CFTC Seeks Public Comment on Advanced Notice of Proposed Rulemaking Relating to Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets

The Commodity Futures Trading Commission today published an Advanced Notice of Proposed Rulemaking to provide notice of, and seek public comment regarding, its intent to establish a comprehensive regulatory framework comprised of fit-for-purpose rules concerning section 2(c)(2)(D) of the Commodity Exchange Act and retail commodity transactions described thereunder involving crypto assets (such transactions, “CTXs”).

Commodity Futures Trading Commission Logo

CFTC Chair Michael Selig outlined the details in a speech delivered October 5 at the Fordham Law Blockchain Regulatory Symposium and in an op-ed published in the Wall Street Journal, linking the initiative to the CLARITY Act's failure to advance in the Senate. Selig noted at the outset of his remarks that his words reflect his personal views as Chair, not necessarily those of the full Commission.

What the CFTC Published

The document covers Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM), addressing the “retail commodity transactions” defined under section 2(c)(2)(D) of the Commodity Exchange Act. The CFTC calls these CTXs: in Selig's framing, transactions where a retail customer trades crypto with margin, leverage, or financing. The ANPRM solicits comment on three fronts: how to prevent abusive practices under a uniform national regime; how to give market participants crypto-specific guidance on the compliance practices the CFTC, drawing on its supervisory experience since 2014, considers sound; and how to codify the CAM as a designated contract market subcategory designed specifically for CTXs.

Written comments must be submitted within 60 days of the ANPRM's publication in the Federal Register and will be publicly visible on Regulations.gov. The press release does not specify the Federal Register publication date, so the exact deadline is not yet determinable. The Commission states it will use the comments to inform possible future action, such as a formal rulemaking proposal. Selig said the goal is to prevent fraudulent schemes of the kind seen with FTX, not merely pursue them after the fact.

The Three-Step Ladder and the CAM

Selig describes the market as a three-step ladder. On the first step sit ordinary spot exchanges, subject to CFTC anti-fraud and anti-manipulation authority but otherwise governed broadly by state money-transmission laws. The second step holds exchanges that also offer retail customers margin, leverage, or financing: by law they must register with the CFTC and fall under its exclusive jurisdiction. The third step covers venues that also allow perpetuals and other derivatives, also registered with the CFTC. Today's proposals target the second step.

Exchanges already registered as designated contract markets (DCMs) could offer CTXs under fit-for-purpose rules. Platforms wanting to offer only CTXs could register either as a standard DCM or as a CAM. A CAM would need to satisfy the core principles the law requires of DCMs, with regulations tailored for CTXs, while venues offering futures, options, or swaps would remain in the existing DCM regime. Selig stressed this is a federal option: just as in banking, where a firm chooses between a federal or state charter, crypto firms could choose between state licenses and federal registration depending on their product mix. Only Congress, he said, can make CFTC registration mandatory for all crypto exchanges.

Measures on the Table

Among the protections the framework would contemplate, according to Selig's remarks at the Fordham symposium, are manipulation-risk assessments at the point of listing, tied to an asset's distribution and concentration, lock-up periods, vesting schedules, and programmatic issuance or buyback arrangements. The ANPRM also raises a proof-of-reserves requirement for exchanges holding customer assets in omnibus accounts, and mandatory intermediation by a futures commission merchant (FCM), bringing with it protections on disclosures, capital, and fund segregation, alongside Bank Secrecy Act anti-money-laundering and know-your-customer obligations. The CFTC says it wants comment on how to adapt FCM requirements for the specifics of crypto activity.

For those aligned with the cypherpunk tradition, the agency proposes codifying an interpretation of “actual delivery”: transferring a crypto asset to a user's external, non-custodial wallet within 28 days would generally satisfy the exception to the requirement of trading on a registered exchange. Outside the current proposal's scope, though under active study, is a durable policy for developers who publish software without soliciting orders, controlling execution, or holding client assets. Under such a framework, writing code alone would not trigger registration as an introducing broker.

Remarks at the Fordham Law Blockchain Regulatory Symposium

Chris, thank you for the kind introduction. It's great to be back with you in New York City. It feels like just yesterday that we were sitting together talking shop in Willkie's offices down the street. After having had the opportunity to work with you at the Commission and in private practice, it's an incredible honor to now follow in your footsteps as Chairman of the Commodity Futures Trading Commission (CFTC). But there will always be only one “CryptoDad.”

Commodity Futures Trading Commission Logo

Why Now: The CLARITY Act

The political backdrop is explicit. On September 15, the Senate rejected the cloture motion on the CLARITY Act by 49 votes in favor and 50 against, falling short of the 60 required, as covered in our article on the failed vote. Selig stated publicly that he was disappointed: the bill would have drawn a statutory line between securities and non-securities, required centralized crypto exchanges and brokers to register with the CFTC, and introduced tailored core principles. In his editorial, he wrote that agency action cannot indefinitely substitute for a legislative framework passed by Congress. The move had, in any case, been signaled conditionally on August 20, when Selig declared that if the CLARITY Act stalled, the CFTC would deploy its existing authority to launch a crypto markets regime.

The CFTC is relying on a joint interpretation published with the SEC in March 2026 that classifies crypto assets into five categories, placing Bitcoin and Ether among digital commodities, meaning assets that are not securities. On the SEC side, Selig also referenced the agency's proposed Regulation Crypto Assets, released on August 21.

The Bigger Picture

In just over ten days, the Federal Reserve published its rules for bank-issued stablecoins, the SEC introduced its crypto custody proposal, and now the CFTC is opening the exchange front. Three regulators assembling a patchwork while Congress remains gridlocked.

The picture carries a dual lesson. On one hand, nothing changes for platforms at this stage: after an advance notice, the process still requires a formal proposal, a public comment period, and a final rule, and the federal pathway leaves two routes open, state and federal, without a general mandate that only legislation could create. On the other hand, comparing this to Europe clarifies the difference in approach. Selig himself cites MiCA, alongside the UK and Singapore, as organic frameworks adopted in the wake of FTX's collapse, while the United States proceeds through parallel, voluntary tracks. That European framework is already being stress-tested, as seen in the Binance case. We'll continue tracking the Federal Register publication and the opening of the comment period.

The story is compelling less because yet another network supports USDT and more because of the historical irony: the dominant stablecoin is returning to the infrastructure it started on, but with an entirely different architecture. Here is what has been announced, by whom, and what changes technically.

Tether to Launch USD₮ on RGB, Expanding Native Bitcoin Stablecoin Support - Tether.io

28 August, 2025 — Tether, the largest company in the digital assets industry, today announced plans to launch USD₮ on RGB, a next-generation protocol for issuing digital assets on Bitcoin. RGB recently reached mainnet with its 0.11.1 release and has been designed to make Bitcoin more than just a store of value. By enabling private, […]

Tether.io

What Was Announced, and by Whom

The first official step came on August 28, 2025, when Tether published a press release announcing its intention to issue USD₮ on RGB, a protocol for issuing and transferring assets on Bitcoin and the Lightning Network, citing a launch “in the near future” without specifying a date. Then on March 6, 2026, Utexo announced a $7.5 million seed round led by Tether. CEO Paolo Ardoino stated that Bitcoin had always been central to Tether’s vision for USDT and that what had been missing was production-ready infrastructure. According to crypto.news, participants in the round included Franklin Templeton, Maven11 Capital, Fulgur Ventures, Auros Ventures, and Flow Traders.

The timeline, though, has shifted repeatedly. As early as July 6, according to crypto.news’ account of an interview published by Bitcoin Magazine, the debut was expected within weeks, possibly in July, with wallet support including Tether Wallet. At the end of September, Ardoino wrote on X that USDT was coming back, posting “it’s coming home,” as reported by CoinDesk. On October 2, Ihnatiuk pointed to October as the target month, adding that Utexo had obtained a commercial license to issue USDT on Bitcoin under the Tether brand and to distribute it, through its own infrastructure, to exchanges, wallets, and payment providers.

From Omni to RGB: What Changes Technically

In 2014, USDT launched on Bitcoin via the Omni protocol, which recorded token data directly on the blockchain. Over time, the vast majority of USDT migrated to faster and cheaper networks like Tron and Ethereum, and in 2023 Tether announced it would stop issuing new USDT on Bitcoin’s legacy Omni layer.

RGB works in the opposite direction. With client-side validation, asset data stays off-chain, and only compact proofs are anchored to the Bitcoin ledger. Tether’s own press release explains that this model reduces on-chain footprint, protects privacy, and enables Lightning Network compatibility, without any new opcodes or changes to Bitcoin’s consensus rules. Ownership is tied to Bitcoin’s unspent transaction outputs, or UTXOs. Bringing USDT to Bitcoin via RGB does not mean placing every USDT transaction on the Bitcoin blockchain, and according to 24/7 Wall St., miners would earn only minimal fees from the project.

Utexo Raises $7.5M Led by Tether to Launch Native USDT Settlements on Bitcoin

Detailed price information for Franklin Resources (BEN-N) from The Globe and Mail including charting and trades.

The Globe and MailUnknown

Utexo’s documentation describes an execution and settlement layer for payment operators, where transactions run off-chain and state is anchored to Bitcoin, without introducing a new consensus mechanism. Three services have been announced: private USDT transfers, direct BTC-to-USDT swaps without intermediaries, and bitcoin-collateralized loans without wrapping. Lightning Network support is expected to follow after the mainnet launch.

The Freezing Problem

There is one point that the RGB version makes particularly sensitive. On Ethereum and Tron, Tether can freeze individual addresses, a tool it has deployed at scale: in our in-depth piece on the Senate report on USDT and Iran, we reported how the company claims to have helped freeze nearly $550 million linked to Iran in 2026. On RGB, assets are tied to UTXOs, not to addresses. According to ChainCatcher, as cited by KuCoin, Utexo would not be able to freeze assets the way Tether does on Ethereum; instead it would maintain a blacklist of UTXOs linked to sanctioned or illicit activity, distributed to exchanges and institutions to block redemption. CryptoBriefing describes the same approach as blacklisting specific outputs rather than freezing entire accounts. In the sources we were able to consult, this mechanism is not yet formally documented by either Tether or Utexo.

Utexo Overview - Utexo Protocol Docs

Utexo Protocol Docs

What Is Confirmed and What Is Not

The distinction that matters. Source: Tether and Utexo press releases, industry press, October 2026

• Primary sources: Tether’s intention to issue USD₮ on RGB (August 28, 2025) and Utexo’s Tether-led seed round (March 6, 2026).
• Industry press only: October launch date, Utexo commercial license, UTXO blacklist mechanism.
• Not confirmed: a specific launch date, officially announced distribution partners, primary documentation on the blacklist mechanism.

The Bigger Picture

The real interest lies in the architectural reversal. Omni used Bitcoin as a place to write token data; RGB uses it as an anchor, leaving data with the parties involved. For Tether, it is a way to return to Bitcoin without routing every transaction through it. For Bitcoin, it is the prospect of becoming a settlement layer for stablecoins without touching its base protocol.

Two lessons stand out. First, the project’s success won’t depend on the technology itself but on adoption: a new USDT variant only matters if wallets, exchanges, and payment providers actually support it, and today no names have been publicly confirmed. Second, the privacy that makes RGB attractive is precisely what challenges Tether’s compliance model, which has relied on freezing addresses across public networks. For European readers, a further open question is how this version would sit within the MiCA framework, where USDT is already under regulatory pressure, as both CryptoBriefing and Yahoo Finance have noted. While the Federal Reserve was drafting rules for bank-issued stablecoins, the world’s largest stablecoin issuer is quietly reopening a different path on a separate network. Whether the launch actually happens, and when, is what we’ll be watching.

Enormous Opportunity, but Systemic Risk Cannot Be Ignored

Lagarde opened with a direct acknowledgment that AI carries real economic upside. Her concern, as stated at the ESRB session, is that the upside comes bundled with risks that current frameworks were not designed to handle.

“If we want to use AI wisely, policymakers must anticipate risks to the financial system. The AI Act in Europe sets rules for artificial intelligence systems based on the risks they pose. But that is not enough: addressing frontier models, which are becoming increasingly powerful, will also require cooperation at a global level.”

She then sharpened the warning, describing AI as presenting:

“Enormous opportunities in terms of efficiency, but also the emergence of new systemic risks.”

The critical phrase is “systemic risks”: not isolated failures affecting one institution, but cascading events capable of destabilizing entire financial networks. That framing carries real weight coming from the head of the ECB.

The Cold War Parallel: AI and Nuclear Arms Control

To illustrate the stakes, Lagarde reached for a historical analogy that surprised many in the room. During the Cold War, the United States and the Soviet Union negotiated limits on their nuclear capabilities and worked together to prevent further proliferation, even while competing fiercely on every other front. The comparison to today's AI race is, in her view, both apt and sobering.

“The difference between that era and today is that the United States holds a clear lead in frontier AI. They might view any global agreement as a means of slowing them down, from their perspective, but that is a short-sighted view.”

Lagarde's point is that there is a shared planetary interest in preventing the most advanced AI models from falling into the hands of fraudsters and bad actors. That interest does not disappear because one nation currently leads the race. She called for global cooperation on AI governance involving all countries that have developed and deployed the technology, not just European ones.

The ESRB, which Lagarde chairs, has formally flagged several specific risks tied to advanced AI models. Cyber defenses protecting critical financial systems need urgent review, because frontier AI changes the threat landscape that those defenses face. Financial authorities should also ensure that firms have rapid-response plans ready, and that cross-sector coordination protocols exist, for the scenario where an attack spreads beyond a single institution to the wider industry.

Shared Concerns: When AI Firepower Falls Into the Wrong Hands

Lagarde's warnings echo concerns raised by U.S. Senator Bernie Sanders, who has argued that continuously flooding the AI sector with capital is dangerous precisely because models are already scaling faster than governance can keep pace. Sanders went as far as drafting proposed legislation to slow down AI model development, a move that reflects a growing bipartisan unease in Washington about unchecked AI scaling.

The specific threat scenario that concerns both Lagarde and critics like Sanders is not abstract. An AI-powered agent instructed to brute-force its way through the cyber defenses of a bank, a blockchain network, or a virtual payment system could operate continuously, at machine speed, with a persistence no human attacker can match. If that kind of capability were weaponized by a hostile actor, the resulting breach could trigger a domino effect across interconnected financial infrastructure, leaving the entire online transaction system exposed.

The ESRB session in Frankfurt was not a theoretical exercise. Lagarde used the platform to call for a concrete international framework, one that treats advanced AI as a systemic risk category deserving the same institutional coordination that nuclear non-proliferation received in the twentieth century. Whether Washington, Beijing, or London are ready to engage on those terms is the open question that regulators across the EU will be watching closely in the months ahead.

What Changes from November 1

The rules apply to individuals and companies sending crypto to, or receiving crypto from, non-residents, including transfers to one's own account on a foreign exchange. Domestic transfers within Brazil are unaffected. For amounts up to $50,000, users select a purpose from a simplified ten-item list. Above that threshold, 96 classification codes are available. Transfers to one's own overseas account come pre-filled with purpose and counterparty, requiring only confirmation. Companies must additionally declare whether the counterparty belongs to the same economic group.

Self-custody wallets follow a separate path. No purpose declaration is required, but users must confirm ownership of the wallet. Binance will report these operations to the central bank under a distinct category. Some international transfers are also capped at $100,000 per transaction when the counterparty is not authorized on the Brazilian foreign-exchange market.

The Regulatory Framework

Binance will report transactions monthly to the Banco Central do Brasil under Resolução BCB 521/2025, the rule that brings international virtual-asset transfers inside Brazil's foreign-exchange regime. The exchange has clarified this is not the Travel Rule, which Brazil is rolling out in phases: domestically in 2027 and internationally in 2028. On January 1, 2027, Resolução BCB 584 takes effect, introducing precautionary suspensions that can delay certain outgoing transfers while additional checks are carried out. Binance has promised further details before the November 1 deadline.

The scale of Brazil's crypto market puts these rules in context. According to Chainalysis, between July 2025 and June 2026 Brazil moved $252.5 billion in crypto, ranking first in the 2026 Global Crypto Adoption Index and second globally for cross-border flows, despite a 1.6% year-on-year decline in activity. Tax data from Brazilian authorities shows 1.13 trillion reais in stablecoin transactions declared between August 2019 and December 2025, representing roughly 72% of all reported crypto activity in the country.

Why This Matters for Global Exchange Users

In the European Union, the obligation to share originator and beneficiary information on crypto transfers has already applied since December 30, 2024, under the Transfer of Funds Regulation (TFR). Binance is also under scrutiny from European regulators over its use of the reverse solicitation clause permitted under MiCA. The Brazilian case illustrates how the same exchange must adapt its compliance procedures jurisdiction by jurisdiction, with requirements that differ substantially from one country to the next.

For anyone using a global platform like Binance, the information required at the point of transfer and the time it takes for withdrawals and deposits to clear now depend directly on their country of residence and the local regulatory framework in force. Brazil and the EU are converging on the same underlying principle: cross-border crypto flows must be traceable. How each jurisdiction implements that principle is where the differences emerge.

Here is what the SEC actually approved, why it said yes, what these products genuinely are, and why they cannot start trading yet.

What the SEC Actually Approved

The order approves a proposed rule amendment filed by Cboe BZX on August 10, 2026, and published for comment in the Federal Register on August 19. The SEC received zero public comments. The order was signed by the Division of Trading and Markets under delegated authority. Cboe needed this procedure because its existing rules for Commodity-Based Trust Shares exclude from standard listing any products targeting a multiple, or inverse multiple, of a benchmark's performance. The six funds meet every other listing requirement but fail specifically on leverage.

A terminological point matters here. The six funds carry “ETF” in their names, but footnote 5 of the order clarifies that these are Commodity-Based Trust Shares and therefore exchange-traded products, or ETPs: securities registered under the Securities Act that are not regulated as investment companies under the Investment Company Act of 1940. The trust sponsor is Volatility Shares, the trustee is Wilmington Trust, and the custodian is U.S. Bank.

Why the SEC Said Yes

The SEC found the proposal consistent with Section 6(b)(5) of the Exchange Act, which requires exchange rules designed to prevent fraud and manipulation and protect investors and the public interest, and with Section 11A(a)(1)(C)(iii) on the availability of quotation and transaction information. Three reasons drove the approval.

First: each of the six underlying assets is tied to a futures contract that has traded for at least six months on a CFTC-registered designated contract market (DCM), and Cboe holds surveillance-sharing agreements covering each one. Second: leveraged products on the same underlyings already trade. The order specifically cites the existing 2x Volatility Shares products on Bitcoin (BITX) and Ether (ETHU), noting that applying consistent standards to products with the same economic exposure levels the playing field among issuers. The order also references three previously listed 3x commodity products that are no longer trading, without explaining why they were delisted.

SEC.gov | Notice of Filing of Proposed Rule Change to List and Trade Shares of iShares Bitcoin Premium Income ETF under Nasdaq Rule 5711(d) (Commodity-Based Trust Shares)

U.S. Securities and Exchange Commission

Third, on investor protection: the SEC is explicit that protection does not come from the order itself, but from existing rules on recommendations and advice. That means Regulation Best Interest for brokers recommending these products to retail clients, the fiduciary duty of advisers under the Investment Advisers Act, the enhanced sales practice and margin requirements FINRA imposes on leveraged and inverse securities, and Cboe's own suitability rules. The order evaluates whether the exchange's rule is consistent with securities law. It is not a judgment on whether these products are suitable for any individual investor.

What the Order Approves, and What It Does Not

The distinction that matters. Source: SEC, order 34-106577, October 2, 2026

• Approves: the rule allowing Cboe BZX to list and trade shares of the six funds.
• Does not set: a launch date. Per Cboe's own filing, the registration must first become effective.
• Does not replace: suitability and recommendation rules, which remain with brokers and advisers.

What These Products Actually Are: Not a Bitcoin Multiplier

According to the order, each fund targets daily results, gross of fees and expenses, equal to three times the daily performance of a benchmark composed of front-month and second-month futures on the underlying asset. The fund invests in those benchmark futures alongside cash and cash equivalents held as collateral or margin. If those contracts are unavailable due to price or position limits, the fund may use longer-dated futures, other ETFs or ETPs with exposure to the same underlying, or listed options. These are not funds that hold Bitcoin or Ether directly: they use derivatives. The Cboe notice adds that the sponsor adjusts the number of futures held in portfolio daily to maintain the target exposure.

SEC.gov | Notice of Filing, and Order Granting Accelerated Approval of, a Proposed Rule Change to Amend Rule 14.11(e)(4) (Commodity-Based Trust Shares)

U.S. Securities and Exchange Commission

The word “daily” changes outcomes over multi-day periods in ways that surprise many investors. Over four alternating sessions of +10% and -10%, Bitcoin finishes at -1.99% while a hypothetical 3x product falls to -17.19%, not the -5.97% a simple “multiply by three” calculation would suggest. In a trending market, two consecutive 10% gains produce +21% for Bitcoin and +69% for the 3x. The full worked examples are in our guide to 2x and 3x leveraged crypto ETFs. The point here is narrow: the SEC order does not change the nature of these instruments, and their description in the filing is that of products with a daily objective.

Why Trading Cannot Start Yet

The approval covers the listing rule, not the public offering. The order sets no launch date. It is Cboe's own notice, in footnote 8, that specifies the trust's registration under the Securities Act is not yet effective and that shares will not trade on the exchange until it becomes so. The notice also states that at least 100,000 shares of each fund must be outstanding before trading begins. At the time of writing, the sources we consulted reported neither an effective registration date nor a launch date for any of the six funds.

For European readers, one additional clarification applies. American retail products of this type are generally not purchasable by retail clients in the European Union, because they lack the Key Information Document (KID) required under the PRIIPs regulation. MiCA does not change this structural barrier for US-domiciled products.

Bitcoin and Ether Alongside Gold and Oil

The editorially significant detail in this order is the placement. Bitcoin and Ether receive no special treatment: they are two of six “Reference Commodities” in the order, sitting beside gold, silver, crude oil, and natural gas, all processed under the same Commodity-Based Trust Shares framework.

The Six Products and Their Reference Futures

COMEX, CME, and NYMEX are all part of the CME Group. Source: Cboe BZX notice of filing, 91 FR 53686

The path to this order is cumulative. In September 2025, the SEC had approved generic listing standards for Commodity-Based Trust Shares. On July 29, 2026, per the Cboe notice, those standards were amended to permit actively managed products, add a definition of “digital commodity,” and allow up to 15% of a trust's net asset value to be composed of assets that do not meet the generic criteria. The October 2 order adds the leverage exception on top of that framework. Among the ETP precedents the order cites for transparency and surveillance parity is the iShares Bitcoin Premium Income ETF, approved by the SEC on May 29, 2026.

The Bigger Picture

Following spot ETFs, whose substantial inflows we covered separately, and after 2x products and income-generating crypto wrappers, the US regulated infrastructure is now extending to more sophisticated and higher-risk crypto instruments. The timing is striking. On October 1, one day before this order, the SEC had also published its proposed rule on crypto custody for advisers and funds. A few days earlier, the Federal Reserve had released its rules for bank-issued stablecoins. In under two weeks, the SEC and the Federal Reserve together added three components to the regulated perimeter around crypto products.

