Polymarket has paid at least $350,000 to social media influencers over a 14-month period, with many of those creators later promoting the prediction market platform on X without clearly disclosing a paid relationship, according to a POLITICO investigation based on PayPal transaction records.

According to POLITICO, the payments were sent by Polymarket chief marketing officer Matthew Modabber through a personal PayPal account between January 2025 and February 2026.

Market rout and leverage unwind

Cryptocurrency markets registered a sharp drawdown this week as bitcoin fell from near $74,000 to an intraday low around $61,556, a roughly 17% decline over four trading days. The move coincided with more than $4.4 billion in liquidations across derivatives markets, with long positions bearing the bulk of the losses.

Ether slid below $2,000 during the same period, and trading dynamics on major exchanges signaled a pullback in institutional participation: the Coinbase premium — the price gap between Coinbase and Binance — has been negative and widening, an indicator market participants often read as weaker U.S. institutional bid.

Traders and analysts pointed to a combination of macro and market‑micro factors. Heightened geopolitical tensions involving the U.S. and Iran appeared to sap risk appetite, while speculative capital rotated toward AI equities that were perceived to offer clearer near‑term earnings. On-chain metrics also showed that many recent buyers were underwater, intensifying forced selling in a leveraged market.

Gnosis Pay exploit underscores middleware risk

On June 1, users of Gnosis Pay — a service that links noncustodial Safe wallets to Visa‑branded payment cards — experienced an exploit traced to a vulnerability in the Zodiac Delay Module, a third‑party component used in Safe’s modular stack. Gnosis co‑founder Martin Koppelmann publicly urged affected users to withdraw certain assets, and the Gnosis team subsequently said it would cover user losses related to the incident.

The event follows a similar pattern seen in other recent incidents, where core wallet frameworks remain intact but ancillary modules introduce attack surfaces. A week earlier, a separate incident involving a third‑party Safe module known as the Squid exploit drained about $3.2 million from dozens of Safe wallets. Together, these failures highlight the security tradeoffs introduced by composable middleware: integrating external modules accelerates feature development but multiplies dependency and review surfaces.

For products that bridge on‑chain wallets to off‑ramp rails like Visa, the incidents illustrate the technical and operational complexity of safely extending noncustodial keys into payments ecosystems. The events have already reignited debate among custodial and self‑custody proponents about which custody models best balance user convenience and systemic risk.

Zcash halt and verification key updates after minting vulnerability

Zcash experienced a separate disruption when security researcher Taylor Hornby disclosed a flaw in the Orchard shielded protocol circuit that, according to the researcher, could enable undetected minting of ZEC. The disclosure precipitated an emergency response from the Zcash team, including temporarily disabling Orchard, coordinating a soft fork, and deploying verification key updates via a hard fork within days.

Price action responded violently: ZEC lost more than 40% in a 24‑hour window as market confidence in supply integrity deteriorated. Observers have noted that Zcash’s Turnstile Accounting — the system for tracking shielded pool balances — may not readily reveal whether counterfeit coins were minted and migrated within normal outflow bounds. That uncertainty, rather than any single technical fix, is what markets appear to be pricing.

Notably, the researcher reported using contemporary AI tooling during analysis, a reflection of how machine‑assisted code review is lowering the marginal cost of uncovering complex cryptographic or protocol vulnerabilities. That capability increases both the speed at which bugs are found and the urgency of rapid, coordinated protocol responses.

Regulatory pressure: MiCA transitional deadline looms

Adding to market strains, the EU’s Markets in Crypto‑Assets (MiCA) transitional period expires on July 1, 2026. MiCA entered into force on December 30, 2024, and member states were given up to 18 months to transpose its provisions into national law. Some jurisdictions accelerated that timeline — for example, the Netherlands implemented a shortened window — but the July 1 date is the common regulatory boundary for operating without authorization across the bloc.

The practical implication for users and service providers is concrete: crypto‑asset service providers serving European customers without MiCA authorization risk being out of compliance and could be forced to restrict services or accounts. Industry participants have urged users to verify the regulatory status of their platforms and consider self‑custody options where appropriate.

