese virtual‑asset service providers, with plans to roll out digital‑asset trading services targeted at institutional investors at a later stage. Japan has completed regulatory reforms to classify crypto‑assets as financial instruments, laying a regulatory foundation for future products such as crypto ETFs.

4. Pakistan Launches Virtual‑Asset Licensing Regime; Existing Providers Must Apply for NOC by Sep 5 link

Pakistan Virtual Assets Regulatory Authority (PVARA) announced the official launch of its virtual‑asset licensing regime. Under Section 70 of the Virtual Assets Act, 2026, existing virtual‑asset service providers must submit NOC applications by September 5; otherwise, they will be required to cease operations. PVARA has concurrently opened sandbox and alternative licensing pathways for different categories of virtual‑asset service providers and new applicants.

5. Two Binance Employees Detained in UAE Police Probe Have Been Released link

According to The New York Times, two Binance employees have been detained by UAE police amid an investigation into potential financial‑crime activities, while another executive heading Binance’s Dubai‑based subsidiary underwent police questioning in July. The exact subject of the authorities’ investigation remains unclear. Binance responded that the relevant employees only gave statements for routine investigations involving third‑party fund flows; they were neither subjects nor targets of the probe and have all been released. The report added that Binance contacted UAE government officials earlier this month seeking assistance and expressing concerns over employee safety.

Sponsored by FinTax

6. Vietnam to Launch Regulated Crypto‑Market Pilot in Q3 2026 link

Vietnam is pushing forward with its crypto‑market regulatory pilot amid anti‑money‑laundering rectification pressure from the Financial Action Task Force (FATF). Five enterprises have been approved to conduct relevant businesses, and the first batch of local digital‑asset exchanges may launch as early as Q3 2026. Vietnam has been on the FATF grey list since June 2023 and still needs to remedy deficiencies across ten areas including the regulation of virtual assets and their service providers. Statistics show Vietnam had over 17 million crypto‑asset holders in 2024, with crypto trading volume exceeding $200 billion in the twelve‑month period ending June 2025, representing a 55% year‑on‑year increase. Licensed operators are required to meet a paid‑in‑capital requirement of at least 10 trillion VND (approximately $381.8 million).

7. BitMart’s Official Chinese Account Demands Founder Disclose User‑Asset Details and Repayment Plan link

BitMart’s official Chinese‑language social‑media account published a post demanding the founder provide public, transparent and verifiable explanations regarding the whereabouts of user assets, causes behind withdrawal restrictions, affiliated‑account and fund arrangements, unpaid employee salaries and compensation, as well as the user‑asset repayment plan. The account also called for disclosure of wallets, assets, liabilities and deployable reserves, alongside details covering remaining assets, total liabilities, repayment ratio, payout sequence, timeline, supervisory authorities, and acceptance of independent third‑party audits.

8. Hu Xiaowei, №2 Figure of Prince Group, Invests in Boyaa Interactive and Multiple Hong Kong Financial Institutions via Future King link

According to Caixin, citing an investigation by the U.S‑based Organized Crime and Corruption Reporting Project (OCCRP), Future King is held under the alias Hu Yanming by Hu Xiaowei, the second‑in‑command of the Prince Group. It has held stakes in Singapore‑registered Future Oasis Pte Ltd and Hong Kong‑listed Boyaa Interactive International (00434.HK). Future King also made indirect investments in Evergrande Property Services prior to its IPO and set up the Future Wing Discretionary Trust. Via Future King’s offshore corporate structure, Hu Xiaowei also became a shareholder in two Hong Kong‑based asset‑management firms, namely Dongchu Securities Co., Limited and Dongrong Wealth Co., Limited.

9. OKX Restricts Hong‑Kong‑Based Staff From Using Claude; Monthly AI Model Spend Hits $6‑8 Million link

Following a brief suspension of its enterprise‑grade Claude account in early August, OKX has barred its Hong‑Kong‑based staff and employees transiting through China from using Anthropic’s Claude; the enterprise account has since been restored. OKX stated that prior usage by some Hong Kong employees may have been inconsistent with Anthropic’s regional‑access policies. It will restrict Hong‑Kong‑based personnel from accessing Claude as required and route relevant AI requests to alternative models. Anthropic’s policies currently prohibit Claude usage in mainland China and Hong Kong. OKX had previously encouraged employees to leverage AI in daily work and incorporated AI‑related competency into performance reviews. The firm disclosed its monthly spending across major large‑model providers stands at approximately $6‑8 million.

Star Xu, founder of OKX, noted that the company is in communication with Anthropic, Claude’s developer, to restore account access, and emphasized that OKX does not operate in mainland China amid prevailing crypto‑regulatory conditions. According to OKX, over 75 % of its more than 1,000 weekly product releases and code commits are completed with assistance from Oli, its in‑house AI development platform, though manual reviews remain mandatory prior to deployment. The company also plans to tighten internal enterprise‑LLM access controls to ensure Claude is only available to users located in regions permitted under Anthropic’s policies.

10. HSBC Requests Source‑of‑Funds Declarations From Some Mainland China Investment Clients; Non‑compliance May Trigger Service Suspension link

HSBC Hong Kong has recently dispatched notifications to certain existing investment‑based clients from mainland China, requiring them to submit the Declaration for Opening/Maintaining Accounts and update contact details via the HSBC HK App. The declaration mandates clients to confirm that funds for investment activities stem from legitimate sources outside mainland China, and consents to the bank disclosing relevant personal data upon requests from law‑enforcement or regulatory authorities. According to the notice, investment‑related services may be suspended if the declaration is not submitted by August 20; such services risk termination should submission remain outstanding by September 12. In its August 18 statement, HSBC noted the measure complies with applicable regulatory requirements and aims to ensure the KYC and customer‑due‑diligence information provided by mainland‑China‑based investment clients remains up‑to‑date and valid.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. Ethereum Foundation Launches Post‑Quantum Research Challenge With $1M Prize Pool link

The Ethereum Foundation has launched the Better Codes Open Challenge to advance post‑quantum Ethereum research. Participants may leverage AI agents, toolchains and prompts to explore mathematical optimization schemes for hash‑based SNARKs. Submissions will be verified via Lean 4 formal proofs, with opportunities to claim the Ethereum Foundation’s $1 million Proximity Prize. The project is jointly supported by ZK Security, EigenLabs and Yukon Research.

2. WLFI Sets Up Trust Entity; Mack McCain to Serve as Chief Trust Officer Concurrently link

Trump‑family‑affiliated project WLFI announced the promotion of former General Counsel Mack McCain to Chief Legal Officer (CLO) and Chief Administrative Officer (CAO) of WLFI and all its affiliated entities. He will also serve as Chief Trust Officer of the in‑formation World Liberty Trust Co., N.A. Mack McCain previously served as Chief of Staff to the Chief Legal and Compliance Officer and Deputy General Counsel for Regulatory Affairs at Robinhood, General Counsel at Arta Finance, and held senior legal positions at Charles Schwab and Scottrade. In his new roles, he will oversee legal strategy, management and governance across the entire WLFI ecosystem, and lead the trust and fiduciary governance‑framework operations of World Liberty Trust Company under the supervision of the U.S. Office of the Comptroller of the Currency (OCC).

In addition, World Liberty Financial (WLFI) has launched its first batch of USD1‑denominated RWA perpetual‑contract markets. Aster DEX has gone live with trading pairs including SPCXUSD1, CLUSD1, XAUUSD1, SNDKUSD1 and SKHYNIXUSD1. WLFI stated it will provide liquidity support for these markets via 250 million WLFI tokens and $12.5 million worth of USD1. This launch covers RWA assets such as gold, crude oil and global equities, with more USD1‑denominated RWA perpetual‑contract markets to be added later.

3. Arbitrum Activates ArbOS 61 on Aug 20, Optional Compliance Filter Available for Appchains link

Following Arbitrum governance approval, the ArbOS 61 “Elara” upgrade has been activated. It adds optional protocol‑level transaction filtering, priority‑fee support and alternative data‑availability interfaces for dedicated chains, and raises the Stylus contract code‑size limit from 24 KB to 96 KB. Compliance filtering is disabled by default; dedicated‑chain owners select compliance service providers and enable the feature manually, and Arbitrum One and Nova have not adopted it for the time being. Priority‑fee functionality for Arbitrum One still requires a separate DAO vote, while the base‑fee management range is adjusted to 0.01‑0.10 gwei.

4. Optimism‑Funded Casts Key Vote To Reallocate 546.9M OP From User Airdrops to Ecosystem Strategic Fund link

Test in Prod, the core development team funded by Optimism, cast a critical supporting vote of 8.486 million OP approximately 17 minutes before the voting deadline, lifting the approval rate from 45.77% to 61.84%. The highly controversial governance proposal ultimately passed with 17.974 million affirmative votes versus 10.931 million negative votes. The proposal reallocates 546.9 million OP originally earmarked for user airdrops into the strategic ecosystem fund managed by the Optimism Foundation to advance OP Mainnet as well as enterprise‑level partnerships and growth. The Optimism Foundation holds that broad‑scale user airdrops no longer align with its institutional‑oriented strategy. While entities and researchers including L2BEAT and Polynya raised objections over insufficient transparent oversight and ambiguous value for token holders, Test in Prod argued that enterprise‑expansion bids demand fund reserves and confidentiality to compete in the market.

5. Linera Unveils New Product Around LNRA Token Sale, Aims to Become the Next Hyperliquid link

Layer‑1 blockchain Linera published an announcement unveiling a new round of products tied to the LNRA token sale, explicitly setting the goal of “becoming the next Hyperliquid”. Linera features real‑time prediction markets built on its Microchain architecture, where markets can launch and settle within one minute. Founded by Mathieu Baudet, a former researcher for Meta’s Libra/Diem project, the project currently has a core team of merely five members. Linera stated that LNRA will serve as the network’s native token, with full sale details to be disclosed at a later date.

Sponsored by FinTax

6. Dark‑Pool Prop AMM Hits $100M Daily Volume on Ethereum for the First Time link

Dark‑pool Prop AMM daily trading volume has surpassed $100 million for the first time on the Ethereum network, accounting for approximately 10% of Ethereum’s spot DEX trading volume, with FermiSwap and Metric capturing the majority of market share.

7. Uniswap Fee Switch Brings No Harm to LPs; LP‑Trader‑Protocol Triple‑Win Achieved link

Uniswap’s fee switch has not yielded adverse effects; instead, it has delivered a triple‑win outcome for LPs, traders and the protocol. Nearly one month has passed since the full launch of protocol fees on Uniswap V4. LP TVL has remained virtually unchanged, even on the Base network amid competition from Aerodrome. Comparable results have been observed for Uniswap V3 on Ethereum, with sustained improvements in price impact for trading pairs between native assets and stablecoins, as well as between stablecoins.

Uniswap co‑founder Hayden Adams stated that substantial asset‑trading activity exists on Uniswap. There are 8 pools with monthly trading volume above $1 billion, 57 above $100 million, 284 above $10 million, 1,039 above $1 million, 2,419 above $100,000, and 4,324 above $10,000. The above figures only count pools with highly reliable price data, and actual volumes may be higher.

8. Gnosis Chain Passes GIP‑153, Transitioning From Sovereign L1 to Ethereum L2 link

Gnosis Chain, the long‑established public Layer‑1 blockchain, has formally passed GIP‑153, the governance proposal for its transformation from a sovereign standalone L1 into a highly Ethereum‑aligned L2. On the eve of the voting deadline, multiple official‑affiliated addresses including Gnosis co‑founder Stefan George cast concentrated affirmative votes, successfully meeting the quorum requirement. Co‑initiated by Gnosis founder tw_tter and core team members, the proposal intends for Gnosis Chain to shed the security shortcomings and inflation‑driven subsidy drawbacks inherent to traditional PoS L1 networks, directly inherit security from Ethereum validators, and become the first Ethereum L2 to realize synchronous composability.

9. Arthur Hayes Returns To Lead Flop Labs; Large‑Scale Airdrop Expected in Q4 2026 link

Arthur Hayes announced he is “coming out of retirement” to lead Flop Labs. According to Hayes, Flop Network targets the AI‑agent economy, and its native token FLOP will act as the payment asset for AI agents to acquire computing resources and other services, adopting a no‑presale, no‑VC, 100% fair‑launch model. The project plans a large‑scale airdrop in Q4 2026 and will activate its genesis block in Q1 2027. FLOP will be used by AI agents to obtain computing resources and relevant in‑network services.