Two readings follow from all of this. The order is what it says it is: a clearance for a listing rule, with investor protections delegated to existing suitability and recommendation frameworks rather than embedded in the approval itself. Separately, the fact that Bitcoin and Ether are processed in the same order as gold and oil signals how crypto's entry into regulated finance increasingly runs through the standardized instruments of commodity markets, complete with their costs, their position limits, and their daily reset. Watch for the registration to become effective and for any announced launch date. For readers new to leveraged crypto products, our guide on what cryptocurrencies are provides a useful starting point.

What the Lawsuit Actually Targets

Filed under the Administrative Procedure Act, the complaint challenges the OCC's final rule of March 2, 2026, tied to Interpretive Letter 1176, and asks the court to declare both unlawful. The ICBA argues the OCC exceeded the authority granted by the National Bank Act, on the grounds that a national trust bank should conduct fiduciary activities, not unrelated business lines. The suit also seeks to void the conditional approval granted in February to Protego Holdings, a company active in digital asset custody, trading, lending, and issuance.

The Regulatory Gap at the Heart of the Case

The ICBA contends that crypto trust banks, because they don't take deposits, operate largely outside the federal regulatory perimeter. A national trust charter, the group argues, overrides many state-level rules, including consumer protection statutes. Missing from these institutions: Community Reinvestment Act obligations, consolidated supervision, capital and liquidity requirements, and FDIC insurance coverage.

Before the recent wave of approvals, the ICBA argues, the OCC had never authorized a national bank that lacked both deposit-taking and genuine fiduciary activities. ICBA president Rebeca Romero Rainey put it directly in a statement: “Congress did not create the trust charter as a side door for crypto companies.”

Stablecoin Legislation Makes the Stakes Higher

The broader context is the GENIUS Act. According to American Banker, the legislation made trust charters significantly more attractive because it allows crypto firms to qualify as federal issuers of payment stablecoins. The ICBA's complaint states, per Yahoo Finance, that the OCC approved 21 national trust banks, including conditionally, during the Trump administration. The ICBA further argues that the GENIUS Act, which takes effect by January 18, 2027, cannot retroactively cure charters already granted before the law entered force.

Why This Matters Beyond US Borders

The OCC had not issued a public response to the lawsuit at the time of publication. The questions raised here, though, are not uniquely American. Who should be permitted to custody digital assets on behalf of third parties, and under what safeguards, is a question MiCA is also wrestling with in its own framework across the EU. The GENIUS Act's stablecoin provisions, for instance, have parallels in ongoing European debates about e-money token issuers and their reserve requirements under MiCA Title III.

If a federal judge strikes down the OCC's March 2026 rule, the ruling could directly affect firms that already hold conditional trust charters or are waiting on pending applications. Protego Holdings is the most visible name in the complaint, but the outcome will set precedent for every crypto firm currently eyeing a federal banking license. Investors and operators on both sides of the Atlantic should watch the District of Columbia docket closely over the coming months.

The topic returned to the spotlight on October 2, when the SEC approved the rule change allowing Cboe BZX to list products with 3x daily exposure to Bitcoin and Ether in the United States. This guide focuses not on that news event, but on the underlying mechanism: what these instruments are, how the daily reset works, why cumulative returns can diverge sharply from “Bitcoin times three,” and what separates US products from their European counterparts. All numerical examples are hypothetical, calculated by the SpazioCrypto editorial team on a gross basis before costs and tracking differences. They illustrate the shape of the risk, not a prediction of any specific outcome.

Product Status as of October 4, 2026

This is the only section of the guide subject to becoming outdated. The mechanics described everywhere else do not change.

On October 2, 2026, the SEC approved the rule amendment allowing Cboe BZX to list six 3x products issued by Volatility Shares through the VS Trust, including a 3x Bitcoin ETF and a 3x Ether ETF. The approval covers the listing itself, not the commencement of trading: the trust registration must still become effective, and at the time of research no launch date had been announced. 2x versions on Bitcoin and Ether from the same issuer are already trading in the United States. In Europe, 3x products on Bitcoin and Ether have existed for longer, as explained further below. For the broader regulatory context on digital asset custody, see our deep-dive on the SEC custody and funds proposal.

What Is a Leveraged Crypto ETF?

A leveraged ETF is an exchange-traded fund that seeks to replicate a multiple of the daily performance of an index or asset, typically 2x or 3x. Buyers gain amplified exposure without opening a margin account or directly trading futures or other derivatives: the fund handles all of that internally. In the case of crypto products, the underlying asset is Bitcoin or Ether, although, as we will see, not in the sense of “owning” those tokens outright.

The label “ETF” deserves a caveat. In the filing submitted by Cboe, the new US funds are described as commodity pools registered with the CFTC, not as investment companies under the Investment Company Act of 1940. The filing uses the term exchange-traded product, or ETP, for funds like these that lack that registration. European equivalents are typically ETPs or ETNs, meaning debt securities issued by a company, which adds issuer risk that a traditional fund does not carry. Leverage itself is hardly new: the same filing notes that approximately sixty-seven products with a 3x or inverse-3x objective are already listed in the United States, fifty-one ETFs and sixteen ETNs. What changes now is the crypto underlying. To brush up on the basics, see our guide on what cryptocurrencies are.

What 2x and 3x Actually Mean

A 2x product targets twice the daily move of its benchmark; a 3x product targets three times. If the benchmark gains 10% in a single session, the 2x objective is +20% and the 3x objective is +30%. If the benchmark falls 10%, those objectives become -20% and -30%. Amplification works in both directions, which is precisely why the price of a potentially larger gain is a potentially larger loss. Inverse versions also exist, such as the -3x products listed in Europe, which aim to profit when the underlying falls. This guide focuses on the long versions, the ones most widely discussed.

Two words carry more weight than any others: “daily” and “target.” The Cboe filing refers to daily results, before fees and expenses, corresponding to three times the benchmark's daily performance. That is a target, not a guarantee, and it applies to no period longer than a single day.

3x Bitcoin ETF: A Simple Example Starting With $1,000

Imagine investing $1,000 in a 3x Bitcoin product for a single day. If Bitcoin gains 10%, the objective is +30% and the position rises to roughly $1,300. If Bitcoin falls 10%, the objective is -30% and the position drops to roughly $700. As long as the analysis stays within one trading day, the “times three” rule holds. The table below shows the most straightforward single-day scenarios, before costs and tracking differences, calculated by SpazioCrypto.

Why a Daily 3x Is Not a Monthly 3x

The complication begins once you hold the product for two, three, or ten days. Each day, the target is recalculated on the fund's current value: the next day's result applies to whatever value the fund reached after the previous day. In technical terms, daily returns compound, and compounding is not the same as simple addition. A four-day alternating sequence makes this concrete: Bitcoin gains 10%, loses 10%, gains 10%, loses 10%.

The table tells a precise story. After two days, Bitcoin is down 1%, and “three times Bitcoin” might suggest a −3% result. The 3x fund, by contrast, registers −9%. After four days Bitcoin sits at −1.99%, the naive calculation points to −5.97%. The 3x lands at −17.19%. Bitcoin is barely moved; the fund has shed more than a sixth of its value. There's no management error at play. This is compounding arithmetic, applied to a daily objective.

The effect doesn't always cut against the holder, though. If Bitcoin gains 10% on two consecutive days, it climbs from 100 to 121 (+21%): “three times” would imply +63%, yet the 3x actually delivers +69% (1,000 to 1,300 to 1,690). The same logic applies on the downside: two consecutive 10% drops equal −19% for Bitcoin, and the 3x logs −51% rather than the −57% a naive calculation would suggest. In a steady, prolonged trend compounding amplifies gains even further; in a choppy market it erodes them. For anyone watching crypto markets, where frequent swings are the norm, the erosion scenario is far from a remote possibility.

What the daily reset actually does

The daily reset is the operation by which the fund, each day, restores its exposure to the promised level: three times its current net asset value. The filing describes exactly this process: the sponsor increases or decreases the number of futures in the portfolio to account for subscriptions, redemptions, and benchmark movements, so the daily target can be maintained. Starting with $1,000 and a 3x, initial exposure is $3,000. If Bitcoin rises 10%, exposure moves to $3,300 and the fund's value reaches $1,300; to restore triple exposure at $3,900, the fund must buy an additional $600 in futures. If Bitcoin falls 10%, exposure drops to $2,700 and value falls to $700; to return to $2,100, the fund sells $600.

The mechanism has one consequence that explains everything else: the fund buys after rallies and sells after declines, every single day, automatically. When prices keep moving in the same direction, this behavior amplifies the outcome. When prices alternate, it penalizes performance.

Volatility decay: why Bitcoin can return to square one while the leveraged ETF can't

Practitioners call this phenomenon volatility decay, or volatility erosion. The most instructive example is when Bitcoin, after a day of gains, fully retraces and ends exactly where it started. Consider: Bitcoin moves from 100 to 110 (+10%), then falls back to 100 the next day (−9.09%, the exact decline needed to retrace). The price is identical to day one. The 3x fund, over that same period, gained +30% then lost −27.27%: from $1,000 to $1,300, then to roughly $945.45, a net loss of 5.45%. The 2x gained +20% then lost −18.18%: from $1,000 to $1,200, then to roughly $981.82, a net loss of 1.82%. Bitcoin breaks even. The leveraged funds don't.

There's a mathematical detail that clarifies why the 3x is more sensitive than the 2x. In the standard approximation, volatility drag scales with the product of leverage times leverage-minus-one: for a 2x that factor is 2, for a 3x it's 6. At equal volatility, a 3x therefore incurs roughly triple the erosion of a 2x. The higher the volatility and the longer a position is held, the wider the gap versus “Bitcoin's return multiplied by three.” The same reasoning applies to Ether-based products, which use an identical futures structure; for a breakdown of the differences between the two networks, see the Bitcoin vs. Ethereum comparison guide.

Spot Bitcoin ETF vs. 2x/3x Bitcoin products: two fundamentally different instruments

The most important distinction concerns what the fund actually holds. A spot Bitcoin ETF holds real Bitcoin, custodied by an appointed custodian, and aims to track the price without leverage; we covered the massive flows into these vehicles in the analysis of the record ETF inflow series. A leveraged fund is a different animal: it uses derivatives and cash to achieve a daily multiple of Bitcoin's move, and holds no physical Bitcoin.

Why futures rather than spot Bitcoin

The answer is largely technical. Tripling exposure to Bitcoin requires instruments capable of delivering notional exposure beyond the capital invested, and futures, which demand only a margin deposit, are the natural tool for that. For U.S.-listed products, the filing names as benchmark a portfolio of CME Bitcoin futures in the front and second months, rolling from the expiring contract to the next over five trading days each month, with roughly 20% of the expiring positions replaced each day of that window, per SpazioCrypto's review of the Cboe BZX filing. The fund does not invest in physical Bitcoin; it holds futures, cash, and cash equivalents that serve as collateral. If futures are unavailable (for example, due to price or position limits), the fund may fall back on longer-dated contracts, other Bitcoin-exposed ETFs or ETPs, and options.

The practical implication is subtle but real: the “3x” references a futures-based benchmark, not necessarily the Bitcoin spot price. The roll from one contract to the next, and the spread between futures and underlying prices, can introduce additional tracking differences beyond whatever Bitcoin itself is doing on exchanges.

What happens if Bitcoin drops 10%, 20%, or 30% in a single day

Leverage accelerates losses faster than intuition suggests. With a 3x, a daily decline of 10% in Bitcoin translates to −30% for the fund; a 20% drop becomes −60%; a 30% drop becomes −90%. There's also a theoretical wipeout threshold: because exposure is triple the NAV, a single-day decline of roughly one-third of the underlying (−33.3%) would zero out a 3x product in theory. For a 2x, that threshold sits at a 50% daily drop in Bitcoin.

Single-day drawdowns of this magnitude are rare. These figures are stress-test scenarios, not forecasts. The point is to show the shape of the risk: after a steep drop, the base from which you need to recover shrinks dramatically. An extreme example illustrates it clearly: Bitcoin falls 30% one day and rebounds 30% the next, moving from 100 to 70 and then to 91, a net loss of 9%. The 3x fund drops to €100 and climbs back only to €190, a loss of 81% over the same two days. Getting back to the original €1,000 from €190 would require a gain of roughly 426%.

Leveraged crypto ETFs: U.S. availability and what European investors need to know

In the United States, Volatility Shares has traded 2x Bitcoin and Ether ETFs for some time. The 3x versions received Cboe listing approval on October 2, 2026, but, as noted at the outset, they still need to clear the SEC registration process before trading can begin. Prior to launch, Cboe member firms must receive a specific risk disclosure covering, among other things, trading outside regular market hours, when the fund's indicative value is not updated in real time. The filing also references the suitability obligations that U.S. brokers must satisfy before offering leveraged products to clients.

For European investors, the picture is different. U.S.-listed products are generally unavailable to EU retail clients because their issuers do not produce the Key Information Document (KID) required under PRIIPs regulation. That same barrier is why European savers could not directly purchase U.S.-listed spot Bitcoin ETFs. European-domiciled alternatives do exist: Leverage Shares listed 3x long and −3x short ETPs on Bitcoin and Ethereum on the Swiss SIX exchange in November 2025, and, per Structured Retail Products data, brought the same four products to Borsa Italiana's SeDeX segment on February 11, 2026. Unlike margin derivatives, these ETPs carry no margin call and cap losses at the amount invested, though that full amount can still be nearly wiped out.

Practical access for an Italian retail investor depends on their broker, the KID's availability, and their client classification. Some product pages from the issuer carry a “professional investors only” label, so verification with your intermediary is essential before making any assumptions. One further distinction worth keeping in mind: ESMA caps leverage for retail CFDs on crypto assets at 2:1, a limit that does not apply to a 3x ETP.

Key risks at a glance

Here is a summary of the risks covered so far, plus a few subtler ones:

• Volatility decay: in choppy markets the fund loses ground even when the underlying price goes nowhere, and the drag compounds the longer you hold.
• Amplified losses and potential wipeout: a single-day drop of roughly one-third in the underlying can theoretically zero out a 3x fund, and recovering from deep losses becomes proportionally far harder.
• Costs and tracking differences: management fees, futures roll costs, and the spread versus spot price all stack on top of the leverage effect.
• Issuer risk (in Europe): for ETPs and ETNs, the security represents a debt obligation of the issuing company.
• Liquidity and trading hours: outside regular session hours, the fund's indicative value is not updated in real time.
• Leveraged market dynamics: in crypto, cascading liquidations of leveraged positions can produce sharp, sudden moves, as seen in the short squeeze that pushed Bitcoin past $87,000, a clear example of how leverage amplifies market swings.

Who are these products actually designed for?

Issuers describe these products as tools for active traders with short time horizons who want to express a directional view over a single day or a few days. Volatility Shares presents itself on its own profile as an issuer of ETFs for “sophisticated traders,” and the filing references the suitability rules U.S. brokers must follow before recommending them. Those signals alone indicate a product that was never built for a general audience. Investors with a multi-year horizon, or a steady, systematic approach like Dollar-Cost Averaging (DCA), operate on a fundamentally different logic from a fund that resets every single day.

Sources and methodology

Details on the new 3x products are drawn from the Cboe BZX notice of filing published in the Federal Register on August 19, 2026 (91 FR 53686, File SR-CboeBZX-2026-065), which we read in full: filing text. Information on the October 2 approval and on European products comes from multiple sector publications and issuer communications. All tables are original calculations by the SpazioCrypto editorial team based on hypothetical daily returns, before fees and tracking differences, and do not represent the performance of any real fund.

Frequently asked questions

Does a 3x Bitcoin ETF actually deliver triple Bitcoin's return?

Only on a single day, and as a target, not a guarantee. Over longer periods, daily returns compound and the outcome can diverge sharply from three times Bitcoin's return: worse in volatile, sideways markets and potentially better during long, steady trends.

What is the daily reset?

It's the fund's daily recalculation of its exposure, which is brought back to a fixed multiple of its current net asset value. After a gain the fund scales up its positions; after a loss it scales them down. That mechanism, repeated every day, produces both the trend amplification and the decay in choppy markets.

Can you lose everything with a leveraged crypto ETF?

In theory, yes. A single-day decline of roughly one-third in the underlying can wipe out a 3x fund; for a 2x fund the threshold is a 50% daily drop. Moves of that size in a single session are rare, but after very large losses, recovering becomes mathematically far more demanding.

What's the difference between a 2x and a 3x Bitcoin ETF?

The multiplier. A 2x fund targets twice the daily move; a 3x targets triple. At the same level of volatility, the 3x experiences roughly three times the volatility decay of the 2x and has a lower theoretical wipeout threshold: a −33.3% daily move versus −50% for the 2x.

Does a leveraged Bitcoin ETF actually buy Bitcoin?

Not directly. Per the filing for the new U.S. products, the funds invest in Bitcoin futures, cash, and cash equivalents rather than physical Bitcoin. The 3x exposure is also referenced to a futures benchmark, not necessarily to the spot price.

Are leveraged crypto ETFs suitable for long-term holding?

Issuers describe them as instruments for active traders with short time horizons. Because of the daily reset and volatility decay, long-term outcomes can diverge dramatically from expectations, and risk grows with holding period.

Can Italian investors buy leveraged crypto ETFs?

U.S.-listed products are generally inaccessible to EU retail clients due to the absence of a PRIIPs-compliant KID. European-listed 3x ETPs on Bitcoin and Ethereum do exist, including products that, per sector press reports, have been available on Borsa Italiana since February 2026. Actual access depends on your broker, KID availability, and client classification. Some issuer product pages display a “professional investors only” notice, so always check with your intermediary first.

Is investing in a leveraged Bitcoin ETF a good idea?

This article is purely informational and does not constitute investment advice or a recommendation to buy any specific product. Leveraged instruments carry significant risks, including the possibility of losing most or all of the capital invested. Suitability depends on individual objectives, time horizon, and risk tolerance. Always read the official product documentation before acting, and for material decisions consider consulting a licensed financial adviser.

The news was reported by Teleborsa on October 2, 2026, following an earlier mention by FX News Group the day before. The intervention targets investment services and activities in financial instruments offered without authorization, a distinction that matters when reading the crypto component of the total correctly.

Consob Blocks Five Sites: Which Platforms Were Targeted

According to Teleborsa's report, the blocked entities include Daxton-Italia, Inmarket24, ICloudFX, and Ambrosiafx, along with their respective sites and client-access pages. That's four distinct names but five blocked URLs: Inmarket24 appears under two separate domains, in addition to its client login page. The count of five should not be read as five separate companies.

This action follows Consob's August intervention, which SpazioCrypto covered in its earlier analysis of Consob enforcement orders against unauthorized financial sites. What's new here is an updated enforcement count, not a change in the legal framework governing crypto platforms.

The 235 Crypto-Linked Sites Are a Historical Figure

Consob received its power to order website blocks in July 2019. Within the cumulative total of 1,834 blocked sites, the 235 cases connected to crypto-asset activity represent roughly 12.8% of all enforcement actions, according to Teleborsa's October 2, 2026 reporting (calculated as 235 divided by 1,834).

That share describes how the overall counter breaks down by category. It does not measure the volume of funds at risk, the number of victims, or the average risk profile of any particular platform. One blocked site does not necessarily correspond to one distinct operator either: multiple domains can trace back to a single scheme.

How the Blocks Work, and Where They Fall Short

FX News Group notes that implementing Consob's orders falls to Italian internet service providers and can take several days for technical reasons. The regulator's order and the actual blocking of connections do not happen simultaneously.

A rising block count, on its own, documents neither recovered funds nor client refunds. By the same logic, the absence of a URL from a published warning list does not prove that an operator is authorized. Verifying a platform's identity and regulatory status is a separate step, as we explained in our deeper look at fake exchanges exploiting the MiCA brand to defraud users.

The Wider Picture

The value of this update lies in how precisely it's interpreted. The block counter makes enforcement activity visible, but measuring its effectiveness would require additional data: how many people were reached by those sites, how much money was exposed, and whether blocked operators simply reappear under new domains. A rising tally of site blocks doesn't prove fraud is growing, nor does it prove it's shrinking.

For crypto market observers, separating the product advertised from the activity actually conducted is just as important. That distinction came up in an entirely different context with the fake Turin bank that promised gold and crypto returns. The documented facts here stay narrow: five new sites covered by the latest order and a historical pool of 235 Consob-blocked sites linked to crypto activity. Blurring those two levels makes for a punchier headline, but a less accurate story.

Defrauded savers: Guardia di Finanza seizes 1.6 million euros

Funds collected with promises of extraordinary returns were used by suspects to purchase real estate, land, and stakes in Italian companies

RaiNewsMarco Bobbio

One point deserves immediate clarity: available sources do not establish that any of the six million euros collected was actually converted or invested in cryptocurrency. On the contrary, according to prosecutors' reconstruction of events, the promised investments in both gold and crypto were never concretely executed. Gold and cryptocurrency served as the commercial hook to attract victims, not as a real destination for the money raised. Here is precisely how the scheme operated.

A Bank That Never Really Existed

Between 2021 and 2023, according to findings by the Turin Economic and Financial Police Unit, hundreds of savers were persuaded by a dense network of self-styled financial advisors to hand over money in exchange for promises of very high returns. The investments were pitched through an entity presenting itself as a London-registered “investment bank,” with declared offices also in Spain and Turin, marketed as a financial intermediary specializing in gold and cryptocurrencies. According to investigators, this supposed bank held no authorization of any kind required to legally operate in the financial investment sector.

To reinforce the operation's credibility in the eyes of victims, savers were given login credentials for an online platform where they could apparently track the performance of their investments in real time. According to investigators, however, those investments were never actually made. The platform displayed entirely fictitious returns, disconnected from any underlying real investment activity.

The Ponzi Structure Behind the Fake Returns

The financial mechanism used to sustain the deception, at least in its initial phase, matches the classic Ponzi structure. A portion of money deposited by new investors was used to pay back other savers amounts presented as interest or investment returns, creating the illusion of a genuinely functioning and profitable system. This type of structure can hold together only as long as incoming new capital exceeds outgoing payments toward promised returns, a balance that, by definition, cannot last indefinitely.

According to a reconstruction reported by Il Sole 24 Ore, over 1.6 million euros of the proceeds were used by some of the suspects to purchase dozens of properties, plots of land, and stakes in Italian companies. That figure corresponds precisely to the amount pocketed by the promoters through money laundering of fraud proceeds. These concrete, traceable assets are exactly what the preventive seizure executed in recent days targeted.

Operation by the Numbers

What we know. Source: Guardia di Finanza, ANSA, October 2, 2026

• Raised: over 6 million euros from hundreds of savers (2021-2023).
• Seized: over 1.6 million euros in real estate, land, and company stakes.
• Key finding: the promised gold and crypto investments were reportedly never actually executed.

