SwarmNode.ai

Casey Wagner

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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The US senator pushing for a national strategic bitcoin reserve just got a promotion.&nbsp;



Cynthia Lummis, a Wyoming Republican who has <a href="https://blockworks.co/news/senators-oppose-sec-accounting-standards">long championed</a> the crypto industry, will lead the new digital asset subcommittee under the Senate Banking Committee.&nbsp;



Lummis <a href="https://blockworks.co/news/senator-lummis-bitcoin-reserve-bill-crypto-policy">debuted the text</a> for the Bitcoin Reserve Bill last summer at the Bitcoin 2024 Conference in <a href="https://blockworks.co/news/bitcoin-2024-nashville-recap">Nashville</a>. She introduced the bill late last Congress but has not yet unveiled an updated text this session.&nbsp;



The original bill sought to have the US government acquire a total of <a href="https://blockworks.co/news/bitcoin-as-a-potential-us-reserve-asset">1 million BTC</a> — around 5% of the total supply. The bill permits sales of the asset for only one purpose: paying off the national deficit.&nbsp;



“We will be debt free because of bitcoin,” Lummis said in Nashville.&nbsp;



Now, with her own subcommittee and Senate Banking Chair Tim Scott’s ear, movement on the reserve could come a lot faster. Speculation that President Trump may <a href="https://blockworks.co/news/trump-campaign-promises-bitcoin-reserve">create the stockpile</a> via an executive order seems to have dissipated in recent weeks.&nbsp;



But, it’s very possible we see some sort of presidential action from Trump directing the DOJ to refrain from auctioning seized bitcoin.&nbsp;



In any case, Lummis seems committed to getting the reserve off the ground in Congress, <a href="https://x.com/SenLummis/status/1882454483852255605">saying</a> on Thursday that lawmakers “need to urgently pass bipartisan legislation.”&nbsp;



We’ll be curious to see what the subcommittee selects as its first hearing topic.



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US Senate creates first-ever digital asset subcommittee 

Felix Jauvin

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A major thesis I have for 2025 is that FX will be one of the key macro assets to focus on.&nbsp;



The big reason is that FX currencies are the exhaust valve for interest rate differentials between other countries, and therefore tariff implementation since that gets directly imputed into global capital flows that are key drivers of global currencies.&nbsp;



With this belief in FX volatility being the key exhaust valve of Trump’s tariff and trade policy this year, I went ahead and interviewed one of the best macro FX traders I know: Brent Donnelly of Spectra Markets.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/Bz196-fJ0IU?si=ndpDg2aOvPKgXGjk" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Of course, nothing beats watching the full episode, but here are a few of my favorite takeaways:&nbsp;



<h2 class="wp-block-heading">On how much capital flows drive FX currency: </h2>



“The hard thing is that the capital flow stuff kind of happens around the edges. So if you have a good capital flow story, that could be marginally biased in one direction. But if the bigger drivers like rate differentials are pointing in the other direction, it&#8217;s not going to work. So capital flows tend to be more of like an accelerant, not a directional driver.”



<h2 class="wp-block-heading">On how emerging market currencies are mostly driven by carry trades:</h2>



“For an EM it&#8217;s usually all about the carry. So if you can sell USD and buy Brazil and it goes nowhere for a year, let&#8217;s just say you make 10% on that carry. That&#8217;s a really good carry trade. So dollar Brazil is going to go up and down. But if you have the view that dollar Brazil is going to go down, it&#8217;s kind of a free lunch. So like for two years in Mexico, it was basically a free lunch to own Mexican pesos because reshoring was good and that led to a steady and stable carry trade.”



<h2 class="wp-block-heading">On the impact of this week’s Bank of Japan rate hike:</h2>



“They did a hike recently of 15 basis points and they did one of 20 and now the market&#8217;s expecting 25 and 22bps is priced in.



So then the question becomes this: If this hike is priced in, which it is, what are the signals from the central bank at the meeting? They could hike 15 and just say, you know, they are a little bit scared about market stability because they felt like they blew up the world in August. And because of that guidance paired with so much of the hike already being priced into markets, it could end up being a dovish outcome for the meeting.”



There are many more interesting tidbits in the interview, including a deep dive into how Trump’s tariff threats are impacting FX currencies, so I highly recommend checking it out!



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FX lessons from Brent Donnelly 

Macauley Peterson

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Rumors of a “second foundation” — a more commercially-oriented alternative to the Ethereum Foundation — turned out to be a ruse…sort of. Lido and P2P.org founder Konstantin Lomashuk <a href="https://x.com/2nd_foundation_/status/1882058366023025039">teased</a> the idea on X Wednesday, but quickly walked it back.



“If a second foundation ever does form, it must have a clear purpose that complements the enormous work of current contributors,” he <a href="https://x.com/Lomashuk/status/1882150153781702962">wrote</a>. “I appreciate everyone’s support and believe we need more organizations contributing to Ethereum.”



Before Lomashuk revealed he wasn’t serious, the notion was endorsed by a number of prominent Ethereum voices, including Uniswap founder Hayden Adams. “Moving technical development to a 2nd foundation is not crazy…[With] the right leader I bet it could raise big $ and have a huge impact,” Adams <a href="https://x.com/haydenzadams/status/1881749898003136640">mused</a>.



As if on cue, hours later a new group funded by the EF — going by the name Etherealize — <a href="https://x.com/Etherealize_io/status/1882213980858642599">emerged</a> from stealth.



The new organization, which calls itself an “institutional marketing and product arm for the Ethereum ecosystem,” will be a resource for TradFi. The team of eight is led by <a href="https://x.com/VivekVentures/status/1882214791198175537">Vivek Raman</a>, who previously headed AI and crypto investment banking at BitOoda. Raman also had trading experience at Nomura, Deutsche Bank, UBS, and Morgan Stanley.



Grant Hummer, James Fickel and Philipp Muens are also signed on.