10. Harmony Confirms Full‑Network Rollback; Over 109,000 User Transactions Permanently Discarded link

Harmony unveiled its rollback plan for the exploit incident, restoring the states of Shard 0 and Shard 1 to 23:25:37 UTC on August 11 to completely eliminate the 2.385 trillion illicitly minted ONE tokens by the attacker. The exploit once drove ONE down by more than 30%. Harmony stated that since the counterfeit ONE tokens had circulated across exchanges, DEXes, cross‑chain bridges and staking addresses, targeted burns, blacklists or selective transaction recoveries risked harming unrelated funds. A fixed‑window rollback is therefore deemed the lowest‑risk solution.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. BTC breaks above $77,500, nearly 20% gain in three days link

OKX market data shows that BTC broke above $77,500 and traded at $77,100 at press time, marking a 20% gain in the past three days. ETH surged past $2,400 and is now quoted at $2,412, with a gain of over 25% in the past three days. According to CoinGlass data, around $1.254 billion in liquidations occurred across the network over the past 24 hours, including approximately $1.083 billion in short‑position liquidations, with 155,678 traders globally getting liquidated. The largest single liquidation order took place on Hyperliquid for BTC‑USD, worth $23.5968 million.

Strategy holds 840,447 BTC with an average cost basis of $75,385. Based on Bitcoin’s current price, Strategy has broken even and recorded an unrealized paper profit of around $192 million. BitMine holds 5,815,164 ETH with an average cost basis of $3,366. Calculated at Ethereum’s current USD price, BitMine currently carries an unrealized paper loss of roughly $5.792 billion.

On August 20, a total of 174,764 traders faced liquidations, with total liquidation value hitting $2.98 billion. A BTC‑USD position on Hyperliquid constituted the largest single liquidation at $48.8 million. This scale surpasses the $2.23 billion single‑day liquidations during the “tariff shock” in February 2025, ranking as the eighth‑largest liquidation event in cryptocurrency history.

2. SEC Proposes Regulation Crypto Assets: Issuance Exemptions & Conditional Safe‑Harbor for Certain Crypto Investment Contracts link

The U.S. SEC has proposed “Regulation Crypto Assets” to establish a specialized securities‑issuance regime for certain investment contracts involving crypto assets. The proposal sets forth two exemptions from registration under the Securities Act: a one‑time applicable exemption permitting issuers to raise up to $5 million over a four‑year period, and another allowing issuers to raise up to $75 million every 12 months. Both exemptions mandate relevant information disclosure to investors, with the latter additionally requiring financial statements and ongoing reporting obligations. The proposal also introduces a conditional safe harbor, under which crypto assets may no longer be governed by the “investment contract” upon satisfying relevant conditions. Securities issued under exemptions of the new rules and certain secondary‑market transactions shall be exempt from state‑level securities registration and qualification requirements. The proposal will open a 60‑day public comment period upon publication in the Federal Register.

3. CFTC Chair: Crypto Market‑Structure Rules Will Move Forward Even Without Clarity Act Passage link

Michael Selig, Chair of the U.S. Commodity Futures Trading Commission (CFTC), stated that the crypto industry will still receive regulatory rules even if Congress fails to pass the crypto market structure bill, the Clarity Act. Selig noted that the CFTC is evaluating multiple crypto regulatory measures and may formulate relevant rules under existing statutory authority. The Clarity Act is currently stalled due to Senate disputes over ethics provisions, with a procedural vote expected in September. In addition, the CFTC is advancing regulatory rules for prediction‑market event contracts and plans to finalize relevant provisions soon, while soliciting public comments on “computational power futures” trading tied to AI computing power. Selig said the CFTC will collaborate with the Department of Commerce to develop standards for AI computing‑power futures to ensure such products meet regulatory requirements.

4. CME CEO Clashes With CFTC and Kalshi Over Prediction‑Market Regulation link

CME CEO Terrence Duffy stated at a CFTC Innovation Advisory Committee meeting that certain prediction‑market contracts carry manipulation risks and called for tightened regulation. He pointed out that some self‑certified listed contracts, especially markets concerning political events, could harm industry credibility. CFTC Chair Michael Selig responded that the products referenced by Duffy are not available on U.S. markets. The two sides further discussed prediction‑market regulation. Selig stated the CFTC would push forward revisions to event‑contract rules and strengthen consumer‑protection measures. Subsequently, Duffy and Kalshi Chief Operating Officer Luana Lopes Lara debated market manipulation and regulatory capacity. Jurisdiction over prediction‑market regulation remains contested, with federal regulators and state authorities competing over the regulatory scope for event‑based contracts such as sports‑related ones.

5. Citi Launches Custody+ Platform; Digital‑Asset Custody Supporting BTC to Launch Later This Year link

Citi announced the launch of its new‑generation custody service suite Custody+, delivering near‑real‑time and real‑time custody infrastructure for scenarios including continuous trading, shortened settlement cycles and digital assets. Citi stated that its digital‑asset custody service is expected to go live later this year, initially supporting Bitcoin (BTC), and will be integrated within the same service framework as traditional‑asset custody to deliver a unified custody experience for clients. Citi also noted that over 80 percent of its total custody event volume is already processed in real‑time. Custody+ will further incorporate instant settlement, real‑time liquidity management, foreign exchange and Citi Token Services among other capabilities.

Sponsored by FinTax

6. Tether CEO: AI Products Covering Healthcare and Finance to Roll Out for Emerging Markets link

Tether CEO Paolo Ardoino stated that the company is accelerating its expansion into technology and infrastructure sectors beyond financial services, with the next step being the roll‑out of basic AI applications for developing markets. Ardoino said smartphones have become relatively prevalent even in poorer regions, enabling simple AI models to run on‑device. Accordingly, Tether plans to develop AI tools covering vertical sectors such as healthcare, finance and sports, allowing ordinary users to leverage AI in daily life. Ardoino did not disclose specific business models for the AI business. He also revealed that Tether now has over 650 million global users.

7. Kraken Opens US Stock Trading for EEA Users, Supporting Over 7,000 US Equities link

Kraken has opened U.S. stock trading for eligible users in the European Economic Area (EEA), covering more than 7,000 U.S. stocks. Within a single account, users can trade traditional U.S. equities, over 600 crypto‑assets and more than 700 tokenized xStocks. The service is provided by Payward Europe Digital Solutions, authorized under EU MiFID II, and is accessible via Kraken Pro and the Kraken App. Existing EEA users must accept additional agreements to gain access.

8. Metaplanet to Inject 2,100 BTC Into Super League to Build US Bitcoin‑Treasury Platform link

Japan‑listed Bitcoin‑treasury firm Metaplanet (TSE: 3350) and Nasdaq‑listed Super League Enterprise (Nasdaq: SLE) announced a definitive agreement. Metaplanet intends to inject 2,100 BTC (approximately $132.1 million) and $2.5 million in cash into Super League through its U.S. subsidiary in exchange for common stock, preferred stock and warrants, with an initial total investment of roughly $134.6 million. Upon transaction closing, Super League will be renamed Superplanet, Inc., with a proposed ticker symbol change to SUPA. Metaplanet is expected to hold approximately 95.7% of its outstanding common stock. Superplanet will serve as Metaplanet’s U.S. Bitcoin‑treasury platform.

9. Trump: CFTC Chair Pushing Hyperliquid for Legal US Market Entry link

U.S. President Donald Trump stated at a White‑House event with tech‑industry leaders that CFTC Chair Mike Selig approved the first “genuine” Bitcoin perpetual contract to be listed on a CFTC‑registered exchange back in May of this year. He added that efforts are underway to bring Hyperliquid into the U.S. market in a fully compliant and lawful manner.

10. Ondo Executive: Tokenization Mirrors Early‑Stage ETF Development Cycle link

John Hoffman, Head of Product at Ondo Finance, said that asset tokenization follows a development path similar to early ETFs, gradually moving past market skepticism toward adoption. Ondo launched its tokenized US‑Treasury product OUSG in 2023, and its Treasury‑related products now hold around $2 billion in TVL. Ondo Global Markets, its tokenized stocks and ETF platform, hit $1 billion in TVL within eight months after launch. Hoffman noted that Ondo’s perpetual‑contract platform has recorded approximately $9 billion in notional trading volume in seven weeks since going live. The firm also plans to launch “smart portfolios” that bundle multiple tokenized stocks into a single token. These products are currently available only for non‑U.S. markets, and Ondo aims to offer tokenized products in the United States following legislative progress such as the Clarity Act.

Binance founder CZ stated that “tokenization of everything” should be advanced. Tokenization is one of the best ways for nations to raise capital or attract foreign direct investment (FDI), and both countries and enterprises have incentives to sell tokenized stocks to global investors. CZ voiced support for advancing tokenization across all blockchains. Though this brings liquidity fragmentation, multi‑party parallel advancement represents the fastest way to scale the industry. High interoperability among assets from different issuers can mitigate liquidity fragmentation to some extent.

Fundraising

• Intercontinental Exchange (ICE) plans further investment in Polymarket, with cumulative investment exceeding $1.6 billion. link

• Etched announced the completion of a $700 million financing round, valuing the company at $21 billion. link

• Ethena has entered into a $1 billion secured warehouse financing arrangement with FalconX. link

• NeoSoul closed an $11 million Pre‑A financing round, with participation from MH Ventures, Amber Group and others. link

• Beldex completed an $8 million financing round led by Sigma Capital. link

Learn more, check out crypto-fundraising.info.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Author | @agintender

Complied by | WuBlockchain

Original Link:

About three months ago, we used on-chain data to analyze trading volume and open interest (OI) across several centralized exchanges (CEXs). The analysis was conducted in two parts: the first examined trading volume (Vol/PoR), and the second examined open interest (OI/PoR). The conclusions at the time were somewhat abstract, so those interested can check them out for themselves.

2026 Q1 data:

;

Some might argue that a single snapshot proves little, or that once incentive campaigns end and fee rates return to normal, the data will naturally revert. So, what actually happened? One follow-up analysis is enough to find out.

This article focuses on three things:

• Rerunning the Vol/PoR analysis using Q2 data;

• Rerunning the OI/PoR analysis;

• Comparing Q1 and Q2 to see whose ratios are converging and whose are deteriorating.

I. Hyperliquid Remains the Benchmark

The formulas remain unchanged:

Vol/Reserve = 30-day total trading volume ÷ 30 ÷ core reserve assets (BTC + ETH + USDT + USDC)

OI/PoR = total open interest ÷ core reserve assets

Hyperliquid remains the benchmark, as it is the trading venue where fabricating data would be the most costly. The reasoning was already explained in the previous two articles and will not be repeated here. See:

Hyperliquid’s performance this quarter can be described as growth against the broader trend.

Hyperliquid’s TVL increased from $4.88 billion to $6.11 billion, up 25%, while its 30-day derivatives trading volume rose from $206.8 billion to $237.7 billion, up 15%. Capital inflows grew faster than trading volume, bringing the benchmark ratio down from 1.44x to 1.30x. After applying a 15% tolerance band, the Q2 threshold is 1.49x, compared with 1.66x in Q1.

Some may argue that a lower threshold could unfairly label certain exchanges as having anomalous data. Therefore, all assessments in this article underwent sensitivity testing using both the new Q2 threshold and the previous Q1 threshold of 1.66x.

II. Looking at the Denominator First: Reserves Are Shrinking Across the Industry

The denominator of the ratio is reserves. All figures below are sourced from the exchanges’ official PoR pages using June 2026 snapshots and converted at standardized prices of $63,001 for BTC and $1,769 for ETH.

Three observations:

First, reserves are shrinking across the board. Binance declined by 17%, OKX by 21%, and Bybit by 29%. Two forces are at work here. One is token prices: with BTC falling into the $63,000 range, the dollar value of crypto-denominated assets in PoR naturally declined. The other is genuine capital outflows. The overall direction is clear: liquidity is receding across the entire industry.

Second, Bitget’s excess reserves are retreating. In Q1, we noted that Bitget maintained a BTC reserve ratio of 237%, giving it a “we’ve got money and have no reason to run” level of confidence. In Q2, that figure fell to 156%. A substantial amount of the platform’s own BTC was withdrawn from the reserve pool. This is not a major issue, since it is the platform’s own money, but it directly affects our ratios. More on that later.

Third, MEXC’s excess reserves remained virtually unchanged. Its BTC reserve ratio stood at 269%, almost identical to 270% in Q1. However, one detail is worth noting: MEXC users actually held only 4,699 BTC on the platform. For an exchange claiming nearly $400 billion in monthly trading volume, its entire user base had deposited fewer than 5,000 BTC in total. That said, some argue that MEXC is best known for altcoin trading, which is also a reasonable explanation.

Data period: June 6 to July 6, 2026 (30 days) | Sources: Official Proof of Reserves pages of each exchange, CoinGlass, CoinGecko, and DefiLlama

Note: This article samples only these eight exchanges and is not representative of the entire market. The findings inevitably contain a margin of error.

III. Vol/PoR: Reassessing the Trading Volume Dimension

The 30-day trading volume was calculated using CoinGecko’s daily series and converted at each day’s BTC price. See the Limitations section for details on the data source change. The benchmark is 1.30x, with a threshold of 1.49x:

Binance remains the one that needs no explanation. Its total ratio stood at 0.59x, meaning every $1 in reserves corresponded to just $0.59 in average daily trading volume. Its derivatives ratio was 0.51x, less than half the benchmark. The total ratio was higher than Q1’s 0.44x, but this was driven by a 17% contraction in the denominator, not an explosion in the numerator. Its spot ratio of 0.078x was almost identical to Q1’s 0.081x. A vast amount of dormant capital remains parked on the platform: deposits stay deposited, and long-term balances remain settled. This is what a mature exchange should look like.