Why the Mechanism Matters More Than the Single Case

What makes this case particularly instructive, beyond its specific severity, is the combination of elements assembled to build a veneer of credibility around an entirely fictitious operation. The reference to a foreign-registered investment bank, declared physical offices in multiple European countries, an organized network of advisors presenting themselves as industry professionals, and above all a digital platform capable of simulating live investment performance: all of these were designed specifically to lower the psychological defenses of people who would ordinarily recognize the warning signs of an unclear financial proposal.

Gold and cryptocurrencies, in this context, functioned primarily as a marketing lever. Both are asset categories perceived by the general public as potentially very lucrative, capable of attracting savers seeking returns above those offered by traditional investment channels, regardless of whether any real investment activity existed behind the pitch. This is a pattern worth remembering each time you evaluate any investment proposal that combines promises of high returns with sophisticated financial terminology that can only be verified through channels supplied by the same promoter.

The Bigger Picture

This case fits into a growing pattern of episodes in which the digital asset investment space is used as a credible backdrop for fraudulent schemes that, in substance, have little to do with blockchain technology itself. The actual criminal mechanism, here as in many comparable cases, remains the classic pyramid fraud, simply dressed in digital language and aesthetics capable of appearing more convincing to investors drawn to the real or perceived opportunities of the crypto sector.

The lesson here is twofold. First, this case underscores how essential it is to verify independently, through channels not provided by the same promoter, whether any financial intermediary offering gold or cryptocurrency investments actually holds the authorizations required to operate legally before entrusting it with any money. Second, the fact that the platform used to reassure victims displayed entirely fabricated returns confirms how deceptive a professional-looking digital interface can be on its own. An interface is never, by itself, proof that the underlying investments are real. For investors who want to understand how to evaluate these instruments properly, our guide on what cryptocurrencies are remains a useful starting point.

The FCA's Financial Services Register and the SEC's EDGAR database both offer free public tools to verify whether an entity is genuinely authorized to offer investment products. In the UK and EU post-MiCA, any firm soliciting investment in crypto assets must hold a valid CASP license or national equivalent. When a promoter's credentials can only be checked through the promoter's own platform, that alone is reason to stop and look elsewhere.

With that distinction in mind, here is what the proposal actually contains, what else it introduces, and why its timing matters for the broader trajectory of U.S. crypto regulation.

The Proposal at a Glance

What it actually says. Source: SEC, October 1, 2026

• “Self-custody” means: the adviser custodies assets on behalf of clients, not investors holding their own keys.
• Only permitted when: no qualified third-party custodian is available for that specific asset.
• Still a proposal: a 60-day public comment period opens now. No rule is yet in force.

What the SEC Crypto Custody Proposal Actually Contains

The document, running 760 pages and identified as proposal 2026-100 in SEC filings, covers registered investment advisers, registered investment companies, and business development companies. It updates custody requirements under both the Investment Advisers Act of 1940 and the Investment Company Act of the same year. The most discussed provision would permit advisers to hold clients’ crypto assets directly, but only in limited, specific circumstances: principally, when the adviser itself determines that no qualified custodian alternative exists for a given digital asset. This is not a general permission. It’s a fallback for situations where qualified custody infrastructure for a particular asset simply doesn’t yet exist in the market.

A second substantive change would expand the range of entities that can serve as qualified custodians. The proposal explicitly recognizes state-chartered trust companies as qualified custodians for crypto assets held by clients and regulated funds, provided they meet four conditions: they must be authorized by their state to offer crypto custody; they must maintain reasonable procedures to prevent loss, theft, or misappropriation; they must hold certified financial statements and internal control reports; and they must keep client assets segregated from their own.

SEC Proposal Would Address How Investment Advisers and Funds Can Custody Crypto Assets Under the Federal Securities Laws

U.S. Securities and Exchange Commission

Three Steps That Brought the SEC to This Point

This proposal didn’t emerge from nowhere. A 2023 SEC proposal that would have extended crypto custody rules to all assets in a far broader manner was formally withdrawn in June 2025. A few months later, in September 2025, the SEC’s Investment Management division published a no-action letter, carrying no binding legal force, indicating it might not recommend sanctions against state-chartered trust companies treated as banks under certain conditions. Yesterday’s formal proposal formalizes an approach the SEC had already signaled informally.

SEC Chair Paul S. Atkins had publicly stated on September 14 that he had directed Commission staff to draft a proposal specifically covering self-custody and state trust companies, noting that the latter path “already works” in practice. Atkins framed the intervention by pointing out that the crypto market had grown from a niche into an asset class worth trillions of dollars, while U.S. custody rules had failed to keep pace. He said the proposal would give advisers and funds “a compliant pathway where none existed before,” replacing the uncertainty created by custody rules designed for an era of purely traditional assets, a situation he described as unsustainable in the twenty-first century.

Why Now: The CLARITY Act Connection

The timing of this proposal isn’t accidental. It arrives days after the procedural vote on the CLARITY Act failed in the U.S. Senate, and multiple sector sources have directly linked the two events. The SEC’s move is widely read as regulators advancing on their own administrative track, independent of the legislative stalemate in Congress. The dynamic mirrors what played out recently with the Federal Reserve’s proposals to implement the GENIUS Act: while Congress struggles to reach political consensus on a comprehensive regulatory framework, individual federal agencies continue moving independently on the files within their own jurisdiction.

The proposal explicitly states its goal as removing regulatory barriers that limit advisers’ ability to provide crypto investment advice, and enabling regulated funds to offer a wider range of digital asset strategies. That includes allowing wealth managers and hedge funds to hold Bitcoin and other crypto assets directly, rather than exclusively through an ETF or another intermediary. For European investors watching from the MiCA side of the Atlantic, the contrast is notable: MiCA establishes a unified licensing regime across 27 member states, while the U.S. continues to resolve crypto custody jurisdiction agency by agency.

Roller Coaster Ride: Statement on Proposed Adviser and Regulated Fund Custody Rules; Crypto Custody Rules

Commissioner Hester M. Peirce

U.S. Securities and Exchange Commission

The Bigger Picture for Institutional Crypto

This proposal targets a structural bottleneck that has kept crypto assets walled off from traditional wealth management for years. The old custody rules were built around securities, banks, and conventional broker-dealers. Applying those rules mechanically to cryptographic keys and on-chain assets created persistent ambiguity about who qualified as a custodian and how an adviser could offer crypto exposure while meeting fiduciary obligations to clients.

Two readings of this proposal are worth holding together. On one hand, for all its technical density, the proposal addresses a real structural problem that has blocked regulated institutional capital from entering crypto through the conventional channels of wealth management. On the other hand, it’s still a proposal. A 60-day public comment period now opens, and the text could change substantially before any rule takes effect. The wealth management industry’s reaction during the consultation phase will be worth watching closely, as will any pushback from state regulators whose trust companies would gain new federal recognition. The SEC’s next step depends, in part, on what that comment period reveals.

The underlying legal question is not new to financial services. The same exemption has long been invoked by CFD brokers operating across multiple jurisdictions. What makes it significant now is that the maximum MiCA transitional period expired on July 1, 2026, meaning firms without authorization should have begun winding down EU operations and helping clients exit their positions in an orderly way.

EU questions Binance over continued operations despite wind-down order

Securities regulators looking at use of legal exemption by world's biggest crypto exchange

Financial Times

How Binance Continues to Serve EU Clients

According to sources cited by the Financial Times, the local licenses Binance held in France, Spain, and Poland have lapsed under MiCA rules. In several European countries where Binance never obtained a local license, some clients are being served through a Binance entity regulated in Abu Dhabi, which received authorization in that jurisdiction in December 2025. It is this mechanism, routing EU client activity through a non-EU regulated entity, that regulators are now scrutinizing.

Several authorities have already sent formal information requests to the company, asking for specifics on how individual clients were classified as having initiated contact “exclusively on their own initiative”, the technical standard that distinguishes genuine reverse solicitation from ordinary commercial outreach. Worth noting: Binance is not the only firm under scrutiny. The Financial Times reports that smaller firms are also subject to similar reviews, placing this story within a broader supervisory sweep rather than a targeted action against the world’s largest crypto exchange.

An Exemption That Must Stay Exceptional

The Dutch regulator AFM has taken a clear public stance on the issue, stating that platforms “cannot simply claim reverse solicitation” as an automatic justification for continued operations, though it declined to comment specifically on Binance. Regulators in Germany, France, and Greece similarly declined to address the Binance case directly. ESMA has repeatedly made its position clear: this exemption is meant to cover genuinely exceptional situations, not serve as a parallel commercial channel for firms that want to keep operating in the EU single market without going through standard authorization.

Article 61 Provision of crypto-asset services at the exclusive initiative of the client | European Securities and Markets Authority

Home

Enforcement action, including potential financial penalties, remains a concrete possibility if the answers provided by firms under review do not satisfy regulators, according to the same sources. As of now, no public enforcement decision has been issued against Binance on this specific matter. A Binance spokesperson for Europe and the UK told Reuters that the company is “not leaving Europe” and that Binance maintains it operates in compliance with applicable regulations while continuing to pursue a path toward full MiCA authorization.

What We Know, Precisely

The situation as of today. Source: Financial Times, Reuters, October 1, 2026

• Confirmed: licenses lapsed in France, Spain, and Poland; EU clients served via Abu Dhabi entity.
• Ongoing: formal information requests from multiple regulators on a case-by-case basis.
• NOT confirmed: no formal investigation or public sanction has been launched.

Why This Matters Beyond Binance

The stakes extend well past Binance itself. This episode will determine, in practice, how far a major non-EU exchange can go in serving European users without a genuine MiCA passport, simply by routing activity through an entity licensed elsewhere and invoking a narrow legal exemption. A clear precedent here, in either direction, will have direct consequences for every operator in a comparable situation, including the smaller firms already identified by sources as being subject to parallel reviews.

Public Statement | European Securities and Markets Authority (ESMA)

As the MiCA transitional period ends on 1 July 2026, ESMA is calling on unauthorised crypto-asset service providers to take immediate steps to wind down their EU activities in an orderly manner, while safeguarding investors' interests and supporting market integrity. Unauthorised providers should stop onboarding new EU clients, limit services to those strictly necessary for an orderly exit and communicate clearly with clients about timelines and next steps. ESMA also reminds clients to verify whether their provider is authorised under MiCA in the ESMA Register: https://lnkd.in/d4k_yZKV 👇 Read here the full statement for more details.

LinkedInEuropean Securities and Markets Authority (ESMA)

This fits into a broader moment in which the practical details of EU crypto authorization are becoming sharply defined. As our earlier analysis of KYC and AML compliance providers for European CASPs showed, there is a meaningful difference between obtaining a license and maintaining continuous operational compliance over time. The same principle applies here, on a different plane: holding a license in some EU countries in the past does not grant the right to operate across the entire single market today through regulatory shortcuts.

The Bigger Picture

This episode is, in all likelihood, the first real stress test of what MiCA’s reverse solicitation boundary actually means in practice for a large non-EU operator. For months, the debate was largely theoretical. Now, with ESMA and multiple national competent authorities actively requesting information, the question has become operational: how strictly will the EU enforce the principle that this exemption must remain genuinely exceptional?

Two things stand out. First, this situation shows that the end of the MiCA transitional period didn’t close the question of who can operate in the EU single market. It simply moved the contest to the interpretation of the regulation’s exceptions. Second, the fact that smaller operators are also under review signals a systematic supervisory approach, not a one-off action targeted at the largest exchange. Over the coming months, the outcomes of these reviews could produce the clearest guidance the sector has yet seen on where exactly the line falls between a legitimate exemption and a structured workaround. Investors and compliance officers at any non-EU platform still serving European users should treat the progress of these reviews as a direct indicator of their own regulatory exposure. For broader context on how crypto regulation is evolving in Europe, our guide on what cryptocurrencies are offers a useful starting point.

One clarification before diving into the mechanics: Tschudin did not oppose payment innovation. She called it “sensible.” The concern is narrower and more technical: what happens if that innovation scales to the point where it strips central banks of core policy tools? Tschudin identified two specific transmission channels worth examining closely.

First Mechanism: Fewer Deposits, Less Credit

The first risk is what economists call disintermediation. If households and businesses were to shift significant sums from commercial bank deposits into stablecoins, banks would end up with a smaller funding base and, as a direct consequence, reduced capacity to extend loans to the real economy. Tschudin made the point plainly: the central bank’s ability to influence how much credit is available in the economy, and at what cost, feeds directly into overall monetary policy effectiveness.

This isn’t a concern invented for the occasion. As early as July 2026, the SNB’s own financial stability report flagged disintermediation as one of the primary risks associated with stablecoin proliferation. The institution has been building a coherent analytical framework around this issue for months, not issuing a sudden alarm.

Second Mechanism: The Singleness of Money

The second risk is conceptually subtler. It concerns what economists call the “singleness of money”: the principle that one franc must equal exactly one franc, at any moment and under any circumstance, regardless of where it is physically held. Tschudin pointed out that because stablecoins operate outside the central banking system, a “franc held in a stablecoin” is not automatically guaranteed to hold the same value as a real franc at every point in time. That gap directly undermines the uniformity principle.

If large stablecoins were to develop while remaining too distant from the existing two-tier financial system, Tschudin warned, central banks would face a growing burden in fulfilling their institutional mandate. The solution she called for isn’t prohibition: it’s a regulatory framework capable of preserving monetary authority influence even as these instruments spread.

The Two Mechanisms in Summary

What the SNB fears. Source: Petra Tschudin, Zurich, September 30, 2026

• Disintermediation: fewer bank deposits means less credit available to the real economy.
• Singleness of money: a “stablecoin franc” is not always guaranteed to equal a real franc.
• Not a rejection: Tschudin is calling for regulation, not a block on innovation.

A Concern Shared Across Central Banks

This warning doesn’t arrive in isolation. Similar concerns have been voiced in recent months by the European Central Bank, the Federal Reserve Bank of New York, and the Bank for International Settlements, all of which have noted that stablecoins could substitute for traditional bank deposits, alter how credit institutions fund themselves, and complicate monetary policy transmission. That’s the same underlying tension that surfaced when the ECB proposed revising MiCA’s stablecoin reserve rules, where the core fear was a direct channel between stablecoin issuers and commercial banks capable of transmitting shocks between sectors.

For context: the SNB is far from a digital money skeptic. The Swiss institution ranks among the world’s most active central banks in wholesale CBDC testing, a track conceptually close to what we covered with Pontes in the Eurosystem. Tschudin’s message is not “blockchain yes or no.” It’s a stated preference for forms of innovation that remain anchored to central bank money, over private stablecoins that drift too far from that system.

The Bigger Picture

Tschudin’s warning completes, from the opposite direction, the picture we’ve been building over recent weeks tracking institutional stablecoin adoption at banks like SoFi and large institutions like Citi. After tracking how stablecoins are embedding deeper into financial infrastructure, we now see why the central banks that must coexist with this shift are watching it with a mix of curiosity and institutional caution.

Two readings emerge from this moment. First, the fact that near-identical concerns are arriving simultaneously from central banks in Switzerland, the euro area, and the United States suggests this is not an eccentric minority view: it’s a genuinely shared position at the highest levels of the global monetary establishment. Second, the distinction Tschudin draws with precision, between payment innovation in itself (which she calls sensible) and stablecoins that drift too far from the central bank money system, offers a useful lens for anticipating what kind of regulation monetary authorities will likely pursue in the coming years. The goal won’t be an indiscriminate barrier to innovation. It will be an attempt to keep innovation anchored in a system where central banks retain their capacity to govern. For a grounding primer on these instruments, our guide on what stablecoins are remains a useful starting point.

Ark Invest's Track Record of Bold Bets

Ark Invest built its reputation on concentrated, high-conviction wagers on transformative technology. The firm was founded in 2014 and has since become one of the most closely watched asset managers among retail and institutional investors alike.

Wood has never shied away from going against prevailing market sentiment, and that contrarian instinct has defined the firm's identity. From Tesla to Bitcoin, already a fixture in Ark's portfolio, the move into AI follows a clear internal logic: back the technologies Wood calls disruptive innovation, the kind that can reshape entire economies. Sometimes the call is wrong. Often, it pays off substantially.

In our view, thanks to this Technology Revolution, the equity market will continue to climb a “wall of worry” as real GDP growth accelerates to 7-8% while inflation surprises significantly on the low side of expectations, interest rates rise, and the yield curve inverts. https://t.co/oVyTMvcRCW

— Cathie Wood (@CathieDWood) September 23, 2026

Ark doesn't fear the “wall of worry” surrounding AI. In a recent interview, Wood stated that every major bull market she has witnessed was born amid widespread concern, pointing directly at the current climate of unease around artificial intelligence as a positive contrarian signal rather than a reason to hold back.

Who Is Cathie Wood?

Wood's career spans decades of institutional finance. She began as an assistant economist at The Capital Group straight out of USC, where she graduated with honors. She then spent 18 years at Jennison Associates LLC, rising through roles as chief economist, equity research analyst, portfolio manager, and Director.

That foundation led her to co-found Tupelo Capital Management in the late 1990s, which managed roughly $800 million in thematic strategies at its peak. Her next move was accepting the chief investment officer role at AllianceBernstein, where she oversaw a portfolio valued at more than $5 billion, before leaving to launch Ark in 2014. The departure took courage; the results vindicated it.

Focused on the convergence between #AI and #Bitcoin, this episode of Bitcoin Brainstorm is one of our best yet with @bitcoinpark_ and @rodroudi. https://t.co/EwHwnQ7NEP

, Cathie Wood (@CathieDWood) September 19, 2026

Ark's Innovation Strategy and the AI Bet

From day one, Ark's investment philosophy has centered on companies developing technologies capable of opening fast-growing markets. The approach carries above-average risk: rather than focusing on current valuations, Ark builds medium-term forecasts based on what target companies might be worth once the technologies they use today achieve widespread adoption. Broad forecasts and market analysis are the tools. Both can be wrong.

The clearest proof of this model working was 2020. The Ark Innovation ETF (ARKK) delivered a 153% return that year, driven largely by Tesla, whose shares surged approximately 740%, according to Ark's own fund performance disclosures. That single cycle established Wood as one of Wall Street's most-watched fund managers.

Wood's current thesis is that innovations don't advance in isolation. Ark's active exposure today spans blockchain, AI, and energy storage, and management views these not as separate silos but as converging platforms that reinforce each other. Backing all three simultaneously creates compounded upside potential. It also multiplies the downside risk. Neither prospect appears to unsettle anyone at Ark's offices.

AI is now the focal point. Wood has been vocal about the fact that the loudest critics of artificial intelligence, the voices calling for slowdowns and restrictions, remind her of similar warnings issued at the dawn of the internet. She sees widespread skepticism as a structural feature of every major technology cycle, not a warning sign. That read may prove right or wrong. What isn't in question is that Ark is committing capital behind it.

What This Means for Investors

For investors tracking Ark's next moves, the signal is clear: AI-linked equities are the firm's stated priority for fresh capital. Wood has positioned this not as a speculative play but as a long-cycle bet on technological convergence, with blockchain and energy storage serving as complementary legs of the same thesis. Investors should watch how Ark adjusts its ETF holdings in the months ahead, particularly ARKK and ARKQ, for concrete evidence of how the AI allocation takes shape. The firm's history shows that early positioning in its target sectors, however uncomfortable at the time, has often been its strongest differentiator.

First: this is not a bipartisan Senate report, nor a judicial finding against Tether. The document was produced by the Democratic minority staff led by Senator Richard Blumenthal, and the report itself describes its own findings as “preliminary.” Second, and perhaps more important for interpreting the statistics accurately: the 84% figure refers to a sample of wallets already selected because they were previously sanctioned, not a random sample of global USDT usage. It does not mean that 84% of all USDT transactions are connected to Iran.

Tether Has Supported Nearly $550 Million in Iran-Linked USD₮ Freezes as U.S. Expands Sanctions Campaign - Tether.io

Tether's cooperation with U.S. and international authorities has supported more than 2,900 investigations globally, including over 1,600 involving U.S. law enforcement 28 September 2026 — Tether, the largest company in the digital asset industry, today reaffirmed its longstanding cooperation with U.S. and international law enforcement as the U.S. Department of the Treasury expands its campaign […]

Tether.io

What the Report Actually Says

The 28-page document analyzed 846 wallets designated by the U.S. Office of Foreign Assets Control (OFAC) or Israel's financial counterterrorism unit between June 2021 and August 2026, finding that the majority operated almost exclusively through Tether's stablecoin. The report describes USDT as a “significant financial lifeline” within Iran's shadow banking system, alleging it helped finance groups including Hezbollah. As one example, the document cites two sanctioned Iranian nationals who reportedly received a combined $603 million in USDT between 2021 and 2025 through addresses only later designated by authorities.

On the basis of these findings, Blumenthal called on the U.S. Treasury and Justice Departments to open an investigation into Tether's anti-money-laundering controls and sanctions compliance. To be precise: this is a request for an investigation, not a formal charge, and no legal proceedings against the company have been announced.

Tether is a preferred payment system for terrorist organizations, operating as a superhighway for the Iranian government to evade sanctions, carry out hostile drone & missile campaigns, & commit human rights abuses. I joined @SquawkCNBC to discuss my new report. pic.twitter.com/Nnl20M589I

, Richard Blumenthal (@SenBlumenthal) September 29, 2026

The Paradox: Evasion Tool and Freezing Mechanism at Once

Here is the most genuinely interesting dimension of this story. Tether responded publicly through CEO Paolo Ardoino, rejecting the report's framing and stating that the company “has consistently demonstrated that USDT is not a haven for sanctioned entities, terrorist organizations, or criminal networks.” To support that position, Tether said it cooperated in freezing nearly $550 million in Iran-linked USDT in 2026 alone: over $344 million across two wallets designated by OFAC in April, and more than $131 million across four TRON network wallets tied to the Central Bank of Iran, identified in July according to analysis by blockchain analytics firm Chainalysis, with additional cases flagged by Israeli authorities covering more than 640 addresses and $22 million.

This creates a genuine paradox worth telling accurately rather than flattening in one direction. The same report that identifies USDT as the preferred tool for circumventing international sanctions also implicitly acknowledges the other side of the coin. Precisely because Tether is a centralized issuer capable of unilaterally freezing specific addresses at the request of authorities, the very stablecoin the report says helped Iran move money also enabled, in the same period, the freezing of hundreds of millions of dollars tied to that country. This structural characteristic, as seen in the Capstone-EQIBank case, sharply distinguishes centralized stablecoins like USDT from native assets such as Bitcoin or Ether, which no issuer can freeze in any comparable way.

The Political Context Matters

This report lands at a moment of sharp political tension around crypto in the United States. A Republican administration has pushed for a more industry-friendly regulatory framework, including recent Federal Reserve proposals tied to the GENIUS Act on stablecoin oversight, while Democratic opposition has maintained a more critical stance toward the sector. That context doesn't make the investigators' data less relevant, but it does explain why the document deserves the same careful reading applied to any report produced by a single political faction, pending independent verification or formal action from the federal agencies Blumenthal has petitioned.

