First Digital USD

Michael McSweeney

Crypto prices plunged Friday, triggering the market’s most severe — and perhaps most consequential — wave of liquidations on record.



More than $19 billion worth of liquidations were triggered during the past day, according to <a href="https://www.coinglass.com/LiquidationData">Coinglass</a> data, with $16.8 billion of that figure on the long side. The true figure “is likely much higher” owing to the way Binance, which saw significant volume during the event, reports&nbsp; liquidations, Coinglass <a href="https://x.com/coinglass_com/status/1976796969961193641">wrote</a> on X.&nbsp;&nbsp;



The decentralized perpetuals trading platform Hyperliquid saw a significant portion of the day’s action: $10.3 billion in liquidations, with $9.3 billion on the long side, per Coinglass.



The developments were fueled by the escalating <a href="https://x.com/0xdoug/status/1976850615621107743">unwind</a> of leveraged positions and a collapse in open interest. Bitcoin’s price fell to as low as $104,000, with altcoins big and small impacted more severely.



Felix Jauvin, host of the Forward Guidance podcast, told me, &#8220;This was one of the messiest liquidation events that I’ve seen in a long time. The last one I remember like this was probably May 2021. With estimates of around $20b of liquidations, it’s likely someone big got carried out and there was nowhere to hide other than spot long.&#8221;



&#8220;Leverage long? Liquidated. Leverage short? Forced deleveraging through exchange auto deleveraging (ADL),&#8221; he explained. &#8220;I’m&nbsp;hearing a lot of stories of people that were short, took profits and bought the dip and then were quickly liquidated right after.&nbsp;It’s&nbsp;a mess and will take quite a while for market makers to reshore up liquidity again.”



Onchain activity surged dramatically, though some users encountered significant delays in the chaos. Aave founder Stani Kulechov <a href="https://x.com/StaniKulechov/status/1976777483824644454">wrote</a> on X that “[t]he protocol operated flawlessly, automatically liquidating a record $180M worth of collateral in just one hour, without any human intervention.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1/ Yesterdays crash brought chaos to DeFi lending markets. Aave: $182M in liquidated loans Spark: $16M in liquidated loans Morpho: $35M in liquidated loans Lets dive into the data 👇&mdash; Jack 🟪 (@JackMandin) <a href="https://twitter.com/JackMandin/status/1977008640281510245?ref_src=twsrc%5Etfw">October 11, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Speculation quickly surfaced on Crypto Twitter around yet-to-be-named industry firms suffering major losses that, in turn, deepened the rout. Alongside these theories, traders shared testimonies of complete or near-total wipeouts of leveraged positions.



“Probably one of the most severe flushes I’ve ever seen on alts, I didn’t even imagine alts had this much leverage in them,” Cobie, the long-time crypto trader and commentator, <a href="https://x.com/cobie/status/1976788855006302686">wrote</a> on X Friday. “It feels like someone got hit very hard and will see a large body float to the surface soon, reminds me a little of summer 2021.”



“Don’t let a leverage blowup dictate your long-term views. The future is bright, good things to come, patience is rewarded,” he went on to conclude.



Bitcoin’s price has since partially recovered and is trading around $112,200 at the time of writing. The collective crypto market cap is down 9% in the past day, per Coingecko. Among the altcoins bucking the trend was <a href="https://www.coingecko.com/en/coins/zcash">Zcash</a>, which posted additional gains post-crash after climbing sharply in the days and hours beforehand.



Some market participants swiftly drew comparisons to the dramatic market drops around Tether/Luna and FTX. Both proved to be market-defining events last cycle.&nbsp;



Beyond the raw numbers —&nbsp;Coinglass reports 1.6 million traders liquidated in the past 24 hours —&nbsp;the event demonstrated crypto’s vastly expanded interconnectedness with global markets and power politics.



The selloff appears part of a broader reaction to a new flare-up in US President Donald Trump’s trade war against China. Trump, in a pair of posts on his Truth Social website, declared his intention to impose 100% tariffs in response to a move by China to restrict access to its rare earth materials. The U.S. would also restrict Chinese access to “critical software”, Trump said, per the <a href="https://www.nytimes.com/2025/10/10/us/politics/trump-xi-china-tariffs-rare-earth.html">New York Times</a>. Major US indices <a href="https://www.nytimes.com/2025/10/10/business/stock-market-trump-tariffs.html">tumbled</a> on the news, especially after Trump doubled down on his tariff threats.&nbsp;



While the US-China trade relationship has fluctuated between cool détente and outright hostility since Trump took office, his latest moves struck at the heart of the most important exchange of goods between the two countries: software that fuels the global AI revolution and the crucial ingredients required to manufacture the chips behind it.



Beyond the macro implications, the Trumpian roots of the crypto market turbulence may prove to be more consequential than the losses themselves.



Nearly 10 months into his second term, Trump and his family have fully embraced the industry —&nbsp;personally, professionally, and politically. The industry, too, embraced Trump, pouring millions of dollars into GOP election coffers. 