In its kick-off, Etherealize <a href="https://x.com/Etherealize_io/status/1882213986965565918">sounded</a> “a note of gratitude for the [EF], who has ushered the growth of a new global economy.” It added: “The EF cannot — and should not — do it all. We’re here to help.”



Now, many of the same folks who’ve been calling for <a href="https://blockworks.co/news/ethereum-scaling-progress-and-leadership">a leadership change</a> at the EF are <a href="https://x.com/iamDCinvestor/status/1882231601867944133">rallying</a> behind the new group. Some, who just this week were removing .eth from their X names, have <a href="https://x.com/antiprosynth/status/1882426645388337538">done</a> an about-face.



As a content hub, the new website features half a dozen <a href="https://dashboard.etherealize.io/">interactive graphs</a> and four blog posts credited to Ramen. The content positions Ethereum as the leading blockchain platform for institutional adoption due to its security, decentralization and regulatory clarity as a commodity with <a href="https://blockworks.co/news/ether-etfs-approved-for-us-exchange-july-23">approved ETFs</a>. It promotes both the store of value role and rollups as scalable and efficient platforms to meet institutional needs.



<a href="https://www.etherealize.io/content/eth-a-store-of-value-with-cash-flow">ETH’s staking yields</a> and active asset tokenization platform rounds out the <a href="https://www.etherealize.io/content/why-are-institutions-tokenizing-assets-on-ethereum">pitch</a> to TradFi players.&nbsp;



Aave founder Stani Kulechov <a href="https://x.com/StaniKulechov/status/1882404776815755536">said</a>, “it makes sense to double down on institutions, especially as most of the DeFi is on Ethereum.”



While the Etherealize debut is likely to placate the EF’s more <a href="https://blockworks-research.beehiiv.com/p/steering-the-ship">strident critics</a> in the short term, the real test will be if the org can make a dent in the current narrative of Ethereum leadership being out of touch and uncompetitive. The mood is no doubt partly a function of ETH’s underperformance, which has touched a four-year low against bitcoin in recent days.



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Ethereum’s ‘second foundation’ was a ruse — then Etherealize launched

David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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North Korean hackers. Accidentally throwing out your seed phrase. The IRS, DOJ and SEC. Being forced to interact with customer service departments at exchanges.



As far as scary monsters in crypto go, those would be far up the list. Still, none scarier than the notion that the bull market has peaked without securing generational wealth.



All that has everyone searching for top signals. Hints that the fun is over for another four years.



Trump’s <a href="https://blockworks.co/news/trump-more-than-a-memecoin">stupidly successful memecoin</a> launch is a decent candidate. Especially so paired with bitcoin’s new all-time high around his inauguration. Was that the top?



It would be easy to agree if crypto was like it was in 2021. Back then, in the midst of the monster bull run, there were really only two memecoins — dogecoin and shiba inu — and both hit enormous peaks along with bitcoin.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcTSrvzkn1EEuXOVzc9-25Jbzfz5RuE8-xjcvZ-g0cr1-dHmeCdQOtNdVNAEDVxDOdfWg-wGnGTLuP_mOatPvze7SgmIrebuf-0pLFIlDpfdSOKJtPJnLx5I7bBAnRdDO1YYTW0XA?key=LL51OpIMf0VXbNX6ryp2kgF3" alt=""/></figure>



Except, DOGE and SHIB didn’t peak at the same time. Looking back, the rotation between them is totally obvious.



DOGE, in blue, exploded from about $1 billion market cap to over $80 billion between January and May 2021, alongside bitcoin’s own rally from $20,000 to over $64,000.



It then drained as bitcoin corrected but never really came back at size. SHIB (in purple) shined instead, rallying from $3 billion market cap to almost $40 billion between September and the end of October — matching bitcoin’s rally almost exactly.



So, in retrospect, the Great Dog Coin Rotation was probably the most obvious top signal for the last cycle.



This time around, it’s much harder to tell.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1183" height="853" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=1024&amp;h=1024" alt="" class="wp-image-96553" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=1183 1183w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=304 304w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-4.png?w=80 80w" sizes="auto, (max-width: 1183px) 100vw, 1183px" /></figure>



The most simple read is that memecoins in 2021 topped out alongside bitcoin. So maybe a major rally in memecoins might mark the end in 2025. 



Except, there are just so many new launches — FARTCOIN, GOAT, AI16Z, PENGU, SPX and now TRUMP — making it difficult to spot an actual top for memecoins overall.&nbsp;



One peak and correction feeds into another and into another. The DOGE-SHIB rotation on steroids.&nbsp;



To bears, that might sound like a risky game of musical chairs. But to the bulls, it probably sounds just right.



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Why top signals could be less obvious this cycle

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Looking for a new narrative? Marc Boiron, CEO of Polygon Labs, has one for ya: yield-bearing stablecoins.&nbsp;



Once these stablecoins are better understood, they’re set for takeoff, Boiron said. In fact, he wouldn’t be surprised if it ends up driving “a decent amount of activity in 2025.”



So far, stablecoins (not just yield-bearing ones) are up to a $207 billion market cap, per rwa.xyz <a href="https://app.rwa.xyz/stablecoins">data</a>.



It’s not just the yield that’ll draw stablecoin activity, it’s also the regulatory clarity that we’re seeing over in Europe courtesy of MiCA. It’s even looking more and more likely that the US is on the regulatory path as well.



For companies — like fintechs — watching the stablecoin market from the sidelines, it’s hard to not feel the FOMO when looking at Tether’s attestations. And that’s clear from Boiron’s conversations with non-crypto native folks.&nbsp;



This, shall we call them, new set of players are telling Boiron, “hey, we want our own stablecoin, because we can see how much money we can make off of it, and we&#8217;ve got a boatload of users, it&#8217;s really easy to push them into that stablecoin and get a lot of volume, and obviously revenue from that as well.”&nbsp;



“The second part of it is just having better rails for their users, knowing that there&#8217;s a set of users who are [going to want to] send payments, especially remittances, as of right now, and they actually want to make that available rather than incurring” fees, he continued.