OKX is clean. Its derivatives ratio was 0.93x, while its total ratio was 1.01x, meaning every $1 in reserves corresponded to roughly $1 in average daily trading volume. Its cross-validation discrepancy was also 0%, making it the most robust dataset among the eight exchanges. Reserves declined by 21%, while trading volume contracted in tandem. The numerator and denominator receded together, keeping the ratio stable.

HTX looks surprisingly healthy. Its ratio stood at 1.07x, below the threshold. The only caveat is that its self-reported trading volume was approximately 50% higher than the cross-validated figure. However, adjusting the figure downward would only make HTX look healthier, so the assessment remains unchanged. Its real issue is not trading volume, but OI, which will be discussed in the next section.

Bybit remains within the line. Its ratio stood at 1.42x, just one step away from the threshold. Its reserves contracted by 29% this quarter, the steepest decline among the eight exchanges. There was no unusual movement in the numerator, or trading volume. Instead, the shrinking denominator pushed the ratio higher. Bybit is now the clearest case to watch for “denominator risk.” It is cleared on the trading volume dimension for now, but if reserves continue to flow out while trading volume does not decline accordingly, it could cross to the other side of the line next quarter.

Has KuCoin made it back to shore this quarter? This is the most intriguing set of figures in the entire article. KuCoin’s monthly spot trading volume fell from $65 billion in Q1 to $32.4 billion, a 50% decline. Its spot ratio dropped from 0.98x to 0.536x, while its derivatives ratio fell from 1.27x to 0.98x, already below the on-chain benchmark. Its total ratio stood at 1.52x, only 0.03 above the threshold, meaning the anomalous volume has essentially fallen to zero. In Q1, we attributed KuCoin’s abnormal spot volume to trading incentive campaigns. Now that those incentives have been scaled back, the data has fallen accordingly. Through its own behavior, KuCoin has retroactively confirmed our assessment from three months ago.

Bitget has slipped from healthy territory into the gray zone, but its case needs to be examined separately. Its derivatives ratio rose from 1.33x in Q1 to 1.68x, while its total ratio reached 1.90x. By any measure, that looks like deterioration. But do not rush to convict it. Bitget’s BTC reserve ratio fell from 237% to 156%, meaning the platform itself withdrew a substantial amount of its own funds from the denominator. Put simply, a ratio can deteriorate in two ways: the numerator can rise, or the denominator can fall. In Bitget’s case, at least half of the deterioration came from the latter. This is not volume inflation. It is a withdrawal of the platform’s proprietary capital. Cross-validation suggests that its reported trading volume may be approximately 30% too high. If recalculated using the downward-adjusted figure, its derivatives ratio would fall back to around 1.2x, within the normal range.

Gate. Q1: a total ratio of 2.03x. Q2: the total ratio surged to 3.25x, while the derivatives ratio jumped from 1.75x to 2.77x. More troublingly, its reserves contracted by 19%, yet trading volume barely declined.

MEXC. In Q1, we attributed its derivatives ratio of 2.95x to trading incentives and zero-fee campaigns. In Q2, its derivatives ratio reached 3.73x, nearly three times the on-chain benchmark. Interestingly, its spot ratio did decline from 0.81x to 0.447x. The spot incentives appear to have genuinely ended, but all the firepower shifted into derivatives. The conclusion can therefore only be revised: this is not a campaign; it is the business model. An exchange whose users collectively deposited only 4,699 BTC generated $354.4 billion in monthly derivatives trading volume. For every BTC deposited by users, there was $75 million in monthly derivatives turnover.

IV. OI/PoR: Reassessing Outstanding Positions

Trading volume measures flow, while OI measures outstanding positions. Every open contract requires real capital to be locked as margin. CoinGlass has not yet published its Q2 report, as the quarter has only just ended. Therefore, this section uses a real-time snapshot taken on July 4, 2026, which will inevitably differ from the Q1 methodology based on quarterly averages.

Benchmark: Hyperliquid OI/TVL = 1.16x ($7.09 billion / $6.11 billion).

MEXC’s OI has now caught up with Bybit’s: $9.69 billion versus $9.64 billion. An exchange with $3.2 billion in reserves carries almost the same amount of open interest as one with $9.9 billion in reserves. MEXC’s OI/PoR ratio stands at 3.06x, the highest among all eight exchanges. In Q1, we said, “You can fabricate trading volume at little to no cost, but you cannot create OI out of thin air.” Now, either every MEXC user is fully leveraged, or…

Gate. Its OI/PoR ratio stood at 2.33x, up from 2.25x in Q1. Rather than converging, it deteriorated further. Gate carries $9.07 billion in OI against just $3.9 billion in core reserves. In Q1, we warned that “Gate’s liquidation system could come under pressure during extreme market conditions.” We repeat that warning unchanged, but with even greater emphasis.

KuCoin and HTX share the same unusual pattern: extraordinarily high OI-to-volume ratios. KuCoin stood at 3.74 and HTX at 4.44, meaning it would take three to four full days of trading volume to turn over all open positions on these platforms once. By comparison, Binance stood at 0.81 and Hyperliquid at 2.35, with the latter partly attributable to on-chain order placement incentives. When outstanding positions significantly exceed trading flow, it usually points to one of two things: zombie positions or “embellished” OI reporting. Meanwhile, KuCoin’s OI/PoR ratio remained firmly stuck at 2.76x. Flow is easy to pull back; outstanding positions are harder to hide.

V. Quarter-on-Quarter Comparison

Now, let us compare the data from the two quarters side by side.

Quarter-on-Quarter Change in Suspicious Trading Volume (Portion Above the Threshold):

Some may argue that the increase in total suspicious trading volume from $295 billion to $519 billion is merely a statistical artifact caused by the lower threshold. It is not. As noted earlier, even under the previous Q1 threshold of 1.66x, suspicious volume at MEXC and Gate would still be approximately $240 billion and $180 billion, respectively. The real driver is that, in a bear market, the denominator, or reserves, declined, while the numerator, or reported trading volume, did not. In fact, it even edged higher. Capital receded, but the reported figures refused to follow. That is how the gap in water levels became visible.

Market Share Comparison Across Three Periods:

The combined real market share of the top three exchanges rose from 75.6% to 79.3%. Bear markets have always favored concentration. When the tide recedes, capital instinctively flows toward the pools least likely to fail.

VI. RWA Interlude: U.S. Stocks Are Hot, but Are the Numbers Heating Up Too?

Tokenized U.S. equities and RWA trading gained traction across crypto exchanges this quarter. MEXC’s homepage carousel featured not new meme coins, but SK hynix, Kioxia, and Samsung, the chip stocks that surged amid the memory supercycle. Bybit launched a TradFi section, placing gold, crude oil, and the Nasdaq front and center. On Gate’s navigation bar, “Stocks” sits alongside Polymarket. Meanwhile, Binance’s bStock promotions have been relentless. So, have the trading figures for RWA equities actually started to take off?

Three observations:

First, RWA trading has genuinely reached meaningful scale. On active trading days, RWA derivatives volume across the sampled exchanges reached $22.3 billion per day. Memory stocks were the primary drivers, with SanDisk generating approximately $6.4 billion and SK hynix about $4 billion. Together, the two memory leaders accounted for nearly half of total RWA trading volume. The DRAM supercycle is now being traded with leverage by retail investors worldwide through crypto perpetual markets.

Second, there is an intriguing coincidence in the data. Hyperliquid, the benchmark used in this article, derived 20.6% of its trading volume from RWAs, almost identical to Binance’s 20.7%. This suggests that, regardless of the exchange, the proportion of trading activity allocated to the same underlying assets is broadly similar. Under an extreme sensitivity test, removing all of MEXC’s 26.2% RWA volume would reduce its derivatives ratio from 3.73x to 2.75x. However, once Hyperliquid’s 20.6% RWA volume is removed simultaneously, the threshold also falls to 1.19x. MEXC would still stand at 2.3 times the threshold. The same applies to Gate: after removing its 12.1% RWA share, its ratio would still be twice the threshold.

Third, the denominator remains small. Equity perpetuals use USDT as margin, so the formula treats them fairly. In the spot market, tokenized equities generate only $330 million in daily trading volume across the entire market, while user holdings are even smaller. This is not enough to distort the core reserve methodology.

Disclaimer: This report is based on publicly available data from the exchanges’ official Proof of Reserves pages, CoinGlass, CoinGecko, and DefiLlama. It does not constitute investment advice. OI figures are based on a real-time snapshot taken on July 4, 2026, rather than quarterly averages. Trading volume figures are self-reported by exchanges and aggregated by CoinGecko. This article samples only eight exchanges and is not representative of the entire market. The findings inevitably carry a margin of error.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Editor | WuBlockchain

In December 2022, Core Scientific was one of the most prominent Bitcoin miners to go bankrupt during the crypto winter. Less than four years later, the company had secured more than $24 billion in potential long-term contract revenue, reached a market capitalization of approximately $7 billion, and become a key partner for AI industry participants such as CoreWeave and AMD seeking to lock in power and data center capacity.

At first glance, this looks like a classic story of a bankrupt miner suddenly striking it rich. But Core Scientific did not turn itself around simply by riding a rebound in Bitcoin prices. Instead, it recast the same power, land, and data center resources from relatively volatile Bitcoin mining assets into scarce AI data center infrastructure.

From a Publicly Listed Miner to Just $4 Million in Cash

Core Scientific’s predecessor was incorporated in late 2017, and the company began operating under the Core Scientific name in 2018. In January 2022, it listed on Nasdaq under the ticker CORZ through a merger with special purpose acquisition company Power & Digital Infrastructure Acquisition Corp.

At the time, Core Scientific’s principal businesses included self-mining Bitcoin, providing hosting services to third-party miners, and selling mining equipment. Its business model depended on three critical conditions: Bitcoin prices remaining high, mining machines operating continuously, and power costs remaining stable.

In 2022, all three conditions deteriorated almost simultaneously.

Bitcoin fell steadily from its November 2021 high of nearly $69,000 and briefly dropped to approximately $16,000 in November 2022. Meanwhile, the network hash rate and mining difficulty continued to rise, meaning miners had to deploy more computing power and consume more electricity to produce the same amount of Bitcoin.

Rising energy prices squeezed margins further. Core Scientific stated in its bankruptcy filings that its electricity costs reached approximately $106 million in the first half of 2022. Power prices continued to rise over the summer, while the company was also frequently required to curtail electricity consumption at the request of power suppliers.

Customer default added another layer of pressure. After crypto lender Celsius filed for bankruptcy in 2022, it became embroiled in a dispute with Core Scientific over their hosting agreement. Core Scientific said that Celsius had failed to pay approximately $7 million in accumulated charges and was continuing to cause the company additional losses.

Core Scientific reported a net loss of approximately $434.8 million in the third quarter of 2022. On December 21, 2022, the company formally filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas. It had approximately $4 million in cash on the filing date.

Core Scientific’s problem was not a lack of assets. Rather, the company had invested heavily to expand its mining business, using debt to purchase mining machines and build data centers. When Bitcoin prices, power prices, and financing conditions all reversed at once, those fixed assets could not be monetized quickly enough, while the company’s cash flow dried up first.

Bankruptcy Restructuring Preserved the Most Valuable Assets

Chapter 11 restructuring did not require Core Scientific to liquidate all of its assets immediately. The company was able to continue operating during the bankruptcy process while reallocating debt and equity among creditors, equipment financing providers, and existing shareholders.

Core Scientific completed its restructuring and emerged from bankruptcy in January 2024. The company said the restructuring reduced its debt by approximately $400 million while preserving approximately 724 MW of operational capacity, together with data centers, land, grid connections, and supporting infrastructure across several U.S. states.

Existing shareholders were not completely wiped out. Under the restructuring plan, they received common stock and warrants in the reorganized company and were eligible to participate in a related rights offering. Assuming the full exercise of the warrants and including the rights offering, the securities allocated to existing shareholders could represent as much as approximately 60% of the reorganized company’s equity.

The reorganized company’s shares resumed trading on Nasdaq on January 24, 2024. They opened at approximately $5.89 and closed at approximately $3.44 on the first day. Initially, the market still viewed Core Scientific as a Bitcoin miner that had only just emerged from bankruptcy and needed to repair its balance sheet.

However, the data center and power assets preserved through the restructuring later became the foundation for the company’s valuation reversal. Mining machines can depreciate rapidly, and Bitcoin production is affected by both the token’s price and network difficulty. By contrast, data centers that have already secured grid connections, built substations, and assembled large sites are difficult to replicate in the short term.