In return, the Trump administration has pushed policies that favor the industry, and it ended an era of oversight under former President Joseph Biden that prioritized regulatory pressure and legal combat. Congress passed <a href="https://blockworks.co/news/trump-signs-genius-law">landmark stablecoin regulation</a> and, despite <a href="https://www.politico.com/news/2025/10/09/tensions-over-crypto-bill-boil-over-in-the-senate-00601479?cdlcid=5d23ad3c953109375ea49b92&amp;section=&amp;utm_campaign=cryptocodex&amp;utm_medium=email&amp;utm_source=newsletter">disputes</a> between Republicans and Democrats, lawmakers are likely to pass market structure reforms sometime in the future as well.&nbsp;



Still, Friday’s events confirm that, despite the favorable treatment, the crypto market is not immune to Trump’s geopolitical whims. The industry’s march across Wall Street — ETFs, DATs, investments and more — means that crypto may inescapably rise or fall as Trump’s hot-and-cold trade war with China continues. Friday’s events could happen again, though perhaps not with the same scale or intensity.



The coming days will reveal the extent of the damages, the firms impacted, and the degree to which publicly traded crypto companies will be affected.&nbsp;



More broadly, it remains to be seen whether Friday was the start of a new crypto bear market — or the latest twist in its most important bull market yet.&nbsp;

Bitcoin

Crypto liquidations drive historic market turbulence 

Blockworks

Norwegian authorities are investigating a potential information leak after online bets on this year’s Nobel Peace Prize winner spiked hours before the announcement, suggesting possible insider trading.



According to local reports, originally <a href="https://www.bloomberg.com/news/articles/2025-10-10/unusual-bets-on-nobel-peace-prize-winner-prompt-probe-into-leaks?embedded-checkout=true">surfaced</a> by Bloomberg, wagers favoring Venezuelan opposition leader Maria Corina Machado, who received the 2025 Nobel Peace Prize for her advocacy of democracy, surged on Polymarket shortly after midnight Norwegian time.



The Nobel Committee, which made its decision earlier in the week, said it is treating the matter as a serious breach of confidentiality.&nbsp;



Kristian Berg Harpviken, director of the Norwegian Nobel Institute, told reporters the spike “seems we have been prey to a criminal actor who wants to earn money on our information.”&nbsp;



As the Empire newsletter discussed earlier today, <a href="https://empire-blockworks.beehiiv.com/p/bloomberg-terminal-for-zoomers">data from Polymarket</a> show a user operating under the handle dirtycup placed about $70,000 in bets on Machado just hours before the announcement, netting roughly $30,000 in profit. Two additional accounts also bet heavily on Machado, with the three collectively earning around $90,000, according to Finansavisen.



The episode raises questions about transparency and oversight in online prediction markets, which let users trade on the outcomes of real-world events.&nbsp;



In 2022, Polymarket agreed to block US users after the US Commodity Futures Trading Commission (CFTC) ruled it was operating without registration. The Nobel Institute said it will conduct a full internal review to determine whether confidential information was accessed or shared unlawfully.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Polymarket

Polymarket bets trigger Nobel leak probe in Norway

Morgan Stanley will lift all restrictions on which of its wealth management clients can invest in cryptocurrency funds, the firm told financial advisors on Friday, according to a CNBC report.



<a href="https://www.cnbc.com/2025/10/10/morgan-stanley-drops-crypto-fund-restrictions-for-wealth-clients.html">Beginning</a> October 15, financial advisors will be able to recommend bitcoin and ether investment products to any client, including those using retirement or trust accounts. Previously, such access was reserved for investors with over $1.5 million in assets and an “aggressive” risk profile.



The policy change comes amid a broader recalibration in US financial regulation toward digital assets following the 2024 election of President Donald Trump. Morgan Stanley, which oversees about $8.2 trillion in client assets, is positioning itself to compete with digital-native brokerages such as Coinbase and Robinhood, which have grown their crypto offerings in recent years.



The firm also plans to enable direct trading of bitcoin, ether and solana through its E-Trade platform later this year.



Morgan Stanley’s global investment committee recently advised clients to limit initial allocations to crypto at roughly 4%, depending on portfolio objectives. Chief investment officer Lisa Shalett described crypto as a “speculative and increasingly popular asset class” that many—but not all—investors will want exposure to.



The bank will rely on automated monitoring tools to prevent excessive concentration in digital assets. At launch, advisors will be restricted to offering funds managed by BlackRock and Fidelity, but Morgan Stanley is evaluating other crypto fund providers as the sector matures.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



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<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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Morgan Stanley opens crypto fund access to all wealth clients

Kalshi, the US-regulated prediction market operating under Commodity Futures Trading Commission (CFTC) oversight, has raised $300 million in new funding at a $5 billion valuation, <a href="https://www.nytimes.com/2025/10/10/business/dealbook/kalshi-prediction-market-fundraising.html">according</a> to The New York Times on Friday.



The company allows investors to trade on the outcomes of real-world events—from elections to inflation data—and has increasingly attracted both institutional and crypto-native traders seeking regulated exposure to event-based markets.



The platform, founded in 2018 by Tarek Mansour and Luana Lopes Lara, operates legally under the CFTC’s designated contract market status, distinguishing it from decentralized or offshore prediction venues that lack regulatory approval.



Its new funding reportedly includes participation from both Wall Street funds and crypto-focused investors, reflecting a broader trend toward convergence between traditional finance and Web3-linked derivatives. Kalshi’s move into “hybrid trading” seeks to blend event-driven contracts with more familiar asset-class tools, extending its reach to professional traders and retail users alike. Event-based trading has grown as market participants look for instruments tied directly to data releases or political outcomes. Kalshi’s expansion follows rising institutional interest in alternative hedging tools, and comes amid regulatory scrutiny of unlicensed platforms offering similar services.