I mean, let’s take a look at Tether’s <a href="https://tether.io/news/tether-hits-7-7-billion-2024-nine-month-profits-102-5-billion-in-u-s-treasury-holdings-almost-120-billion-usd%E2%82%AE-circulation-and-an-over-6-billion-reserve-buffer-in-q3-2024-attestation/">third-quarter attestation from last year</a>. The firm reported a whopping $2.5 billion net profit in that quarter alone, even if it does <a href="https://blockworks.co/news/tether-profits-versus-blackrock">bundle unrealized gains</a> on bitcoin with other revenue in its disclosures.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd8k0BBzptOBUllXhhLC5wyxdCka9MpojgonjhcaNhWZDCPYSeVXiXIq9kDtAVmxM0d46H7ui4GDPYSY7QIk4Wz88F3ZZlF2nVrCcDpaJWCRjBBK5LbHtKD4STkW7N3srtrcYOA8Q?key=LL51OpIMf0VXbNX6ryp2kgF3" alt=""/><figcaption class="wp-element-caption">No surprise that Tether’s topping the list</figcaption></figure>



“Everybody sees how profitable Tether is, and they&#8217;re like, ‘Okay, I can do that with less risk now,’ especially fintechs, right?” He said. Boiron believes we’ll see new entrants that are looking to enter the space because there may be the opportunity to improve the user experience through yield-bearing stablecoins.



This doesn’t mean we’re going to see companies simply launch their own stablecoins. They’ll also adopt other stablecoins as well, Boiron added.&nbsp;



“They understand that there&#8217;s a significant distribution of USDC, and a lot of people hold it. They&#8217;ll, for example, want to make that still available through their application, while also launching their own stablecoin,” he noted.



More than that, Boiron thinks that Polygon Labs&#8217; ability to scale and push “massive” amounts of stablecoin volumes onchain means that now is the time for stablecoins to really shine. 



I told Boiron that I thought 2024 was the year of the stablecoin, but I’m beginning to think this is just the start.



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Stablecoins will drive a ‘decent amount’ of activity in 2025: Polygon Labs CEO

Jack Kubinec

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On Friday, the SEC filed suit against Nova Labs, the developer behind the Helium Mobile crypto-enabled cell network. The agency charged Nova Labs with fraud and registration violations.



The litigation wound up being the last of Gary Gensler’s four-year tenure as SEC chair, and it was a seemingly poetic way for Wall Street’s <a href="https://blockworks.co/news/gary-gensler-resigning">top cop to go out</a>. The regulator frequently locked horns with the crypto industry, which bristled against his “<a href="https://blockworks.co/news/sec-crypto-anti-innovation-crusade">regulation by enforcement</a>” approach. His staff departs with a lawsuit against a company it had been investigating for years — and which many in crypto think could give the asset class <a href="https://blockworks.co/news/helium-tech-for-disaster-relief">real-world utility</a>.



The SEC <a href="https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26229">argued</a> that <a href="https://blockworks.co/news/lightspeed-newsletter-helium-cell-coverage">Helium hotspots</a> — which provide wireless connectivity and dole out token rewards — along with discovery mapping — where Helium Mobile users share their data with the company in exchange for tokens — both equate to unregistered securities sales. The agency also accused Nova Labs of fraudulently telling potential investors that Lime, Nestlé and Salesforce had used its wireless network.



A Nova Labs executive told me the Gensler-led SEC inquiry had been going on for two years prior to the suit and called the last-day lawsuit “as irresponsible as it is wrong-headed.”



The debate on whether most crypto tokens are securities has been a long-running one in crypto, although it may come to not matter as much: Fox Business <a href="https://www.foxbusiness.com/markets/trump-admin-eyes-cftc-lead-digital-asset-regulation">reported</a> President Trump aims to give the CFTC the regulatory lead on crypto, meaning the SEC won’t have as much say over <a href="https://blockworks.co/news/sec-wrong-about-crypto-asset-securities">alleged crypto securities</a>.



As for the fraud part of things, Mashable <a href="https://mashable.com/article/helium-lime-web3-crypto">reported</a> in mid-2022 that Helium’s website said it had partnered with the scooter app Lime, and Lime said the partnership didn’t exist. The exposé led to a bit of egg on the face for Helium, which removed mentions of Lime as well as Salesforce from its website shortly thereafter. The SEC also says Helium falsely told investors that Nestlé was involved in the Helium network, whereas actual contact between the two was limited.&nbsp;



Nova Labs CEO Amir Haleem wrote on X that none of the SEC’s claims “hold any water at all.” Elsewhere, Haleem <a href="https://x.com/amirhaleem/status/1881069433688584376">posted</a> a screenshot of a 2020 email from Salesforce, seemingly confirming some sort of partnership between the two.&nbsp;



With the SEC expected to take a more crypto-friendly approach under President Trump, the suit may seem unlikely to go anywhere. There’s a catch however: Reuters <a href="https://www.reuters.com/world/us/trumps-new-sec-leadership-poised-kick-start-crypto-overhaul-sources-say-2025-01-15/">reported</a> Trump’s SEC is expected to freeze crypto litigation that does not involve fraud. Gensler’s SEC may have tried to force a continuation of its suit by charging Nova Labs with fraud.



Now, a potential <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">Paul Atkins-led</a> SEC might have to choose between continuing a lawsuit it didn’t start or appearing not to care about fraud.