CoreWeave Gave Mining-Site Power a New Pricing Model

Core Scientific’s partnership with AI cloud infrastructure company CoreWeave became the pivotal event in the shift in its valuation framework.

The two companies had already worked together on an approximately 16 MW project in Austin, Texas. In June 2024, Core Scientific announced a new 12-year agreement with CoreWeave to provide approximately 200 MW of high-performance computing infrastructure. The company estimated that the contract could generate more than $3.5 billion in potential cumulative revenue over its full term.

Under the initial agreement, CoreWeave would fund approximately $300 million in project capital expenditures, which would be credited against future hosting fees. This arrangement reduced Core Scientific’s upfront construction burden and allowed it to gradually convert existing mining sites into high-density data centers suitable for GPU clusters.

The companies subsequently expanded their partnership several times. The long-term capacity contracted in 2024 grew from approximately 200 MW to approximately 502 MW through successive additions of roughly 70 MW, 112 MW, and 120 MW. This figure excluded the earlier approximately 16 MW Austin project.

In February 2025, the companies added another approximately 70 MW at the Denton project in Texas. Core Scientific expected to fund approximately $104 million of capital expenditures for the expansion, with CoreWeave funding the remaining related capital investment.

Including the earlier Austin project, the agreements between the two companies covered approximately 588 MW, which Core Scientific reported as approximately 590 MW. The contracts had 12-year terms and represented approximately $10.2 billion in potential cumulative revenue.

These contracts changed the way capital markets assessed Core Scientific. Investors had previously focused primarily on its Bitcoin output, hash rate, mining-machine efficiency, and BTC holdings. After the pivot, the more important metrics became contracted capacity, the number of megawatts generating billable revenue, the value of long-term contracts, and project delivery timelines.

When one megawatt of power is used for Bitcoin mining, its value depends on the price of Bitcoin, network difficulty, and mining-machine efficiency. When it is used for AI compute hosting, that same power capacity can potentially be converted into comparatively stable revenue through contracts lasting more than a decade. Core Scientific’s assets did not change completely, but their use case and the duration of the resulting cash flows did.

A $9 Billion Acquisition That Never Closed

CoreWeave was not only one of Core Scientific’s largest AI hosting customers; it also tried twice to acquire the company outright.

In 2024, CoreWeave offered to acquire Core Scientific for $5.75 per share in cash, but Core Scientific’s board rejected the proposal. At the time, Core Scientific said the offer significantly undervalued the company and its growth prospects.

The two companies reached another acquisition agreement in July 2025. Under its terms, Core Scientific shareholders would receive 0.1235 shares of CoreWeave Class A common stock for each CORZ share they held.

Based on the transaction terms announced at the time and CoreWeave’s five-day volume-weighted average price, the deal valued Core Scientific’s fully diluted equity at approximately $9 billion. Based on CoreWeave’s closing share price on July 3, 2025, the consideration was worth approximately $20.40 per Core Scientific share.

However, this was a fixed-exchange-ratio transaction with no fixed cash price. As CoreWeave’s share price declined, the implied value of the consideration offered to Core Scientific shareholders fell with it. By September 2, 2025, the implied value had dropped to approximately $11.41 per share.

Some Core Scientific shareholders were also concerned that the transaction would require the company to give up the potential upside from remaining independent in exchange for shares in another AI infrastructure company that likewise faced high capital expenditures, customer concentration, and debt pressures.

On October 30, 2025, Core Scientific shareholders voted against the transaction, and the two companies subsequently terminated the merger agreement. Although the transaction never closed, the approximately $9 billion valuation nevertheless became an important reference point as the market reassessed the value of Core Scientific’s power and data center assets.

From the $5.75-per-share cash offer in 2024 to the approximately $9 billion all-stock transaction in 2025, CoreWeave’s two acquisition attempts showed that Core Scientific’s core value no longer lay only in its mining machines and Bitcoin output. It increasingly lay in power capacity that could be delivered within a relatively short period.

AMD Took the Story Into Its Second Phase

The CoreWeave contracts demonstrated that Bitcoin mining sites could be converted into AI data centers. The AMD-related partnership could also reduce Core Scientific’s dependence on a single customer and a single project.

In 2026, Core Scientific announced a large-scale infrastructure partnership with AMD. According to the disclosures accompanying Core Scientific’s second-quarter 2026 results, the partnership could ultimately support up to approximately 2.5 GW of leasable capacity. Signed 15-year agreements covered five projects and approximately 529 MW, representing more than $14 billion in potential base contract revenue.

In addition to the contracted capacity, AMD received reservation rights for approximately 1.925 GW of additional capacity. If all of these rights are converted into definitive projects, the partnership’s total potential scale could reach approximately 2.5 GW. However, reserved capacity is not the same as revenue under signed contracts. Its eventual conversion will still depend on site selection, grid access, project construction, and end-customer demand.

As part of the partnership, AMD received warrants to purchase up to 30 million shares of Core Scientific common stock at an exercise price of $23.47 per share. Following the execution of the related leases on July 27, 2026, warrants covering approximately 6.5 million shares had vested and become exercisable. The arrangement means AMD is not only an equipment and industry partner but could also participate in the upside from an increase in Core Scientific’s share price.

Of the AMD-related contracted capacity, approximately 152 MW was leased by AI infrastructure operator Neocloud. Core Scientific, Neocloud, and AMD also entered into a tripartite credit support agreement designed primarily to protect AMD equipment deployed at the sites and to give AMD the option to cure certain defaults by Neocloud. The relevant documents, however, did not characterize AMD as an unconditional guarantor of all of Neocloud’s payment obligations.

By July 2026, Core Scientific had contracted approximately 1.1 GW of customer power capacity, representing more than $24 billion in potential contract revenue. Approximately 437 MW had begun generating billable revenue, corresponding to approximately $635 million in annualized GAAP hosting revenue.

From approximately 590 MW under the CoreWeave agreements to approximately 529 MW under the AMD- and Neocloud-related agreements, Core Scientific was beginning to move beyond a model driven by a single customer at the contracted-capacity level and to reposition itself as a data center developer serving multiple AI industry participants.

The Financials Are Beginning to Validate the Pivot, but the “Windfall” Remains a Valuation Narrative

Core Scientific’s revenue mix has changed markedly.

In the second quarter of 2026, the company generated approximately $164.2 million in total revenue. High-density colocation revenue was approximately $136.7 million, or about 83% of the total, while self-mining digital asset revenue was approximately $21.5 million.

The high-density colocation business generated approximately $80 million in quarterly gross profit, with a gross margin of approximately 59%. By contrast, the self-mining business recorded a gross loss of approximately $12.2 million and a gross margin of approximately -56%. The company reported adjusted EBITDA of approximately $41.1 million for the quarter.

This means high-density colocation is no longer merely a future plan. It has become Core Scientific’s largest source of revenue and gross profit. The mining business that once supported the company is becoming a smaller, less profitable residual operation.

There is, however, still a significant gap between contract value and accounting profit.

Core Scientific reported a second-quarter net loss of approximately $1.155 billion, of which approximately $1.046 billion came from fair value changes in warrants and contingent value rights. These losses were driven primarily by the increase in the company’s share price and were non-cash accounting items; they did not mean the company had incurred an equivalent amount of actual cash outflow during the quarter.

Even so, the company still recorded a GAAP operating loss of approximately $78.5 million in the second quarter, indicating that it had not yet achieved stable profitability on an accounting basis.

Core Scientific generated approximately $230.9 million in net cash from operating activities in the first half of 2026, but this figure included approximately $208.2 million in proceeds from the sale of digital assets, as well as customer prepayments and other changes in working capital. Positive operating cash flow therefore cannot be taken to mean that the data center business can already fund all construction and financing expenditures on a standalone basis.

The AI data center pivot also requires enormous capital investment.

In the first half of 2026, Core Scientific spent approximately $954 million in cash on purchases of property, plant, and equipment, of which approximately $181 million was funded by CoreWeave. The company also paid approximately $233 million to acquire land and development rights, bringing the combined cash investment in these two categories to approximately $1.187 billion.

To support project construction, the company issued $3.3 billion of 7.75% senior secured notes due 2031 in May 2026. As of June 30, 2026, Core Scientific’s long-term debt had risen to approximately $4.3 billion from approximately $1.06 billion at the end of 2025.

The more than $24 billion in potential contract revenue therefore should not be interpreted as $24 billion in cash that the company has already secured. This revenue must be recognized gradually over more than a decade and depends on projects being completed on schedule, customers continuing to perform their contractual obligations, and data centers operating reliably.

Core Scientific shares closed at $21.77 on August 5, 2026, ET, up approximately 533% from their $3.44 closing price on the first day of relisting on January 24, 2024. Based on approximately 321.3 million shares outstanding as of July 23, the company’s market capitalization was approximately $7 billion.

This rally reflects capital markets pricing in future cash flows ahead of their realization. Investors are not buying profits that the company has already earned; they are buying the possibility that its power resources can be converted into AI data center revenue in the years ahead.

What Core Scientific Is Really Selling Is “Time to Power”

Core Scientific’s turnaround was not simply the result of a bankrupt miner returning to profitability on the back of a Bitcoin rebound. It was a transformation in both infrastructure use and valuation framework.

In the Bitcoin mining era, the company’s primary assets were mining machines, hash rate, and mining sites capable of securing a continuous supply of low-cost electricity. In the AI data center era, mining machines have become less important, while land, grid access, substations, fiber connectivity, cooling systems, and project execution capabilities have become the core assets.

As demand for AI data centers grows rapidly in the United States and grid interconnection can take years, what customers are actually buying is not merely electricity but the ability to obtain large-scale energized capacity within a defined timeframe. A mining site that has already been selected, secured grid access, and retained room for expansion may be brought online faster than a data center built from scratch.

What Core Scientific sells, therefore, is not merely megawatts. It can also be understood as “time to power.” By securing land and power resources in advance and then signing long-term contracts with AI customers, the company is converting infrastructure once used for Bitcoin mining into longer-duration hosting cash flows.

This model has not eliminated risk; it has changed the source of that risk.

Core Scientific’s primary risks once came from Bitcoin prices, electricity prices, and network mining difficulty. Now, they are more likely to come from capital expenditures, financing costs, customer concentration, construction delays, and contract performance. If projects cannot be delivered on schedule, or if customer demand and financing conditions change, the more than $24 billion in potential contract revenue may still not be fully realized.

From approximately $4 million in cash and Chapter 11 bankruptcy protection to a market capitalization of approximately $7 billion and more than $24 billion in potential contract revenue, Core Scientific has unquestionably achieved a dramatic valuation reversal.

But the company’s real transformation is not that it suddenly owns more Bitcoin. It has evolved from a miner dependent on crypto prices into a data center developer whose core products are power capacity and speed to energization. Whether it has truly escaped the high-leverage risks of the previous cycle will ultimately depend on whether these power blueprints can be converted, on schedule, into data centers that generate recurring billable revenue.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Editor | WuBlockchain

In the past, the market evaluated a Bitcoin mining company primarily through three metrics: how much hash rate it controlled, how many bitcoins it mined each day, and how many bitcoins it held on its balance sheet. For a group of publicly listed miners now pivoting toward AI and high-performance computing (HPC), that formula is becoming obsolete.

The new units of valuation are no longer limited to EH/s and BTC. They increasingly include MW and GW. Investors are beginning to ask how much energized capacity or capacity with definitive grid interconnection arrangements a mining company controls, how much of it has been contracted to AI customers, and how much has already been delivered and begun generating billable revenue.

Behind this shift are two industries facing starkly different conditions. Revenue per unit of Bitcoin mining hash rate remains under pressure, while demand for power from AI data centers continues to grow rapidly. In an updated forecast released in April 2026, the International Energy Agency (IEA) projected that global data center electricity consumption would rise from approximately 485 TWh in 2025 to approximately 950 TWh in 2030, nearly doubling. The IEA had previously estimated that data centers would account for nearly half of the growth in U.S. electricity demand between 2024 and 2030.

Power has therefore become the scarce asset connecting the two industries. Land, substations, transmission access, and long-term power arrangements originally secured for Bitcoin mining machines are being repurposed as AI infrastructure. Mining companies are no longer monetizing power solely by using computation to produce Bitcoin. They are also using long-term data center leases to monetize power capacity and the associated construction and operating capabilities.

The Old Mining Formula Is Becoming Obsolete

Miners are pivoting toward AI not simply because it makes for a more compelling story, but because profit margins in traditional mining are becoming increasingly thin.

Following the 2024 Bitcoin halving, the block subsidy fell to 3.125 BTC. At the same time, the network hash rate and mining difficulty have continued to rise over the long term, steadily diluting the revenue available to each individual mining machine. According to VanEck, Bitcoin hashprice had fallen to approximately $30.6/PH/s/day by mid-July 2026, while miners across the network generated average daily revenue of approximately $28.5 million over the previous 30 days. Less efficient mining machines were already near or below their breakeven levels.