The company’s CFTC oversight and compliance posture have been cited as key competitive advantages as it positions itself at the intersection of financial innovation and regulatory legitimacy.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Kalshi

Kalshi raises $300M at $5B valuation

The Bank of Russia will allow domestic banks to engage in limited cryptocurrency operations under stringent oversight, marking a controlled step toward crypto integration in the country’s financial system.



First Deputy Chairman Vladimir Chistyukhin <a href="https://bits.media/bank-rossii-opredelilsya-s-dopuskom-bankov-k-kriptooperatsiyam/">announced</a> the move at the Finopolis fintech forum, noting that while the central bank remains conservative on decentralized assets like Bitcoin, it recognizes the need to align with market realities.



Chistyukhin stated that the Bank of Russia will impose strict requirements on participating institutions to ensure crypto does not become a dominant banking activity. A draft framework would reportedly cap crypto exposure at 1% of a bank’s capital, paired with high reserve thresholds to mitigate systemic risk. “We hold conservative views and think about how appropriate it is for the banking sector to include cryptocurrency in its assets,” said Chistyukhin, speaking in Russian. “After discussing with the professional banking community, we came to the conclusion that it would be unjustified to exclude banks from such operations.”



The initiative follows growing pressure from Russia’s financial sector to ease restrictions amid persistent Western sanctions and ruble instability.



The country’s experimental legal regime for crypto transactions, introduced earlier in 2025, already allows qualified companies and wealthy investors to use digital assets for international settlements. To qualify, individuals must hold at least 100 million rubles in deposits and securities and report annual income above 50 million rubles.



Chistyukhin and Governor Elvira Nabiullina both urged the swift passage of a comprehensive cryptocurrency bill by 2026. The legislation would establish a licensing system for service providers and clarify the legal status of crypto entities operating in Russia.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Banks

Russia’s central bank to allow limited crypto activity by banks

Macauley Peterson

In the past few months, a new class of public companies has raced to amass billions in crypto. The largest, after Michael Saylor’s bitcoin-focused Strategy, is BitMine Immersion (BMNR) chaired by Wall Street strategist Tom Lee, which now holds about 3.75% of ETH’s supply, <a href="https://app.blockworksresearch.com/analytics/team/charts/3025">according to</a> Blockworks Research data.&nbsp;



That begs the question: will <a href="https://blockworks.co/news/eth-treasury-companies-growth">digital-asset treasuries (DATs)</a> turn their balance sheets into protocol leverage?



In principle, DATs can garner real sway, <a href="https://x.com/RyanWatkins_/status/1971053119631962230">suggests</a> Ryan Watkins of Syncracy Capital, while skeptics <a href="https://x.com/post_polar_/status/1969850373142986881">counter</a> that Ethereum’s governance process, client diversity and stubborn validator “social layer” make outright capture unlikely.



While the issue quickly enters the speculative realm, one thing that is clear is BitMine is in a privileged position among DATs, according to Watkins, because of its trading volume.&nbsp;



“BitMine’s doing, on average, well over 10x the amount of volume [compared to SBET] every day,” Watkins told Blockworks. “So it can raise money the fastest to buy ETH, and it&#8217;s just going to continue to scale.”



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="889" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1024&amp;h=1024" alt="" class="wp-image-108881" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">At this scale, other ETH DATs barely register | Source: <a href="https://blockworks.com/analytics/treasury-companies/ethereum-treasury-companies/ethereum-treasury-companies-eth-holdings">Blockworks Research</a></figcaption></figure>







<h2 class="wp-block-heading">Where a DAT could matter</h2>



It’s early days and DATs are still focused primarily on how to grow their treasuries. Watkins sketched a plausible arc for a well-financed DAT if the easy capital flywheel slows.



“At a certain point, I do think that the <a href="https://blockworks.com/analytics/treasury-companies/market-data/crypto-treasury-companies-mnav">mNAV</a> alchemy will stop working as well, and then you&#8217;ll start to see BitMine getting more creative and aggressive, like deploying the ETH onchain and starting to be a bigger player in the Ethereum economy,” he said.



Influence would accumulate indirectly, most likely affecting application <a href="https://blockworks.co/tag/governance">governance</a> first; if a DAT parks a nine-figure balance on <a href="https://blockworks.co/tag/aave">Aave</a> or a major <a href="https://blockworks.co/tag/liquid-staking">liquid staking</a> protocol, its views would carry weight.&nbsp;



“If you’re Aave and Tom Lee is 10–20% of your deposits, you might want his opinion before a big change,” Watkins said.



Then there could be infrastructure ownership. If the DAT starts operating validators, RPCs and indexers in a big way, it could shift who gets called when parameters or client development priorities change.