Implications and what to watch

Three themes emerge from recent events. First, leverage and concentrated derivative positions amplify price moves — liquidations remain a primary driver of short‑term volatility. Second, the architecture of Web3 services matters: composability accelerates innovation but introduces operational dependencies that are progressively becoming the focal point for attackers. Third, regulatory transitions such as MiCA impose timeline‑driven operational risk for centralized platforms offering services to European users.

For market participants, the near term will be shaped by how exchanges, protocol teams, and third‑party module developers respond to these failures: faster disclosure, coordinated emergency upgrades, and improved security auditing can restore confidence, but they are not panaceas. Users concerned about counterparty or platform risk should review custody arrangements and confirm whether their providers have regulatory authorization if they operate in the EU.

Finally, the Zcash episode underscores a broader point: supply integrity is fundamental to token value. Even when teams patch vulnerabilities quickly, the reputational shock can trigger sustained repricing as participants reassess trust in protocol assumptions.

We will continue to monitor price action, on‑chain flows, and follow‑up technical disclosures related to these incidents.

Disclaimer: This article is for informational purposes and does not constitute investment or legal advice. Readers should verify technical claims and consult professionals before acting.

Morgan Stanley Wealth Management has expanded its crypto offering by enabling eligible clients to convert digital asset holdings into spot crypto exchange-traded products through a new referral arrangement with Galaxy Digital.

According to a Friday announcement, high-net-worth Morgan Stanley clients can lend cryptocurrencies including bitcoin, ether, and Solana to Galaxy Digital and receive shares in spot crypto investment products in return, including the recently launched Morgan Stanley Bitcoin Trust.

The companies said the process allows investors to move crypto exposure into regulated investment vehicles without selling their digital assets first. The announcement added that the structure could reduce in-kind crypto-to-ETP onboarding times by as much as 75%.

Explaining the rationale behind the arrangement, Alison Nest, Head of Investment Solutions Products at Morgan Stanley, said the bank has been active in decentralized finance and views the referral capability with Galaxy as a way to help wealth management clients integrate digital assets into their portfolios through an institutional framework.

Nest said the arrangement creates a connection between traditional finance and decentralized finance while giving investors additional ways to diversify their holdings.

Morgan Stanley deepens digital asset push

The latest initiative arrives as Morgan Stanley continues to add new crypto-related products and services across its wealth management and brokerage businesses.

Earlier this year, the bank launched the Morgan Stanley Bitcoin Trust, a spot Bitcoin exchange-traded fund that completed its first month without recording a day of net redemptions, according to previous company disclosures.

Recent regulatory filings have also shown the bank expanding beyond Bitcoin products. In May, Morgan Stanley disclosed holdings in the Volatility Shares XRP ETF and the Grayscale XRP ETF, adding XRP-linked investment products to a crypto portfolio that already included Bitcoin and Ethereum exposure.

At roughly the same time, the firm submitted an updated registration statement for the Morgan Stanley Solana Trust, a proposed spot Solana ETF that would hold SOL directly and stake part of its assets through third-party providers. According to the filing, staking rewards generated from those holdings would contribute to the fund’s overall returns.

Crypto access has also extended to Morgan Stanley’s brokerage business. Through a pilot program launched on E*Trade in May, the bank began offering Bitcoin, Ether, and Solana trading through infrastructure provided by Zerohash. 

Morgan Stanley executives said at the time that the initiative formed part of a strategy to keep clients within the firm’s investment ecosystem.

Leadership changes have accompanied the expansion. Amy Oldenburg, a longtime Morgan Stanley executive, was appointed earlier this year to lead the firm’s first dedicated digital asset strategy role.

Galaxy expands institutional services

For Galaxy Digital, the partnership adds another institutional channel to its lending and asset management business.

According to company figures, Galaxy generated $505 million in adjusted gross profit during 2025 from its trading, lending, asset management, and staking services division.

Only days before announcing the Morgan Stanley referral arrangement, Galaxy also introduced an institutional over-the-counter prediction market trading desk, adding another service aimed at professional investors.

The U.S. House Ways and Means Committee has released seven crypto tax discussion drafts that would introduce new rules for decentralized finance lending, stablecoin payments, staking rewards, and other digital asset transactions ahead of a June 9 congressional hearing.

According to crypto journalist Eleanor Terrett, the discussion package breaks crypto tax policy into a series of standalone proposals covering areas such as stablecoins, mining, staking, DeFi lending, wash-sale rules, charitable donations, and a voluntary disclosure program for taxpayers with unresolved crypto reporting issues.

The proposals arrive as lawmakers increase their focus on how digital assets should be taxed in the United States. Several of the subjects included in the drafts were previously grouped together under greater legislative efforts, including the bipartisan Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act, known as the PARITY Act, and separate legislation introduced by Senator Cynthia Lummis.

DeFi lending and stablecoin transactions move into focus

Among the most closely watched provisions are those affecting decentralized finance activity. Terrett said the discussion drafts address DeFi lending, an area that has faced years of uncertainty over how transactions should be treated under U.S. tax law.

The package also includes provisions related to stablecoin payments. Under one proposal, compliant stablecoins could qualify for a de minimis treatment on small gains and losses generated through everyday transactions.

The measure would allow certain low-value payments to receive different tax treatment from speculative crypto trades. At the same time, lawmakers continue to examine how stablecoins should be treated within the tax system.

As reported by crypto.news earlier, the bipartisan PARITY Act proposed a deemed-basis rule for regulated dollar-pegged payment stablecoins. According to Representative Steven Horsford’s office, the provision would treat digital dollars used as payment instruments more like cash for tax purposes while including safeguards against trading and arbitrage abuse.

Several anti-abuse measures also appear in the new discussion drafts. Terrett said the proposals would extend wash-sale and constructive-sale rules to crypto transactions, bringing digital assets closer to the framework already applied to traditional financial markets.

Mining and staking rules remain under review

Tax treatment of mining and staking rewards remains another major topic within the package. According to Terrett, the discussion drafts include provisions addressing both activities alongside charitable contributions and reporting requirements.

Related legislative efforts have already sought changes in this area. Under the PARITY Act introduced by Representatives Horsford, Max Miller, Suzan DelBene, and Mike Carey in May, taxpayers would be allowed to elect when staking and mining rewards become taxable. Horsford’s office said the proposal is designed to address the so-called phantom income issue faced by some participants.

Earlier coverage also noted that 18 bipartisan lawmakers urged the Internal Revenue Service to revisit its 2023 staking guidance before the 2026 tax year.

Attention now turns to the Ways and Means Committee hearing scheduled for June 9, where the discussion drafts are expected to play a central role. Terrett said the proposals will likely feature prominently during the proceedings as lawmakers evaluate potential changes to crypto taxation.

Outside the tax debate, Congress continues to consider other digital asset legislation. The CLARITY Act is advancing through the legislative process, while Representative Nick Begich recently introduced the American Reserves Modernization Act, a bill that would pursue budget-neutral methods of increasing U.S. Bitcoin reserve holdings rather than requiring the government to purchase up to 1 million BTC over five years.

Cardano is getting attention again, but not the kind holders usually want.

ADA fell to around $0.16 on Thursday, down nearly 30% over the past seven days and more than 75% over the past year, CoinDesk data show. The token briefly traded below $0.16, its lowest level since December 2020, extending a drawdown that has turned Cardano from one of crypto’s largest retail communities into one of the market’s clearest stress cases.

The latest selling followed comments from founder Charles Hoskinson, who said he was “taking a break” after warning that Cardano could face a “wave of failures” across its ecosystem. His remarks came after TapTools, a Cardano analytics platform, said it would shut down after four years, and after the community voted against funding Cardano’s 2026 Summit in Singapore.

The market reaction has now spread beyond price.

Santiment said ADA’s social dominance reached about 0.52%, a 2026 high, meaning more than one in every 190 crypto-related discussions across tracked social channels focused on Cardano.

Daily active addresses also climbed to 28,459, the highest level in four months, suggesting users are moving funds, checking positions or interacting with the network during the selloff.

Such a kind of activity can be read two ways.

The bullish version is that Cardano’s base has not disappeared. ADA still has one of crypto’s louder communities, and activity rising into a selloff can show holders are engaged rather than checked out.

However, another read is that attention is being pulled in by distress. Project shutdowns, funding fights and the founder stepping back are not the kind of catalysts that usually bring durable bids. Retail loyalty can keep a token relevant, but it cannot replace ecosystem growth, new capital or working applications.

That is the test now. ADA is cheap by old cycle standards, but cheap alone is not a catalyst. Cardano needs evidence that projects can survive, treasury funding can be deployed and users have reasons to do more than defend the chain online.

Cameron Winklevoss has defended Zcash after the privacy coin plunged as much as 45% and Cypherpunk Technologies shares dropped 37% following disclosure of a critical bug that could have allowed unlimited counterfeit ZEC to be created.

According to a June 5 X post, Cameron Winklevoss defended Zcash as investors reacted to the disclosure of a critical vulnerability in the network’s Orchard shielded pool. While acknowledging that bugs can emerge in any blockchain system, he argued that the focus should be on how quickly researchers identify and address them.

“When it comes to any L1, there will be bugs. What’s important is that there are world class researchers focused on hardening the network and staying ahead of the bad guys.”

His remarks arrived as pressure spread across companies tied to the Zcash ecosystem.

Shares of Cypherpunk Technologies, a publicly traded company focused on accumulating Zcash, fell to their lowest level since March. Yahoo Finance data showed the stock dropped 37% to $0.59 after touching an intraday low of $0.53. At the same time, shares of Gemini-linked GEMI declined 4.4% to $4.41 as technology stocks weakened across U.S. markets.

Shielded Labs says exploit was possible before emergency fix

Details released by Shielded Labs showed that security researcher Taylor Hornby discovered the vulnerability on May 29 during an AI-assisted audit. According to the organization, the flaw remained undetected for roughly four years inside the Orchard shielded pool.

Shielded Labs stated that Hornby successfully used the exploit in a local testing environment to create unlimited counterfeit ZEC without detection. The organization added that the same method could have worked on the Zcash mainnet before the issue was patched.

An emergency response led by the Zcash Open Development Lab and other ecosystem contributors resulted in a network upgrade completed by June 2. The fix temporarily paused Orchard activity before restoring it with corrected code.

Despite the repair, Shielded Labs said cryptographic tools alone cannot determine whether the exploit was used before the patch because Orchard transactions are designed to preserve privacy.

While the organization described prior exploitation as unlikely, it emphasized that users should not rely solely on that assessment.

The Zcash Foundation later released Zebra 5.0.0 through the NU6.2 hard fork, re-enabling Orchard with the corrected circuit. According to the foundation, no evidence of unauthorized value creation had been identified.

Market participants cut exposure as uncertainty grows

Selling intensified across Zcash-related assets following the disclosure. According to data from crypto.news, Zcash (ZEC) plunged more than 45% in 24 hours, hitting an intraday low of $264.80 on June 5. The privacy coin has since pared some of those losses and was changing hands at around $361 at press time.

Among those reducing exposure was BitMEX co-founder Arthur Hayes. In a post on X, Hayes said he sold his entire ZEC position because the incident undermined his investment thesis around privacy-focused assets.

Hayes wrote that exploitation appeared “extremely unlikely” but argued that the inability to conclusively rule it out created a problem for a privacy-focused cryptocurrency. 

“The privacy from AI, govt, big tech narrative demands perfection not improbability. I read about the exploit yday, and didn’t appreciate how it violated my narrative mental map. The 30% dump, made me rethink, and I had to take profit on the entire position.”

Meanwhile, Cypherpunk pushed back against concerns that counterfeit coins had entered circulation. In a statement posted on X, the company said there was “zero evidence” that the vulnerability had been exploited. It also argued that an attacker would have had little incentive to hold counterfeit ZEC through a major bull market instead of selling the coins earlier.

Hyperliquid has been flagged by the UK Financial Conduct Authority, bringing regulatory scrutiny to one of the largest crypto perpetual futures venues.

According to a notice published by the UK Financial Conduct Authority on May 21, Hyperliquid, Hyper Foundation, the protocol’s application, and related social media channels may be offering or promoting financial services and products in the United Kingdom without authorization.

The regulator stated that consumers should avoid dealing with the platform and warned that firms operating without approval may not provide the protections available through regulated financial services.

The FCA’s warning arrived as cryptocurrency perpetual futures, commonly known as perps, attract increasing attention from regulators, exchanges, and trading firms.

Unlike traditional futures contracts, perpetual futures have no expiration date and rely on recurring funding payments to keep prices aligned with spot markets.

At the same time, major operators of regulated exchanges have begun discussing whether similar products could gain a larger foothold in traditional financial markets.

Traditional exchanges are studying perpetual futures

Speaking at Piper Sandler’s Global Exchange & Fintech conference on June 4, CME Group Chief Executive Terry Duffy criticized the Commodity Futures Trading Commission’s decision to allow regulated crypto perpetual futures in the U.S.

Duffy argued that the highly leveraged products introduce risks that many market participants may underestimate. He said perpetual futures can allow traders to maintain positions indefinitely while using leverage that may reach 50 times the deposited capital.

According to Duffy, automatic liquidation mechanisms and funding-rate costs could expose retail investors to significant losses if they do not fully understand how the products function.

Describing the market as increasingly driven by speculation, Duffy questioned whether the new contracts serve the long-term interests of investors.

While CME’s chief executive voiced concerns, Intercontinental Exchange Chief Executive Jeffrey Sprecher took a different approach. During remarks made last week, Sprecher said the parent company of the New York Stock Exchange was studying Hyperliquid’s model and discussing with regulators why traditional venues could not offer comparable products.

Those comments emerged as regulated crypto perpetual futures began entering the U.S. market. On May 29, the CFTC approved the first regulated crypto perpetual futures products for U.S. participants, opening a market that had previously been dominated by offshore platforms.

U.S. firms move into a market long led by offshore venues

Following the regulatory approval, prediction market operator Kalshi launched Bitcoin perpetual futures and introduced Ethereum perpetual futures on June 4.

According to regulatory filings, another 11 cryptocurrency perpetual futures contracts, including products tied to Solana and Dogecoin, remain under review.

Elsewhere in the sector, Coinbase Financial Markets received regulatory guidance allowing eligible institutional clients in the United States to access perpetual futures and options listed on Deribit, the derivatives exchange acquired by Coinbase in 2025.

Kraken has also announced plans to offer regulated Bitcoin perpetual futures through Bitnomial Exchange, a regulated platform acquired by parent company Payward earlier this year.

Against that backdrop, Hyperliquid remains one of the largest decentralized venues for perpetual futures trading.

The platform’s scale has made it increasingly difficult for regulators and traditional exchanges to ignore. By May 20, Hyperliquid had generated $255 million in revenue for the year, according to reported figures, while the HYPE token had gained 101% over the same period.

Triple-A, a licensed global payments firm, has begun a European rollout of Multicurrency Accounts that link local euro collections to stablecoin rails and global payout options. The product gives businesses a named EUR IBAN without needing an EU legal entity and consolidates collection, conversion and payout into a single platform that supports payouts to more than 70 countries.

What the product does

The Multicurrency Accounts offer customers a named euro International Bank Account Number, enabling firms to receive SEPA and SEPA Instant transfers as if they had a local euro account. From there, funds can be routed to a traditional bank account, converted and sent into a stablecoin, or distributed as local-currency payouts across Triple-A’s supported markets.

Key capabilities include:

• Collection of euro payments via SEPA rails without establishing an EU entity or separate local bank account.
• Integrated conversion and settlement into stablecoins alongside traditional fiat payouts.
• Global payout coverage exceeding 70 jurisdictions, intended to simplify reconciliation and lower transaction predictability.

Why this matters to businesses

For companies that sell into Europe or run platforms with EU-based users, collecting euros typically requires either opening a local subsidiary and bank account or relying on intermediary providers, which can add cost, time and reconciliation complexity. Triple-A’s offering aims to remove that onboarding hurdle by providing named euro accounts without a local entity, while keeping collection and payout flows connected in the same infrastructure.

That unified approach is significant because it collapses what are often separate steps in cross-border workflows: collection, conversion and payout. By linking SEPA collection directly to stablecoin rails and local-currency payouts, payouts can be executed faster and with fewer handoffs. For B2B sellers, marketplaces, and platforms that manage many payees across multiple jurisdictions, this reduces operational friction and can improve cash flow timing.

Regulatory and market context

Triple-A positions the product as bridging traditional banking rails with cryptocurrency settlement options. The company is registered with the U.S. Financial Crimes Enforcement Network and holds licences across jurisdictions including Singapore and Europe, an important point given the heightened regulatory attention on stablecoins and cross-border transfers.

Stablecoins have been promoted as a way to speed settlement and reduce foreign exchange overheads, but widespread commercial adoption depends on robust on- and off-ramps to fiat. Providers that focus narrowly on stablecoin rails can struggle to offer local collection capabilities; conversely, traditional payment providers often lack direct access to digital-asset settlement. Triple-A’s pitch is that combining both capabilities in one system addresses a practical market gap.

Industry implications and risks

In practice, the impact of products like Multicurrency Accounts will hinge on several factors. First, bank and regulator acceptance of named IBAN flows routed through non-EU entities will determine how broadly firms can rely on these accounts. Second, counterparty, custody and AML controls around stablecoin conversions remain a focus for regulators and corporate treasurers, affecting how quickly large enterprises will shift liquidity into tokenised rails.

Operationally, bringing collection and payout into a single ledger can simplify reconciliation and lower per-transaction costs, which matters for platforms with many small payouts. It also creates a clearer technical path for firms that want optionality between fiat and token settlement depending on corridor economics.

How it fits into the competitive landscape

Triple-A’s announcement highlights a broader industry trend: providers seeking to stitch together fiat rails, banking relationships and tokenised settlement to offer end-to-end cross-border payment services. While some market participants specialise in stablecoin settlement and others in local-rail collection, the value proposition here rests on integration and coverage.

The company says the offering is intended for a range of customers, including B2B merchants selling into Europe, exporters, platforms that collect and disburse funds for users and other payment service providers or electronic money institutions seeking to add euro collections to their stacks. Triple-A also indicates plans to expand collection capabilities to include U.S. dollar and Singapore dollar accounts in the future.

Takeaway

Triple-A’s Multicurrency Accounts represent a practical step toward reducing friction in euro collections and global payouts by combining SEPA access with stablecoin rails. The product could ease market entry for non-EU firms selling into Europe and provide platforms with a unified path from collection to payout. However, the broader adoption will depend on regulatory acceptance, counterparty controls and how cost savings compare with traditional banking and payment-provider alternatives.

For corporates and fintechs evaluating cross-border architectures, the announcement underscores the growing focus on hybrid solutions that marry established banking rails with digital-asset settlement to deliver faster, more predictable global payments.

Helium founder Amir Haleem has stepped down as chief executive of Nova Labs after HNT’s price suffered a steep multi-year decline and the company sold its consumer mobile business.

According to Haleem’s announcement on X, Mario Di Dio has taken over as CEO of Nova Labs, while Haleem has moved into the chairman role. The leadership change came as HNT remained under heavy pressure, with the token down 96% over five years and another 15% on the day of Haleem’s exit, according to the market data cited in the report.

Helium mobile sale fails to lift HNT

Nova Labs completed the sale of Helium Mobile to Noble Mobile on June 2, 2026, according to the company update cited in the report. The sale came two days before Haleem announced his resignation as CEO.

Helium Mobile had become one of the project’s more visible consumer products after Nova Labs tried to connect crypto incentives with low-cost cellphone service. Still, the HNT token did not recover after the sale. According to the report, HNT stayed down 30% over the week and 46% over the month.

At the same time, Helium’s other tokens also remained far below earlier levels. MOBILE has fallen 76% over five years, while IOT has dropped 87%, according to the price figures cited in the report. Nova Labs issued the tokens to reward operators of Helium-linked networking devices.

Haleem says he still holds HNT

In his departure message, Haleem said he still holds HNT, according to the report. His statement came after years of public comments in which he promoted the long-term case for Helium and its token-backed network model.

Some users on X described his move to chairman as a deserved break after a long run, according to the report. Others focused on HNT’s price history and the timing of his exit, especially after the company sold Helium Mobile without a recovery in the token.

The leadership handover also closed a major chapter for Nova Labs. Haleem spent more than a decade building Helium’s wireless network concept, which used crypto rewards to encourage people to run hardware devices that supported the system.

Nova Labs leaves behind years of controversy

Helium raised nearly $365 million over its lifetime, with FTX listed among its backers, according to the report. In 2022, the company faced criticism after it advertised Lime, Salesforce, and Nestlé as network users, although those companies were not using the network.

A Forbes investigation later reported that insiders mined close to half of all HNT during the token’s early months. The SEC sued Nova Labs in January 2025 under then-chair Gary Gensler, accusing the company of making materially false and misleading statements about users, including Lime, Nestlé, and Salesforce.

After Paul Atkins took over the SEC under President Donald Trump, Nova Labs settled the case in April 2025. According to the report, Nova Labs paid a $200,000 civil penalty tied to one misrepresentation charge, while the SEC dismissed the remaining claims with prejudice.

Brad Sherman has criticized proposals to distribute government payments through stablecoins, warning during a congressional hearing that such a system could support tax evasion while lawmakers simultaneously advance several new crypto tax proposals.

According to remarks delivered during a House Financial Services Committee hearing on oversight of federal banking regulators, U.S. Representative Brad Sherman argued that using stablecoins for government payments would create risks that outweigh any potential benefits.

The criticism came after National Credit Union Administration Chairman Kyle Hauptman suggested that stablecoins could improve the speed of government disbursements.

Hauptman told lawmakers that dollar-pegged tokens operate around the clock, allowing tax refunds and emergency payments to reach recipients outside traditional banking hours, including weekends and holidays.

Responding to the proposal, Sherman said he could not think of a worse idea and argued that government-backed stablecoin payments would legitimize what he described as an alternative system designed to facilitate tax evasion.

Sherman also raised concerns about yield-bearing stablecoins, stating that legal professionals were already searching for ways to work around restrictions on interest payments and urging regulators to develop rules capable of preventing such outcomes.

Stablecoin tax rules remain under review

Sherman’s comments arrive as Congress examines how stablecoins should be treated under U.S. tax law.

As reported earlier by crypto.news, the House Ways and Means Committee recently released seven discussion drafts covering digital asset taxation ahead of a June 9 hearing.

According to crypto journalist Eleanor Terrett, the package includes proposals addressing stablecoins, staking rewards, mining income, DeFi lending, wash-sale rules, charitable donations and a voluntary disclosure program for unresolved crypto tax reporting.

Among the proposals is a provision that could allow compliant stablecoins to receive de minimis treatment for small gains and losses generated through everyday transactions. The measure would separate certain low-value payments from speculative crypto trading activity for tax purposes.

Lawmakers have previously explored similar concepts through the bipartisan Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields Act, known as the PARITY Act.

According to Representative Steven Horsford’s office, that proposal included a deemed-basis rule that would treat regulated payment stablecoins more like cash while incorporating protections against trading and arbitrage abuse.

Regulators outline banking and compliance plans

Elsewhere during the hearing, federal regulators discussed the implementation of stablecoin oversight requirements established under the GENIUS Act.

FDIC Chairman Travis Hill said regulators are preparing customer identification requirements for stablecoin issuers and indicated that proposed rules could be released soon.

At the same hearing, Comptroller of the Currency Jonathan Gould defended the Office of the Comptroller of the Currency’s handling of a national trust bank charter application submitted by Trump-linked World Liberty Financial.

The exchange became tense after Representative Gregory Meeks questioned Gould’s independence and asked whether he was acting on behalf of the public or the Trump family.

Gould rejected the criticism, describing the comments as unprecedented and saying the pressure he had experienced came from lawmakers rather than political figures connected to the administration.

The regulatory discussion unfolded as crypto firms continue to gain access to traditional banking infrastructure. Falcon Finance launched its fUSD stablecoin with Anchorage Digital, the first federally chartered crypto bank, while crypto exchange Kraken recently received a Federal Reserve master account with certain limitations.

Separately, World Liberty Financial said last month that it was in the final stages of obtaining conditional approval for its banking charter application.