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Gensler wraps tenure as SEC chair with lawsuit against Nova Labs

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Congressional Republicans are working to reverse new IRS guidelines that require so-called “custodial brokers” to report transactions.&nbsp;



Rep. Mike Carey and Sen. Ted Cruz this week introduced corresponding resolutions seeking to “roll back the <a href="https://x.com/RepMikeCarey/status/1882110957700448414">disastrous IRS broker rule</a>.”&nbsp;



The legislation comes weeks after a group of crypto lobbying firms sued the IRS over the rule. They claim the requirement “exceeds the agencies’ statutory authority, violates the Administrative Procedure Act (“APA”) and is unconstitutional.”&nbsp;



As it currently stands, starting in 2025, custodial brokers are required to <a href="https://blockworks.co/news/irs-new-form-crypto-accountants">report gross proceeds</a>. In 2026, they will have to report cost basis for certain transactions.&nbsp;



The final version of the 1099-DA form was published at the end of last year. While earlier drafts had included a section where brokers had to identify their “type” of business, the final form nixed this box. It’s a small change, but by cutting this section the IRS more or less punted the issue of DeFi actors.&nbsp;



Even so, those opposed to the rule claim that the rule still imposes unfair reporting obligations on intermediaries and other actors in the crypto space.&nbsp;



The resolutions have some co-sponsors (Sens. Cynthia Lummis and Tim Sheehy, to name a few), but neither have been scheduled for a markup or vote just yet. This is a hot-button issue in the crypto space though, so we’d expect companies to be directing a significant amount of their lobbying efforts here.



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Republicans seek to overturn IRS crypto broker rule

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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As expected, Donald Trump has backed off a bit on the <a href="https://blockworks.co/news/unpacking-trump-potential-tariff-policies">ambitious tariff goals</a> he touted on the campaign trail.&nbsp;



“I think we’ll do it Feb. 1,” Trump said during a Monday press conference, referring to tariff increases on Canada, Mexico and China.&nbsp;



While he did not comment on specific timing or pace of tariffs, based on <a href="https://www.youtube.com/watch?v=65aE9KFMR3Y">conversations</a> with Stephen Miran, head of Trump’s council of economic advisors, we expect to see tariffs increase by around 2% to 5% per month.&nbsp;



The first time Trump proposed 25% tariffs on China was back in 2018. What ended up actually happening was a ~17% effective tariff, which was implemented over the course of a year.&nbsp;



“The after-tariff dollar-import price of goods coming from China was practically unchanged,” <a href="https://blockworks.co/news/trump-gradual-tariff-policy">Miran said</a>.&nbsp;



In <a href="https://blockworks.co/news/trump-day-one-crypto-promises">Trump’s day 1</a> trade policy <a href="https://www.whitehouse.gov/presidential-actions/2025/01/america-first-trade-policy/">memorandum</a>, he gives various federal agencies until April 1 to turn in reports on “unlawful migration and fentanyl flows” from Canada, Mexico and China.&nbsp;



He also instructs the secretaries of the Treasury, Commerce and Homeland Security to evaluate how to create the “External Revenue Service,” a new agency Trump wants to task with collecting tariffs.&nbsp;



“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Trump said on Monday.



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Tariff tantrum? Not yet. 

Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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If you’ve been reading Forward Guidance, you know the last few days in crypto land have been — to put it mildly — eventful.&nbsp;



Bitcoin surged to a new all-time high the day Donald Trump was sworn in. After a pullback, BTC’s price rebounded yesterday to $107,000. BTC hovered around $104,200 at 1:30 pm ET.



Despite a lack of <a href="https://blockworks.co/news/donald-trump-day-one-actions">crypto-specific</a> executive orders, optimism stemmed from word of a new Hester Peirce-led SEC <a href="https://blockworks.co/news/sec-new-crypto-task-force">crypto task force</a>.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeCLjj5gTvOpyUW38sRP6A2nG52Qr7oyuq0_zlEDRCZkj3z_VmWdH7ycT9EPESCUX35F5Ppw1Kv39psgsJdixHuYShOhNPS-LhEh28c0YjObNYL_5OaiXnLBvRKJW4obqqur2xA?key=NxSk-6sa-ktC3q2APaQhBzFr" alt=""/></figure>



Those watching the space know Peirce’s name; Wormhole Foundation general counsel Cathy Yoon called it “a relief” that she would guide this unit.&nbsp;



“She is proactive, engaged and most importantly, rational when it comes to thoughtful regimes concerning digital assets,” Yoon said of the SEC commissioner in a statement.&nbsp;&nbsp;&nbsp;&nbsp;



Peirce’s crypto-friendly record is clear, and spans years. She first floated a <a href="https://blockworks.co/news/coinfund-president-crypto-regulation">“token safe harbor proposal”</a> in 2020 to spur developer innovation by temporarily exempting builders from securities laws registration provisions. She said US spot bitcoin ETFs should have been <a href="https://blockworks.co/news/commissioner-etf-statements-signals-contention">approved years before</a> they got the green light in January 2024.&nbsp;



And in an era marked in part by <a href="https://blockworks.co/news/hester-peirce-sec-lbry-unsettling">SEC lawsuits</a> against crypto companies, Peirce <a href="https://blockworks.co/news/hester-pierce-dont-regulate-courtroom">said bluntly in 2023</a> that “litigation is not the most effective way to carry out regulations.”&nbsp;&nbsp;&nbsp;



Philip Moustakis, a partner at Seward &amp; Kissel LLP and an ex-senior counsel in the SEC’s enforcement division, noted that while former SEC Chair Jay Clayton paired enforcement actions with informal guidance, that essentially stopped under Gary Gensler.



The task force announcement signals the return of valuable informal guidance and potentially more formal direction in the works, Moustakis added.&nbsp;



“This is not to say the federal securities laws will not apply to crypto offerings or transactions under appropriate facts and circumstances,” he said. “Ideally, however, there will <a href="https://blockworks.co/news/sec-wrong-about-crypto-asset-securities">be more clarity</a> with respect to when and <a href="https://blockworks.co/news/coinbase-howey-question-second-circuit">how they apply</a>, and they will be applied in a way that lets crypto [be] crypto.”