Talent capture is another risk. While hiring or even starting a core development team alone doesn’t move Ethereum’s governance process, a dense cluster of researchers and client contributors under a single treasury could be a kind of soft power.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Honestly, Ethereum needs to be thinking of counter attack strategies here. People will just build centralised proof of authority chains using the EVM, steal a decades worth of R&amp;D. And then poach all the devs. They are not your friends. <a href="https://t.co/GsNuqZcSek">https://t.co/GsNuqZcSek</a>&mdash; Nick Almond (@DrNickA) <a href="https://twitter.com/DrNickA/status/1963722781755056244?ref_src=twsrc%5Etfw">September 4, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Dr. Paul Dylan-Ennis, a lecturer at University College Dublin (known on X as <a href="https://x.com/post_polar_">Polar</a>), and avid <a href="https://blockworks.co/tag/ethereum">Ethereum</a> governance watcher, pushes in the other direction. Ethereum isn’t a company, and the Ethereum Foundation isn’t a management team.



“It’s a weird polycentric system of people who have specifically opted into its ethos, which is a little ideological,” Dylan-Ennis told Blockworks.



He understands the assumption that “money talks” and, at sufficient scale, someone like Lee could wield ETH holdings to shape Ethereum’s direction.&nbsp;



“But that’s a fundamental misreading of how Ethereum works, both culturally and structurally,” Dylan-Ennis said.



The governance structure of Ethereum, from AllCoreDevs (ACD) calls, EIP editors, the <a href="https://www.ethcatherders.com/">Cat Herders</a>, and so on, are about coordinating processes, not profits. To “take over” Ethereum, a DAT would have to build consensus with client teams, and then convince a globally distributed base of node operators and validators to run its preferred code.



Today, public trackers <a href="https://ethernodes.org/">show</a> on the order of 10,000–15,000+ Ethereum nodes globally — a diffuse base that must opt in to any change. That is far messier than hiring a few senior engineers, in Dylan-Ennis’ view.



“Maybe Ethereum is not the perfect example,” Watkins noted, also referring to the governance process as “messier” than “a democratic or plutocratic governance system where it&#8217;s just clear who has the power [and] how much power they have.”



“For <a href="https://blockworks.co/tag/solana">Solana</a> it&#8217;s more straightforward,” Watkins said. “You hold a ton of tokens, you vote with those tokens — that&#8217;s the impact.”



But DATs are in a “speculative incubation period, where we&#8217;re figuring out how to scale these treasuries the fastest,” he said. Right now, for a successfully scaling DAT like BitMine, there’s no pressure to get creative in governance. At least not yet.



Smaller treasuries are already experimenting at the edges. “They need to find ways to stand out,” Watkins said. So, we see ETHZilla <a href="https://blockworks.co/news/ethzilla-etherfi-puffer">deploying hundreds of millions of dollars</a> into liquid staking ecosystems, for instance.



BitMine isn’t doing that for now, but the potential is there.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="889" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1024&amp;h=1024" alt="" class="wp-image-108882" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-35.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Tom Lee’s BitMine Immersion Technologies Inc (BMNR) leads the ETH holdings race among DATs by a wide margin | Source: <a href="https://blockworks.com/analytics/treasury-companies/ethereum-treasury-companies/ethereum-treasury-companies-eth-holdings">Blockworks Research</a></figcaption></figure>







<h2 class="wp-block-heading">Ethereum’s immune system</h2>



Dylan-Ennis’ rejoinder is that Ethereum’s governance has repeatedly chosen caution over expediency. The project’s “immune system” is the combination of process and culture: rough consensus on ACD, conservative client teams across both consensus and execution layers, and a constituency of node operators who are ideological first and profit-driven second.



There’s no shortcut around EIP review, client implementation and building social consensus around chain upgrades. Any putative DAT push would still face these bottlenecks.



Coinbase — or any major stakeholder — can offer input like everyone else, but history suggests outsized corporate pressure backfires in credibly neutral systems. The closest historical analog is outside Ethereum: <a href="https://blockworks.co/news/bitcoin-blocksize-war">Bitcoin’s 2017 block size war</a>, where a miner-exchange-VC coalition backed SegWit2x, only to lose to a user-led counter-movement.



The most likely outcome of a heavy-handed push, Dylan-Ennis argues, isn’t capture but a hard-forked ghost chain and reputational blowback for whoever tried, much like Bitcoin Cash (<a href="https://blockworks.co/price/bch">BCH</a>) is today.



Stablecoin issuers and exchanges can influence which fork “wins” by deciding what they support — exactly what happened during <a href="https://blockworks.co/tag/ethereum-merge">the 2022 Merge</a>, when <a href="https://blockworks.co/tag/circle">Circle</a> (<a href="https://blockworks.co/tag/usdc">USDC</a>) and <a href="https://blockworks.co/tag/tether">Tether</a> (<a href="https://blockworks.co/tag/usdt">USDT</a>) publicly committed to support only the <a href="https://blockworks.co/tag/proof-of-stake">proof-of-stake</a> chain, starving the <a href="https://blockworks.co/tag/proof-of-work">PoW</a> fork of oxygen. Any future governance break would likely see similar alignment dynamics.&nbsp;



Watkins invoked the essay by Jo Freeman, “<a href="https://www.jofreeman.com/joreen/tyranny.htm">The Tyranny of Structurelessness</a>,” as a potential critique of Ethereum governance: when formal authority is weak, informal centers of gravity emerge. “It’s not clear who has the power,” he said. That doesn’t mean power is absent.



“A good candidate for being one of these centers…is whoever holds a 10% mountain of ETH,” Watkins said. Influence, in that world, would mean coalition-building with large stakeholders, like exchanges and asset managers, and winning “hearts and minds” of operators within the ecosystem to adopt a given release when it ships.