The Bigger Picture on Centralized Stablecoins

This episode illustrates the complexity of the role centralized stablecoins now occupy in global financial infrastructure, including its most sensitive corners. Wide adoption makes them inevitably attractive to those seeking to circumvent international sanctions, simply because they're easy to use and broadly accepted. Yet the same centralized architecture that creates this vulnerability is precisely what allows authorities, working with the issuer, to intervene and freeze funds at a scale that would be impossible with a native, decentralized asset.

Two lessons stand out. The first is familiar but still gets ignored: distinguish between a political report's conclusions, however detailed, and a definitive judicial finding, especially when the document comes from one political side and calls itself preliminary. The second is the genuine paradox at the center of this story. The same instrument identified as a sanctions-evasion vehicle simultaneously enabled hundreds of millions of dollars in freezes against the same country. That contradiction deserves to be reported in full, without collapsing it toward either accusation or defense. Whether the Treasury or the Justice Department decides to open a formal investigation remains the question to watch. For a broader grounding in how these instruments work, SpazioCrypto's guide to stablecoins covers the essentials.

On September 24, the Fed published two distinct proposals, later formalized in the Federal Register five days later. Each addresses a different layer of the framework, and together they complete the third of three parallel regulatory tracks established by the GENIUS Act, signed into law in July 2025.

The Two Fed Proposals: What They Actually Require

The first proposal covers prudential requirements for Fed-supervised issuers: reserves, capital adequacy, risk management, custody arrangements, and permitted activities. The central requirement is a strict 1:1 backing rule. Every stablecoin dollar issued must be fully backed by permitted reserve assets, which include cash, balances held at Federal Reserve Banks, certain bank deposits, U.S. Treasury securities maturing within 93 days, qualifying repurchase agreements, and eligible money market funds. Tokenized versions of these same assets are also permitted in certain circumstances.

Reserve assets must be held separately from the issuer's other assets at all times. Redemptions to users must generally occur within two business days, according to the proposal text published in the Federal Register. If reserve value falls below the required coverage threshold, the issuer must notify the Fed immediately. In cases of persistent capital shortfall, the issuer could be required to liquidate reserves and fully redeem all outstanding stablecoins in circulation.

The second proposal defines the approval process itself. Under the GENIUS Act, only an entity designated as a Permitted Payment Stablecoin Issuer (PPSI) may legally issue a payment stablecoin in the United States. For state-chartered banks under Fed supervision, this means any subsidiary seeking PPSI status must first obtain approval from the Federal Reserve Board. The applicant files with its regional Federal Reserve Bank, submitting a detailed business plan and the rationale supporting the request. Once a materially complete application is received, the Fed has 120 days to render a decision. Denied applicants retain the right to appeal, including through an oral or written hearing.

The Consortium Question: Where Regulation Meets the Real Market

One detail inside the second proposal stands out, because it connects the regulatory procedure directly to a market development already underway. The Fed explicitly requested public comment on whether a single approval application could cover multiple banks participating in a consortium, rather than requiring each institution to file separately.

This procedural question is not abstract. A consortium of 21 U.S. financial institutions, including Bank of America, Citi, and Goldman Sachs, has already committed to forming a joint venture to issue a shared stablecoin, as reported by Bloomberg and Reuters. The Fed asking specifically how to handle consortium applications suggests the regulator is already designing the framework around real-world scenarios, not theoretical edge cases.

The Two Proposals at a Glance

Source: Federal Reserve, Federal Register, 2026

• Proposal 1: 1:1 reserves, segregated custody, redemption within 2 business days.
• Proposal 2: PPSI approval process, 120-day decision window, right of appeal.
• The open question: the Fed asks whether one application can cover an entire bank consortium.

Three Regulators, Three Parallel Tracks

The GENIUS Act splits stablecoin oversight across three federal regulators depending on the issuer's charter type. The Office of the Comptroller of the Currency covers nationally chartered banks and their subsidiaries. The Federal Deposit Insurance Corporation covers state-chartered banks not in the Federal Reserve System. The Fed itself covers state-chartered member banks. The OCC had already published its own analogous proposal earlier in 2026. The Fed's September 24 action completes the third track, closing the regulatory triangle the GENIUS Act established.

Federal Reserve Board requests public comment on two proposals related to establishing a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act

The Federal Reserve Board on Thursday requested public comment on two proposals related to establishing a regulatory framework for Board-supervised payment sta

Board of Governors of the Federal Reserve System

A Federal Reserve official stated, in comments published alongside the September 24 press release, that the proposals represent an important step in implementing the GENIUS Act, while acknowledging that further work remains before stablecoins become genuinely reliable payment instruments. The regulatory path is far from finished.

How This Fits the Bigger Picture of Tokenized Dollars

This proposal belongs to a sequence of institutional developments that have accelerated in 2026, but it addresses a distinct layer that earlier news hadn't reached. SoFi's bank-issued stablecoin SoFiUSD and the expanded partnership between Citi and Coinbase showed tokenized money moving inside existing payment infrastructure. The Clearing House and Quant network demonstrated how major banks are building shared rails for tokenized deposits.

The Fed's proposals don't address how tokenized money moves. They address who is legally permitted to create it. That distinction matters enormously. Watching the pipes through which digital dollars flow is one thing; watching who gets the license to turn on the tap is another question entirely.

What This Means for the U.S. Stablecoin Market

These proposals mark a clear maturation point for the U.S. stablecoin sector. Not long ago, the central question was whether payment stablecoins would ever receive comprehensive federal regulation. Today the question has shifted to which specific banking procedure an institution must follow to obtain issuer authorization. That shift in framing mirrors transitions other innovative financial products have gone through when moving from experimentation to full regulatory legitimacy.

Two signals are worth watching from this point forward. First, the Fed's explicit request for comment on consortium applications indicates the regulator is already anticipating a market dominated by multi-bank alliances rather than standalone issuers. Second, the public comment period now open before final rule adoption gives the banking sector a genuine window to shape the details of a framework that will define how the tokenized dollar enters the U.S. financial system for years ahead. Investors and institutions tracking this space should monitor the comment period closely: the final rules will likely differ from these drafts, and the differences will matter. For a grounding in what stablecoins are and how they work, our stablecoin guide covers the fundamentals.

One important clarification upfront: the Banca d'Italia is not announcing the adoption of this technology in any live payment system. This is a technical study analyzing the state of the art and possible design trade-offs, not an operational decision. Here is what it contains, and why it matters for anyone following the crypto space.

Banca d'Italia: Privacy Technologies and Verifiability in Digital Payment Systems

The Banca d'Italia publishes “Technologies for privacy protection and verifiability in digital payment systems,” the new issue of the “Markets, infrastructures, payment systems” series. With the evolution of payment systems…

Home pageBanca d'Italia

The Problem the Study Addresses

The document starts from a fundamental conflict that becomes more visible as digital payment systems evolve. On one side, transactions should shield users from unjustified monitoring and misuse of personal data. On the other, regulatory compliance demands mechanisms for traceability, control, and accountability. Balancing these two goals is especially complex in institutional payment infrastructures, where public trust and regulatory responsibility must coexist within the same architecture.

The study explicitly examines both decentralized architectures, typical of the blockchain world, and centrally managed infrastructures like traditional payment systems. It identifies three distinct privacy objectives a payment system can pursue: anonymity, data confidentiality, and unlinkability, meaning the inability to connect multiple distinct transactions to the same individual simply by observing them.

The Cryptographic Tools: What They Are and How They Work

To pursue these privacy objectives, the study examines three families of cryptographic tools. Blind signatures allow one party to digitally sign a document without reading its content, a technique that lets an intermediary authorize a payment transaction without knowing exactly what it is authorizing. Cryptographic commitments allow a party to “commit” to a value today that will only be revealed at a later point, guaranteeing the value cannot be altered in the meantime while remaining hidden until disclosure.

Zero-knowledge proofs, the most sophisticated of the three, allow one party to mathematically demonstrate that a statement is true without revealing any information beyond the bare fact that the statement is true. Applied to payments, this means proving that an account holds sufficient funds for a transaction, or that a transaction respects specific regulatory limits, without ever disclosing the actual account balance or the specific transaction details to whoever verifies the proof.

Selective Controls, Not All or Nothing

The most interesting element of the study concerns verifiability mechanisms that allow selective oversight without forcing a binary choice between total privacy and total surveillance. In practice, these tools make it possible to build systems where a transaction remains private for the general public but can be made visible to a specific authority under specific, predefined circumstances. Think of a money laundering investigation: the relevant transaction becomes visible to regulators without requiring all other users to sacrifice their privacy in every other case.

This approach differs sharply from the most widely used public blockchains, where every transaction is visible to anyone by design. It differs equally from traditional banking systems, where full traceability toward the intermediary is simply the norm. The study therefore suggests that a middle ground exists, technically achievable today, capable of offering more privacy than traditional banking without eliminating the selective oversight that public blockchains cannot provide. This conversation is taking place precisely as the same central bank works actively on multiple fronts of digital payment infrastructure, as seen with Pontes and the ongoing debates around the digital euro.

The Bigger Picture

This study illustrates how cryptography born to make cryptocurrencies possible is steadily crossing the boundaries of its original ecosystem and becoming a subject of serious inquiry at the most traditional financial institutions. Zero-knowledge proofs, refined over years in decentralized finance protocols and privacy-oriented blockchains, are now being examined by a central bank as a potential tool for solving a very concrete problem in tomorrow's institutional payments.

The lesson is twofold. First, the gap between crypto's cryptographic innovation and the design requirements of traditional finance is closing faster than most observers realize from the outside. Concepts developed in an ecosystem that institutional investors once viewed with deep skepticism are now being analyzed with academic rigor by the Italian central bank. Second, the trade-off between privacy and control remains one of the most delicate design challenges for any future digital payment system, whether that system is a digital euro, a private stablecoin, or an entirely new infrastructure still to be conceived. Whether and how these technologies find concrete application in upcoming pilot projects is worth watching closely. For a broader understanding of the technologies involved, our guide on what cryptocurrencies are remains a useful starting point.

Citi and Coinbase Join Forces to Boost Digital Asset Payment Capabilities for Global Clients

Citi, the leading global bank, serves more than 200 million customer accounts and does business in more than 160 countries and jurisdictions. Learn more today.

Citigroup.com Homepage

This expansion builds on a relationship that's already been running for nearly a year. Citi and Coinbase announced their initial collaboration, focused on fiat-to-crypto payment infrastructure, in October 2025. What's new here is the scope and the direction: the partnership now works both ways, and it's aimed squarely at commercial adoption by large enterprises.

How the Partnership Works in Both Directions

The first piece of the deal covers stablecoin acceptance by Citi's institutional clients. Through Spring by Citi, the bank's commercial payment acquisition platform, corporate clients can accept stablecoin payments at the point of sale. Coinbase Payments handles the conversion. When a buyer pays in stablecoins, Coinbase converts the tokens into traditional currency, and Citi, acting as the settlement bank, credits the equivalent amount in fiat to the merchant. The merchant never touches the stablecoin directly.

The second piece runs in the opposite direction. Coinbase has adopted Citi's Virtual Account Wallet solution, part of the bank's banking-as-a-service offering, to power its own Coinbase Virtual Accounts. A business using these accounts gets something that feels like a standard bank account: incoming traditional currency is automatically converted into stablecoins. Shahmir Khaliq, Citi's head of services, described the partnership in a joint press release as “a critical step in our strategy to offer clients optionality,” while Coinbase framed it as giving businesses “bank-account-like functionality, with stablecoin speed under the hood.”

Coinbase brings bank-grade fiat and stablecoin payments to businesses, in collaboration with Citi

TL;DR: Coinbase is expanding what businesses can build on its payments infrastructure through a deepened collaboration with Citi. Coinbase chose Citi's Virtual Account Wallet to power Coinbase Virtual Accounts, giving customers fiat wallets that automatically convert incoming fiat into stablecoins. And Coinbase's payments infrastructure now enables Citi's institutional clients to accept stablecoin payments through Spring by Citi.

Logo Coinbase

Infrastructure Live, Adoption Still Unproven

One detail that deserves attention, and was absent from several initial reports: Coinbase describes this capability as already available, but the official announcement from both companies does not name a single client that has actually processed a payment through Spring, nor does it disclose any transaction volumes to date. The infrastructure is live and ready. Whether corporate clients will use it at scale is a question the next several months will answer.

The potential scale, though, is worth keeping in mind. Citi operates in more than 180 countries and jurisdictions. Coinbase, for its part, references a global stablecoin holder base of more than 150 million users. The initial launch covers the United States, with additional features and markets planned for later phases. And the commercial stakes are real: according to Coinbase's own financial disclosures, stablecoin-related revenue generated nearly $600 million in the first half of 2026 alone, making this one of the exchange's most important business lines.

The Deal at a Glance

What the agreement covers. Source: Citi, Coinbase, September 28, 2026.

• Direction 1: Customer pays in stablecoins, Coinbase converts, Citi settles in fiat to the merchant.
• Direction 2: Incoming fiat to a Virtual Account is automatically converted into stablecoins.
• Current status: Infrastructure live, no real client volumes disclosed yet.

A Fourth Model for Money on Chain

This announcement fits into a broader pattern that has emerged in recent weeks, as major financial institutions experiment with different approaches to putting money on blockchain rails. In the UK, large banks including Lloyds, Barclays, NatWest and HSBC have opted for shared tokenized bank deposits. In the US, SoFi chose a proprietary bank stablecoin for card settlement, while The Clearing House selected Quant to build a shared tokenized deposit network across twenty-five major banks.

Citi and Coinbase represent a fourth, distinctly different model. A large global bank doesn't issue its own stablecoin and doesn't build a peer network with other institutions. Instead, Citi acts as a regulated bridge between the fiat world and existing stablecoins, allowing its corporate clients to operate in both without ever becoming crypto operators themselves. It's the same principle of silent adoption observed in the launch of World Money, applied here not to the end consumer but to the relationship between a major bank and its enterprise clients.

The Bigger Picture

The real significance of this announcement may lie less in the technical details and more in the language used to describe it. Nobody involved is talking about pilots, experiments, or theoretical use cases. This is commercial infrastructure, available now, offered by one of the world's largest banks to corporate clients across more than 180 countries. Whether it gets used at scale, and what volumes it generates, remains an open question.

Two things stand out for anyone watching this space. First, the fact that a bank of Citi's size chose to rely on an external exchange, Coinbase, to manage the stablecoin layer, rather than building its own proprietary solution, says something about where crypto-native expertise actually sits, even as traditional financial institutions move in. The gap between institutional intent and in-house capability remains wide. Second, the growing variety of models now visible across the industry, from tokenized deposits to bank-issued stablecoins to this regulated-bridge approach, suggests the sector is still far from settling on a single dominant architecture for putting corporate money on blockchain rails. For readers who want to understand the building blocks better, our guide on what stablecoins are remains a useful starting point.

Generali's 325 Million Euro AI Commitment

Gianluca Perin, country general manager of Generali Italia, spoke plainly in an interview with La Repubblica:

“Our clients have, and will continue to have, the best possible experience. Including through the technological innovation we develop every day.”

Perin's position reflects a broader strategic reality. For a company of Generali's scale, tying capital to an exponentially growing sector is not a speculative bet but a defensive necessity. The group manages assets across 50 countries, and AI-driven personalization of insurance products is seen internally as the primary lever for maintaining competitive margins through 2027.

The European dimension of this story matters too. European Commission President Ursula von der Leyen, in her State of the Union address to EU institutions after the summer recess, called for coordinated AI investment across member states as a mechanism to rebuild European cohesion. Von der Leyen framed the issue directly: rising nationalism is fragmenting the EU from within, and a joint AI investment drive could restore the collective momentum the European project has been losing.

The US and China have spent years ahead of Europe on AI infrastructure. Von der Leyen's call was not ceremonial. It was a recognition that the gap is measurable and the window to close it is narrowing.

What AI Means for Banks and Credit Institutions

Perin's analysis extends beyond insurance into the structural gap in financial protection that has historically characterized markets like Italy. His argument is that AI allows insurers to personalize their offer in ways previously impossible at scale, matching product to need rather than forcing clients through standardized packages. He describes a near-term future where “physical AI” will enable genuinely new services, not just faster delivery of existing ones.

“We are convinced that, to face challenges like demographic and climate change, the public system must ally with an advanced private counterpart. As the country's leading insurer, we want to identify the needs of families and businesses. AI helps us personalize our offer and respond to client needs. They are asking for faster, digital, and personalized processes. Tomorrow, physical AI will allow us to provide entirely new services. This applies to businesses too. With technology we can do a great deal to guarantee operational continuity, even in the face of a catastrophic event.”

The banking sector shares these structural pressures. Maurice Lisi, head of digital business, marketing and payments at Banca Popolare dell'Emilia Romagna, put it this way:

“In the banks of tomorrow, digital will orchestrate the relationship. People will continue to bring their expertise and take their responsibilities. AI will expand the possibilities to understand and assist.”

Lisi's framing captures the consensus emerging among European banking executives: AI does not replace the human relationship in banking, it restructures what that relationship is actually doing. The routine, the bureaucratic, the documentary, all of that moves to the machine. The judgment, the context, the professional responsibility, those stay with the person.

Three Ways AI Is Changing the Banking Experience

According to sector expectations, AI will reshape the customer banking experience across three distinct operational areas:

• Direct client interaction: Banks want to give clients access to assistance whenever they need it, with comprehensible responses and the option to escalate to a human operator when the situation demands it. This is not a chatbot replacement strategy but a layered service model.
• Support for client-facing advisers: Several European banks are actively developing AI assistants deployed alongside remote advisers, helping them surface and apply relevant information faster. The intended outcome is a better-prepared professional who can focus attention on the conversation while the AI handles the procedural and documentary load.
• Pre-meeting preparation and scenario analysis: AI can gather relevant elements, model scenarios, and prepare the framework for adviser-client interactions. The adviser retains judgment, human contextual understanding, and professional accountability, while delegating research and documentation to the AI system.

These three use cases are not speculative roadmaps. Several institutions across France, Germany, and the UK are already piloting versions of each, with European Banking Authority guidance on AI model risk management providing a regulatory floor for deployment decisions.

AI as Finance's Next Frontier

Alongside digital currencies and on-chain money, AI represents a structural shift that financial institutions can no longer observe from a distance. The sector is not immune to technological disruption. What changes with AI is the pace: adoption cycles that took decades in earlier technology waves are now compressing into years.

For European banks and insurers, the strategic question is not whether to integrate AI but how quickly they can do so without compromising regulatory compliance under frameworks like MiCA (for digital assets) and the EU AI Act (for AI system risk classification, which entered into force in August 2024). Generali's 325 million euro commitment through 2027 and the public statements from BPER leadership signal that the largest institutions have already made their decision. Smaller credit institutions and regional banks now face a narrowing window to define their own AI strategy before the gap between early movers and laggards becomes structural.

Bitcoin was trading in the $84,000-$85,000 range, while Ethereum held near $2,700. The real story isn't any single price level. It's the seasonal anomaly: a quarter that's historically quieter than others has become the stage for a sustained rally driven by spot buying, ETF inflows, and institutional demand, all while bond yields and macro uncertainty remain elevated.

Bitcoin's Second-Best Q3 Is Still a Projection

Bitcoin.com, citing CoinGlass data recorded on September 26, calculated a 43.5% gain from roughly $58,500 to $84,000. Had that level held through September 30, Q3 2026 would rank as the second-best third quarter in the historical series tracked by CoinGlass, behind only the +80.41% posted in 2017.

The correct framing is “on track” or “in the running.” The quarter closes September 30, and a few days of volatility can reshuffle the rankings entirely. The same CoinGlass table, updated during the September 28 session, showed a provisional return of 41.8%. That gap isn't a mistake to paper over. It's the normal result of different snapshot times and different reference prices.

Ethereum: The Bigger Surprise

Ether's move is even more striking. The September 26 snapshot showed a Q3 gain of +71.02%, clearing the previous quarterly record of +66.55% set in 2025. The September 28 provisional CoinGlass figure came in at +69.64%, still enough to keep Ethereum on track for its best Q3 on record.

The comparison with Bitcoin shifts the market narrative. This isn't simply a flight to the dominant digital asset: over the quarter, Ethereum outperformed BTC by roughly 28 percentage points as of September 26. That signals greater risk appetite within the crypto sector, though it doesn't by itself confirm a permanent capital rotation.

Q3 2026 in Three Numbers

Snapshot of September 26 and CoinGlass table accessed September 28, 2026.

• BTC: approximately +43.5% as of September 26, +41.8% in the CoinGlass reading of September 28.
• ETH: approximately +71.02% as of September 26, +69.64% in the CoinGlass reading of September 28.
• Macro: PCE on September 30 and Employment Situation on October 2, both at 8:30 AM Washington time.

Seasonality Is Not a Market Law

Framing Q3 2026 as a break from seasonality is a useful angle, but it needs to stay close to the data. According to the CoinGlass historical table, the average Q3 return is positive: approximately +8.61% for Bitcoin and +13.10% for Ethereum. The period isn't inherently weak. What makes it distinctive is the dispersion: very strong years sit alongside sharply negative quarters.

A single quarter can't prove that seasonal patterns have lost their predictive power. What it can show is that a market entering a period with less favorable historical precedents found enough demand in 2026 to push through them. Whether this represents a regime shift will take more data points to determine, not a definitive headline written on the eve of the close.

Spot Buying and ETFs Support the Rally, But Demand Isn't Uniform

Investing.com points to elevated spot market activity and institutional demand as pillars of the advance. In its September 23 report, Glassnode noted that U.S. spot Bitcoin ETFs had recorded approximately $1.3 billion in inflows over the prior five trading days, while spot volume on monitored exchanges had more than doubled from the August lows.

The same Glassnode analysis includes a necessary caution: the seven-day average volume was still roughly 30% below year-ago levels, and institutional buying hasn't been uniform across all players. ETFs were returning as net buyers of Bitcoin, while companies holding bitcoin on their balance sheets were net sellers in August. The rally therefore rests on a healthier spot foundation than a leverage-driven run, but that doesn't equate to unlimited demand.

The Test: PCE, Jobs Data, and Quarter-End

The macro calendar makes the final days of the quarter particularly sensitive. The Bureau of Economic Analysis will publish its Personal Income and Outlays report for August on September 30 at 8:30 AM Eastern, including the PCE price index closely tracked by the Federal Reserve.

On October 2 at 8:30 AM Eastern, the Bureau of Labor Statistics will release the September Employment Situation. Stickier-than-expected inflation or a stronger jobs market can push yields and the dollar higher, creating headwinds for risk assets. Weaker data could fuel expectations for a less restrictive Fed, though the market may react ambiguously if any slowdown looks recessionary.

The Broader Read

Q3 2026 is saying something more interesting than “Bitcoin is up.” Demand has simultaneously supported both the leading digital asset and Ethereum through a period that offered no obvious seasonal tailwind. BTC is approaching what would be its second-best Q3 on record, and ETH is within reach of its all-time best quarterly performance, but the final ranking remains open until September 30 closes.

The decisive question now moves from the calendar to the market regime itself. If spot buyers and ETFs continue absorbing supply through the PCE and jobs data, the quarterly performance can serve as a launchpad for a more ambitious Q4. If yields and the dollar reassert dominance, Q3 will remain an exceptional but isolated chapter. The available data shows genuine strength. It doesn't guarantee continuation.