Arthur Jakoby, co-chair of the securities litigation and enforcement practice at Herrick, Feinstein LLP, said he considers the group creation “a sign that the SEC will review all current crypto-related enforcement actions and likely discontinue existing cases which the <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">new leadership</a>…views as ill-conceived or inconsistent with promoting the growth of the crypto industry in the United States.”



Perhaps some of that will be discussed in this meeting slated for Thursday:



<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">🚨 SEC SCHEDULES CLOSED-DOOR MEETING FOR THURSDAY JAN 23 topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement… <a href="https://t.co/zyuuMW8Hzf">pic.twitter.com/zyuuMW8Hzf</a>&mdash; Alex Thorn (@intangiblecoins) <a href="https://twitter.com/intangiblecoins/status/1881810457943810195?ref_src=twsrc%5Etfw">January 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



We can’t mention the SEC’s move without noting what it could mean for the <a href="https://x.com/JSeyff/status/1881753384405041360">growing number</a> of crypto ETF filings in front of them.



After plans for <a href="https://blockworks.co/news/us-crypto-etfs-approval-outlook">solana, XRP and litecoin ETFs</a>, newer proposals now include funds that would hold DOGE and <a href="https://blockworks.co/news/trump-token-sets-tone-for-crypto">Trump’s memecoin</a>.&nbsp;



The industry shouldn’t expect any approvals overnight, many agree. Still, the SEC unit promoting structured disclosure frameworks, practical registration paths and regulator-industry engagement would go a long way, 21Shares crypto research strategist Matt Mena said.&nbsp;&nbsp;



That, he added, “could create a more transparent approval process, addressing key SEC concerns such as custody, investor protection and market integrity — just as was done for spot bitcoin ETFs.”



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What the SEC’s new crypto task force could mean 

Donovan Choy

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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The Ethereum Foundation is going through a bit of civil unrest, but work on the world computer continues.&nbsp;



Ethereum researcher Justin Drake published on the <a href="https://ethresear.ch/t/native-rollups-superpowers-from-l1-execution/21517">ethresearch</a> forums yesterday a compilation article on a new rollup design known as “native rollups.”



If you’re non-technical like I am, keeping up with Ethereum’s ever-changing landscape of rollup designs is tedious — let alone keeping up with its entire infrastructural stack.



But the simplest way to think about native rollups is that it relies on Ethereum L1 validators for proving, i.e., state transition function and validation.



This contrasts with optimistic rollups (e.g., Optimism, Arbitrum) or zk-rollups (e.g. Starknet, ZKsync) that push the computational burden of execution to an L2 before relying on a fraud or zk proof system to generate a state root and proof which settles back on mainnet.



These proof systems are code-heavy and subject to bugs and other vulnerabilities, which is why rollup sequencers — the entity that orders transactions on an L2 — have historically been centralized. Complaints about sequencer centralization in turn have spurred “based” rollup designs like Taiko that rely on Ethereum L1 validators to perform sequencing (you can read all about it <a href="https://blockworks.co/news/unpacking-the-based-rollups-debate">here</a>).



But back to native rollups. Drake’s proposal suggests introducing an “execute” precompile — a hardcoded function into the EVM — that will verify EVM state transitions of users’ transactions. This achieves a few breakthroughs:



<ul class="wp-block-list">
<li>Native rollups no longer need to invest in and maintain expensive prover networks of miners with specialized GPU hardware since proving would be handled and enforced by L1 validators.</li>



<li>Native rollups no longer need to maintain complex governance structures involving trusted security councils to approve contract upgrades in order to achieve EVM-equivalency.</li>
</ul>



Both of these unlocks in effect make native rollups “trustless” by inheriting the security of Ethereum L1.



Finally, like based rollups, native rollups would enjoy “synchronous composability,” which refers to the ability of onchain transactions to be composable across different rollup chains, rather than being fragmented. The return to seamless fungibility of assets across L1 and L2 chains would solve the longstanding UX problem of constant bridging across chains.



Unlike based rollups, however, native rollup execution will not be constrained by the 12-second block time. Thanks to the “execute” precompile, L1 validators will only need to verify zk proofs without having to perform computation themselves.



Could native rollups mitigate the problem of ETH value accrual? Perhaps.



As I understand it, validators would enforce execution with the new precompile, which would make ETH necessary for transaction settlement.



Second, the elimination of L2 governance (and its tokens) could redirect value back to ETH as the primary value sink.



Native rollups represent yet another incremental but pivotal step toward reinforcing Ethereum&#8217;s value proposition and ETH’s role as the foundation of the decentralized ecosystem.



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Ethereum’s native rollups promise trustless scalability

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



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I’m happy to announce that we can officially retire the term “regulation by enforcement.” It can now join “cautiously optimistic” and “soft landing” on the shelf of terms nobody needs to hear anytime soon.&nbsp;



Yesterday, acting chair Mark Uyeda announced that Hester Peirce — known around here as Crypto Mom for her dissents over the SEC’s approach to the space — would head up a new taskforce: Crypto 2.0.



With Gary Gensler officially out of the building, it’s now abundantly clear that the SEC is serious about crypto companies coming in and registering. Don’t believe me? Just look at what Uyeda said in the press release: Crypto 2.0 “will succeed only if the Task Force has input from a wide range of investors, industry participants, academics and other interested parties.”