For miners, this means that even if Bitcoin does not suffer another major price decline, intensifying competition can still reduce earnings. Mining machines must be upgraded continuously, electricity must remain sufficiently cheap, and any downtime, difficulty adjustment, or increase in financing costs can quickly erode margins.

More importantly, Bitcoin mining is still fundamentally a commoditized business. Hash rate produced by machines of the same generation is not meaningfully differentiated, making it difficult for miners to command a lasting premium based on brand alone. Revenue also fluctuates in real time with Bitcoin prices, transaction fees, and network difficulty. By contrast, once an AI data center signs a long-term lease with a creditworthy customer, it may be able to convert grid access, data center construction, and operating capabilities into longer-duration, more predictable cash flows.

This is the starting point for miners reassessing their own assets. The most valuable asset may not be the ASIC machines inside the facility, or the Bitcoin that has yet to be sold, but the grid access rights already secured behind the mining site.

Core Scientific’s Financial Statements Already Look Completely Different

Core Scientific is the clearest example of this shift.

In the second quarter of 2026, the company generated $164.2 million in total revenue, an increase of approximately 109% year over year. High-density colocation revenue reached $136.7 million, accounting for approximately 83% of total revenue, compared with just $10.6 million in the same period a year earlier.

By contrast, self-mining revenue fell approximately 66% year over year, from $62.42 million to $21.54 million. The business incurred $33.7 million in quarterly costs, resulting in a gross loss of approximately $12.17 million and a gross margin of -56%. The high-density colocation business, meanwhile, generated approximately $79.98 million in gross profit, with a gross margin of 59%.

The same portfolio of data center assets produced completely different financial results under the two business models. By mid-July 2026, Core Scientific had 437 MW of customer power capacity generating billable revenue, corresponding to approximately $635 million in annualized GAAP colocation revenue. It had contracted approximately 1.1 GW of customer power capacity, representing more than $24 billion in potential contract revenue.

This does not mean the transformation is complete. The company recorded $797.5 million in capital expenditures in the second quarter, far exceeding its revenue for the period, and a significant portion of its contracted capacity had not yet begun generating billable revenue. But the results at least demonstrate that a mining company’s financial center of gravity can shift within a very short period. A decline in Bitcoin production no longer necessarily means revenue must fall with it, provided that capacity previously used for mining can be converted into billable customer power capacity.

A Single Data Center Lease Can Be Worth Tens of Billions of Dollars

If Core Scientific illustrates the shift in revenue mix, TeraWulf and Hut 8 demonstrate how power capacity and data center development, construction, and operating capabilities can be repriced through long-term contracts.

In July 2026, TeraWulf signed a 20-year data center lease with Anthropic. The agreement covers the Justified Data campus in Hawesville, Kentucky, which is planned to provide approximately 401 MW of critical IT load for AI workloads. Delivery is expected to begin in the second half of 2027, with the full capacity scheduled to come online in early 2028. TeraWulf said the contract was expected to generate approximately $19 billion in revenue over its initial term and receive investment-grade credit support.

That same month, Hut 8 announced a second 15-year, $9.8 billion lease at its Beacon Point campus in Texas, adding 352 MW of IT capacity and bringing the same customer’s total contracted capacity at the campus to 704 MW. The base-term contract value at Beacon Point consequently reached $19.6 billion, even though the first data hall in the second phase is not expected to begin delivery until the second quarter of 2028.

These transactions reveal a new industry reality: for AI customers, the hardest resource to secure may not be GPUs, but large-scale power capacity that can come online within a defined timeframe. Chips can be purchased and servers can be deployed, but transmission lines, substations, land permits, and grid interconnections often take years to develop.

Bitcoin miners happen to have completed part of that work in advance. In pursuit of low-cost power, they have spent the past decade searching for sites near generation sources that can support large loads and allow rapid construction. Those assets were originally used to keep tens of thousands of ASIC miners running. Now that AI data centers face power bottlenecks, the same siting and energy capabilities have gained a new path to monetization.

Why the Same Power Capacity Commands a Higher Premium When Used for AI

The essence of the miners’ transformation is not simply unplugging mining machines and replacing them with GPUs.

Bitcoin mining can tolerate relatively high interruption rates. Miners can shut down voluntarily when electricity prices rise or the grid is under strain, and they can relocate equipment to another site. AI training and inference workloads, by contrast, require greater power stability, network bandwidth, cooling capacity, and system redundancy. High-density GPU racks also impose far more demanding data center design requirements than traditional mining facilities.

The premium does not come from reselling the same electricity at a higher price. It comes from converting power capacity into highly reliable critical IT load. What commands the premium is therefore not merely the possession of power, but a combination of four capabilities: energized capacity or capacity with definitive grid interconnection arrangements, engineering capabilities sufficient to complete construction on schedule, financing capabilities that can support enormous upfront investment, and customer credit strong enough to underpin long-term leases.

Long-term leases also change the risk profile of a mining company. Mining revenue depends on Bitcoin prices, network difficulty, and transaction fees, all of which can change daily. AI colocation revenue depends more heavily on contract duration, delivery schedules, and tenant performance. The former resembles commodity production, while the latter increasingly resembles the business of a data center developer or infrastructure asset operator.

This also explains why the market has begun to focus on who is leasing the data center capacity. A long-term lease backed by an investment-grade hyperscaler can help a miner obtain project financing at a lower cost. The same 100 MW of capacity may receive a very different valuation if the tenant is smaller, the lease term is shorter, or the credit quality is weaker.

Wall Street Is Beginning to Price Miners by MW, Not BTC

In an AI infrastructure valuation framework for miners published in June 2026, VanEck used EV/Gross Energized Power as its primary metric for comparing mining company valuations. Based on data as of June 4, 2026, it found that companies with signed AI or HPC leases generally traded at multiples above 10x on this basis, while companies with little to no contracted capacity that were still relying primarily on their prospective power pipelines traded at approximately 2x to 6x. These multiples were not price-to-earnings, EV/Revenue, or EV/EBITDA multiples.

This means the market is distinguishing between capacity at different stages. Planned capacity remains part of a project pipeline or development concept. Secured power capacity has obtained a power agreement or grid interconnection arrangement, but may not yet be energized. Energized capacity is physically capable of receiving power. Delivered and billable capacity has been handed over to the customer and has begun generating revenue. The four categories cannot be valued as equivalent.

As more projects enter operation, valuation standards will continue to evolve. The market first rewards miners that control power resources, then those that sign contracts, and ultimately returns to more conventional questions: Were projects delivered on time and on budget? How much cash flow does each MW generate? Can returns on capital cover financing costs?

This shift is also driving a divergence among Bitcoin miners. Companies such as Core Scientific, TeraWulf, Hut 8, and Cipher increasingly resemble data center development and operating platforms, while MARA and CleanSpark continue to maintain greater exposure to Bitcoin mining. In the future, so-called “mining stocks” may no longer constitute a sector that can be valued using a single framework.

The Greatest Risk Is Treating a Power Blueprint as Realized Revenue

The AI pivot has raised the valuation ceiling for mining companies, but it has also created execution hurdles far higher than those in traditional mining.

Based on data as of June 4, 2026, VanEck estimated that the relevant companies had delivered only approximately 25% of their leased capacity at the time, with a funding gap of approximately $50 billion between near-term capital expenditure requirements and cash on hand. The estimate did not include future operating cash flow or funds that could be raised by selling or pledging BTC. VanEck also estimated that the companies faced nearly $221 billion in long-term capital expenditure requirements, but it did not define this amount as a “long-term funding gap.” Much of the GW capacity and aggregate contract value announced in press releases still corresponds to construction scheduled for 2027, 2028, or later.

This means a multibillion-dollar contract cannot be treated as an equivalent amount of current revenue. Projects may still be affected by grid upgrades, equipment deliveries, construction costs, financing conditions, regulatory approvals, and community opposition. For miners without experience building high-density data centers, any delay or cost overrun could damage both cash flow and market valuation.

Customer concentration is another risk. Long-term leases can improve revenue visibility, but they can also allow a single customer to determine the future of an entire campus or even an entire company. If investment in AI infrastructure slows, tenants reduce capital expenditures, or a new generation of chips changes data center design, miners may find that capital-intensive assets built for a specific customer cannot be repurposed quickly.

The transformation itself also requires enormous amounts of capital. Miners can raise funds through equity issuance, convertible bonds, project loans, and customer prepayments, but these methods may also result in shareholder dilution, higher leverage, and complex financing constraints. Controlling power resources is only the entry ticket. The ultimate return depends on whether those resources can be converted into billable assets at a reasonable cost.

Mining Companies Are Becoming Power Infrastructure Companies

Bitcoin mining has not lost its value. It can still monetize electricity quickly and provide highly leveraged returns when Bitcoin prices rise. Unlike traditional data centers, mining facilities can also curtail load voluntarily, participate in grid demand-response programs, and generate transitional revenue from power capacity that has not yet been contracted to another customer.

For a group of publicly listed miners, however, Bitcoin is shifting from the sole core business to one of several ways to monetize power infrastructure. Mining machines can be replaced and mined Bitcoin can be sold. What is truly difficult to replicate is secured land, grid interconnection rights, transmission infrastructure, and large-scale power arrangements.

The claim that “power is the most valuable asset” therefore requires an important qualification. It does not refer to GW capacity that exists only in a development plan, or simply to cheap electricity. It refers to power that can be connected to the grid on schedule, financed, built into a high-density data center, and leased over the long term to creditworthy customers.

Miners once sought cheap electricity to produce more Bitcoin. Now, through data center leases, they are beginning to monetize scarce grid interconnection resources and the time value embedded in infrastructure. Bitcoin mining has therefore reached a new fork in the road: some companies will continue to bet on Bitcoin prices and hash-rate cycles, while others may shed the “miner” label altogether and become a new class of power-backed real estate developers for the AI era.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

Editor | Wu Blockchain

TL;DR

• Overall funding has cooled: In Q1 2026, crypto VC funding fell by approximately 50% quarter-on-quarter, with capital increasingly concentrated in mature companies that already have customers, revenue, and meaningful transaction volume.

• Stablecoin payments are bucking the trend: Rain, OpenFX, RedotPay, Mesh, Conduit, and other companies have continued to raise sizable rounds across card issuance, cross-border payments, foreign exchange liquidity, wallets, banking connectivity, and settlement.

• VCs are focusing on infrastructure: Stablecoins enable 24/7 cross-border settlement, while infrastructure providers can generate revenue through transaction fees, foreign exchange spreads, card services, and APIs.

• The momentum should not be overstated: Onchain stablecoin volume is not equivalent to real-world payment volume, and funding remains concentrated among a small number of leading companies. Compliance, fiat on-ramps and off-ramps, local banking relationships, and service commoditization remain key challenges.

• Where capital may go next: Cross-border B2B payments, stablecoin-linked cards, bank-to-stablecoin connectivity, multi-chain payment orchestration, and AI agent payments could continue to attract investment.

Crypto venture funding slowed sharply in the first quarter of 2026. According to Galaxy Research, crypto VCs invested approximately $4 billion across 355 deals, representing a 50% quarter-on-quarter decline in funding and a 16% decrease in deal count. Meanwhile, the number of newly launched crypto venture funds fell to its lowest level since Q3 2020.

However, the slowdown has not affected every company equally. Galaxy Research noted that the decline in overall funding was largely caused by fewer exceptionally large late-stage rounds, while seed and early-stage activity continued. At the same time, 57% of all capital went to later-stage companies, suggesting that investors have become more selective. Rather than backing companies that depend heavily on tokens and market sentiment, they are increasingly willing to fund businesses that already have customers, revenue, and meaningful payment volume.

Strictly speaking, stablecoin payments are not the largest category of crypto VC investment. In Q1 2026, companies in trading, exchanges, investing, and lending raised approximately $2.6 billion in total, maintaining a clear lead over other sectors.

A more accurate description is that stablecoin payments have become one of the few sectors still producing sizable and rapidly successive funding rounds amid a difficult overall fundraising environment.

Stablecoins Are Moving from Trading Tools to Payment Infrastructure

VC interest in stablecoin payments begins with the continued expansion of stablecoins themselves.

A Federal Reserve study published in April 2026 showed that the total stablecoin market capitalization had reached approximately $317 billion as of April 6, an increase of more than 50% from the beginning of 2025.

Adjusted data from Visa and Artemis indicated that stablecoins processed approximately $10.2 trillion in transaction volume over the preceding 12 months, up 63% year-on-year. However, about 36% of adjusted stablecoin volume in 2025 came from deposits to and withdrawals from centralized exchanges. This means the headline figure cannot be treated as equivalent to payments for goods and services.

Historically, stablecoins were mainly used to transfer funds between exchanges or as temporary safe-haven assets during periods of crypto market volatility. Companies are now attempting to connect this onchain liquidity with the traditional financial system through cross-border B2B payments, remittances, payroll, corporate treasury management, card payments, bank accounts, and foreign exchange settlement.