The essay’s remedy — make authority explicit — aligns with ongoing efforts to refine and improve EIP/ACD procedures, suggesting Ethereum’s best defense against perceived capture is more sunlight, not less.



But it has to be genuine. Prior <a href="https://hackernoon.com/hows-that-open-source-governance-working-for-you-mphv32ng">analyses</a> of open-source software communities note the same dynamic Freeman flags: rhetoric of openness can mask entrenched, informal hierarchies — useful context when evaluating claims like “anyone can propose an EIP.”



<h2 class="wp-block-heading">Open questions</h2>



For now, Watkins sees limited influence from Tom Lee, in part because scaling the balance sheet is still the main event. “He doesn’t even run a full node,” Watkins said, adding that staking through custodians presumably keeps BitMine’s ether far from having any impact on the day-to-day of client releases and parameter changes in the near term.



But the pace of accumulation, and the willingness of smaller DATs to push into infra, DeFi and validator operations, makes this more than a thought experiment.



Blockworks contacted a BitMine representative for comment on their future plans, but had not heard back at time of publication.



“We still just don’t know what the end state of these treasury companies will be,” Watkins said. If DATs evolve from price bets into policy levers, Ethereum’s norms will be tested in public.



The bet from Dylan-Ennis’ side is that those norms domesticate newcomers, rather than the other way around.



Vitalik Buterin <a href="https://vitalik.eth.limo/general/2025/09/21/low_risk_defi.html">has framed</a> the cultural constraint clearly: “Ethereum is a decentralized ecosystem, and so any activity that Ethereum does cannot be a backroom decision of a few people, it must be viable as a cultural rallying point.”



You can’t fork culture, and you can’t buy legitimacy. In Ethereum, protocol control isn’t granted by capital, it’s ratified by consensus.



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Can money buy Ethereum? On power and protocol politics

Roger Ver, the early Bitcoin investor and Bitcoin Cash promoter known as “Bitcoin Jesus,” has reached a tentative $48 million settlement with the US Justice Department to resolve criminal tax fraud charges filed in 2024.



The <a href="https://www.nytimes.com/2025/10/09/technology/roger-ver-bitcoin-justice-department-deal.html?unlocked_article_code=1.sE8.xx5H.LlbKWwOXVl0N&amp;smid=nytcore-ios-share&amp;referringSource=articleShare">agreement</a>, first reported by The New York Times and still pending court approval, would drop charges if Ver meets all payment and compliance terms. The case underscores a marked shift in federal crypto enforcement under President Donald Trump’s second administration, which has eased pressure on high-profile industry figures after years of scrutiny under President Joe Biden.



Ver, 46, was accused of evading taxes linked to his digital asset holdings while renouncing his US citizenship in 2014. Prosecutors alleged he concealed the value of his Bitcoin portfolio before expatriation. Arrested in Spain last year, Ver faced extradition proceedings until negotiations began earlier in 2025.



According to the NYT report, Ver also paid $600,000 to political strategist Roger Stone and retained attorneys tied to Trump’s legal defense network in an effort to reduce his exposure.



The case follows a series of reversals in US crypto enforcement. Since January 2025, the SEC has dropped suits against Coinbase and other major exchanges, while President Trump pardoned Ross Ulbricht and the BitMEX founders.&nbsp;



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Roger Ver reaches $48M tax settlement with US prosecutors: NYT

Luxembourg’s Intergenerational Sovereign Wealth Fund (FSIL) will allocate 1% of its portfolio — about €7 million — to bitcoin and other crypto assets, Finance Minister Gilles Roth announced on Thursday, during the 2026 budget presentation. The move makes Luxembourg the first Eurozone country to introduce sovereign exposure to bitcoin exchange-traded funds (ETFs), a significant symbolic development for Europe’s financial landscape.



According to Roth, the FSIL will gain exposure indirectly through regulated ETFs rather than direct holdings, minimizing custody and operational risks. Treasury Director Bob Kieffer confirmed that the allocation follows a July 2025 policy revision allowing up to 15% of FSIL assets to be placed in “alternative investments,” including crypto.



As of mid-2025, FSIL held roughly $887 million, mostly in bonds and index funds. Kieffer described the 1% allocation as a balanced experiment reflecting Bitcoin’s “long-term potential.”



The decision aligns with Luxembourg’s ongoing efforts to establish itself as a fintech and crypto hub under the EU’s Markets in Crypto-Assets (MiCA) regime. The country hosts numerous firms seeking MiCA licenses, reflecting its ambition to shape Europe’s digital finance infrastructure.



Luxembourg joins a growing list of governments cautiously exploring bitcoin exposure.



Norway’s $1.9 trillion sovereign fund indirectly holds bitcoin through corporate equities, while the Czech Republic and Finland have signaled similar interest.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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bitcoin ETFs

Luxembourg wealth fund to allocate 1% to Bitcoin ETFs

Kate Irwin

This is a segment from The Drop newsletter. To read full editions, <a href="https://blockworks.co/newsletter/the-drop" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Could “Gaming Capital Markets” spur interest in crypto gaming?



Zynga co-founder Justin Waldron is behind the <a href="https://x.com/ogprotocol/status/1975715526967239154">upcoming launch</a> of the Open Game Protocol, a chain-agnostic app layer that aims to reward players of any game in any token — and reward developers with tokens, too.



“We think the most important thing for players is that they get rewarded, and even more so, that they believe in the rewards they get. And the most important thing for developers is that they get more players, and that at the end of the day, they can make a living making games,” Waldron told me in an interview.



But it’s not exactly easy for game developers — who are not blockchain engineers — to reward players with any token already on the market, because that would involve buying large amounts of that token upfront and then writing smart contracts to distribute it.



“For most game developers, all that stuff is a non-starter,” Waldron said.



<h2 class="wp-block-heading">Conflicting incentives</h2>



Crypto gaming has had an identity crisis for years as disparate genres like narrative games and casino games are lumped together. Many crypto game developers, investors, and influencers have touted the importance of “good games first” before all else.



But perhaps they failed to realize why anyone would play a crypto game in the first place: a player can win something of real financial value. Otherwise, big-budget games like Fortnite and League of Legends — backed by multibillion-dollar studios — offer a better gaming experience overall.



Some indie devs have realized that crypto gaming’s advantage is the financialization that makes it different, but we’ve yet to see any title break out into the mainstream. This year, we’ve seen casino games, hypercasual titles, and “Ponzi-esque” titles come and go, all trying to tap into a more token-forward approach.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">GCM is next. Gaming Capital Markets&mdash; justin waldron (@jtwald) <a href="https://twitter.com/jtwald/status/1975435878614073788?ref_src=twsrc%5Etfw">October 7, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Marketing around crypto games has emphasized what blockchains are being used, touting them like big-name brands. This is often because it’s the L2s themselves who are doing the marketing.



But L2 blockchains’ motivations and interests may actually be in opposition to what game developers actually need.&nbsp;



“Their own incentives are kind of getting in the way,” Waldron told me. “They’re like, ‘I want to drive a certain type of TVL and transactions on my chain.’ So they’ve become less aligned with the games that they’re working with, to some extent.”



<h2 class="wp-block-heading">How it works</h2>



Waldron likened OG Protocol to Stripe, because any game developer can get token rewards set up for their game as quick as setting up credit card payments.



But there’s also a community component, and tokens can be staked.



“We built a system to create these reward pools so that the token communities can decide which games get how much rewards,” he said. “Instead of the games making the assets, it’s assets pairing with existing games.”



Traders are able to support the tokens and games they like.&nbsp;



All of this is possible because of what Waldron calls “gamecoins,” which are attached to existing tokens. He used FARTCOIN as an example.&nbsp;



“The FARTCOIN gamecoin is not used inside of the games. Actually, it’s a governance token that just determines where the rewards of FARTCOIN go. And so it’s a way of speculating on how big is the game ecosystem for FARTCOIN going to become.”



Game developers outside of crypto might ultimately use the protocol for their non-crypto games as an alternative to traditional advertising, Waldron suggested.



“It becomes like another way to acquire users that’s cheaper and more effective than ads,” Waldron said, adding that developers could also buy gamecoins and stake them against their own titles.



The OG Protocol is using Solana to start, but plans to expand to EVM chains in the future. It’s being incubated by <a href="https://x.com/pixiekate13/status/1976013310593319257">ICMrun</a>, a Solana-forward group focused on applications for tokenization.



At some point, OG Protocol hopes to offer its app layer as an integration for existing crypto wallets via a “play button” of sorts that lets traders see any token and then have “play” beside it as an option to play games that use that token in addition to existing wallet options like buy, sell, or swap.&nbsp;



“We probably have 30 or 40 wallet partners that are already interested in doing it,” Waldron said.



This could certainly help crypto wallets achieve their <a href="https://blockworks.co/news/robinhood-trading-apps-going-social">super-app</a> dreams.



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Gaming

OGP wants to pair any token with any game

Crypto exchange Kraken is expanding access to traditional derivatives markets by connecting U.S. traders directly to CME Group’s futures products, including energy, metals, equities, and foreign exchange.



Originally <a href="https://www.theblock.co/post/373899/kraken-expands-access-to-traditional-cme-contracts-like-oil-and-gold">reported</a> by the Block on Thursday, the company confirmed that its regulated futures commission merchant, Kraken Derivatives US, will facilitate trading in CME contracts such as oil, gold, silver, the S&amp;P 500, and other major FX pairs like EUR, GBP, and JPY.



The move marks a significant step in Kraken’s push to bridge digital and traditional finance, positioning it alongside brokerages such as Robinhood, which have also expanded into conventional asset classes.



Kraken, reportedly exploring an initial public offering at a valuation near $20 billion, has been preparing this expansion since acquiring US retail futures platform NinjaTrader earlier this year for $1.5 billion — the largest crypto–TradFi acquisition to date. The firm launched CME-listed bitcoin and ether futures on Kraken Pro over the summer and now plans to extend its coverage to commodities, equities, fixed income, and FX markets.



CME, the world’s largest derivatives marketplace, recently reported record crypto derivatives volume exceeding 340,000 contracts per day. The firm is also set to debut options on Solana and XRP futures on October 16.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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kraken

Kraken expands CME derivatives access to oil, gold and FX

Bybit says it has become the first cryptocurrency exchange to receive a full Virtual Asset Platform Operator License from the Securities and Commodities Authority (SCA) of the United Arab Emirates (UAE).&nbsp;



It’s a regulatory first for the Gulf nation and a significant step in the country’s bid to establish itself as a global hub for compliant digital finance.