Applications close at 5:00 PM CET on October 27, 2026. The European Central Bank published the original call on September 15, with Banca d'Italia flagging the initiative on September 23. The focus of this particular round: selecting merchants for a pilot program scheduled to launch in the second half of 2027.

A Dedicated Checkout for Real Purchases

The pilot will use a near-final beta version of the digital euro, closely aligned with the technical and functional specifications outlined in the EU legislative proposal, but without legal tender status. The program will involve staff from participating central banks, selected intermediaries, and merchants. This call specifically targets remote payments via websites and mobile applications.

Participating merchants must set up a dedicated or adapted checkout accessible only to pilot users. Real goods and services will be purchased within a controlled environment. That distinction matters: observing actual transactions helps identify operational friction, but a closed user group does not predict how the broader retail customer base would respond.

Eligibility Requirements and Application Process

According to the ECB merchant call document, applicants must be legally established in the European Union and capable of serving customers in at least two pilot locations. An active e-commerce website or m-commerce application and integration-ready infrastructure are also required. Simply operating an online store does not guarantee entry to the selection process.

Applications must be submitted in English, using the questionnaire in Annex 1 and the signed declaration in Annex 2. The ECB asks that the questionnaire be kept in its original Excel format and sent to digitaleuro-pilotmerchant@ecb.europa.eu. Meeting the stated requirements moves an applicant into the comparative evaluation stage, but it does not secure admission.

The Pilot in Three Figures

Sources: ECB and Banca d'Italia documentation, consulted September 28, 2026.

• October 27, 2026, 5:00 PM CET: deadline for merchant applications.
• Second half of 2027: scheduled pilot launch, with a planned 12-month duration.
• 7 Italian PSPs out of 36: intermediaries already selected across the euro area, separate from the merchants sought in this call.

Seven Italian PSPs Already on Board

On July 14, Banca d'Italia announced that Banca Monte dei Paschi di Siena, Banca Sella, Isybank, Nexi Payments, Numia, Poste Italiane, and UniCredit had been selected. These seven Italian operators are among the 36 payment service providers chosen across the euro area. That earlier selection covered intermediaries. The September call now targets the merchants who will use their services.

Admitted merchants will need to sign an agreement with the ECB and establish or update a contractual relationship with a pilot PSP to handle payment acceptance. The ECB FAQ clarifies that having an existing relationship with one of these operators is not a prerequisite for applying. Any pairing will still need to fit the requirements of the experiment.

Participation Comes With Real Costs

Participation is voluntary and carries no financial compensation beyond the revenue from goods and services sold during the pilot. Merchants bear their own participation costs without reimbursement. On the other side, they will not pay commissions to PSPs for pilot payment services. The distinction is worth spelling out: zero commissions on those specific services does not eliminate the cost of integrating and running the test.

Merchants are also expected to provide structured feedback on integration, technical issues, support quality, and the overall payment experience. The evaluation framework includes observations before, during, and after the pilot period. This connects to a broader debate in Europe around merchant acceptance costs, though the pilot's conditions do not define the fee structure of any eventual permanent system.

What This Pilot Actually Measures

The real value of this phase lies in measuring the operational effort required to bring the digital euro into a live commercial environment. Integration timelines, clarity of onboarding procedures, and the quality of technical support may prove as decisive for adoption as the monetary characteristics of the currency itself. The pilot can deliver concrete data on these variables, even if a closed test group cannot stand in for the full retail market.

The political and institutional decision remains separate. The ECB will only decide on issuance after relevant legislation has been adopted. As the ongoing debate over the digital euro's role in payments and its relationship with bank deposits shows, building operational readiness means confronting questions that are still unresolved. For anyone tracking this project, the next meaningful signal will come from what the test reveals about daily usability, not from projecting an outcome before results are in.

One clarification before anything else: Paolo Molesini is the victim here, not a suspect. The people whose identities were impersonated, including Intesa Sanpaolo CEO Carlo Messina and a well-known corporate lawyer, had no involvement and no knowledge of being used as tools of the fraud.

How the Fraud Unfolded

According to the Corriere della Sera reconstruction, Molesini received a WhatsApp message that appeared to come from Carlo Messina, CEO of Intesa Sanpaolo, urgently requesting wire transfers to seize an international financial opportunity. To make the request credible, the fraudsters staged a phone call. The voice on the line sounded like Paolo Nastasi, managing partner of the Italian office of international law firm A&O Shearman, presented as the legal intermediary for the operation. Molesini knew Nastasi personally, and the voice struck him as genuine.

In reality, as reported by Corriere della Sera, the voice had been reproduced using AI-based vocal cloning tools trained on publicly available recordings, interviews, conference appearances, and corporate videos. Convincing emails with apparently authentic documents and bank coordinates followed. Molesini ultimately authorized the transfers, directed primarily toward accounts in China and Hong Kong.

Part of the funds was subsequently recovered by the Milan Prosecutor's Office. The amount still missing, however, remains substantial. Most sources cited by the Italian press indicate approximately 36 million euros; a separate reconstruction published by ANSA reports 39.5 million euros. Both figures are cited here pending a definitive and unified statement from investigators.

The Money Trail: Offshore Accounts and Bitcoin Wallets

According to Corriere Milano, the funds were routed through accounts opened in Malta, Luxembourg, and the Netherlands, as well as through a Canadian money transfer platform, before landing in two Bitcoin wallets. The route follows a pattern now familiar to anyone tracking international money laundering investigations: an initial pass through the traditional banking system across multiple jurisdictions, followed by a conversion into digital assets that are harder to trace and freeze once the money exits regulated intermediaries.

International letters rogatory are currently underway, according to judicial sources cited by the Italian press, targeting the cryptocurrency trail before any conversion to cash. That race against time is common to many investigations of this type. At least one name appears in the Milan Prosecutor's register of suspects, linked by some accounts to an Israeli citizen who may correspond to a fictitious identity. At this stage, that individual remains a suspect, not a convicted person, and the investigation continues.

Case Summary

What we know. Sources: Corriere della Sera, ANSA, Il Post, 2026

• The deception: fake WhatsApp message plus an AI-cloned voice of a lawyer the victim knew personally.
• The funds: approximately 95 million euros transferred, with 36 to 39.5 million euros still missing according to various sources.
• The route: Malta, Luxembourg, Netherlands, a Canadian transfer platform, and two Bitcoin wallets.

Not an Isolated Case: Other Italian Banks Targeted

Fideuram was not the only institution hit with a similar mechanism in the same period. According to ANSA, a manager at Banca Ifis authorized operations totaling approximately 24 million euros in May, with funds diverted across Spain, Singapore, Hong Kong, and Bahrain. Around 20 million euros from that case were recovered through a preventive seizure. A third incident, smaller in scale, involved a cooperative credit institution for roughly 2 million euros, with part of the funds later located in Croatia.

Three separate episodes, different amounts and jurisdictions, but united by the same core scheme: forged communications exploiting personal trust in a known figure, reinforced by AI voice cloning to bypass standard internal controls on high-value transactions. This connects directly to growing scrutiny of suspicious financial flows linked to crypto, a topic we explored when analyzing the Bitrace report on high-risk addresses.

The Bigger Picture

Beyond the specific gravity of this case, the Fideuram fraud exposes a structural vulnerability affecting the entire financial sector. AI-based voice cloning tools are, according to multiple sector analyses, now freely available, require no advanced technical expertise, and can be deployed near-anonymously. Anyone with a public profile, from conference speakers to executives who appear in corporate videos, is potentially exposed to this type of attack.

Technological deepfake detection is not yet reliable enough to serve as a primary defense. The most effective protection remains procedural: never authorize transfers on the basis of a single communication, always verify through a separate channel established beforehand (not the one referenced in the suspicious message), and require multi-person approval for high-value operations.

For anyone observing the financial crime landscape, two lessons stand out. First, three separate Italian financial institutions were hit with the same scheme within a few months, suggesting either an organized campaign or a technique now replicated independently by multiple criminal groups. Second, the routing of funds through Bitcoin wallets at the final concealment stage confirms a pattern visible in other investigations: cryptocurrency is increasingly used as the last link in a laundering chain that originates in traditional banking, not as the starting point of the fraud. SpazioCrypto will continue tracking developments in this investigation, particularly the outcome of international letters rogatory on the funds still unaccounted for.

Three developments stand out. Below, they are separated clearly, with a distinction drawn between what has been officially confirmed and what remains unverified, particularly on the question of attribution.

The Stolen Amount Rises to $387.5 Million

Bitget explained that the roughly $35.9 million increase from the initial estimate of $351.6 million does not reflect a second attack. According to the exchange, the higher figure results from the inclusion of transfers on Zcash and TRON that were initially left out of the incident accounting. Bitget maintains this is a more complete reconstruction of the same September 24 event, not a separate or subsequent breach.

On the recovery side, the exchange has launched a bounty program offering up to 10% of any recovered value, split equally between contributors who help freeze the attacker’s funds and those who assist in actual recovery. The program is open to other exchanges, security researchers, and on-chain investigators. Circle and Tether have already frozen approximately $320,000 in stablecoins linked to the attacker’s address, in coordination with Bitget. That number needs context: $320,000 represents a fraction of a percent of the total declared loss.

The Withdrawal Schedule

Bitget published a detailed, asset-by-asset timeline for the gradual resumption of withdrawals, designed to manage liquidity and avoid sudden pressure on the network. Bitcoin withdrawals restart on September 28 at 08:00 UTC, followed by Ether on September 29 and USDT across multiple supported networks on September 30. All remaining assets, including any recoverable XRP, along with remaining services, are expected to follow by October 2. CEO Gracy Chen will also hold a public Q&A session thirty minutes before Bitcoin withdrawals reopen, to brief the community directly on the state of the investigation.

Bitget says the vulnerability exploited by the attacker has been identified and patched. The exchange confirmed its earlier account: the attack compromised a backend infrastructure system, making fraudulent transfers appear authorized without private keys ever being exposed. On attribution, the CEO stated that IP addresses consistent with VPN services previously used by a North Korea-linked group were detected. That remains a company-stated suspicion, not an independently confirmed attribution. The investigation is formally still open.

Why Ripple Cannot Simply Freeze the Stolen XRP

The third development is the most technically significant. The attacker moved approximately $83 million in stolen XRP out of three of the five wallets where the funds had originally been split, leaving around $75 million still sitting in the original accounts. The core issue is structural, not a policy choice. A centralized stablecoin issuer like Circle or Tether can block tokens it has issued directly, on request. The XRP Ledger protocol contains no mechanism that would allow Ripple to unilaterally freeze native XRP held in a wallet controlled by the attacker. Exchanges can restrict accounts that receive those XRP once deposited with them, but there is no way to block the funds while they remain in the original wallet.

The same logic applies, for structurally parallel reasons, to the more than 63,000 Ether also stolen, worth approximately $183 million at the time of the attack. Ether is a native blockchain asset, not a token issued by a company, so no issuer holds the power to freeze it. The comparison is useful because it clarifies a distinction that often gets blurred: some digital assets have an emergency “off switch” controlled by a corporate issuer; others, by design, do not, regardless of how serious the circumstances are.

A Hidden Risk Inside the Protection Fund

One detail that has received less attention concerns the composition of the fund Bitget uses to guarantee user reimbursement. The fund, established in 2022, holds 5,500 Bitcoin and is denominated entirely in a single volatile asset with no diversification into more stable currencies. At Bitcoin’s price of around $84,000 recorded on September 26, the fund was worth approximately $464 million, enough to cover 84% of the declared loss. But because the fund is Bitcoin-denominated, its coverage capacity moves with the asset’s price. A decline of roughly 16% from the September 26 price would push the fund below the threshold needed to cover the full declared loss, a risk that is separate from the cyberattack itself and not always visible in the exchange’s reassurances to users.

The Bigger Picture

This update illustrates how managing an attack of this scale unfolds across multiple layers at once, not in a neat sequence of separate phases. While the exchange communicates a recovery schedule and reassures users about financial coverage, the attacker continues moving assets on-chain in real time, and the security community must contend with the structural limits of certain protocols when it comes to freezing stolen funds. That theme connects to a broader conversation about the different types of crypto wallets and their respective risk profiles.

Two lessons emerge. First, Bitget’s operational transparency, with precise calendars and consistent updates on the real damage figure, offers a crisis-management approach worth acknowledging, especially compared to past incidents where information trickled out in fragments, as seen with the recent Fogo attack. Second, the protection fund being denominated entirely in Bitcoin is a reminder that even measures designed to reassure users carry their own risks, often less visible than the original threat but not trivial. SpazioCrypto will continue tracking both the attribution investigation and the fate of assets still moving on-chain.

Before unpacking the details, one point deserves emphasis upfront: this is not a confrontation between Italian merchants and Banca d'Italia. As we'll show, the central bank's own technical research, published just days earlier, already leans toward a fee model that favors small businesses. The real question is where exactly to draw the line.

Four Demands from Italian Retailers

The joint document sets out four priorities. First, zero fees on micropayments across all channels, from physical stores to e-commerce, alongside a transparent European benchmark for acceptance costs calculated on the most efficient payment solutions available, not on the average of current private card fees. Second, the digital euro must work on the approximately four million POS terminals already operating in Italy, on electronic cash registers, and in online sales systems, with no additional hardware costs for merchants. Third, offline functionality: shops and restaurants need to keep accepting payments even when network connectivity fails.

The associations ground these demands in a specific figure from the European Central Bank: 54% of in-store transactions across the euro area are below twenty euros, according to ECB data. That makes the fee structure on small amounts especially consequential for bars, restaurants, and neighborhood stores, where low-value payments are the daily norm.

Banca d'Italia's Position Is Closer Than It Looks

On September 9, just weeks before the merchant meeting, Banca d'Italia published a technical study on fee cap models, authored by three of the institution's own researchers. The paper compares two approaches: a specific cap negotiated individually with each merchant, or a uniform market benchmark based on the average fees applied to comparable payment instruments across the euro area. The researchers' conclusion is clear. Individual-agreement models are hard to verify and difficult to enforce, while a uniform market benchmark is simpler to monitor and fairer in practice.

That technical conclusion would be welcome news for small retailers. Today, according to the Banca d'Italia study, small merchants pay fees estimated at three to four times higher than those obtained by large retail chains, a direct consequence of weaker negotiating power tied to lower transaction volumes. Speaking on September 25, Deputy Director General Chiara Scotti reinforced this point, stating that “a fee cap can provide important protection, especially for merchants with less bargaining power”, a concern she described as “particularly relevant in Italy, where nearly 95% of businesses have fewer than ten employees.” She added a technical caution, though: complex mechanisms that are difficult to verify or influenced by individual operators' contractual conditions risk becoming an obstacle to adoption.

The Eurosystem Absorbs Part of the Infrastructure Costs

One concrete element to emerge from the September 25 meeting concerns how this balance will be funded. Deputy Director General Scotti explained that the Eurosystem will directly shoulder a significant share of infrastructure costs, a commitment that helps explain how low merchant fees can coexist with a system that remains financially viable for the intermediaries distributing it. That's not a minor detail: it signals that European institutions are treating the digital euro's fee structure as a matter of institutional priority, not just market negotiation.

On the operational timeline, Scotti confirmed that the pilot phase will begin in the second half of 2027, running for twelve months in a closed environment designed to test a beta version of the digital euro. Thirty-six payment service providers have been selected to participate, including several Italian operators: Banca Monte dei Paschi di Siena, Banca Sella, Isybank, Nexi Payments, Numia, Poste Italiane, and UniCredit.

What This Means for the Digital Euro Debate

This episode shifts the digital euro conversation from abstract principles to a very concrete question: who actually pays to make it work at the checkout counter? For small merchants, who make up the vast majority of Italy's business fabric, the technical direction suggested by Banca d'Italia's own research already points toward a fairer fee model than the current one. Whether the European legislature, at the end of the ongoing trilogue, will actually choose the full zero-fee approach demanded by retailers for micropayments, or settle for a low-but-not-zero level as Scotti's technical caution implies, remains to be seen.

Technical documents and research

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.

European Central BankEuropean Central Bank

Two observations stand out for anyone tracking this story. The digital euro debate has clearly moved into a phase of very specific technical detail, far removed from the broader conceptual discussions of earlier years. And the Eurosystem's decision to directly absorb a meaningful share of infrastructure costs tells you how seriously European institutions take the risk of launching a public currency that arrives disadvantaged against private card networks from day one. Watch the EU trilogue closely: a conclusion could come before the end of 2026, and the outcome will set the fee floor for every small business that accepts digital payments across the eurozone.

Banca d'Italia - Speeches and Interviews by Deputy Directors General

This section contains speeches and interviews by the Deputy Directors General.

Home pageLuca Trequattrini, Chiara Scotti, Sergio Nicoletti Altimari

While Scotti spoke in Rome, Italy's leading retail trade associations were simultaneously presenting a detailed joint position to the Banca d'Italia on how they want the digital euro to function in everyday commerce. Taken together, the two developments move the conversation from principle to economic model. Here is what Scotti said, and what merchants are demanding.

The Bank of Italy's Red Line

Scotti opened her remarks with a data point that frames the shift already underway. According to Banca d'Italia figures, just a few years ago nearly sixty percent of point-of-sale payments in Italy were made in cash; today that share has fallen to forty-nine percent. That trend, she noted, is gradually reshaping the entire payments architecture, in a context where cash remains the only form of central bank money directly accessible to all citizens.

For precisely that reason, Scotti argued, the digital euro must be “simple to use, privacy-respecting and genuinely inclusive,” as well as “convenient for citizens and merchants and sustainable for the intermediaries that will distribute it,” capable of “strengthening resilience without compromising financial stability.” The sharpest point in her address, though, concerns the deposit limit: the digital euro must remain “primarily a payment instrument” and must not become “an alternative savings instrument to bank deposits.”

Scotti noted that central bankers are watching Brussels closely, where the trilogue between the European Parliament, the Council and the Commission will settle what the digital euro actually is, who can use it, how it will be distributed, and what rights and protections citizens and businesses will have. All of that must be resolved before the pilot phase begins, in which Italian payment service providers are expected to participate in significant numbers.

Digital euro: Scotti (Banca d'Italia), a payment instrument, not a savings one - Borsa Italiana

Radiocor. Economy. Digital euro: Scotti (Banca d'Italia), a payment instrument, not a savings one.

Borsa Italiana logo

What Merchants Want: Zero Fees and No New Hardware

On the same day, Confcommercio, Confesercenti, FIPE and Netcomm submitted a joint position to the Banca d'Italia, framing the digital euro as a strategic opportunity to strengthen competition, boost transparency and reduce dependence on large international payment networks. Their four specific demands: zero fees on micropayments; automatic integration of the digital euro into the roughly four million POS terminals already deployed across Italy, with no new hardware investment required from merchants; offline functionality, to prevent lost sales during network outages; and a transparent European benchmark for acceptance fees.

The demands are backed by precise figures. According to the Digital Payments Observatory of the Politecnico di Milano, the value of digital transactions in Italy reached 518 billion euros in 2025, covering forty-five percent of total consumption and surpassing cash for the first time, with more than ten billion operations processed at payment terminals according to Banca d'Italia data. A second figure, drawn from the European Central Bank's “European Payments Landscape” report, reveals the other side: Europe's payments market is concentrated in the hands of just twelve large operators controlling seventy-eight percent of transactions, with forty-three percent attributable to non-European players. That concentration, the associations argue, disproportionately weakens the bargaining power of micro and small businesses relative to large retailers.

Why Micropayments Are the Real Battleground

One figure cited on September 25 explains why trade associations are pushing so hard on micropayments specifically. According to ECB data, fifty-four percent of in-store payment transactions across the euro area involve amounts below twenty euros. Even a small fixed fee applied to each of these low-value transactions would hit small merchants proportionately much harder than large retailers, who process far greater volumes that dilute the same fixed cost across a wider base.

The issue fits into a broader question about how central bank digital currencies must coexist with the existing private payments infrastructure. It's a balance the ECB has already had to navigate in other contexts, including the launch of Pontes, the ECB infrastructure for wholesale settlement in central bank money, and the subsequent ECB proposal to revise MiCA rules on private stablecoin reserves. In all three cases, the same European institution is balancing digital monetary innovation against the stability of the traditional banking system.

What This Means for the Broader CBDC Debate

Together, these two developments shift the digital euro discussion from the abstract to the concrete economic model. The question is no longer whether a European central bank digital currency is a good idea in principle. Now it is about how much can be held, how much it will cost merchants to accept, and how European regulators will prevent it from draining deposits out of the traditional banking system and, by extension, impairing banks' capacity to lend to the real economy.

For observers tracking the European digital currency project, the takeaway is twofold. The fact that both monetary authorities and trade associations are negotiating this level of operational detail months before the European regulation is even finalized signals that the project has entered a genuinely mature phase. At the same time, the tension between the central bank's financial stability concerns and merchants' cost concerns makes clear that the digital euro's final shape will be a negotiated compromise, one that the Brussels trilogue text must ultimately resolve. Readers looking for broader context on these technologies can start with our guide on what cryptocurrencies are and how they relate to the evolving landscape of digital money.

The single most important fact to establish first: the civil forfeiture complaint filed by prosecutors does not directly name Tether, its affiliated exchange Bitfinex, or the bank involved. The filing refers generically to “a cryptocurrency company,” “an affiliated exchange,” and “a bank headquartered in Dominica.” It was the Financial Times, citing unidentified sources, that connected those references to Tether, Bitfinex, and EQIBank. Tether subsequently confirmed that identification is accurate regarding its banking relationship with EQIBank, but has not accepted any allegation of wrongdoing that is the actual subject of the investigation. Here is precisely what the court documents say.

What the Forfeiture Order Covers

According to the civil complaint filed on July 15, 2026, in the U.S. District Court for the Eastern District of California, Capstone allegedly operated as an unlicensed money transmitter in at least six states while presenting itself to banks as an ordinary technology services company. On September 14, 2026, prosecutors executed seizures totaling approximately $84.2 million: $79.11 million from a Wells Fargo Securities account held by Capstone, $1.86 million from a second Wells Fargo account, $2.06 million at JPMorgan Chase, and just over $1 million in USDT distributed across two crypto addresses, according to the forfeiture filing.

Tether Says EQIBank Exposure Is Below 0.034% of Assets After U.S. Seizure | TokenPost

A federal forfeiture filing itemizes about $84.2 million in cash and USDT, below EQIBank's separately cited $89 million figure.

TokenPostRiza Dagoc

Behind Capstone, according to court documents, stood EQIBank, a digitally licensed bank based in Dominica, which allegedly directed how the payments processor moved money. Capstone's owners, identified in the documents, were subjected to an FBI search of a California residence. Their attorney stated the company “denies any wrongdoing” and hopes to resolve the matter quickly. EQIBank filed an emergency motion to recover the seized funds, arguing it was deceived by Capstone and believed the firm was properly registered. A judge has already denied that request.