This transition has also changed the structure of stablecoin investment. Investors are no longer backing only stablecoin issuers. They are looking for opportunities across the entire payment stack, including purpose-built blockchains, stablecoin issuance and orchestration, wallets, fiat on-ramps and off-ramps, foreign exchange liquidity, card issuance, banking connectivity, clearing, and redemption.

Each of these layers has become a distinct startup category.

Recent Stablecoin Payment Funding

The following is not an exhaustive industry dataset. Instead, it highlights representative funding rounds announced since 2025. These companies operate at different layers of the stablecoin payment stack and should not be treated as having identical business models.

These companies illustrate that stablecoin payments encompass several very different business models.

Rain, RedotPay, and Félix Pago sit closer to the application and distribution layer, addressing how users remit, hold, and spend stablecoins. OpenFX, Conduit, and Noah focus on cross-border payments, foreign exchange liquidity, and international settlement. Mesh and Crossmint provide wallets and payment orchestration tools. Stablecore and Ubyx connect banks, issuers, and stablecoin clearing systems, while projects such as Plasma seek to redesign the underlying blockchain infrastructure for stablecoin payments.

This wave of investment is therefore not simply a bet on one particular stablecoin. It is a broader bet on the infrastructure required if stablecoins become widely used as payment and settlement instruments.

Capital Is Favoring Companies with Actual Business Metrics

Unlike earlier crypto companies that relied primarily on future narratives, recently funded stablecoin payment companies increasingly disclose transaction volume, customer numbers, and revenue.

Rain completed a $250 million Series C in January 2026, approximately four months after its Series B and ten months after its Series A. The company said its active card base had increased 30-fold within one year, while its annualized payment volume had grown 38-fold. Rain currently processes approximately $3 billion in annualized transaction volume for more than 200 partners.

OpenFX completed a $23 million seed round in 2025 and raised another $94 million approximately ten months later. The company told Reuters that its annualized payment volume had increased from $4 billion a year earlier to more than $45 billion. It also said that more than 98% of transactions were completed within 60 minutes, compared with the two to five business days often required for traditional foreign exchange settlement.

RedotPay said that, as of November 2025, it had more than six million registered users across over 100 markets. The company reported annualized payment volume exceeding $10 billion, annualized revenue of more than $150 million, and profitability.

Most of these figures are self-reported and may not have been independently audited. Definitions of payment volume, transaction volume, and annualized revenue may also differ between companies, making direct comparisons difficult.

Nevertheless, the disclosures reflect a broader shift. Stablecoin payment companies are attempting to demonstrate value using conventional fintech metrics rather than relying solely on wallet addresses, token prices, and community size.

Why Are Stablecoin Payments Attracting VC Attention?

1. Cross-Border Payments Have Longstanding Efficiency Problems

Traditional cross-border payments often involve a sending bank, correspondent banks, clearing networks, receiving banks, and local payment institutions. Each participant operates according to its own business hours, ledger, and compliance procedures, meaning settlement can take several days.

Payment companies seeking to provide instant transfers across multiple countries may also need to prefund bank accounts in each market. Although the money has not yet been used, it must remain in different jurisdictions to ensure that customers can withdraw funds promptly. This creates a substantial working capital burden.

Stablecoins cannot automatically solve every part of this process, but they can provide a unified settlement asset that operates around the clock. A payment company can transfer stablecoins onchain and then rely on a local partner to convert them into local currency.

For cross-border B2B payments, remittances, global payroll, and internal corporate treasury transfers, faster settlement and reduced prefunding requirements can create direct commercial value.

2. Payment Infrastructure Has a Relatively Clear Revenue Model

Stablecoin payment companies generally do not depend on token appreciation for revenue. Instead, they can charge transaction fees, foreign exchange spreads, card issuance fees, account management fees, API subscription fees, and fiat on-ramp and off-ramp fees.

These revenue models are not new. They are fundamentally similar to those of traditional payment processors and fintech companies. The difference is that stablecoins are used as a back-end settlement tool to reduce friction between countries, currencies, and financial institutions.

For VCs, this means companies can be evaluated using familiar metrics such as payment volume, net revenue, gross margin, customer retention, and cost per transaction. Compared with projects that rely heavily on market cycles and token prices, these businesses are easier to evaluate and explain to traditional technology and fintech investors.

3. Stablecoins Are Becoming an Invisible Back-End Tool

An early stablecoin payment journey typically required users to purchase stablecoins, transfer them to a wallet, and then find a merchant willing to accept crypto. This required users to understand blockchains, wallet addresses, networks, and gas fees, creating a significant barrier to adoption.

Recently funded companies are attempting to hide these steps.

Félix Pago users can initiate remittances through WhatsApp. Rain and RedotPay connect stablecoins with payment cards. Mesh allows a user to pay with one crypto asset while the merchant receives another stablecoin. OpenFX primarily serves fintech and remittance companies, meaning the end user may not even know that stablecoins are involved in settlement.

VCs are therefore not necessarily betting that consumers will actively choose to pay with stablecoins. Instead, they are betting that stablecoins can replace parts of the traditional payment and clearing process in the background. Users may still interact with cards, bank accounts, local currencies, or messaging applications.

4. Regulatory Changes Have Expanded the Potential Customer Base

Regulatory uncertainty previously limited the ability of banks and large payment institutions to adopt stablecoins.

In 2025, the United States passed the GENIUS Act, establishing a federal regulatory framework for payment stablecoins. The Office of the Comptroller of the Currency also confirmed that national banks and federal savings associations could engage in certain stablecoin, digital asset custody, and distributed ledger activities, while removing some previous supervisory non-objection requirements.

Regulation increases the costs associated with reserves, audits, anti-money laundering controls, and licensing. At the same time, greater clarity makes it easier for banks, enterprises, and payment companies to determine which activities they are permitted to pursue.

For institution-focused companies such as Stablecore, Ubyx, and Rain, regulatory clarity expands the potential customer base from crypto companies to banks, fintech platforms, and traditional enterprises.

This also helps explain why recent investor lists include not only crypto-native firms such as Dragonfly, Galaxy Ventures, and Paradigm, but also traditional technology and fintech investors including ICONIQ, Accel, Lightspeed, QED Investors, and Norwest.

5. Payment Company Acquisitions Have Improved Exit Visibility

In February 2025, Stripe completed its acquisition of stablecoin infrastructure company Bridge. Media reports valued the transaction at approximately $1.1 billion. Bridge helps businesses issue, manage, and transfer stablecoins, and Stripe subsequently integrated these capabilities into its payment products.

In March 2026, Mastercard announced an agreement to acquire stablecoin infrastructure company BVNK for up to $1.8 billion, including $300 million in contingent consideration. BVNK connects stablecoins, fiat currencies, banks, and multiple blockchains to provide cross-border payment and settlement services for enterprises.

These acquisitions are important for VCs because the potential exit routes for stablecoin payment companies are no longer limited to token launches or IPOs. They may also be acquired by card networks, payment companies, banks, or major fintech platforms.

The transactions also demonstrate the value of licenses, local banking relationships, and established customer networks. Traditional payment companies can develop blockchain technology internally, but building compliant operations and liquidity networks across multiple countries may take years. Acquiring a company that has already built this infrastructure can be faster.

Why Might the Stablecoin Payment Boom Be Overstated?

Stablecoin payments present a clear opportunity, but parts of the funding narrative may also be exaggerated.

1. Stablecoin Transaction Volume Is Not the Same as Payment Volume

Onchain stablecoin activity includes exchange transfers, market making, arbitrage, DeFi, smart contract interactions, institutional fund movements, and ordinary payments. Even after filtering out some bot activity and duplicate transactions, the remaining volume cannot all be classified as payments for goods and services.

Visa previously noted that, as of March 2025, retail-sized transactions accounted for less than 1% of adjusted stablecoin transaction volume during the preceding 12 months.

Stablecoin transaction volume exceeding that of card networks does not prove that stablecoin payment activity has surpassed Visa or Mastercard. The datasets measure different types of activity and cannot be compared directly.

2. Funding Is Concentrated Among a Small Number of Companies

Rain raised $250 million in a single round, RedotPay raised a total of $194 million in 2025, and OpenFX raised $94 million in one round. A small number of large transactions can significantly increase the sector’s total funding without indicating that every stablecoin payment startup has easy access to capital.

Rain, RedotPay, and OpenFX have all reported rapid business growth. Investors are backing companies that have already achieved meaningful scale. Early-stage projects without licenses, local payment channels, or actual customers continue to face a difficult fundraising environment.

In other words, this looks more like capital concentrating around market leaders than a broad boom across the entire stablecoin payment sector.

3. Core Services Could Become Commoditized Quickly

The technical barriers to wallets, stablecoin on-ramps and off-ramps, cross-border transfers, and payment APIs are declining. A growing number of companies can provide similar functionality, while banks, exchanges, stablecoin issuers, and traditional payment companies are also building their own products.

If multiple platforms can all process USDC or USDT transfers, simply providing an onchain payment API may not create a lasting competitive advantage. Companies will ultimately need to compete on licenses, local banking connections, foreign exchange pricing, payment success rates, risk controls, customer service, and cost.

As competition increases, transaction fees and foreign exchange spreads may decline. Growing payment volume will not automatically translate into high profitability.

4. Global Expansion Still Requires Market-by-Market Execution

Blockchains can operate across borders, but bank accounts, licenses, and fiat currencies do not automatically become global.

Every time a stablecoin payment company enters a new market, it must still establish relationships with local banks, payment institutions, and liquidity providers. It must also comply with local KYC, AML, sanctions screening, data protection, and consumer protection requirements.

If a local bank ends its partnership or an on-ramp or off-ramp becomes unavailable, onchain funds may have already arrived but still cannot be converted into the fiat currency required by the customer.

Stablecoins primarily improve the intermediate settlement layer. They do not eliminate the traditional financial system altogether.

5. Traditional Financial Institutions Are Both Customers and Competitors

Banks and card networks are currently investing in or acquiring stablecoin infrastructure companies because they want to obtain these capabilities quickly. As the technology and regulatory framework mature, however, these institutions may also build their own systems and integrate stablecoin functionality into existing products.

Stripe, Visa, Mastercard, PayPal, and major banks already have merchants, accounts, trusted brands, and regulatory resources. Startups may become their suppliers or acquisition targets, but they could also be pushed into lower-margin back-end service roles.

Where Might Capital Go Next?

Recent funding activity suggests that investment is shifting away from issuing more stablecoins and toward bringing stablecoins into banks, enterprises, and user accounts.

Several areas could continue to attract attention.

The first is cross-border B2B payments. Compared with consumer payments, enterprise transactions are larger and more sensitive to settlement speed, working capital requirements, and foreign exchange costs. Businesses are also more willing to pay for measurable efficiency improvements.

The second is connectivity between banks and stablecoins. The opportunity represented by Stablecore and Ubyx is to enable banks to receive, send, clear, and redeem stablecoins issued by different entities and operating across different blockchains.

The third is stablecoin-linked cards and local payments. Users do not need to find merchants that directly accept stablecoins. Instead, they can spend through existing card and acquiring networks. The successive funding rounds completed by Rain and RedotPay suggest that cards remain one of the most direct ways for stablecoins to enter everyday payment scenarios.

The fourth is a multi-stablecoin and multi-chain orchestration layer. Enterprises generally do not want to integrate USDT, USDC, multiple blockchains, and country-specific on-ramp and off-ramp providers separately. Platforms that can manage asset selection, routing, fees, compliance, and conversion through a unified interface may attract more institutional customers.

The fifth is AI agent payments. Processes such as CAPTCHAs, card verification, and manual authorization in traditional payment systems were generally not designed for AI agents. Stablecoin wallets and programmable payments could provide an alternative settlement mechanism.

However, this area remains driven largely by infrastructure development and expectations. Actual payment demand and revenue still need to be demonstrated.

Conclusion

VC interest in stablecoin payments does not mean the crypto funding winter has ended, nor does it mean stablecoins have already replaced traditional payment systems at scale.

More precisely, as fundraising conditions have tightened, investors have begun searching for companies that can operate independently of token prices, solve real financial problems, and generate recurring revenue.

Stablecoins provide a global, programmable settlement asset that operates around the clock. The opportunity for startups lies in connecting stablecoins with bank accounts, foreign exchange markets, payment cards, local currencies, and compliance systems.

The next stage of valuation will depend not only on funding rounds or onchain transaction volume, but also on how much of that volume represents real customer payments, how much net revenue it generates, how many regulated markets a company can enter, and whether it remains profitable after liquidity, distribution, and compliance costs.