If you’re an avid Empire reader, I’m sure you’ve noticed the optimistic tone David and I have carried for a few months now. We&#8217;ve been saying that the winds of change have shifted the vibe. This week just proved it.&nbsp;



The launch of Trump’s coin led to some confusion and criticism (some of it, <a href="https://blockworks.co/news/trump-token-sets-tone-for-crypto">like I talked about yesterday</a>, is justified) but the SEC’s newest task force shows that it’s looking to ensure a framework that actually works for the industry.&nbsp;



Whether this means that the current lawsuits, including the one the SEC filed against Helium’s Nova Labs on Friday, will be dismissed is still up in the air.&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">I haven&#39;t been privy to these communications (and we&#39;re in largely unprecedented territory), but the Chair and the Enforcement Director are free to have conversations that could lead the Enforcement Division to pursue certain approaches &amp; bring the results back for a vote.&mdash; Marc Fagel (@Marc_Fagel) <a href="https://twitter.com/Marc_Fagel/status/1881793239419859046?ref_src=twsrc%5Etfw">January 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Lots of moving parts behind the scenes at the SEC right now</figcaption></figure>



Remember that Haynes Boone partner Matthew Frankle <a href="https://blockworks.co/news/sec-crypto-lawsuits-future">told us earlier this month</a> that we could perhaps see cases dropped as the SEC adopts a friendlier approach.&nbsp;



The vibes are high, Crypto Mom is in charge, and we’re soo back.



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Why the SEC’s new crypto task force passes the vibe check

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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It used to be that pop culture ran on a 20-year cycle. These days, it’s <a href="https://www.vice.com/en/article/how-the-20-year-trend-cycle-collapsed/">more like 10</a>, or even five.



Crypto is undergoing something very similar, and it’s fast becoming ICOs’ turn.&nbsp;



Seven years ago, a tidal wave of public token sales hit Ethereum, with over <a href="https://www.gemini.com/cryptopedia/initial-coin-offering-explained-ethereum-ico#section-ic-os-receive-increased-regulatory-scrutiny">2,000</a> separate offerings raking in more than $10 billion — almost two-thirds coming in the first three months of 2018 alone.



Here’s one clear sign that initial coin offerings are coming back: Corn’s recent token sale was seven times oversubscribed in the first few hours, so much so they ended up turning away thousands of investors.



Corn is merging two hot narratives from cycles past: public token sales and yield farming. It <a href="https://blog.usecorn.com/corn-the-genesis-of-the-super-yield-network-f52170ffbe84">debuted</a> last year as the “super yield network,” an Ethereum layer-2 on the Arbitrum Orbit stack with a Bitcoin twist.



It’s built to use tokenized wrapped bitcoin, BTCN, as its native asset — to stake, pay gas and otherwise be put to work across its budding DeFi <a href="https://usecorn.com/app?action=earn">ecosystem</a>.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="833" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png" alt="" class="wp-image-96486" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeBeSmxKVaF5EfuIQoCaM2XSR4xykBC0OuUm66JLkcQNlT3uS9_yZ9Rr6S4nD4WHUeeBkLLYHXb81HYlBuYsDXgljON43Ku8zX7AhTAu-XwjqnzRs2MLtJSM9Kl1vu0_obIcr4I_A.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">You’ve heard of DeFi Summer. How about BTCFi Spring?</figcaption></figure>



Corn’s ICO was conducted through <a href="https://blockworks.co/news/mica-euro-stablecoin-renaissance">MiCA-compliant</a> token sale platform Legion. Nearly 4,300 applicants requested $69 million in allocations, with the team accepting $8.3 million from around 700 investors.&nbsp;



Legion is a merit-based venue for connecting projects with the right capital. All participants (which excludes UK and retail in the US) must first KYC, but the real value add is that users can also connect their crypto wallets, X accounts and GitHub profiles.



This allows projects to prioritize investors who are active in crypto, whether that’s showing up onchain or in code, if they so choose.



“We thought: ‘How do we create something that&#8217;s fair and open for small and big, and how do we get very targeted with our token distribution, so we can be in a place to say we have 1,000 or 2,000 long-term committed investors well before the token goes live?” Chris Spadafora, Corn founder, told me over the weekend.



“That&#8217;s what drove us to go down this path, but it wasn&#8217;t an easy decision and it required a lot of work to kind of coordinate all the different groups.”



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1382" height="996" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png" alt="" class="wp-image-96485" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=1382 1382w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=304 304w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcKOPSTIwmo_JtLJH_WFH12OLS1O6-0CHxPGvUwd-4GH1XFrReGXJuz8miLHrMK-BSSJ7F_7_PbHE2AfvSO40AUfd7nKVMBe3jizgpMb_AFFIreA9BAJYHwJbk-gKfgs8ge7WwF.png?w=80 80w" sizes="auto, (max-width: 1382px) 100vw, 1382px" /><figcaption class="wp-element-caption">Early Corn users are earning <a href="https://docs.usecorn.com/docs/users/The_Kernel_Season_2/#how-does-the-program-work">points</a> (or Kernals) for keeping crypto within the Butter Network</figcaption></figure>



Those parties included existing Corn backers from its seed and venture rounds last year — venture capital firms Polychain Capital, GSR, Laser Digital and more.



“Anyone that participated in this round went through an identical process,” Spadafora said. “They had to onboard to Legion, they had to apply, and then we had to accept them.”&nbsp;



The kicker, according to Spadafora, is now that all those funds have been onboarded, the next project that wants to launch on Legion has a direct line and access to some of the biggest funds in the world — along with another 10,000 or 100,000 people on Legion that can invest at the same terms.



But if ICOs really are back, there would need to be improvements. ICOs in 2017 and 2018 were often opaque and painfully skewed toward insiders. Corn’s offering meanwhile had no side letters or secret undisclosed deals.&nbsp;



“There was one contract, it was loaded. If you wanted to invest $1,000 or a million dollars, it was the same deal. Take it or get the fuck out of here,” Spadafora said, and that attitude might be just what ICOs needed all along.