Tether's Actual Role, Stated Precisely

Tether publicly confirmed that EQIBank processed its wire transfers related to USDT issuance and redemption, but stated the company had no knowledge of the conduct under investigation. Tether also quantified its potential exposure at less than 0.034% of the group's total assets, a figure that, applied against its most recent quarterly attestation data, would correspond to roughly $63.8 million, according to TokenPost reporting on the forfeiture filing. The Financial Times, citing court documents, reported that Tether's relationship with EQIBank went beyond that of an ordinary customer: Tether allegedly invested in the bank itself and offered to increase its support in exchange for EQIBank opening a Tether account at a Singapore institution. That detail, worth flagging, comes from documents cited by the Financial Times and has not been directly confirmed by Tether on that specific point.

To be unambiguous about something already being muddied online: neither Tether nor Bitfinex has been charged with any wrongdoing in this proceeding. Prosecutors brought no claims against either company. Both appear in court documents only in relation to funds that moved through Capstone and EQIBank for the processing of legitimate payments.

The Fraud Scheme in the Background

A separate but connected element involves an alleged fraud scheme in which victims, according to court documents, were contacted by individuals impersonating FBI agents. Using psychological pressure, these imposters induced victims to make payments that were subsequently converted into stablecoins. Capstone is accused of facilitating precisely that conversion of stolen funds into crypto. This point, once again, concerns the payment infrastructure exploited by the fraudsters, not any accusation against the issuer of the stablecoin used as the final conversion tool.

The Larger Picture: Stablecoins and Banking Compliance

This case shines light on a delicate and underreported junction between stablecoins, the international correspondent banking system, and anti-money-laundering controls. Large stablecoin issuers, to operate at global scale, must rely on a web of banks and payment processors across multiple jurisdictions to handle the issuance and redemption of their tokens in fiat currency. When one link in that chain, as here an unlicensed payments processor that misrepresented itself to U.S. banks as a tech firm, fails its regulatory obligations, the reputational and operational risk can fall on parties like Tether that were simply using it as a banking service provider, regardless of their own culpability. That dynamic connects directly to the broader scrutiny of high-risk financial flows tied to stablecoins, a theme we examined in our analysis of the Bitrace report on flows toward high-risk addresses.

Two lessons emerge from this episode. First, as stablecoins push deeper into traditional financial infrastructure (a trend we tracked covering The Clearing House and Quant's on-chain initiative), every link in the banking chain supporting them must fully meet its regulatory obligations, because a single weak link can produce reputational damage disproportionate to the actual sums involved. Second, cases like this one, where a complex legal proceeding risks being compressed into misleading headlines, are a reminder of why precision matters: there is a fundamental difference between being formally charged with a crime and being named as a client or commercial counterparty of an entity under investigation. We'll track developments in this proceeding over the coming weeks, as all parties may provide further clarifications. For background on how these instruments work, our guide on what stablecoins are remains a useful starting point.

There's a detail buried in this story that makes it considerably more significant than a routine vendor selection: the same company chosen by The Clearing House is simultaneously powering the equivalent tokenized deposit infrastructure in the United Kingdom. Both announcements dropped on the same day. Here's what the deal covers, and why that transatlantic coincidence reframes the whole picture.

What the Deal Covers

Quant will provide the interoperability, orchestration, and transaction management layer that coordinates the clearing and settlement of tokenized bank deposits across member institutions. Crucially, the network will connect directly with existing traditional payment systems, including the RTP and CHIPS networks, preserving continuity with the infrastructure US banks already depend on. The project itself isn't new: it was publicly announced in June 2026, backed by major institutions including BNY, Citi, PNC, Regions, Santander, and Wells Fargo. Yesterday's news is specifically about the technology vendor selected after a competitive evaluation process. The network is expected to become available to participating institutions in the first half of 2027.

The Clearing House Partners with Quant to Advance the On-Chain Money Initiative | The Clearing House

The Clearing House will use Quant's technology to bring on-chain capabilities to its tokenized deposit clearing and settlement network for financial institutions.

The Clearing House

The Clearing House's chief strategy officer stated, as reported in the official press release, that building interbank infrastructure for tokenized deposits requires proven technology capable of scaling, emphasizing that Quant brings the experience needed to give financial institutions of every size a concrete pathway to participate. Quant's founder and CEO, in the same announcement, described the partnership as a step marking the global transition toward programmable money, adding that The Clearing House's central role in the US banking system means this collaboration sets a standard the rest of the world will follow. One indirect indicator of the market's reaction: Quant's native token hit its annual high in the hours immediately following the news, per CoinGecko data.

The Clearing House Partners with Quant to Advance the On-Chain Money Initiative | Quant

The Clearing House will use Quant's technology to bring on-chain capabilities to its tokenised deposit clearing and settlement network.

QuantMatthew Braithwaite

The Discovery: One Vendor, Two Sides of the Atlantic

Here's where the story gets considerably more interesting. As SpazioCrypto reported earlier, major UK banks, including Lloyds, Barclays, NatWest, and HSBC, had already completed the first live interbank transactions using tokenized deposits as part of the Great British Tokenised Deposit (GBTD) project, coordinated by UK Finance. That same British platform was built by Quant, the identical company chosen by The Clearing House for the American network. Both announcements were published on September 24, 2026.

Tokenised sterling deposits - GBTD initiative

UK Finance

This isn't simply a case of two major markets experimenting in parallel with different architectures. It's also a story about technological concentration. A single private vendor now underpins tokenized deposit settlement infrastructure in both the UK and, potentially, the United States: two of the world's most systemically important financial markets. That detail only became apparent by cross-referencing two separate press releases, published by different organizations, at a moment when media attention was naturally focused on each domestic story individually rather than on the combined picture.

One Vendor, Both Sides of the Atlantic

What cross-referencing the sources reveals. Source: The Clearing House, UK Finance, Quant, September 24, 2026

• USA: Quant selected as the interoperability layer for 25 banks via The Clearing House.
• UK: the same Quant built the platform powering the GBTD project.
• Same day: both announcements published September 24, 2026.

The US Has No Single Model Either

It's worth putting the Clearing House initiative in context: even within the United States, no single model has emerged for bringing bank money on-chain. While The Clearing House builds a collectively owned shared network of tokenized deposits, SoFi took a different route, issuing its own proprietary bank stablecoin to settle its card program. Bank stablecoins and shared tokenized deposit networks are developing in parallel, within the same country, which tells you the industry hasn't converged on a single answer to the underlying question: how to put bank money on the blockchain while preserving its regulatory protections.

One technically important distinction, emphasized by The Clearing House itself, concerns exactly that regulatory dimension. The tokenized deposits on the new network will retain the protections and supervisory oversight typical of ordinary bank deposits, while also becoming programmable and movable around the clock according to predefined rules. That combination of automation and regulatory continuity is designed primarily for use cases like corporate treasury management, liquidity optimization, and cross-border payments.

UK banks complete first live customer transactions using tokenised sterling deposits

Read the latest news and insights from UK Finance: UK banks complete first live customer transactions using tokenised sterling deposits

UK Finance

The Bigger Picture

Banks are no longer asking whether to put money on the blockchain. They're deciding, concretely, which infrastructure they'll use and who they'll build it with. The Clearing House's vendor selection, the outcome of a competitive process among multiple candidates, signals that the pilot phase is behind a significant portion of the American banking system. The real contest now is about building shared infrastructure capable of scaling across the entire sector, not isolated proofs of concept.

For anyone watching this space, two observations stand out. First, the fact that a single private technology vendor now supports the settlement infrastructure of two of the world's most important financial systems simultaneously raises a question worth tracking over time: how much systemic concentration risk is acceptable when critical financial infrastructure depends on a very short list of technology providers, however capable and reliable they may be? Second, the variety of approaches currently in play, from shared tokenized deposits to proprietary bank stablecoins, to central bank money on-chain as seen with the ECB's Pontes initiative in Europe, suggests the sector is still actively exploring which combination of models will prove dominant. Convergence, in all probability, is still several years away. The date to watch in the meantime: the first half of 2027, when The Clearing House network is scheduled to open to participating institutions.

The breach was first flagged through unusual platform behavior and user reports of blocked withdrawals, before on-chain data confirmed the scale of the attack.

Arkham Intelligence Traces the Funds

According to Arkham Intelligence data, a series of large transfers swept through Bitget-labeled wallets in an unusually compressed timeframe. The funds originated from several hot wallets, all tagged as belonging to Bitget, and from at least one cold wallet. Early Arkham tracking put the initial movement at around $176 million, but that figure was quickly revised upward as more transfers surfaced.

Once Arkham and outlets including BeinCrypto had published their findings, Bitget officially confirmed that the total loss exceeded early estimates, settling at just under $351.6 million across multiple assets. A single destination address, 0x770b...63Ee, appears repeatedly in the transaction logs, receiving ETH, AVAX, BNB, USDT, USDC, XAUT, and other tokens from exchange-linked wallets within that narrow window.

The speed and coordination of the transfers is what makes this incident stand out. Multiple wallets sending different assets to the same address, almost simultaneously, is a pattern that raises immediate red flags for on-chain analysts.

How the Attackers Operated

The attack pattern is unusual in ways that merit attention. Several wallets appear to have sent a variety of assets to a single address in an extremely short time span. That profile is consistent with what analysts see during exchange hacks, but it also resembles the internal fund movements that exchanges themselves carry out during wallet maintenance or custody transitions, which is precisely why the initial response was cautious.

The mechanics here contrast with other recent high-profile breaches. In the Fogo hack, attackers moved 400 million Fogo tokens into a single account before redistributing them to a second wallet. The Coldcard incident was different again: a known programming bug that developers had identified but never fully resolved left the system open to exploitation. Three attacks, three different methods. The frequency of these events raises a question the industry hasn't answered convincingly: how much work remains to adequately secure exchanges and the assets they hold?

Bitget confirmed that user withdrawals remain suspended as a precautionary measure. CEO Gracy Chen reassured the community that the full amount affected falls within the Bitget User Protection Fund, meaning user balances are covered.

Bitget's Response and What Comes Next

Credit where it's due: Bitget's reaction was faster and more transparent than many exchanges manage under pressure. The CEO went live for more than three hours on September 24, walking through the situation in real time. Bitget also self-disclosed the full $351.6 million figure before third-party trackers had confirmed it, at a point when Arkham and BeinCrypto were still reporting the lower $170 million estimate. That kind of proactive disclosure matters, and it's worth noting as a contrast to exchanges that obscure losses for days.

As of the latest updates, Bitget says it has already identified leads on who carried out the theft and is working to map the exact sequence of events. The exchange's security team and external investigators are involved. A resolution, partial or full, may come sooner than past incidents of this scale would suggest.

The Bitget hack of September 24, 2026, landing at $351.6 million according to Arkham Intelligence tracking, sits among the largest single-day exchange losses of the year. Investors using centralized exchanges should monitor Bitget's official communications for the withdrawal resumption date and review whether their own assets sit in exchange-held wallets or in self-custody. The Bitget User Protection Fund provides a coverage backstop, but the episode is a clear signal that on-chain security at major exchanges still has structural gaps that sophisticated attackers know how to exploit.

Geopolitical Tensions Enter Financial Risk Calculations

In the ESAs' own words, published in their joint risk assessment: “The strong exposure of the European financial sector to digital infrastructure and service providers from outside the continent, particularly cloud computing services, data centers, and artificial intelligence models, seriously risks amplifying the impact of geopolitical shocks and multiplying operational disruptions.”

The authorities pointing this out are not minor players. The ESAs, short for European Supervisory Authorities, comprise three institutions: EBA (the European Banking Authority), EIOPA (which oversees insurance and pension funds), and ESMA (the European Securities and Markets Authority). When all three speak in unison about a systemic risk, Brusssels tends to pay attention.

US tech giants are the implicit target. These are the same companies whose AI divisions are pushing the Nasdaq to record highs, precisely because European financial institutions are among their most committed customers. The dependency goes both ways: European finance funds American tech, and American tech runs European finance.

In their joint analysis, cloud platforms, data centers, and AI models developed outside the European Economic Area are identified as potential risk multipliers for banks, insurers, and fund managers across the EU. The concern is not theoretical: operational concentration in a handful of non-EU vendors creates a single point of failure that crosses national borders.

Cloud Concentration: The Specific Threat ESMA and EBA Identify

Cloud services, in this context, means the infrastructure that allows banks, insurers, and asset managers to store data and run applications on remote servers. The problem the ESAs flag is concentration: most of these services are controlled by a small number of large technology groups, none of them European.

Should geopolitical tensions escalate further, or a major technology outage occur, the risk index could rise sharply and fast. A political dispute between the US and EU, a sanctions regime, or a cyberattack on a non-European provider could simultaneously affect thousands of European financial institutions with no local fallback.

These concerns are not new. The Governor of the Bank of England raised similar warnings several weeks ago, flagging AI-related systemic risk to global finance. In Washington, Senator Bernie Sanders introduced legislation to slow AI development, though the bill's prospects remain dim given the Trump administration's explicit policy of non-interference in the AI sector.

What Could Actually Go Wrong

The ESAs frame their concern around what they call a “possibilistic” reasoning: not a certainty, but a plausible chain of events. The authorities acknowledge that cyber threats from hostile states and terrorist actors have been on the radar for years. What has changed is the geopolitical backdrop, which has become considerably less stable.

A political or economic shock between major world regions could now translate far more easily into operational disruptions for European financial firms, precisely because their critical digital infrastructure sits abroad or is controlled by operators outside the continent. There is no quick domestic alternative to switch to.

At the core of the ESAs' concern is the rapid growth of AI models embedded in financial operations: tools for data analysis, risk management, and process automation. These systems are becoming more powerful at speed. And as their complexity increases, so does the attack surface they present.

More Technology Means More Entry Points for Attackers

More connected systems and larger volumes of processed data mean more potential entry points for hacking and cyberattacks. Each new technology layer introduced into a financial institution's stack creates a potential new breach point for malicious actors to exploit.

The ESAs do not call for a wholesale reversal of digital transformation. What they urge, repeatedly, is sustained vigilance: tighter oversight of third-party digital dependencies, clearer contingency planning, and a regulatory framework that treats foreign AI and cloud exposure as a systemic risk category in its own right.

For European investors and financial institutions operating under MiCA and DORA (the Digital Operational Resilience Act, which entered into force in January 2025), the ESA warning adds political weight to compliance obligations already on the books. DORA specifically requires financial entities to stress-test their ICT third-party dependencies, including cloud and AI providers. The ESAs are effectively saying that stress tests alone may not be enough if the geopolitical environment deteriorates further. Regulatory watchers should track how EBA, EIOPA, and ESMA translate this warning into supervisory guidance over the coming months.

Executive Summary: Parliamentary Intergroup on Digital Assets, Blockchain and Bitcoin

Executive summary of the Parliamentary Intergroup “Digital Assets, Blockchain and Bitcoin”: scenario and mission, working method, governance, and the September 24, 2026 proceedings at the Chamber of Deputies.

Parliamentary Intergroup “Digital Assets, Blockchain and Bitcoin”

One thing must be stated clearly from the outset: no law was passed today. No formal legislative proposal has been filed. What was presented is a technical draft, developed by one of the Intergroup's fourteen working groups. The Intergroup's own official statement describes it as still requiring verification with parliamentary offices, relevant ministries. Competent administrations before it can become a genuine legislative initiative. Here is exactly what the draft proposes, and the context in which it was presented.

What the Technical Draft Proposes

The working group on digital asset taxation, coordinated by academic and industry figure Ferdinando Ametrano, presented its findings today within the broader Intergroup proceedings. According to the Intergroup's published materials, the technical draft contains four main measures: a return of the crypto capital gains tax rate to 26% from 2027, down from the current 33% rate in force since 2026; the deductibility of costs incurred in conducting transactions; the ability to offset crypto losses against gains from other financial instruments, such as equities and bonds, which current Italian law does not permit; and an annual step-up option for the cost basis of held crypto assets, applied through a substitute tax.

This is not the first time Ametrano has pushed this position publicly. Back in November 2025, during parliamentary debate on the 2026 budget law, he argued publicly for a nearly identical proposal, stressing the need to correct what he called a structural inconsistency in the current framework, one that penalises crypto savings relative to other asset classes without justification. Today's draft is therefore the continuation of a long-running campaign, this time channelled through the more formal structure of the Parliamentary Intergroup.

The Context: A Full Day of Work, Not a Single Announcement

As we reported in our analysis published a few days ago, today's event, titled “Digital Finance, Markets and Monetary Sovereignty: Bitcoin, Blockchain and Tokenisation, a Strategy for Italy”, ran from 10 a.m. to 5:30 p.m. in the Parliamentary Groups Chamber at the Camera, with a total of 164 participants including the 35 members of the Technical Panel and representatives from all fourteen thematic working groups. The taxation proposal is therefore only one of several findings from a much broader day of work that also covered cybersecurity, tokenisation, stablecoins and anti-money laundering.

Thematic Working Groups: Parliamentary Intergroup on Digital Assets, Blockchain and Bitcoin

The organisational structure of the Parliamentary Intergroup “Digital Assets, Blockchain and Bitcoin”: President MP Marcello Coppo, Technical Panel Coordinator Antonio Annino, the Secretariat, and the heads of the fourteen thematic working groups.

Parliamentary Intergroup “Digital Assets, Blockchain and Bitcoin”

The morning opened with institutional remarks from MP Marcello Coppo, the Intergroup's president and the figure responsible for launching the entire process back in 2025. Scientific coordination of the Technical Panel's work falls to Antonio Annino, while the day's organisation and moderation were handled by Gabriele Del Mese. Among the fourteen thematic group coordinators who presented their findings, alongside Ametrano for taxation, was Roberto Garavaglia, an independent consultant and digital payments specialist, who publicly confirmed his participation as the lead of one of the Intergroup's thematic groups. Each coordinator presented the conclusions from their respective area of expertise, spanning cybersecurity through to tokenisation, collectively forming the overall picture to emerge from the day.

One passage in the afternoon's official Intergroup statement stands out: some of today's findings are considered sufficiently mature to begin a first round of institutional dialogue, while others still require further technical validation. The statement does not specify which proposals fall into which category, so it's not possible to say with certainty that the taxation proposal is already ready for government engagement, though its relatively concrete and detailed nature makes it a plausible candidate.

Why this matters directly for Italian crypto holders

This is precisely what sets today’s proposal apart from a generic parliamentary debate on blockchain: it hits directly at the wallet of anyone holding crypto assets in Italy. Current law raises the substitute tax on crypto capital gains to 33% starting in 2026, per the Italian Budget Law, while preserving a separate 26% rate for certain euro-denominated instruments linked to electronic money. A unified 26% flat rate, if actually enacted, would meaningfully cut the tax burden compared to where things stand today.

Among the rationales the working group presented today to justify the reform, as reported at the session, is a pointed comparison: under the current framework, directly held Bitcoin and exchange-traded products that replicate its price on regulated exchanges can end up facing different tax treatment despite representing, in substance, the same economic exposure. That asymmetry is one of the core arguments the group uses to push for regulatory alignment between the two instruments. On the question of cross-asset loss offsetting, it’s worth spelling out the current constraint: Italian law today applies a “closed-compartment” rule, meaning crypto losses can only offset gains from the same asset category, not from equities or bonds. The draft presented today explicitly targets that restriction.

The bigger picture

Whatever the final outcome, this episode confirms something already visible during the Intergroup’s working session: for the first time, Italy is attempting to build its own independent position on crypto policy, rather than simply transposing European rules. Taxation, in particular, is an area where national governments retain significant legislative room outside EU directives, and that autonomy is exactly what gives this proposal its potential weight in the weeks ahead.

Two observations stand out for anyone following this closely. First, the fact that Ferdinando Ametrano, who has been making this case publicly for at least a year, managed to bring it into the structured process of a parliamentary intergroup with 35 technical members and 14 working groups represents a genuine leap in institutional credibility, well beyond a standard industry lobbying request. Second, none of this should be confused with an approval, even if the subject touches on the real financial interests of crypto holders across Italy. SpazioCrypto will track developments and update this piece as soon as the proposal is formally filed or submitted to Parliament. For essential background on the underlying tax context, our guide on what cryptocurrencies are remains a useful starting point.

UK banks complete first live customer transactions using tokenised sterling deposits

Read the latest news and insights from UK Finance: UK banks complete first live customer transactions using tokenised sterling deposits

UK Finance

The central point that distinguishes this news from many other tokenisation stories is that the tokens involved are not a private stablecoin. They represent money already deposited in a bank, and they carry exactly the same legal status and protections as an ordinary current account balance. This piece covers how the tests worked, what comes next, and why this story needs to be read alongside what happened on the European front in the same week.

How the Tests Worked

The project, coordinated by trade body UK Finance and named the “Great British Tokenised Deposit” initiative, involves seven institutions in total: Barclays, HSBC, Lloyds, Monzo, NatWest, Nationwide and Santander, with technical support from Quant Network and advisory input from EY and law firm Linklaters. In the two remortgage tests, funds were locked until blockchain-confirmed title transfer, at which point they were automatically released between the participating banks.

In the HSBC-led test simulating an online marketplace purchase, the mechanism worked differently. The system used programmable deposits to hold the buyer's funds on their account, releasing payment to the seller only after the system confirmed delivery of the purchased item. No physical goods changed hands in this simulated test, but the experiment demonstrated in practice how programmable bank money can reduce fraud risk in transactions, enabling direct settlement between different banks rather than remaining trapped within siloed banking systems.

From Pilot to Production: What Comes Next

The most significant detail in this story concerns what happens from here. As reported by UK Finance on September 24, 2026, participating institutions plan to incorporate a dedicated company and establish a formal governance rulebook, a move that marks the attempt to transform this experiment from a pilot project into genuine production infrastructure, with shared rules and a stable governance structure. The banks involved also plan to issue, in Q1 2027, three tradeable and settleable digital bonds using this same tokenised deposit system.

Tokenised sterling deposits - GBTD initiative

UK Finance

For completeness: Lloyds had already tested tokenised deposits in a different context. In August, the bank completed three live transactions through Project Agorá, led by the Bank for International Settlements, involving sterling, euro and Swiss franc, linking currency conversion, payment and settlement in a single operation. Separately, the UK government is advancing its own digital gilt project, with the first issuance expected by end of Q1 2027 via HSBC's Orion platform, within the digital securities sandbox managed by the Bank of England and the Financial Conduct Authority.

The Tests at a Glance

What was completed. Source: UK Finance, Reuters, 24 September 2026

• The tests: 2 remortgage transactions (Lloyds, NatWest, Barclays) plus 1 marketplace simulation (HSBC and two others).
• Legal status: identical to an ordinary bank deposit, not a stablecoin.
• Next steps: dedicated company, governance rulebook, 3 digital bonds in Q1 2027.

Three On-Chain Money Models in One Week

This is where the UK story becomes particularly significant when read in the context of the same week's broader developments. The same week that UK banks completed these live transactions, the Eurosystem activated the infrastructure bringing central bank money into the settlement of tokenised assets, as covered in our in-depth piece on Pontes. The following day, the ECB and EU national central banks called for a review of MiCA rules on private stablecoin reserves.

Update on the Digital Gilt Instrument (DIGIT) pilot issuance

The Chancellor announced in her Mansion House speech (14 July) that the government is taking steps to prepare for potential further Digital Gilt Instrument (DIGIT) issuances, subject to the success of the first transaction that will take place by Q1 2027 on HSBC's digital securities depository (DSD), HSBC Orion. This announcement follows the appointment of HSBC as the platform provider for the DIGIT pilot issuance following a competitive procurement process in February. On 13 July, HSBC received Gate 2 approval in the Digital Securities Sandbox, becoming the first sandbox entrant to receive approval to provide live DSD services. At Mansion House last year, the government committed to delivering a range of design features, which included supporting interoperability, investor access and exploring the case for listings. The government has been engaging with additional suppliers to support the delivery of these features, together with HSBC. Building on these commitments, HSBC and LSEG (London Stock Exchange Group) have signed a memorandum of understanding to deliver a bilateral Digital Securities Depository link. This link is intended to provide connectivity between HSBC Orion DSD and LSEG's DSD and further deliver on the government's design ambition to support interoperability as a part of the pilot. Through this bilateral link model, the LSEG digital securities depository platform acts as an investor DSD for settlement and asset servicing, alongside HSBC Orion as issuer DSD. The link would enable investors to access and hold DIGIT through either infrastructure, reducing fragmentation between digital platforms and supporting broader participation in the pilot. The government, HSBC and LSEG, are working towards providing a foundation for future connectivity between digital infrastructures, helping to foster innovation, increase investor choice and support the development of the UK's digital capital markets ecosystem. Alongside this agreement, the government has engaged with regulators and LSEG on a potential listing on the London Stock Exchange (LSE). The government expects to list DIGIT on the LSE's main market as a part of delivering the pilot issuance Additionally, the government intends to lay legislation when parliamentary time allows to make amendments to the Digital Securities Sandbox (DSS). These changes aim to support the delivery of DSD services and digital security issuances, including DIGIT on DSS authorised Digital Ledger Technology (DLT) platforms.

GOV.UKHM Treasury

Three distinct models of digital money are now taking shape on-chain, coexisting in the same period: private stablecoins such as USDC and USDT, issued by corporate entities; central bank money distributed through infrastructures like Pontes; and now commercial bank deposits, tokenized yet legally identical to funds held in a standard current account. It's no accident that the Bank of England has expressed a clear preference for innovation through tokenized deposits rather than private stablecoins, given the implications that choice carries for credit creation capacity and national monetary sovereignty.

The Bigger Picture

The framing of “blockchain versus banks” has been overtaken by events. The real question this week's developments pose is which type of money will actually land on-chain, and who will control it: private issuers, central banks, or the commercial banks that have always managed retail deposits. Each model carries different consequences for financial stability, monetary sovereignty, and the banking system's ability to extend credit. That tension is also visible closer to home, in Italian initiatives such as those led by UniCredit and BlockInvest.

Two lessons stand out. First, the fact that four of the UK's largest banks have already settled real transactions, not just lab pilots, confirms that commercial money tokenization has moved from academic concept to live infrastructure. Second, the question of which digital money model prevails, whether private stablecoins, central bank currency, or tokenized bank deposits, or most likely some context-dependent combination of all three, remains one of the most consequential open questions facing the global financial system. Watching how these three models compete, or converge, over the coming months will be essential. For a grounding in the underlying technology, our guide on what cryptocurrencies are offers a useful starting point.

The structure is simple to map out. Binance brings distribution, with an estimated user base of around 300 million globally. Circle brings the USDC infrastructure. The $100 million investment is the economic glue binding both sides of the deal. Below is a precise look at how the deal works and why it matters more than a standard platform partnership.

Deal Structure and Terms

According to Circle's official announcement on September 22, the investment was executed through a private placement of Class A ordinary shares: just over 1.2 million shares at approximately $80.84 each, representing a 5% discount to Circle's NYSE market price in the days before closing. Binance agreed to a lock-up period of up to two years on those shares, a constraint that signals a long-term commitment rather than a short-term speculative position.

Under the five-year commercial agreement, Circle will pay Binance a monthly fee calculated as a percentage of USDC balances held through Circle's infrastructure services. In return, Binance commits to actively promoting USDC adoption across its platform, with particular emphasis on emerging markets. Circle's CEO Jeremy Allaire stated that Binance is now the largest stablecoin wallet in the world for dollar-denominated stablecoins, while Binance co-CEO Richard Teng described the partnership as a long-term commitment, framing the goal as making access to a stable, reliable digital dollar available to anyone with a smartphone.

Third Time Around: The Partnership History

There's a context element that makes this news considerably more significant and guards against rushed conclusions. This agreement doesn't emerge from nowhere: it replaces two earlier deals between the same companies, dating to November 2024 and August 2025. According to data disclosed by Circle itself, USDC's share of total stablecoin balances held on Binance had already grown from 5% in July 2024 to 22% by mid-2025, well before this new equity investment was announced.

That figure reframes the story. This isn't a sudden course correction; it's the acceleration of an adoption trend that had been building for over a year. Worth recalling, too, is that Binance previously backed its own native stablecoin, which was gradually wound down following regulatory pressure in the United States. That history helps explain why the exchange now prefers to deepen ties with a well-capitalized, regulated external issuer rather than reviving a proprietary token.

USDC vs USDT: What Actually Changes

This is the most nuanced part of the story, and precision matters here. The dollar stablecoin market remains dominated by Tether: according to CoinGecko data, USDT's circulating supply stands at roughly $183 billion, compared to approximately $75 billion for USDC. Circle has long sought to expand beyond its historically US-concentrated base, and this Binance deal explicitly targets the international markets where USDT traditionally holds very strong commercial ground.

That said, it would be wrong to conclude that Binance is abandoning USDT, or that USDC is automatically on a path to unseat Tether globally. What concretely changes with this agreement is Binance's financial incentive to promote greater USDC adoption on its platform. That incentive may influence user behavior over time, but it doesn't by itself overturn market dynamics overnight. The trend also connects to a broader shift: stablecoins are increasingly becoming invisible financial infrastructure inside mass-market products, a pattern seen in the launch of World Money and its integration with multiple stablecoins.

Why This Is More Than a Technical Integration

The deal's significance goes beyond the dollar figure. In recent years, Circle has built the institutional and compliance-focused side of the stablecoin economy, positioning transparency and regulatory conformity as its core differentiators. Binance, for its part, controls one of the largest crypto distribution networks in the world, with a particularly strong footprint in emerging markets where access to a stable digital dollar can make a concrete difference for millions of people excluded from traditional banking.

Combining a regulated issuer, a massive distribution channel, and a direct capital investment makes this partnership qualitatively different from a simple technical integration. The dynamic has echoes of what's been observed in Tether's own push to expand beyond its core through private credit: the stablecoin leaders are each looking for durable structural advantages, not just circulation numbers.

The Bigger Picture for Stablecoin Competition

This deal illustrates how competition between the major dollar stablecoins is evolving. It's no longer just a race for circulating supply. The contest is increasingly being decided by economic alignments between issuers and the distribution platforms that sit between them and end users. A regulated issuer that successfully ties itself to the world's largest crypto distribution channel gains an advantage that outlasts any single capital transaction, because it converts a purely technical relationship into a durable, shared economic interest.

Two lessons stand out. First, this episode confirms that the stablecoin battle is shifting toward emerging markets, where access to a stable digital dollar represents a growth opportunity that dwarfs anything available in the already-mature Western markets. Second, caution is warranted before overstating the deal's immediate impact: Tether's dominance in global circulation remains largely intact, and the real test of this partnership will play out over the coming months and years as observers watch whether USDC's share of Binance balances continues to grow at the pace registered since mid-2024. For a foundational primer on these instruments, see our guide on what stablecoins are.

Targeted consultation on the review of MiCA Regulation

This consultation will help the European Commission assess whether MiCA remains appropriate in light of first implementation experiences and market and policy developments since its entry into application.

Directorate-General for Financial Stability, Financial Services and Capital Markets Union and Directorate-General for Energy

The proposal arrives just one day after the ECB activated Pontes, its infrastructure for bringing central bank money into tokenized finance. The timing is no coincidence: Europe's central banking architecture is moving on multiple fronts simultaneously, both building new rails for digital money and rewriting the rules that will govern private stablecoins operating alongside them.

What the ESCB Is Proposing

The formal request is contained in the ESCB's official response to the European Commission's targeted consultation on the MiCA review, the EU digital asset regulation that entered into application last year. Under current rules, specifically Article 54 of the regulation, stablecoin issuers must hold at least 30% of their reserves as deposits at credit institutions. That threshold rises to 60% for tokens classified as “significant”, a designation triggered when a token exceeds certain thresholds related to number of holders, market capitalization, and international usage.

The central banks are proposing to replace this rigid threshold with a liquidity-based requirement. A minimum share of reserves would need to be invested in assets with a maturity of between one and five business days, such as overnight repurchase agreements or very short-term government securities. One distinction deserves precision here: the ESCB has not proposed specific percentages for this new requirement. The submission references 2024 draft technical standards from the European Banking Authority, which indicated thresholds of 40% within one day and 60% within five days for significant tokens. Those remain EBA figures, not the central banks' own final proposal.

A Safety Rule That Creates New Risks

The ESCB's reasoning is worth unpacking carefully, because it inverts the most intuitive reading of the situation. The bank deposit requirement was introduced specifically to protect users, keeping issuer funds inside the regulated and insured banking system. But according to the ESCB submission, those deposits don't behave like ordinary stable bank liquidity. They fluctuate in line with token creation and redemption, creating a direct link between the stablecoin issuer and the bank holding its reserves.

When a stablecoin grows rapidly, large concentrations of money flow into a small number of banks. When a redemption run begins, the issuer may need to withdraw those deposits quickly, transmitting the shock from the stablecoin directly to the bank that held them. The document explicitly cites the USDC and Silicon Valley Bank episode of March 2023, when the collapse of the California-based institution temporarily put part of USDC's reserves at risk, causing the stablecoin to lose its dollar peg for several hours, according to contemporaneous reporting by Reuters and Bloomberg.

The ESCB also flags concerns about “multi-issuance” models, where the same stablecoin is issued simultaneously inside and outside the European Union, with tokens treated as interchangeable. Such a structure, the submission warns, could create liquidity problems if redemptions were to concentrate suddenly on the EU-based component.

What This Means for European Bank-Issued Stablecoins

This is where the story becomes directly relevant for investors and institutions watching the European stablecoin market. A change to the reserve regime isn't an isolated technical detail: it would affect the economic architecture of bank-issued euro stablecoins currently under development. The most prominent example is the consortium of nine major European banks, including UniCredit and Banca Sella, that is building a MiCA-compliant euro stablecoin known as Qivalis.

One point deserves clarity to avoid misreading: the ESCB's proposal is a systemic implication, not a decision targeting any specific project. Qivalis and all other licensed issuers remain subject to whatever rules emerge from the overall MiCA review. The direction of travel matters, though. If liquidity thresholds replace the bank deposit floor, the operational and counterparty-risk calculations for every euro stablecoin issuer shift substantially.

From money market funds to stablecoins: lessons for central banks

The ECB examines parallels between money market fund regulation and the emerging stablecoin framework, drawing lessons for central bank policy.

European Central BankEuropean Central Bank

The euro-denominated stablecoin market remains small by any measure, with total market capitalization estimated at around $800 million according to CoinGecko data, a fraction of the dollar-denominated segment. For context, Tether, the world's largest stablecoin issuer, does not appear in the ESMA authorization register, having seen its MiCA transitional period expire on July 1. The company's CEO stated publicly that this reflects the same policy rationale that led Tether to forgo a European license application in the past, though that characterization comes from the company itself and has not been independently verified.

Two Moves, One Day Apart: Public Infrastructure and Private Rules

The timing is striking, and it reveals quite a lot about Europe's overall digital finance strategy. On September 21, as we covered in our detailed report on Pontes, the ECB activated its infrastructure for settling tokenized transactions in central bank money. Just one day later, the same institution, alongside the broader European System of Central Banks, proposed revisiting the rules governing private money circulating on-chain as stablecoins. These are two complementary pillars of one coherent strategy: build the public settlement layer first, then refine the rules for private digital money to make it safer for the financial system as a whole, not only for direct holders.

The Bigger Picture

This proposal signals a genuine evolution in how European authorities approach stablecoin regulation. The original MiCA rules were drafted primarily to protect end users, requiring that most reserve funds remain within the traditional banking system, insured and supervised. In hindsight, and in light of episodes such as the USDC-SVB crisis, central banks themselves now acknowledge that this approach, well-intentioned as it was, can shift risk rather than eliminate it, concentrating exposure on a small number of banking institutions.

Two lessons emerge for any close observer. First, this episode shows European rulemaking in a phase of genuine institutional maturity: the ECB and ESMA are willing to revisit their own frameworks when real-world experience points to unintended consequences, a sign of seriousness rather than drift. Second, it remains to be seen how the European Commission will respond to this request and what specific liquidity thresholds will ultimately be set, a decision that will directly shape the economic model of every future European bank-issued stablecoin, including Italian projects already in development. The consultation closes at the end of September, and its outcome is worth watching closely. For a broader grounding in these instruments, our guide on what stablecoins are remains a useful starting point.

Nasdaq Composite Hits a New High as Meta and AMD Surge

In the session covered by this article, the Nasdaq Composite closed at a recent record, gaining over 2% on the day. Meta led all major movers, rising 11.4%, while AMD jumped 10%, according to closing market data from TradingView.

Mark Zuckerberg's company added roughly $192 billion in market capitalization in a single session, per Bloomberg data. AMD, which recently pushed into large language model infrastructure on top of its nearly 70-year history in processors and semiconductors, crossed the $1 trillion valuation threshold for the first time in its history.

The gains were not confined to those two names. Intel surged more than 12%, and the Philadelphia Semiconductor Index rose 4.3%, according to TradingView data. The breadth of the move tells a story: chips, data centers, and the software that runs on them are being repriced as a group.

Two additional tailwinds amplified the buying pressure: a pullback in oil prices and a drop in the U.S. 10-year Treasury yield, which fell below 5%. Those factors eased the rate-sensitive calculus that had been holding growth stocks back, and the AI narrative provided the spark. The record, in other words, wasn't built on AI enthusiasm alone, even if AI remains the dominant engine of the tech sector's momentum.

Meta, AMD, Nvidia, Microsoft, Amazon, and Alphabet all hold significant weight not only in major equity indices but also in the universe of ETFs: exchange-traded funds that bundle diversified assets, including stocks, bonds, and cryptocurrencies, into a single tradable instrument. Their outsized representation means their moves reverberate far beyond individual stock-pickers.

What the Rally Signals About Investor Sentiment

The Composite's performance reflects elevated expectations tied to revenue growth from expanding data center buildouts and the relentless demand for computing power. What the index doesn't tell us is whether AI-linked companies will keep climbing over the medium and long term, or whether a correction is being quietly priced in. At some point, the bear trend arrives. The question is timing.

When megacap companies advance, they pull the rest of the index with them. When they disappoint, they amplify the correction. A 2% single-session gain driven by two or three heavyweight names is a rally, yes, but it also concentrates risk in ways that aren't always obvious when the screen is green.

Tech ETFs: What Investors Should Know

For anyone considering exposure to AI through exchange-traded funds, the same principle that applies to every financial asset holds: take the time to understand exactly what you're buying before you buy it. There's no shortcut.

A single ETF can hold hundreds of companies, but its performance is heavily shaped by the largest ones, given their sheer size and economic weight. The recent Nasdaq surge illustrates the gap between numerical diversification and genuine diversification. Owning several ETFs that all hold the same megacaps creates an illusion of spread while stacking exposure to the same concentrated bets.

That kind of numerical overlap tends to increase costs, particularly when investors chase the top performers, and it creates compounding risks when market conditions shift. Real diversification means combining uncorrelated asset classes with distinct exposures. That approach reduces the impact of geographic or sector-specific shocks that will inevitably arise during the holding period of any ETF portfolio. Building that kind of resilience now, while the AI trade is working, is precisely when it's easiest to overlook.

Eurosystem brings central bank money to tokenised finance

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.

European Central BankEuropean Central Bank

There's a second piece of news embedded in the same announcement, one that makes this launch far more significant than a mere technical infrastructure going live: the ECB itself will become a user of tokenized finance, investing a small portion of its own-funds portfolio in euro-denominated tokenized securities. Let's examine exactly what Pontes does, who is already on board, and why that second headline carries as much weight as the first.

How Pontes Works

Pontes provides the cash leg of wholesale DLT-based transactions directly in central bank money, connecting DLT market platforms to the Eurosystem's existing TARGET services. In practice, a bank can trade, say, a tokenized bond on a DLT infrastructure and settle the cash side through the Eurosystem, without needing to rely on a private stablecoin or a tokenized bank deposit. One point deserves emphasis to cut through the noise circulating this week: Pontes is entirely separate from the retail digital euro project aimed at consumers. This system deals exclusively with wholesale transactions between financial institutions.

Thirteen market participants are already operational at launch, according to the ECB's September 21 press release. They include Deutsche Bank, Santander, Société Générale, the European Investment Bank. Several regional German and Spanish banks, along with the Bundesbank itself as a market participant. Four DLT platform operators join them, including Clearstream, a subsidiary of Deutsche Börse. The platform currently runs from 08:00 to 16:00 Central European Time on business days, with a stated goal of reaching round-the-clock operability by 2028. Worth flagging for readers focused on British and European markets: no UK-based institution appears among the thirteen initial participants.

The ECB Becomes an Investor

The second announcement deserves equal attention. As confirmed in the ECB's September 21 press release, the European Central Bank has begun preparatory work to invest a small portion of its own-funds portfolio in euro-denominated tokenized securities, with an initial focus on securities issued by eurozone governments, regional authorities, agencies, and European supranational institutions. Two clarifications matter here: this is not a purchase of cryptocurrencies, and these investments remain entirely separate from monetary policy. The central bank's own-funds portfolio generates income to cover the institution's operating costs, and it's kept distinct from the tools used to conduct actual monetary policy. No specific amount has been disclosed, and the Executive Board will decide on precise timing once preparatory work is complete.

ECB to invest part of own funds in tokenised securities, with settlement via Pontes

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.

European Central BankEuropean Central Bank

The strategic significance of this choice goes beyond any dollar figure. A detail emerging from sector analysis helps explain it: ECB economists have reportedly expressed concern that dollar-denominated stablecoins could, over time, erode European control over monetary policy if they become the default settlement layer for global tokenized markets. Building infrastructure that keeps settlement in European central bank money, rather than ceding it to private issuers or foreign currencies, is a direct response to that concern.

Pontes at a glance

What the launch covers. Source: ECB, September 21, 2026

• What it does: settles the cash leg of tokenized transactions in central bank money.
• Who's in: 13 participants (Deutsche Bank, Santander, Société Générale among others). No UK bank in the initial group.
• The surprise: the ECB itself will invest in tokenized securities settled via Pontes.

Eleven Days After India: The Race Comes Into Focus

There's a timing detail worth pausing on, because we flagged it in an earlier analysis. Just eleven days before this launch, we reported how India had put the exact same theoretical model into production with its Demat 2.0 project: tokenized bonds settled directly with the central bank's digital rupee, via atomic settlement. At the time, we noted that India appeared to have beaten Europe to the punch on this particular front.

Pontes

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.

European Central BankEuropean Central Bank

That forecast is now fact. Pontes goes live on September 11 following India's earlier debut, confirming that the global race to connect tokenized assets with central bank money is a genuine, tightly contested competition, not a scattering of isolated pilot projects, but a contest between entire currency areas vying for a leading role in the next generation of financial infrastructure. The stakes are directly relevant to Italian banks as well, as shown by the path already underway with Italy's first tokenized bond settled in central bank money, even though Italy remains outside the initial group of Pontes participants.

From vision to delivery: building Europe's tokenised financial market

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.

European Central BankEuropean Central Bank

Why It Matters, Even for Those Outside the First Thirteen

For Italian banks and financial infrastructure operators, absence from the founding group does not mean irrelevance. Pontes is a new Eurosystem-wide infrastructure, and Banca d'Italia is a full member of the Eurosystem. The ECB itself has stated that additional participants are expected to join in the coming months. The initial group being composed primarily of large German, Spanish, and French banks, alongside supranational bodies, most likely reflects differences in each national banking system's technical readiness rather than any definitive exclusion.

If the infrastructure does scale toward bonds, securities, collateral, deposits, and other instruments, as the project's own architects have outlined, September 21, 2026 may be remembered not as the launch of yet another payments platform but as an early milestone in building Europe's next wholesale financial market. That trajectory connects directly to the growing role of data infrastructure for tokenized finance, as seen in the S&P Global and Nasdaq investment in Kaiko.

The Bigger Picture

The Pontes launch marks a genuine inflection point for European tokenized finance, because it resolves, at least at the infrastructure level, one of the sector's most debated problems: how to settle tokenized transactions in an asset free of the credit risk attached to any private issuer. Until now, anyone seeking to tokenize a security had to choose between private stablecoins, tokenized bank deposits, or hybrid arrangements, each carrying its own trade-offs. For an initial group of European operators, there is now an alternative that pushes settlement to the safest possible tier, central bank money itself.

Two lessons stand out. First, this launch confirms that the global institutional tokenization race is being decided on highly concrete terms, specifically who manages to build central bank money settlement infrastructure first and at sufficient scale. Europe arrives second after India, per the ECB's own project timeline, but still ranks among the earliest movers globally. Second, the ECB's decision to invest directly in these instruments, even if the precise figures remain undisclosed in its press communications, signals institutional conviction that goes well beyond building a technical platform and could accelerate adoption by other operators over the coming months. Watching which institutions join the original thirteen participants, and whether Italian banks opt in during this first expansion phase, will be worth following closely. For broader context on the underlying technology, our guide on what cryptocurrencies and blockchain are remains a useful starting point.

This isn't a routine token update for WLD holders. World is transforming its identity verification infrastructure into something far closer to a global consumer financial account, with partners including Stripe, Bridge, and Morpho integrated directly into the app. What follows is a breakdown of the features, the caveats regulators in Europe and the US should note, and why the identity-to-finance sequence World is describing deserves close attention.

How do I use Earn?

Earn is a feature in World Money that, where available, lets you deposit supported assets into on-chain lending protocols and track the rewards they generate over time. By depositing supported asse…

World Help CenterWorld Help Center

What World Money Actually Offers

The app, developed by Tools for Humanity, the company behind the World project, lets users hold stablecoin balances in eight different currencies, send and receive digital assets internationally, monitor wallets and transactions, and set price alerts. All of this runs through a self-custodial interface where users retain direct control of their private keys. In the US market, Stripe powers the funding flow via Apple Pay, converting funds into stablecoins within minutes. Bridge handles the creation of virtual accounts that convert deposits into digital US dollars, with account details issued directly by a partner banking institution.

The app also includes a dedicated yield section, powered by the decentralized lending protocol Morpho, which allows users to deposit selected assets to generate interest over time. Rates and conditions are neither guaranteed nor fixed, varying with market conditions. A growing ecosystem of integrated “mini apps” rounds out the offering, including the prediction market platform Kalshi and the Morpho protocol itself for yield management.

A Critical Caveat, Directly from World

Before getting carried away by the scale of this launch, there is a fundamental clarification that World's own official product documentation makes clear, and that every user should understand before signing up. Stablecoins held within World Money are digital assets, not insured bank deposits. That distinction applies to any stablecoin, but it carries particular weight in an app designed and marketed as a daily alternative to traditional banking, where the feel of a “balance” can easily be mistaken for the security of a guaranteed current account.

There is a second caveat worth noting, flagged by early press coverage. Availability across more than 150 countries does not mean uniform access to all features. Functionality and eligibility vary considerably by jurisdiction. The initial official communications did not specify how compliance requirements were addressed in each individual market. For US and UK readers used to FDIC or FSCS deposit protection, that gap matters.

From Identity to Financial Account: The Sequence That Matters

The most striking aspect of this launch, beyond the feature list, is the logical sequence it represents. World began as a system for proving, through iris scanning, that a given user is a real person and not a bot. The company has increasingly tied that mission to AI's growing capacity to generate convincing fake digital identities at scale. With World Money, that same proof of identity becomes the access layer to a complete financial account, built on top of a stablecoin infrastructure.

The chain runs like this: identity verified via World ID unlocks a self-custodial wallet, which holds stablecoin balances, connected to fiat conversion infrastructure provided by Stripe and Bridge, extending all the way to genuine financial services including yield-bearing savings and international transfers. It's the same pattern of silent stablecoin adoption seen in Nubank's Nu Global launch, where deposits convert automatically into stablecoins without the user noticing, and in Lisk's transformation into a fintech platform that abstracts the underlying blockchain entirely.

World Money: A Financial Super App for Humans

World Money is a financial super app for humans. Get paid, hold balances, earn rewards, invest, and send digital assets globally from one app.

World

Why This Raises Regulatory Questions in Europe and Beyond

There is a broader reason to follow this evolution carefully, beyond the product launch itself. Until now, World's biometric identity layer was tied primarily to token distribution and anti-fraud verification. With World Money, that same biometric identity can become the identity layer for real financial services: from payments to savings. That's a meaningful step up. It opens non-trivial regulatory questions about how a system linking sensitive biometric data to access to banking and financial services at global scale should be treated under existing law.

Under MiCA, the EU's crypto-asset regulatory framework that entered full force on December 30, 2024, stablecoin issuers and crypto-asset service providers face strict requirements around e-money licensing, reserve management, and consumer protection. Linking biometric identity data to financial services at this scale would also raise questions under GDPR, particularly around the processing of special-category data. Neither issue is simple, and World's official communications at launch did not address either in detail.

The World Money launch fits a broader pattern: stablecoins and digital payments are progressively disappearing from the “crypto” interface as perceived by the end user, who simply sees a balance, a transfer, a payment, while underneath, blockchains and stablecoins are doing the work. This is a theme that extends well beyond trading, as the growing role of stablecoins in private credit markets and the real economy makes clear.

The Bigger Picture

The launch of World Money marks a potentially significant moment in the evolution of stablecoin-based financial infrastructure, because it brings together two elements that until recently seemed to belong to separate worlds: biometric identity verification and access to full financial services. Whether this represents a genuinely useful evolution, capable of extending financial services to people currently excluded from traditional banking, or a worrying concentration of sensitive data and financial power in the hands of a single project, remains an open and legitimately contested question.

Two observations stand out. First, this launch confirms the trend toward increasingly invisible stablecoins, embedded inside user experiences that look more and more like an ordinary bank account rather than a recognizable crypto product. Second, the scale and speed of this rollout (more than 150 countries from day one, according to World's official announcement) raises concrete questions about how regulators, especially the European Commission, ESMA, and national competent authorities under MiCA, will approach a product that links biometrics and financial services at a combination and scale never seen before. Those questions are likely to find answers in the months ahead. For a grounding in the instruments at the center of this story, our guide to what stablecoins are and how they work is a good starting point.

The most important clarification comes first: this confirmation covers one specific, bounded element. It does not confirm, and must not be conflated with, the far broader claims made by the attacker in recent days, including an alleged six-month compromise of multiple Italian law enforcement departments and 147 gigabytes of extracted material. That part of the story remains, as of today, unconfirmed by Italian authorities.

What the Government Told Parliament

According to Deputy Minister Ferro's parliamentary statement, Italy's National Cybersecurity Agency was notified by Revolut on September 12 of a possible security incident. On September 15, the company formally confirmed the data breach, stating it had shared data relating to 680 clients in total, 8 of them Italian, and had already notified the individuals directly. Revolut also flagged the compromise of a certified email address belonging to the Prefecture of Reggio Calabria.

One technical detail deserves attention. CSIRT Italia, the ACN's incident response team, confirmed the compromise not through an independent investigation of Prefecture systems, but by analysing a sample of one fraudulent email provided by Revolut itself, the kind attackers used to submit information requests. The verification is real, but its methodology is specific: it rests on evidence supplied by the victimised company, not on a concluded autonomous audit of public administration infrastructure.

The Legal Detail That Explains the Path Taken

A regulatory nuance buried in the parliamentary response helps explain why this case travelled through political channels rather than standard compliance procedures. Revolut, as a UK-incorporated entity, falls outside the scope of Italian and EU network security obligations under the NIS Directive, meaning it was not required to make formal notifications to the national agency through the ordinary procedure applicable to companies under that jurisdiction. This is why the information reached Italian authorities through informal channels, and why the matter ended up debated directly in Parliament rather than following the standard technical and bureaucratic route.

Ferro confirmed that investigations remain ongoing. ACN is engaged in continuous dialogue with Revolut to deepen the picture, while also cooperating with the Interior Ministry on threat mitigation. The Postal Police and the National Anti-Mafia and Anti-Terrorism Directorate are also involved, which signals the institutional weight placed on this case, even as official confirmations remain limited to a single compromised address.

Banca d'Italia Is Watching Too

Completing the institutional picture, on September 19 sources attributed to Banca d'Italia stated the central bank is closely monitoring developments. Brief as it is, that intervention confirms the case is now tracked at multiple levels of Italy's institutional apparatus, from cybersecurity to financial supervision. The implication is that the consequences are considered significant well beyond the single security incident itself.

Why the Distinction Still Matters

This point was central to every previous update, and it's even more pressing now that part of the story has received official backing. Today's verification covers a single certified email address, identified through analysis of a sample provided by Revolut. It does not extend to, and cannot be read as endorsing, the far larger claims made by whoever took responsibility for the attack: multiple Italian law enforcement departments compromised over six months, with 147 gigabytes of extracted material, as detailed in our previous update covering those claims.

Italian authorities have not confirmed that broader narrative. One confirmed PEC address is not indirect validation of the entire attacker story. These remain two separate planes, and treating them as one would be a journalistic error, and potentially unfair to the institutions involved, before ongoing investigations reach their conclusions.

The Larger Picture

This update, limited in its concrete scope, nonetheless marks a meaningful milestone in a story we began covering with the initial account of the fake government request that deceived Revolut. For the first time, a specific element of the Italian dimension of the case moves out of the realm of unverified claims and receives institutional confirmation, however indirect the verification methodology: a company-supplied sample rather than an independent audit of public administration systems.

The lesson for anyone following cybersecurity incidents of this complexity is consistent with every previous chapter: truth surfaces in stages. Partial confirmations arrive at different moments and must be handled with equal rigour at each step, never stretched to validate a wider narrative they do not actually support. We will continue to cover developments using the same method, updating the reconstruction only when new verifiable confirmations emerge, and keeping clearly separate what we know for certain from what remains, for now, an unconfirmed claim.

Europe has a well-documented gap in digital transformation spending compared to the United States and China. Italy sits near the bottom of that European gap, and the Simest facility is a direct attempt to close it, at least for the SME segment that drives most of the country's industrial output.

€200 Million Earmarked for Artificial Intelligence

The fund is designed to push Italian SMEs into AI investment. According to the Artificial Intelligence Observatory at Politecnico di Milano, Italy's AI market reached €1.8 billion in 2025, a 50% increase on the 2024 figure. Yet only 8% of small and medium-sized businesses had launched even a single AI project by the end of that year, against 71% of large Italian corporations. That 63-point gap is precisely what the Simest facility is designed to address.

The importance of closing this divide has been signalled at the highest European level. Ursula von der Leyen referenced digital competitiveness and AI positioning in her State of the Union address in mid-September, delivered as the European Commission resumed work after the summer recess. Simest's timing was deliberate: applications opened the same week.

Financing Structure, Terms, and Conditions

The total envelope is €200 million, with 10% of each intervention structured as a non-repayable grant. The loan component carries preferential interest rates over an eight-year term. Approved applicants can receive an advance of up to 50% of the financed amount within a short processing window, which matters for companies that cannot sustain long capital-deployment delays.

The facility draws on the Revolving Fund 394/81, managed by Simest in agreement with Italy's Ministry of Foreign Affairs and International Cooperation. The non-repayable portion distinguishes this scheme from a standard development loan and makes it genuinely attractive for companies with limited balance-sheet headroom.

Access requires registration on the Simest portal at simest.it. The AI investment window sits within the broader Digital and Ecological Transition instrument. Once logged in, businesses can apply through the new AI Investments section, which was activated alongside the September 21 opening date.

The State of AI Adoption in Italy

The numbers from the Politecnico di Milano Observatory frame the challenge clearly. As of December 31, 2025, there were 1,010 Italian companies on record as offering AI solutions or services. Most of these are startups focused on vertical applications in specific sectors, with healthcare and fintech leading the way, alongside office automation and business support tools.

The divide between large corporations and SMEs is stark. Large Italian firms have moved quickly: 71% had at least one active AI project by year-end 2025, according to Politecnico di Milano data. SMEs, which account for roughly 99% of Italian businesses by count, sit at just 8%. That figure has not shifted materially for two consecutive years, which is why targeted public financing is entering the picture now.

An estimated 84% of large companies based in Italy had purchased licences for generative AI tools produced outside Europe by the end of 2025, a 31% year-on-year increase. The practical consequence is that Italy's AI spend is currently flowing predominantly to US platforms rather than building domestic or European capability. For British and US readers familiar with similar debates around AI sovereignty, the dynamic maps closely to discussions around cloud concentration and GDPR-driven data localisation.

If the Simest facility achieves the uptake its architects are targeting, all the percentages above should shift noticeably within two to three years. SME participation in AI adoption could move from single digits into the teens or beyond. More ambitiously, sustained investment at this scale might finally create conditions for European-origin AI products to compete in sectors where Italian industry already holds a comparative advantage, from precision manufacturing to agri-food. The €200 million is not a solution by itself. But for thousands of Italian SMEs currently locked out of AI investment by cost and complexity, it is a meaningful first step.

One framing note worth keeping in mind throughout: prediction markets sit in a legal grey zone between informational financial instrument and outright gambling, and how different jurisdictions treat them varies considerably.

What Prediction Markets Are, in Plain Terms

A prediction market is a platform where users buy and sell contracts whose value depends on the outcome of a real, future event: who wins an election, what a central bank decides on interest rates, the result of a sporting match, or even what a public figure will say in a speech. Each contract typically trades between zero and one dollar, and its price reflects the market's collective estimate of the probability that a given outcome actually occurs. The closer the price is to $1, the more participants believe that outcome is likely.

Unlike a traditional sportsbook, where you bet against a house that sets the odds, a prediction market lets users trade contracts with each other, much like a stock exchange. That market structure, rather than a betting-house structure, is the central argument made by platforms and their advocates for treating these instruments as something distinct from gambling. That debate, as we'll see, is far from settled.

The Two Leading Platforms

The sector is dominated by two names with fundamentally different approaches. Kalshi was built “inside the system” from day one: regulated by the U.S. Commodity Futures Trading Commission (CFTC), it operates in dollars, requires full user identification, and is designed specifically for the American market. Polymarket, by contrast, launched “outside the system”: crypto-native, built on a public blockchain, with a broader global reach but a more complex path to operating legally in the United States, as we covered in our piece on Polymarket's possible return to the U.S. market.

The two platforms have pursued different strategies as well. Kalshi has focused heavily on sports events, which account for the large majority of its trading volume. Polymarket remains stronger in politics, crypto, and global macro events.

Prediction Markets at a Glance

Key concepts. Source: SpazioCrypto

• What they are: markets where users trade contracts on the outcome of real-world events.
• The two models: Kalshi (CFTC-regulated, U.S.-based) and Polymarket (crypto-native, global).
• The grey zone: informational market or gambling? Rules differ sharply by jurisdiction.

Why Volumes Are Exploding

The sector's growth over the past year has been striking. As we reported when analyzing Kalshi's push toward a $40 billion valuation, prediction markets attracted significant capital during periods when other crypto assets were struggling, a sign that investors view these instruments as a distinct opportunity rather than a proxy for broader market sentiment. The real catalyst, though, arrived with major global events: during the 2026 FIFA World Cup, which we covered in depth in our analysis of the $50 billion volume surge tied to the tournament, trading hit record highs, with Kalshi securing an official partnership with FIFA.

Traditional finance and technology are paying close attention. Several major brokerage platforms have begun offering similar products, and at least one large social network developed its own dedicated prediction application after acquisition talks with a sector leader fell through. That kind of interest signals that the category is now considered strategically relevant well beyond the crypto industry.

Insider Trading and the Regulatory Challenge

Rapid growth has brought serious regulatory complications, and anyone approaching these markets should understand them clearly. The most sensitive issue is the use of non-public information. As we documented in our coverage of a former White House staffer sanctioned for trading on the content of presidential speeches before they were made public, prediction markets create a category of “privileged information” far broader than anything in traditional finance. The reason is structural: any real-world event can become a tradeable market, so the universe of potentially exploitable non-public knowledge expands enormously.

European regulators have also started paying closer attention. As we detailed in our analysis of the European Securities and Markets Authority (ESMA) warning, the pseudonymous nature of many participants makes it harder to detect insider trading and “wash trading”, the practice of executing fictitious transactions to artificially inflate reported volume. The regulatory line remains thin and contested. In several European countries, where gambling laws carry strict restrictions, the distinction between “legitimate informational market” and “unauthorized betting” is still an open fight between platforms and regulators.

What This Means for Investors Now

Prediction markets represent one of the most interesting and fastest-moving phenomena in the crypto space, capable of pulling in capital and media attention while increasingly attracting serious interest from traditional finance. They are, however, still relatively new instruments operating in a genuinely uncertain regulatory environment, and their risks should not be underestimated. Volume swings tied to single events can be extreme, and the insider-trading exposure is structurally wider than in conventional asset classes.

Understanding how these platforms work, what separates Kalshi from Polymarket, and what the regulatory picture looks like in your own jurisdiction is the necessary starting point, before any personal assessment of whether these instruments suit your risk appetite. Investors outside the United States should pay particular attention to how MiCA and national gambling laws interact with prediction market products offered to European users, a question that ESMA has flagged as unresolved and one that is likely to produce concrete regulatory decisions before the end of 2026.

Are Prediction Markets Legal?

The answer depends on the country and the specific platform. In the United States, Kalshi operates under direct CFTC oversight, giving it a clear legal status. Polymarket has faced restrictions on American users but has been pursuing a path back into the U.S. market. Across Europe, the interaction between prediction market contracts and national gambling regulations remains an active area of legal uncertainty, with some jurisdictions treating these products as financial instruments and others classifying them closer to betting. Anyone considering participation should verify the legal status of the chosen platform in their home country before committing capital.

This guide is informational only and does not constitute investment or gambling advice. Prediction markets carry real risks, including the possibility of losing the entire amount staked on a single event, and operate under regulatory frameworks that continue to evolve. Full due diligence on any platform is essential before any decision.

Before diving into each episode, the core argument is worth stating plainly. If the first phase of the AI race was defined by a handful of labs competing for the most powerful model, this second phase is shifting decisively toward an infrastructure contest, one built on power plants, billion-dollar fundraises, and diplomatic alliances.

The West's Energy Bet

In the United States and Europe, energy has become the most talked-about bottleneck. Nothing illustrates this more clearly than Google's thirteen-billion-euro investment in Finland, locking the company into a twenty-two-year contract with a nuclear plant that, without the deal, was set to shut down before 2030. For the first time in Europe, AI compute demand has become the financial mechanism keeping a strategically important national energy asset alive.

Around the same time, a signal arrived from an unexpected corner: Bitcoin mining. As we reported when covering IREN, a former Bitcoin miner that reinvented itself as an AI data center giant, the scarce skill today isn't “doing Bitcoin” but managing energy, land, and grid connections at industrial scale. That expertise, built during the mining boom, turns out to be extraordinarily valuable in the AI infrastructure race.

The Map at a Glance

Three fronts, five episodes. Source: SpazioCrypto.

• Energy: Google in Finland, IREN from mining to data centers.
• Capital: Z.AI raises $9.5 billion in under a year.
• Influence: China proposes an open-source AI zone for the Global South.

China's Capital Sprint

On the other side, China's primary challenge isn't energy itself but the speed of raising enough capital to compete, in a landscape made harder by U.S. export restrictions on advanced chips. The clearest example is Z.AI, which raised nearly $9.5 billion in under nine months, across three successive funding rounds that came progressively closer together. Cut off from the most advanced American chips since January, the company has no choice but to build an alternative computational infrastructure, which explains why its appetite for capital has become almost insatiable.

Alongside this, a research report from China's largest telecom operator sketched out what may be the next phase of strategy: according to that forecast, by 2029 inference could account for eighty percent of China's AI compute market, surpassing training for the first time. The shift points away from training a few giant models toward sustaining millions of AI agents running continuously, an infrastructure demand that is even more distributed and costly than today's.

The Third Front: Winning the Global South

There is a third dimension to this competition, less technical and more geopolitical. At the BRICS summit in New Delhi, China's president proposed the creation of a China-led open-source AI zone, offering models, training, and technological cooperation to the bloc's eleven member countries. The timing was deliberate: the announcement came just one day after leading American AI figures publicly debated whether to slow down the pace of AI development, an appeal the White House rejected precisely to avoid ceding ground to Beijing.

This may be the most telling detail of the entire picture. While the U.S. openly debates caution and restraint, China is choosing to accelerate and to share, working to lock in emerging markets before those countries commit to a different technology ecosystem.

The Bigger Picture

Taken together, these five stories mark a phase shift in the global AI race. The challenge is no longer only to build the best model, but to secure the energy to run it at industrial scale, the capital to finance the necessary infrastructure, and the international goodwill to spread its adoption far beyond national borders. Three separate fronts, all converging on the same underlying question: who will succeed in building, first and at sufficient scale, the physical and diplomatic infrastructure on which the next generation of AI will rest?

The practical lesson for anyone tracking this space is that following model announcements alone tells only part of the story. The more consequential contest, and arguably the more durable one, is being decided elsewhere: in power plants, on the trading floors of Asian exchanges, and at diplomatic summits where countries are choosing which technology ecosystem to join. Keeping an eye on these three fronts deserves the same attention that, until now, has been reserved almost entirely for model benchmarks.

Before diving into each move, one point deserves to be fixed upfront: stock tokenization is no longer a fringe experiment carried out by crypto-native actors at the edges of finance. It has become a competitive battleground where some of the most established institutions in global finance are committing real capital, often more than one at a time on the same project.

Four Moves in Three Weeks

On August 24, a major U.S. crypto exchange launched tokenized versions of shares in several of America's largest tech companies on its own blockchain. This was the classic playbook: a crypto platform bringing traditional finance into its own territory, replicating real equities through an external issuing vehicle. SpazioCrypto covered the details in our deep dive on Coinbase and tokenized stocks.

September 1 flipped the script. The London Stock Exchange announced plans to tokenize its hundred largest listed shares, naming Kraken, one of the world's leading crypto exchanges, as its technology partner. As we reported at the time, this was no longer a crypto exchange replicating traditional equities. It was an official exchange stepping directly into tokenization territory, a meaningful reversal of direction.

September 10 made the commitment even more explicit. Nasdaq invested $100 million in Kraken's parent company to jointly build what the two firms are calling “Nasdaq Equity Tokens,” digital versions of Nasdaq-listed shares. This was no longer a technology partnership. It was direct capital placed inside crypto infrastructure. One detail ties the first two episodes together: Kraken's parent company had already received an investment from Deutsche Börse back in April. Three major market operators, the London Stock Exchange, Deutsche Börse, and Nasdaq, now find themselves, in different ways, inside the same ecosystem.

The Map at a Glance

Four moves in three weeks. Source: SpazioCrypto.

• August 24: Coinbase tokenizes U.S. equities on Base.
• September 1: London Stock Exchange selects Kraken for its 100 listed shares.
• September 10-14: Nasdaq invests in both Kraken and Kaiko; S&P Global enters crypto data.

The Fourth Piece: Data Becomes Infrastructure

September 14 added a final element to the sequence, less visible but equally telling. S&P Global led a $110 million round in Kaiko, a firm specializing in crypto market data, alongside an investor list that looked strikingly familiar: Nasdaq again, joined by BNP Paribas and Royal Bank of Canada. As we wrote at the time, this was not the usual “crypto startup raising capital” story. It was evidence that institutions are investing in the least visible, least reported layer of this transformation: the data infrastructure needed to price, index, and surveil digital assets at institutional scale.

The most striking detail here is that Nasdaq appears, once again, among the investors. Within just a few days, the same operator committed capital to both the market infrastructure for tokenized equities and the data layer that will have to support them. Not an isolated bet, but the deliberate construction of a complete stack.

What Connects These Four Stories

Treated as separate episodes, these four announcements are easy to underestimate. Lined up, they argue a precise thesis: stock tokenization has stopped being a technological experiment at the margins and has become a strategic competition among the world's leading financial infrastructure providers. Exchanges like Nasdaq, the London Stock Exchange, and Deutsche Börse, together with data providers like S&P Global and systemic banks like BNP Paribas, are all positioning themselves on the same foundational layer: the one that will eventually allow equities to be issued, traded, priced, and surveilled in digital form at genuinely institutional scale.

This is a development that goes beyond the largest international markets. Across Europe, banks and financial operators are building their own digital asset infrastructure in a similar direction, even if at different speeds. UniCredit's push into crypto custody and trading is one example of how MiCA-regulated institutions are quietly assembling their own pieces of this stack.

The Bigger Picture

Read as a whole, this map offers a more durable lesson than any single headline. Stock tokenization does not advance through one grand announcement. It advances through a sequence of moves that appear independent until you step back and view them together. Connecting those dots, rather than chasing the story of the day, is often the most useful way to understand where this sector is actually heading.

One element of caution remains worth keeping in view. Behind the enthusiasm for these investments, concrete questions are still open: what does it actually mean to own a tokenized stock, what legal rights does it carry compared to a traditional security, and how quickly will these projects translate into products genuinely available at scale to ordinary investors? The direction, though, is now drawn with enough clarity that the trend is hard to dispute. More and more pieces of traditional financial market infrastructure are shifting, one investment at a time, toward the world of blockchain.