The license, <a href="https://www.bybit.com/press/post/bybit-secures-uae-s-first-virtual-asset-platform-operator-license-from-securities-and-commodities-authority-blte25e6cd2d822b03a?channel=pr_&amp;medium=organic_social&amp;source=twitter&amp;sa_utm_ci=107&amp;pid=Social_twitter&amp;dtpid=17600209308403560&amp;campaign=enannouncement_17600209308403560&amp;c=enannouncement_17600209308403560&amp;utm_source=twitter&amp;utm_medium=organic_social&amp;sa_utm_tcn=17600209308403560&amp;sa_utm_channel=pr_&amp;is_retargeting=true">announced</a> on Thursday, grants Bybit authorization to operate regulated trading, brokerage, custody, and fiat conversion services for both retail and institutional clients across the UAE.



Bybit’s achievement follows its In-Principle Approval (IPA) from the SCA in February 2025, obtained with guidance from the Blockchain Center in Abu Dhabi, which helped the exchange navigate the SCA’s compliance framework.



The SCA’s approval makes Bybit the first exchange officially <a href="https://x.com/Bybit_Official/status/1976297822103245111">recognized</a> under the UAE’s Virtual Asset Service Provider (VASP) rules, <a href="https://x.com/adbc_ae/status/1976313261105741894">reflecting</a> the nation’s push to align with Vision 2031 and international financial standards.



Co-founder and CEO Ben Zhou said the license demonstrates Bybit’s commitment to “building trust through compliance and transparency.” The company will now expand its regional headquarters in Abu Dhabi, planning more than 500 local hires and launching education and Web3 innovation programs in partnership with local institutions.&nbsp;



Co-CEO Helen Liu credited the SCA’s “clear, well-structured regulatory framework” for enabling compliant innovation in digital assets.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Bybit

Bybit secures UAE’s first SCA virtual asset license

CipherOwl, a crypto compliance startup founded by former Coinbase and Cruise engineers Leo Liang and Ming Jiang, has raised $15 million in seed funding led by General Catalyst and Flourish Ventures, with participation from Coinbase Ventures and Enlight Capital.



Originally <a href="https://fortune.com/crypto/2025/10/09/cipherowl-crypto-compliance-seed-round-general-catalyst-flourish-ventures/">reported</a> by Fortune, the San Francisco–based firm develops artificial intelligence-driven tools to help financial institutions monitor blockchain transactions for suspicious activity as traditional banks and fintechs expand into digital assets.



Liang and Jiang, who previously worked on Coinbase’s internal compliance systems, launched CipherOwl in 2024 to address what they describe as the “dark forest” of crypto — the web of pseudonymous and cross-chain transactions that challenge conventional anti-money-laundering tools.



The company’s software uses generative AI to automatically flag risky transactions and generate plain-language reports explaining why an alert was triggered, streamlining manual reviews and lowering compliance costs.



Despite competition from established firms such as Chainalysis, Elliptic, and TRM Labs, CipherOwl has already onboarded clients including Coinbase, OKX, and several undisclosed law enforcement agencies.



With only eight employees, the startup aims to differentiate itself as “AI-native,” embedding machine learning into every layer of its detection process. According to General Catalyst managing director Marc Bhargava, this approach could give CipherOwl an edge as the compliance landscape matures and global regulators tighten oversight of crypto markets.



The company has not disclosed its valuation. The new capital will fund hiring and product expansion amid growing institutional demand for crypto risk and compliance infrastructure.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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CipherOwl raises $15 million to advance AI-driven crypto compliance

Casey Wagner

The Senate on Wednesday once again rejected both plans to fund the federal government and end the shutdown, which now enters its ninth day.&nbsp;



Senators have so far voted six separate times on partisan measures to extend funding.&nbsp;



Republicans, with 53 Senate seats, need eight Democrats to cross the aisle.&nbsp;



Without a budget, the crypto policy agenda remains in limbo, but Washington insiders insist that momentum isn’t completely lost.&nbsp;



While the House remains in a shutdown-induced recess, the Senate appears to be in session for both budgetary and crypto matters.



Two people familiar with the matter told Blockworks that the Senate Banking Committee remains committed to moving crypto market structure policy along, even if that means holding a markup hearing mid-shutdown. Regardless of whether a budget is passed, Committee leadership hopes to markup the Responsible Financial Innovation Act before the end of the month, they added.



To recap, the House passed the CLARITY Act in July. The Senate Banking and Agriculture Committees have since been working on their own versions of the bill, which will eventually have to merge with each other and CLARITY.