Crypto VCs are not necessarily betting that one particular stablecoin will win. They are betting that significant parts of the infrastructure required to integrate stablecoins into the real-world financial system have yet to be built and fully developed.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. South Korea Tightens Access to Overseas Exchanges: Identity‑and‑Purpose Verification Added for Cross‑Border Crypto Transfers link

Following the removal of overseas‑exchange apps including Bybit, MEXC and HTX from South Korea’s local Google Play store, South Korea is further tightening workflows for crypto‑asset transfers to offshore platforms. Under the amended Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information, domestic exchanges will henceforth decide whether to permit outbound transfers based on the risk tier of overseas platforms. When sending funds to certain offshore exchanges or personal wallets, users may be required to prove account ownership, state transaction purposes and disclose fund sources; transfers can be delayed or rejected if submitted information is insufficient. Any relevant single‑transaction exceeding 10 million won will be subject to exchanges’ in‑house suspicious‑transaction monitoring systems. The provisions shall enter into force six months upon official promulgation.

2. Licensed Hong Kong HKD‑Pegged Stablecoin HKDAP Contract Carries Multiple Security and Compliance Risks link

After reviewing the Ethereum mainnet contract of Hong‑Kong‑licensed Hong Kong dollar stablecoin HKDAP, blockchain security firm BlockSec stated that it has multiple security and compliance issues, including failed KYC revocation logic, lack of actual on‑chain validation for KYC proofs, and excessive concentration of certain high‑risk permissions. BlockSec pointed out that operations such as minting, freezing, pausing and forced burning of HKDAP can be partially performed by a single role, and the governance process lacks a timelock. It argued that the relevant design is inconsistent with HKMA’s regulatory guidance on high‑risk operations and separation of duties. HKDAP is issued by Anchorpoint Financial, which was co‑founded by Standard Chartered Hong Kong, HKT and Animoca Brands. Anchorpoint is one of Hong Kong’s first two licensed stablecoin issuers.

3. Crypto Mining Banned in Moscow and Parts of Kursk Region, Russia; Restrictions Effective Through End‑2032 link

Under Russian Government Decree №936, cryptocurrency mining and participation in mining pools are banned year‑round in Moscow City, Moscow Oblast and parts of Kursk Oblast, with restrictions remaining in force until December 31, 2032. Russia’s Ministry of Energy stated the measure is mainly intended to mitigate capacity‑shortage risks caused by energy‑intensive mining facilities connecting to power grids. The current crypto‑mining load on Moscow’s power system stands at around 1 GW, while local data‑center capacity may rise to 3.6 GW by 2032, accounting for approximately 17 percent of peak power demand, second only to the United States. Russia has previously imposed long‑term mining restrictions across multiple regions, while still permitting domestically mined cryptocurrency to be used for foreign‑trade settlement under specific conditions.

4. Russian Banks Pre‑Emptively Tighten USDT Scrutiny, Mandating Firms Verify Against Unlaunched Central‑Bank Approved Exchanger List link

Some Russian banks serving import‑export enterprises have begun to require corporate clients to state the economic purpose of USDT purchases and verify whether counterparties are listed in the Central Bank of Russia’s register of digital‑currency exchange operators. However, the register system will only be established when new regulations take effect on September 1, making such verification practically impossible at present. Sovcombank has confirmed that it is requesting supplementary relevant information from some of its clients.

5. Kazakhstan Mints 7,200 BTC Over Three‑Plus Years With Over 465,000 Registered Mining Rigs link

Kazakhstan’s Ministry of Artificial Intelligence and Digital Development stated that from early 2023 to May 2026, local licensed mining companies and mining pools collectively mined approximately 7,200 BTC. Output peaked in 2024 at around 3,400 BTC, followed by 2,300 BTC in 2025 and 519.5 BTC in the first five months of 2026. There are currently 78 licensed mining operators nationwide with over 465,000 registered mining rigs. Mining‑related tax revenue between 2023 and 2025 totalled roughly 350 billion tenge, equivalent to about 75 million US dollars.

Sponsored by FinTax

6. Cambodia to Form Inter‑Agency Task Force for Drafting Virtual and Digital Asset Management Legislation link

Cambodian Prime Minister Hun Manet signed a decision on July 8, which was made public on August 10, announcing the establishment of an inter‑agency working group tasked with preparing and drafting the virtual‑asset/digital‑asset management law and related legal instruments. Composed of 26 members, the working group is co‑chaired by the Secretary of State of the Ministry of Economy and Finance and the Deputy Governor of the National Bank of Cambodia (NBC). Its core mandates are to study relevant laws, regulations and domestic and international best practices, and formulate plans for comprehensive and effective legislative implementation, so as to regulate the country’s growing digital‑asset sector, clarify qualification requirements for service providers, and set up investor‑protection mechanisms.

7. Court in Pingba District, Anshun, Guizhou Convicts Defendant in Fake Crypto Airdrop Fraud; Sentenced to Seven Months’ Imprisonment link

The Pingba District People’s Court of Anshun City, Guizhou Province, has recently heard and handed down a verdict in a fraud case disguised as a virtual‑currency airdrop project. According to case details, the defendant Zhao lured the victim Zhang, who had suffered heavy investment losses, to put the remaining funds in his account into an “airdrop project” on an App with promises of capital preservation and high returns. Zhao pledged returns of 100 to 200 U‑coins within two days and falsely claimed that the investment funds would be transferred to a “public chain”. Believing the lies, Zhang converted 1757 US dollars into Ethereum and completed the transfer through a wallet link provided by Zhao. In fact, the link pointed to a personal account registered by Zhao under his girlfriend’s identity. After failing to recover the money despite repeated demands, Zhang reported the case to the police. The court held that Zhao defrauded others’ property by concealing facts and the amount was relatively large, which constituted fraud. Given his truthful confession after being brought in, full restitution and voluntary guilty plea and acceptance of punishment, Zhao was sentenced to seven months in prison and a fine of 5000 yuan in accordance with the law.

8. Southeast Asian Scam and Kidnapping Gangs Allegedly Relocate to Malaysia; Staff From Multiple Crypto Exchanges Operate On‑Site link

Two recent cases involving Chinese nationals have taken place in Malaysia. Police busted two telecom‑fraud syndicates in Country Garden Forest City, Johor state, arresting over 300 suspects, approximately 95 percent of whom are Chinese nationals. In a separate case, a 73‑year‑old Singaporean man was lured to Malaysia and kidnapped. During the rescue operation, Malaysian police exchanged gunfire with armed suspects, killing two non‑Malaysian suspects. The Singaporean victim and another Chinese woman were rescued, while one Malaysian national and several Chinese gang members were apprehended. Notably, employees of multiple cryptocurrency exchanges are currently operating from physical offices in Malaysia.

9. Tokyo‑Listed Metaplanet Securities Launches Private Placement for First Tranche of Its BitBonds Program link

Metaplanet has launched BitBonds, its new ongoing bond issuance program, and completed the issuance and settlement of its first private placement bonds (21st to 24th unsecured straight bonds). The total issuance size stands at approximately 200 million Japanese yen across four series, with a roughly three‑year maturity and interest rates ranging from 4.0 % to 4.3 %. The issue date was August 13, 2026. Representing the first business linkage between Metaplanet Group’s balance sheet as a Bitcoin‑treasury enterprise and its sales channel for primary financial instruments, the offering aims to provide yen‑denominated yield product alternatives for retail and institutional investors.

10. Deribit Secures Dubai VARA Broker‑Dealer License; Spot Orders to Be Routed to Coinbase Exchange link

Deribit, Coinbase‑owned crypto‑options platform, announced that it has obtained the Broker‑Dealer Licence issued by Dubai’s Virtual Assets Regulatory Authority (VARA). With this licence, Deribit’s spot trading service has undergone a major upgrade: spot buy, sell and trade orders submitted by users on Deribit will be directly routed to Coinbase Exchange for execution, delivering deeper liquidity support and hundreds of new assets for clients. Furthermore, assets acquired via the upgraded spot platform may serve as collateral for derivatives trading on Deribit upon obtaining regulatory approval.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. Ethereum L1 to Abandon Poseidon, Shift to SHA or BLAKE Hash Schemes link

Justin Drake, researcher at the Ethereum Foundation, stated that the EF will no longer advance Poseidon as the hash scheme for Ethereum L1, and will instead adopt traditional hash functions such as SHA or BLAKE. Recent breakthroughs in binary‑field‑based SNARK design enable conventional hash functions including SHA2 and BLAKE2s to deliver SNARK‑performance comparable to Poseidon. This reduces reliance on specialized SNARK‑friendly hash functions and steers Ethereum toward a hash‑heavy post‑quantum cryptography roadmap. Drake noted that the EF post‑quantum team is pursuing development along this direction. The current roadmap targets a production‑grade leanVM in 2027, followed by deployments across the consensus, data and execution layers in 2028.

2. Robinhood Chain Becomes the Largest Network by NFT Trading Volume link

Robinhood Chain’s daily NFT trading volume hit $3.13 million, surpassing Ethereum to become the network with the largest NFT trading volume. The recent popularity of combinations of NFT, meme‑coin and RWA gameplay represented by StonkBrokers on Robinhood Chain has driven the surge in NFT trading volume on the chain, and the market cap of StonkBrokers NFT once exceeded that of BAYC.

Robinhood Chain recorded an average of 11.6 million daily transactions last week, hitting a new all‑time high and rising by roughly 30 % week‑on‑week. Its on‑chain total value locked (TVL) climbed to $473 million, representing a 32 % weekly increase. Nevertheless, daily active accounts grew by merely 3.3 % and remained 11 % below the peak recorded on July 16, indicating that the growth in trading volume and TVL has not translated into user‑base expansion. Meanwhile, the supply of USDe on Robinhood Chain has expanded from $17 million one month ago to $253 million, accounting for approximately 43 % of the chain’s total stablecoin supply and serving as a key driver of TVL growth.

3. Hyperliquid to Enable Auto‑Earn Native Lending Interest for Unused HLP Cash link

Hyperliquid founder Jeff announced that following the next network upgrade, HLP will automatically deploy USDC not utilized for market‑making into the HyperCore native lending pool to accrue interest. On‑chain data shows HLP currently holds approximately $188.7 million in TVL, of which around $148.7 million sits as idle cash in the main account, accounting for nearly 79 % of total capital, with another $40.06 million allocated across seven sub‑strategies. The Hyperliquid native lending pool presently has about $176 million in USDC supplied and $112 million borrowed, corresponding to a 63.7 % utilization rate, a 5 % annualized borrowing rate and roughly 2.87 % annualized supply yield. This move marks HLP’s evolution from a pool primarily for market‑making and liquidation purposes toward a multi‑strategy vault with automated capital allocation.

4. Uniswap Test Token Discovered by Market; Team Switches All Creator Fees to Buy‑and‑Burn link

Uniswap founder Hayden Adams stated that tokens created by the team during Pools trade testing were never meant to be discovered externally. All creator fees generated from Uniswap‑staff‑led tests have now been waived, and both past and future relevant fees will be routed to an auto‑buy‑and‑burn contract. Fees will be unlocked in ETH, and anyone may claim the ETH by burning the corresponding tokens. Adams added that he is considering opening this mechanism for other token deployers.

5. ENS DAO Passes Governance Proposal; ENS Foundation Becomes Formal Operator link

Ethereum Name Service (ENS) announced that token holders have passed and executed the “Next Era of ENS DAO” proposal, establishing the ENS Foundation as a formal operating body with a full‑time executive director, staff and a five‑member board of directors. The foundation will handle engagements with bodies including ICANN, IETF and W3C, advance work on the .ens top‑level domain, conduct regulatory outreach and manage brand protection, while ENS Labs will remain in charge of protocol and product development. The ENS tokens held by the DAO account for 54.6 % of the total supply and remain under token‑holder control; only a one‑time allocation of 1 million ENS has been transferred to the foundation to cover staff compensation under the established framework.

Transactions for the ENS Endowment will adopt an additional 9‑day timelock, and the ENS Security Council is empowered to block operations exceeding the foundation’s authorized scope. Foundation board directors are appointed and removed by token holders. The inaugural five‑member board comprises Executive Director Alexander Urbelis, ENS founder Nick Johnson, alongside Kartik Talwar, Brett Sun and Anthony Leutenegger.

Sponsored by FinTax

6. Solana‑Based Lending Protocol Jupiter Launches Lend v2 link

Solana‑ecosystem lending protocol Jupiter has launched Lend v2, enabling deposited and borrowed assets to simultaneously serve as trading liquidity, so the same capital can generate both lending yields and swap fees. The new release includes optional Smart Collateral and Smart Debt features. Smart Collateral automatically deploys USDC, USDT, SOL or JupSOL into highly‑correlated liquidity pools, while Smart Debt lets borrowed assets accrue trading fees to offset part of borrowing costs. Jupiter Lend currently holds roughly $1.9 billion in deposits and around $823 million in active loans.

7. UniSat Raises Default Wallet Mnemonic From 12 to 24 Words; Existing Users Require No Urgent Migration link

UniSat has released its August 2026 security update. Browser‑extension wallet version v1.7.19 changes the default mnemonic length for newly‑created wallets from 12‑word to 24‑word, and optimizes wallet‑creation and mnemonic‑management workflows. UniSat states that this represents a long‑term security‑configuration upgrade. Existing 12‑word wallets remain BIP‑39‑compliant and do not require urgent migration solely due to the revised default setting. Multiple recent community‑submitted security reports have also been addressed via fixes or hardening measures based on impact scope.