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ICO for bitcoin yield farming chain Corn screams we’re so back

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The first crypto president did a very crypto thing.&nbsp;



Donald Trump launched a memecoin on Friday night, creating arguably the largest trading demand spike ever in crypto. Solana apps and infrastructure <a href="https://blockworks.co/news/trump-memecoins-rock-solana">buckled and sometimes broke</a> as the network processed $39 billion in DEX trading volume on Sunday alone, blowing past its prior daily high of $10 billion, <a href="https://app.blockworksresearch.com/analytics/sol?dashboard=sol-financial">according</a> to Blockworks Research.&nbsp;



Some were quick to cast Trump’s first memecoin foray as a means to onboard masses of new users into crypto, although that seems like wishful thinking. The token is already down 40% from its Sunday high, and there’s no indication that the project has any purpose apart from gambling.



Still, there was one Trumpcoin development I think could have longer-term implications — an overnight surge in Solana’s stablecoin supply. The Solana network housed around $6.1 billion stablecoins on Friday, per Blockworks Research data. Yesterday, Solana held $9.6 billion in stables. That’s $3.5 billion in new stablecoins, amounting to a 57% increase, in just three days.&nbsp;



To put this in perspective, Solana added its last $3.5 billion in stablecoins over a period stretching from March 17, 2024 until Friday. The network packed 306 days of stablecoin growth into a long weekend.&nbsp;



The TRUMP and MELANIA memecoins minted by America’s leading couple were paired with Circle’s USDC stablecoin, meaning traders had to buy the tokens with USDC, Blockworks Research data lead Dan Smith said. This put tons of upward price pressure on Solana-native USDC, so arbitrageurs likely bridged stablecoins over to essentially sell dollars for a little over a dollar.



Historically, stablecoin supply tends to be sticky. It’s been a while since the 2021 halcyon days of Ethereum DeFi, but the layer-1 still holds some $113 billion in stablecoins, more than 11 times Solana’s supply.



In addition to providing liquidity for memecoins, stables can be used for real-world stuff like remittances, payments, or onchain banking. That’s perhaps why a large number of Solana founders called payments and stablecoins the network’s most underrated sectors in <a href="https://blockworks.co/news/solana-founders-survey-responses">our anonymous poll</a>.



So was the TRUMP memecoin — 80% of which is <a href="https://gettrumpmemes.com/#tokenomics">held</a> by insiders — a shameless cash grab? Likely yes, but that doesn’t mean it can’t bring positive knock-on effects to Solana.&nbsp;



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Solana stablecoin supply up 57% after Trump memecoin launch

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Crypto.com has launched its “institutional-grade venue” in the US a day after the first so-called pro-crypto president was sworn in.



The exchange’s CEO, Kris Marszalek, was perhaps alluding to the start of Trump’s term when beginning a Tuesday X <a href="https://x.com/kris/status/1881728439377600975">post</a> with “Today is Day 1.”



Marszalek touted the new US platform’s “deep liquidity, stable banking rails, robust APIs for most demanding high frequency traders, competitive fees and white glove service for all VIPs.”



This comes roughly 18 months after Crypto.com said it would <a href="https://blockworks.co/news/crypto-com-suspending-us-institutional-exchange">temporarily shut down</a> the initial version of the US institutional exchange it was testing. The company cited “limited demand from institutions in the US in the current market landscape” — an apparent reference to SEC lawsuits launched against fellow exchanges <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">Binance</a> and <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase</a> just days prior.



The company noted at the time it could reopen the institutional trading platform in the future. With a president (and many <a href="https://blockworks.co/news/crypto-friendly-congress-steps-into-power">members of Congress</a>) now vowing to support the crypto space, here we are.



“After years of operating in an environment of regulation by enforcement, we are confident that the new administration will work with industry to develop clear regulations to protect consumers and harness the opportunities advancing the industry to make the US the global leader in cryptocurrency,” a Crypto.com spokesperson told me in an email Tuesday.  



This news also follows Marszalek’s <a href="https://x.com/kris/status/1868812557525697004">meeting</a> with Donald Trump last month. A person familiar with the rendez-vous <a href="https://blockworks.co/news/trump-crypto-ceo-btc-reserve-meeting">had told me</a> the two talked about crypto-related appointments and a bitcoin reserve.



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Crypto.com launches the US exchange it suspended in 2023 

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Stablecoin issuer Circle has acquired Hashnote, the company that created the largest tokenized money market fund.



Circle is the company behind USDC, a stablecoin with a market cap that has grown to $48 billion. Call it tokenized cash if you like; Circle CEO Jeremy Allaire did in a Tuesday X space.



But now there’s also growing interest in bringing more real-world assets onchain, the executive noted. Outside of stablecoins, the largest category within the segment is tokenized Treasurys/money market funds.



<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">BREAKING NEWS:  3 big announcements from <a href="https://twitter.com/circle?ref_src=twsrc%5Etfw">@circle</a>.   1) We have acquired Hashnote, issuer of the world’s largest Tokenized Money Market Fund (USYC);  2) we have entered into a strategic partnership with global trading firm DRW to drive USDC and USDY in  crypto and TradFi…&mdash; Jeremy Allaire &#8211; jda.eth / jdallaire.sol (@jerallaire) <a href="https://twitter.com/jerallaire/status/1881726224311206298?ref_src=twsrc%5Etfw">January 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Franklin Templeton launched its OnChain US Government Money Fund (FOBXX) — a <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">yield-bearing alternative</a> to stablecoins — in 2021. Asset management giant BlackRock launched a competing product, <a href="https://blockworks.co/news/empire-newsletter-blackrock-buidl-milestone">called BUIDL</a>, last year.



Hashnote’s version of that is USYC US Yield Coin (USYC). It’s the onchain representation of its Short Duration Yield Fund (SDYF), which holds short-term T-bills. Assets deployed into USYC stand at roughly $1.5 billion, accounting for about half the tokenized Treasurys space.&nbsp;



“We see this as a key building block now,” Allaire said. “The problem that we want to solve is, how can market participants…use yield-bearing collateral, but instantly enable it to be used as cash and to create a sort of 24/7, 365 continuous model for how you can move between cash and yield?” The Circle CEO added: “That’s what this unlocks.”&nbsp;



The Hashnote deal is essentially part of the broader goal of taking the benefits of crypto — constant, globally available market infrastructure — and bringing that over to the TradFi world, lowering costs and boosting efficiency.&nbsp;



Circle is partnering with trading firm DRW via its subsidiary Cumberland, which will expand liquidity and settlement capabilities in USDC and USYC. The stablecoin issuer also said it plans to deploy USDC on the public blockchain Canton.&nbsp;



Whether trillions of dollars worth of assets come onto the blockchain — and how quickly — will depend on institutions seeing enough value in emerging use cases, <a href="https://blockworks.co/news/tokenization-depends-on-use-cases-benefits">Ripple’s James Wallis told me</a> in October. 



Perhaps this Circle deal will accelerate those entities seeing such benefits across the segment. 



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Circle-Hashnote deal looks to ease movement between cash, yield

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During his first 12 hours in office, the 47th president issued 46 presidential actions.



Some were <a href="https://blockworks.co/news/cftc-chair-announces-departure">expected</a>: Donald Trump designated acting chairs of the CFTC (Caroline Pham) and SEC (Mark Uyeda). Others were promised, like the executive orders mandating a federal <a href="https://www.whitehouse.gov/presidential-actions/2025/01/hiring-freeze/">hiring freeze</a> and declaring a <a href="https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency/">national energy emergency</a>. 



Some were symbolic: <a href="https://www.whitehouse.gov/presidential-actions/2025/01/restoring-names-that-honor-american-greatness/">ordering</a> the Gulf of Mexico to become the Gulf of America, and renaming Alaskan peak Denali to Mount McKinley.&nbsp;&nbsp;



Trump got to work on his immigration crackdown, issuing two executive orders: “guaranteeing <a href="https://www.whitehouse.gov/presidential-actions/2025/01/guaranteeing-the-states-protection-against-invasion/">the states protection</a> against invasion” and “protecting the <a href="https://www.whitehouse.gov/presidential-actions/2025/01/protecting-the-american-people-against-invasion/">American people </a>against invasion.”&nbsp;



There were also actions aimed at accomplishing Trump’s “anti-woke” agenda, including executive orders abolishing <a href="https://www.whitehouse.gov/presidential-actions/2025/01/ending-radical-and-wasteful-government-dei-programs-and-preferencing/">DEI</a> programs and requiring agencies to “end the federal funding of <a href="https://www.whitehouse.gov/presidential-actions/2025/01/defending-women-from-gender-ideology-extremism-and-restoring-biological-truth-to-the-federal-government/">gender ideology</a>.&#8221;&nbsp;



Then there are the actions Trump did not make. None of his “<a href="https://blockworks.co/news/trump-day-one-crypto-promises">day 1</a>” moves had to do with the cryptocurrency industry.&nbsp;



To be fair, by my count, Trump only made two explicit “day 1” promises on crypto: fire Gary Gensler (which became moot when <a href="https://blockworks.co/news/gary-gensler-resigning">Gary resigned</a>) and <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-crypto-promises">commute the sentence</a> of Silk Road founder Ross Ulbricht.&nbsp;



That latter promise did not happen.&nbsp;



<a href="https://x.com/elonmusk/status/1881524296386031892">Insiders</a> say the pardon is imminent, though Trump himself has not commented on his plans. Trump has never publicly said why he didn’t pardon or commute Ulbricht during his first term in office.&nbsp;



Trump wooed the crypto industry for months on the campaign trail. His first appearance post-assasination attempt was at the Bitcoin Conference <a href="https://blockworks.co/news/bitcoin-2024-nashville-recap">in Nashville</a>. He hosted Messari founder Ryan Selkis at Mar-a-Lago. He even launched his own <a href="https://blockworks.co/news/donald-trump-touts-new-family-defi-project">DeFi project</a>.&nbsp;



Industry heavyweights paid up, and these first few weeks of Trump 2.0 were supposed to be <a href="https://blockworks.co/news/mike-novogratz-on-trump-presidency">their victory lap</a>. And it still can be. But it’s also clear that Trump’s relationship to the crypto industry has gotten more complicated in the past few days.&nbsp;



Trump never actually said he’d establish a strategic bitcoin reserve or overturn SAB 121 on his first day. But he also never said he’d <a href="https://blockworks.co/news/trump-token-sets-tone-for-crypto">launch $TRUMP</a> and $MELANIA right before taking the oath of office.&nbsp;



To a large portion of the industry, it’s fine if Trump waits weeks or even months before he executes promised crypto policies (whether some of these things can even be accomplished via executive order is legally questionable anyway).&nbsp;



But the president of the United States engaging in this speculative, highly-manipulated corner of the crypto space is decidedly not fine.&nbsp;



Even Selkis, who arguably <a href="https://fortune.com/crypto/2024/07/19/ryan-selkis-messari-trump-steps-down-ceo-politcally-charged-war/">lost control</a> of his company over his vocal support for Trump, said the $MELANIA launch was a <a href="https://x.com/twobitidiot/status/1881106291445449215">mistake</a>.



The memecoins have seemingly put the industry on edge. When $TRUMP launched at 9 pm last Friday night, the mood at <a href="https://blockworks.co/news/inauguration-weekend-crypto-ball">the Crypto Ball</a> shifted. It’s no secret that Trump has a chaotic approach to decision-making, but it’s almost as if some in the crypto world are realizing it —&nbsp;and seeing the ramifications — for the first time.&nbsp;



Lobbyists and donors were unsettled. Almost no one wanted to comment on it, at least on the record — I’d imagine in fear of alienating the administration or Trump himself. Blockchain Association director of government relations Ron Hammond even <a href="https://x.com/RonwHammond/status/1881372088050872808">joked</a> that he’s “staying out of it.”&nbsp;



We’re just barely over 24 hours into Trump’s second term. For those of us watching from the sidelines, it’s shaping up to be a really entertaining four years.



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