Senate Banking Committee Republicans released a revamped version of their bill last month. Democrats responded with a list of principles they’d like to see in the legislation.&nbsp;



The Agriculture Committee has yet to release its draft, which will focus mainly on the Commodity and Futures Trading Commission’s role in crypto market regulation.&nbsp;



Pre-shutdown, a person familiar with the matter said the draft bill was “close,” but now, with federal agencies operating with limited staff, it’s going to take <a href="https://blockworks.co/news/etf-sec-govt-shutdown">more time</a>.&nbsp;



Agency staffers working with Congressional committees on policy — like cryptocurrency market structure — are largely furloughed during the shutdown, lowering the odds that we’ll see a draft soon, according to a person familiar.&nbsp;



With federal agencies operating with limited personnel, new spot crypto ETFs are not expected to be approved until the shutdown ends. In its shutdown operations plan, the SEC said it will <a href="https://blockworks.co/news/capitol-gains-shutdown-blues">not review or approve</a> registration statements or issue notices of effectiveness.&nbsp;



Given the SEC’s new generic listing standards and the extensive work issuers and agency staff put in ahead of the shutdown, two issuers who spoke with Blockworks said they are confident that new products will get the green light quickly after federal operations resume.&nbsp;



The issuers added that they have not received communication from the SEC since the shutdown began last week.



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Capitol Gains

Capitol Gains: Crypto hearings expected to continue mid-shutdown

Ripple has entered a strategic partnership with Bahrain Fintech Bay, the Kingdom’s leading fintech hub, marking a significant expansion of its Middle East presence.



<a href="https://ripple.com/ripple-press/ripple-expands-into-the-kingdom-of-bahrain-through-strategic-partnership-with-bahrain-fintech-bay/">Announced</a> Thursday, the collaboration will focus on strengthening Bahrain’s digital asset and blockchain ecosystem through pilot projects, educational initiatives, and ecosystem events.&nbsp;



Ripple’s Managing Director for the Middle East and Africa, Reece Merrick, said the company aims to help Bahrain advance its blockchain infrastructure while preparing to offer Ripple’s digital asset custody solution and Ripple USD (RLUSD) stablecoin to local institutions once approved.



Bahrain Fintech Bay Chief Operating Officer Suzy Al Zeerah emphasized the Kingdom’s growing role as a digital finance hub, noting that the partnership aligns with Bahrain’s long-standing position as a regional financial center.



Ripple’s involvement includes showcasing blockchain use cases such as cross-border payments, stablecoins, and tokenization, underscoring its focus on institutional-grade digital asset infrastructure.



Ripple’s renewed momentum comes on the heels of major regulatory and strategic wins — notably securing a DFSA licence in Dubai to offer regulated crypto payments from the DIFC, the acquisition of prime broker Hidden Road for $1.25 billion, and fresh institutional tie-ups tied to its RLUSD stablecoin, such as the DBS / Franklin Templeton integration.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Bahrain

Ripple partners with Bahrain Fintech Bay to boost digital asset innovation

Sharps Technology Inc. announced on Thursday that it is expanding its Solana digital asset treasury strategy through a partnership with Coinbase Global.



The <a href="https://www.prnewswire.com/news-releases/sharps-technology-expands-digital-asset-treasury-strategy-with-coinbase-302579160.html">collaboration</a> will enable Sharps Technology to use Coinbase Prime for custody, liquidity, and over-the-counter (OTC) trading as it manages more than 2 million SOL — currently valued at roughly $400 million with SOL trading above $210.



According to strategic advisor James Zhang, the partnership gives Sharps Technology institutional-grade infrastructure and deep liquidity to support its growing treasury initiative. The company, traditionally focused on medical device sales and distribution, has adopted an unusual digital asset strategy aimed at leveraging blockchain-based yield generation within the Solana ecosystem.



The decision aligns Sharps Technology with a broader trend of public firms incorporating digital assets into balance sheet strategies, echoing earlier moves by Tesla and MicroStrategy. While Coinbase provides regulatory-grade custody, Sharps Technology’s pivot into crypto introduces volatility risk tied to SOL price fluctuations and evolving US oversight of corporate digital asset holdings.



The collaboration highlights Coinbase’s continued expansion into institutional services amid a more moderate regulatory posture by the SEC in 2025. Sharps Technology said it views this partnership as a cornerstone for advancing decentralized finance participation.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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<ul class="wp-block-list">
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<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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Coinbase

Sharps Technology expands Solana treasury with Coinbase partnership

Binance Japan and PayPay announced on October 9, 2025, that they have entered a capital and business alliance aimed at merging cryptocurrency services with Japan’s leading cashless payment platform.



As part of the <a href="https://prtimes.jp/main/html/rd/p/000000037.000126862.html">agreement</a>, PayPay acquired a 40% equity stake in Binance Japan, signaling a strategic effort to integrate digital assets into mainstream financial ecosystems. The collaboration seeks to create seamless user experiences that bridge crypto and fiat transactions across PayPay’s network of over 70 million users in Japan.



Initial initiatives under discussion include allowing purchases of cryptocurrencies through “PayPay Money” within the Binance Japan app and enabling crypto-to-fiat withdrawals into PayPay accounts. The companies described the move as a step toward a “new financial experience” that unites blockchain infrastructure with everyday digital payments.



Binance Japan CEO Takeshi Chino said the partnership marks “an important step toward Japan’s digital finance future,” highlighting plans to expand Web3 adoption through accessible payment tools. PayPay’s Financial Strategy Head Masayoshi Yanase emphasized the firm’s focus on offering secure, user-friendly solutions for crypto transactions integrated into PayPay’s platform.



Binance Japan has operated under the registration of the Kanto Local Finance Bureau as a licensed crypto asset exchange since August 2023, providing spot trading and lending services.&nbsp;



This is a developing story.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

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