8. 15 x402 Payment Service Providers Including Coinbase Each Violate At Least One Security Rule link

A study published at the 35th USENIX Security Symposium tested 15 major x402 payment service providers including Coinbase, Thirdweb, PayAI and Mogami, finding that every tested platform violated at least one security rule, with a total of 49 rule violations and 31 distinct vulnerabilities. The covered providers accounted for 99 % of x402‑transaction volume and 98 % of payment value during the study period, though this does not imply vulnerabilities exist for the same share of transactions. The research categorized risks as free‑of‑charge goods or‑service acquisition, asset theft, service disruption and gas‑fee abuse, and validated six attack paths under constrained conditions; researchers did not actually transfer provider‑held assets. Coinbase, PayAI and Mogami collectively acknowledged six vulnerabilities, some of which have been fixed while others remain in progress. The real‑world deployment scope of these fixes across live x402 infrastructure remains unclear.

9. MegaETH Native Stablecoin USDm Supply Plunges Over 95% From Peak to Around $18 Million link

The current supply of MegaETH‑native stablecoin USDm stands at around $18 million, representing a drop of over 95 % from its roughly $600‑million peak in May this year. Launched jointly by MegaETH and Ethena, USDm deploys its reserve capital into BlackRock’s BUIDL fund, with generated yields used for MegaETH token buy‑and‑burn operations. Based on the present $18‑million supply and a 3.6 % SOFR rate, Castle Labs estimates USDm can generate approximately $650,000 in annual yield, and attributes the sharp supply contraction to declining on‑chain usage on MegaETH.

10. World Liberty Financial Delays Revenue‑Sharing Token for Maldives Trump‑Branded Resort Amid Iran Conflict link

World Liberty Financial and its partners have postponed the digital‑token issuance tied to the Trump‑branded resort development in the Maldives. Originally scheduled for launch this spring, the token would have granted investors partial proceeds from financing loans for the resort. The rollout has been delayed amid regional‑travel disruptions stemming from the Iran‑related conflict, and no new launch date has been set. Developed by UK‑listed firm DAR Global, the project was intended as one of World Liberty’s flagship real‑world‑asset tokenization initiatives. The firm had previously also discussed tokenizing real‑estate properties, investment funds, oil and gold.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish

1. SEC Further Delays Tokenization “Innovation Exemption”, Awaiting Clarity Act Outlook link

According to crypto journalist Eleanor Terrett, the SEC’s token‑related “innovation exemption” initiative has been further delayed, with details not expected to be released anytime soon. Sources note that one contributing factor may be ongoing negotiations among stakeholders over token‑provisions in Section 10505 of the Clarity Act. Should the SEC move forward with measures via the innovation exemption, it could undermine compromises reached around that section. As a result, the exemption may remain on hold until the path forward for the Clarity Act becomes clearer. The SEC still plans to hold a public meeting at a later date to discuss new rules and exemptions for crypto‑asset financing transactions, namely Regulation Crypto Assets.

The innovation exemption proposal would potentially allow public companies to oppose third‑party tokenization of their stocks, and may require relevant trading platforms to be U.S.‑based entities with strengthened anti‑money‑laundering controls. The SEC originally planned to release the exemption in May but postponed it following feedback from stock exchanges, public companies and other market participants. Meanwhile, the Clarity Act has previously stalled amid partisan disputes over ethics restrictions for public officials regarding crypto‑related activities. Senate Majority Leader John Thune has filed a cloture motion in preparation for a procedural vote in mid‑September.

2. Russia’s Central Bank Proposes Allowing Non‑Qualified Investors to Buy BTC, ETH and USDT With Annual Caps link

The Bank of Russia has released a draft set of rules for cryptocurrency purchases, proposing that non‑qualified investors may buy a maximum of 300,000 rubles (approximately 3,645 US dollars) worth of crypto‑assets per year through each broker, crypto‑exchange operator or asset management firm. Currently permitted tokens include BTC, ETH and USDT, with screening criteria covering market capitalization, average daily trading volume and at least five years of overseas price history. Qualified investors face no purchasing limits for crypto‑assets on exchanges and over‑the‑counter markets. All investors must complete a risk test prior to trading, and public comments on the draft will be accepted until August 24.

3. Bitcoin Miners’ Fee Revenue Share Drops to 0.69%, Near 10‑Year Low link

Glassnode data shows that Bitcoin transaction fees currently account for only 0.69% of miner revenue, remaining near the 10‑year low of 0.52% hit in April this year. The fee‑revenue share has stayed below 1% for nearly one year, with miner income relying more heavily on the 3.125‑BTC per‑block subsidy. According to Checkonchain, Bitcoin’s total network hashrate has fallen from its October 2025 peak of 1.3 ZH/s to 861 EH/s, representing a roughly 33% decline. The estimated average production cost per BTC now stands at $78,254, around 23% above the spot price at that time.

4. Strategy Sells 1,690 BTC to Repurchase STRC link

Strategy sold 1,690 BTC at an average price of $64,262 between August 3 and 9, generating approximately $108.6 million in proceeds, all of which were used for STRC repurchases. During the same period, the company raised around $653.1 million by selling 6.59 million MSTR shares, of which $650 million was deployed to boost its U.S. dollar reserves to $4.65 billion. Strategy currently holds 840,447 BTC with an aggregate cost basis of roughly $63.36 billion and an average acquisition price of $75,385 per BTC.

Michael Saylor, Executive Chairman of Strategy, published data from the firm’s BTC Credit model. The model adopts reference assumptions of a 10% annualized BTC return, a BTC price of $63,701, and 40% volatility, and marks credit spreads across investment‑grade, high‑yield and distressed tiers. Per the model, Strategy’s BTC reserve is valued at $53.54 billion and its U.S. dollar reserves stand at $4.65 billion. The BTC floor price for STRC is $16,184, meaning undercollateralization would occur if BTC trades below this level; its implied BTC risk stands at 8.84% with a credit spread of 115 basis points. The combined notional size of the company’s debt and preferred stock amounts to $21.952 billion, yielding an overall BTC floor price of $20,587.

In an interview, Strategy CEO Phong Le stated that notwithstanding market attention around recent partial position sales, the firm plans to resume Bitcoin accumulation later this year. Phong Le noted that year‑to‑date, Strategy has bought approximately 175,000 BTC while selling roughly 7,000 BTC, putting purchases at about 25 times sales volume. He emphasized that proceeds from recent Bitcoin sales have primarily funded preferred‑stock dividend payments, share buybacks and U.S. dollar reserve building, and that the company will restart Bitcoin purchases within the year amid adjusted business priorities.

5. Fidelity Plans to Add Staking and Quarterly Cash Distributions to Its $900M Ethereum ETF link

Fidelity plans to add ETH staking and quarterly cash distributions for the Fidelity Ethereum Fund (FETH), which has a net asset value of $898 million. Under normal circumstances, the fund may stake up to 100% of its held ETH with no minimum‑staking requirement, and will retain part of its ETH for redemptions, expenses and other liquidity needs. The fund will keep 85% of total staking rewards, while the remaining 15% will be paid to the fund sponsor, custodians and node operators. Net staking rewards will first be applied to cover fund expenses, and any surplus will be distributed in cash on a quarterly basis. The fund may sell part of its ETH to raise funds for distributions when necessary.

Sponsored by FinTax

6. Anthropic Signs $9.1B AI Computing Deal With Bitcoin Miner Riot link

Anthropic has reached a long‑term cloud‑computing agreement worth approximately $9.1 billion with bitcoin miner Riot Platforms to lock in computing power for Claude. Riot will supply 191MW of data‑center capacity from its Rockdale campus in Texas under a 20‑year contract. This marks Riot’s further shift from bitcoin mining toward AI data‑center operations.

Separately, on August 4, bitcoin miner MARA closed two loans with Coinbase Credit and Two Prime Lending respectively, putting up 18,750 BTC as collateral. The collateral was valued at roughly $1.2 billion at the time, securing about $600 million in new capital. The combined principal of the two loans stands at $750 million. The $450‑million Coinbase loan includes the refinancing of an existing $150‑million credit facility, translating to $300 million in fresh proceeds, while Two Prime provided an additional $300‑million loan. The Coinbase loan carries a current interest rate of around 7.5%, and Two Prime’s loan bears a fixed rate of 7.65%. Both loans mature in 2028. MARA stated that proceeds will be used for general corporate purposes including energy‑asset acquisitions and the expansion of bitcoin‑mining, AI and high‑performance‑computing infrastructure.

7. Li Lin‑Backed Avenir Group Quietly Launches UMX Targeting Crypto‑Friendly Securities Platform link

UMX (The Unified Market Exchange), incubated by Li Lin‑backed Avenir Group, has launched its invitation‑only public beta. According to official disclosures, UMX positions itself as a “crypto‑friendly securities platform” and plans to deliver both crypto‑asset trading and real‑world US stock trading services within a single platform.

Based on publicly available materials, UMX’s product design centers on capital flow and improved capital efficiency between crypto markets and securities markets. For users participating in both markets, traditional brokerages and crypto trading platforms typically maintain separate accounts, funds and margin requirements. UMX attempts to consolidate relevant trading and capital workflows onto one platform.

Under its disclosed product framework, UMX functions more as a unified‑account system integrating brokerage, crypto exchange and cross‑market capital‑management capabilities, rather than merely offering crypto‑asset and US‑stock trading side‑by‑side.

According to UMX, the platform has rolled out its invitation‑only public beta alongside pre‑registration for the official release. Users holding a beta code may register via the official website or App and access available features subject to their jurisdiction, account qualifications and product‑access rules. Capabilities opened during public beta include US stocks, ETFs, US stock options, crypto‑asset trading, cross‑asset transfers, and crypto‑stock conversion functions.

8. Wintermute Plans $1B Investment Over 5 Years in High‑Frequency Trading and AI Infrastructure for Traditional Market Expansion link

Crypto market‑maker Wintermute plans to invest approximately $1 billion over the next five years in high‑frequency trading and AI data‑center infrastructure, with funding expected from retained earnings, while expanding into equities, commodities, foreign exchange and prediction‑market businesses. Wintermute CEO Evgeny Gaevoy stated that the firm’s average daily trading volume has fallen from around $15 billion last year to $10 billion this year. Roughly 10 % of its current revenue comes from non‑crypto markets, with a target to lift this share above 50 % by the end of 2027. Its U.S. affiliate is registered as a broker‑dealer, enabling trading in stocks and stock options and acting as an authorized participant for exchange‑traded products. Wintermute also intends to double its New‑York headcount from the current 17 employees next year and expand its global workforce by 40 %.

9. Andre Cronje: Pure DeFi No Longer Exists; Ecosystem Has Evolved Into “On‑Chain Finance” link

Andre Cronje, founder of Flying Tulip and core developer of Fantom, recently stated on a program that the vast majority of decentralized‑finance (DeFi) protocols are no longer genuinely decentralized. According to Cronje, “true DeFi” must feature decentralization, immutability and disintermediation, attributes that most currently operating protocols fail to satisfy. He pointed out that with the adoption of circuit‑breakers, emergency controls, decision‑makers, curators and risk committees mirroring traditional banking structures, DeFi has evolved into a new financial paradigm dubbed “onchain finance” or open finance, sacrificing part of its original immutability and decentralization. DefiLlama data shows DeFi total value locked (TVL) has halved over the past ten months, falling from $167 billion in early October 2025 to $75 billion.

10. GSR: Crypto Bull Market Return Requires Cooled‑Off AI Investment and Fed Rate Cuts link

Spencer Hallarn, Head of Markets at GSR, said in a recent interview that the crypto market is currently sluggish, partly due to large‑scale capital rotation by investors into the AI sector, with equity financings for AI‑infrastructure projects from big‑tech firms further tightening overall market liquidity. Amid current market conditions, client demand for long‑term budget planning, OTC hedging structures and real‑world‑asset (RWA) solutions has risen significantly. Regarding the tokenization trend, Hallarn noted that many closed‑end tokenization platforms with heavy KYC requirements lack meaningful trading activity. The real opportunity for tokenization lies not merely in wrapping assets into tokens, but in repairing the underlying pipelines of traditional banking and settlement. He believes market liquidity could flow back and support Bitcoin higher should AI‑related investment cool off and the Federal Reserve commence interest‑rate cuts.

Fundraising

• Kalshi’s valuation could rise to $40 billion, with Sequoia and Wellington in talks for a new financing round link

• Former bitcoin‑mining firm Firmus has secured $2 billion in financing to accelerate the construction of AI data centers in Australia link

• Spatial‑data DePIN project Vangrid has closed a $9‑million seed round to expand its Physical AI data network link

• Crypto travel‑infrastructure startup Entravel has completed $7.5‑million financing to build a stablecoin settlement system link

Learn more, check out crypto-fundraising.info.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish