A research paper published this week quantifies what happens when bank deposits move at blockchain speed. The number is large enough to reshape how banks fund the economy, and the crypto industry is building the pipes without acknowledging the consequences.

The crypto industry has spent two years building infrastructure to put bank deposits on chain. The banking industry has spent two years worrying about what happens when it works. A new research paper puts a number on the worry, and the number is large enough that both sides should be paying closer attention.

How bank lending actually works

This section requires explaining something that most crypto coverage skips entirely: the mechanics of fractional reserve banking and why deposit stability is the load bearing wall of the entire system.

When a customer deposits $1,000 at a bank, the bank does not keep $1,000 in a vault. It keeps a fraction, typically 3% to 10% depending on the bank’s risk profile and regulatory requirements, and lends the rest. That $900 or $970 goes to a mortgage borrower, a small business, or a commercial real estate developer. The borrower spends it, and the recipient deposits it at another bank, which lends most of that out again. This is the money multiplier, and it is the engine that converts $22 trillion in U.S. bank deposits into $12 trillion in bank lending.

The system works because deposits are sticky. A customer who deposits money on Monday does not withdraw it on Tuesday. The bank can rely on a statistical floor, the amount that will remain regardless of individual withdrawals, and lend against that floor with reasonable confidence.

Regulatory frameworks formalize this assumption. Basel III assigns stability scores to different deposit types. Retail deposits from individuals receive the highest stability weighting because individuals rarely move their entire balance in a single day. Corporate deposits receive lower scores because businesses manage cash more actively. Interbank deposits receive the lowest scores because banks move money constantly.

The Liquidity Coverage Ratio, a core Basel III metric, requires banks to hold enough high quality liquid assets to cover 30 days of net cash outflows under stress. The calculation assumes that retail deposits experience outflows of 3% to 10% over 30 days. Corporate deposits face outflow assumptions of 20% to 40%. These percentages determine how much of each deposit type a bank can lend out.

Tokenized deposits threaten to reclassify every deposit into the highest outflow category, because the technology makes any deposit as mobile as an interbank transfer.

What the paper found

The research paper, published on August 25, modeled three scenarios for tokenized deposit adoption in the U.S. banking system.

In the low adoption scenario, covering 5% to 10% of total deposits, the impact on lending capacity is modest: roughly $120 billion, absorbed through minor adjustments to reserve ratios and overnight funding markets. Banks would barely notice, and the adjustment would be indistinguishable from normal quarter to quarter fluctuations in deposit levels.

In the moderate scenario, covering 15% to 25% of deposits, lending capacity falls by $580 billion. This is the headline number, and it represents a meaningful contraction. To put it in context, $580 billion is roughly the total outstanding balance of U.S. auto loans, or about one third of all outstanding commercial and industrial loans. A contraction of that magnitude would not cause a crisis, but it would tighten credit availability for borrowers at the margin, precisely the small businesses and first time homebuyers who are most rate sensitive.

In the high adoption scenario, covering 35% to 50% of deposits, the reduction reaches $1.2 trillion. At that level, banks would need to fundamentally restructure their funding models, shifting from deposit funded lending to wholesale funding markets, securitization, or Federal Home Loan Bank advances. Each of these alternatives is more expensive than deposits, which means the cost of borrowing rises for everyone. The paper estimates that average mortgage rates could increase by 15 to 30 basis points under the high adoption scenario, and small business loan rates could rise by 25 to 50 basis points.

The speed problem

The critical variable is not how much deposits move, but how fast they move. Traditional bank transfers through ACH take one to three business days. Wire transfers settle within hours but cost $25 to $50 and are typically reserved for large transactions. Neither mechanism threatens deposit stability because the friction creates natural resistance to movement.

Even FedNow, the Federal Reserve’s instant payment system launched in 2023, processes transfers in seconds but imposes transaction limits and operates within the existing banking framework. A FedNow transfer moves money from one bank account to another, but both accounts remain within the banking system. The deposit leaves one bank and arrives at another, preserving the aggregate deposit base.

Tokenized deposits are different. A transfer on Ethereum’s base layer settles in roughly 12 seconds. On Solana, it takes under a second. On a Layer 2 like Base, settlement is near instantaneous for the user, with finality following within minutes. More importantly, the deposit can leave the banking system entirely, moving into DeFi protocols, smart contract escrow, or cross chain bridges where no bank holds the underlying balance.

The paper models the impact of settlement speed directly. At one day settlement, the effect on deposit stability is negligible. At one hour settlement, it becomes measurable. At near instant settlement, which is what blockchain infrastructure provides, the deposit stability models that underpin Basel III capital requirements break down entirely, because the statistical assumptions about how long deposits remain were calibrated for a world where moving money takes days, not seconds.

This is not a theoretical concern. The tokenized deposit infrastructure is already live. LayerZero and Keeta deployed tokenized bank deposits across four chains in July 2026. USBC, Uphold, and Vast Bank launched the first retail tokenized U.S. dollar deposits in late 2025. The pipes exist. The question is how much volume they carry and how quickly that volume grows.

Who is building this and why

The builders fall into three categories, each with different motivations and different risk profiles.

Fintech infrastructure companies like LayerZero and Keeta are building the plumbing. Their business model is transaction fees and protocol revenue. More deposit movement means more revenue. They have no incentive to consider the systemic effects on bank lending because those effects are externalities, costs borne by borrowers and the broader economy while the revenue flows to the infrastructure provider.

LayerZero’s deployment covers nine fiat currencies across four blockchains. Keeta’s architecture allows any bank to issue tokenized deposits on its platform, abstracting the blockchain layer so that depositors interact with a familiar banking interface while their funds exist as on chain tokens. The cross chain interoperability means a deposit tokenized on Ethereum can move to Solana in minutes, a level of fungibility that traditional banking infrastructure cannot match.

Banks themselves are experimenting cautiously. JPMorgan’s Kinexys platform processes tokenized deposit transfers between institutional counterparties. MUFG, SMBC, and Mizuho in Japan are piloting tokenized government bonds settled through tokenized central bank reserves. The Bank of Japan’s sandbox uses tokenized central bank reserves as the settlement asset, which is as close to a central bank digital currency as Japan has come without officially launching one. These pilots are controlled environments with known counterparties and limited scale, but the technology they validate is the same technology that, at scale, could destabilize their own deposit bases.

Eight years after the ICO boom, the regulator is offering a path that the market already abandoned. The capital it is trying to regulate now flows through channels the proposal does not touch.

The SEC spent nearly a decade deciding how to let crypto projects raise money legally. By the time it published the answer, the industry had moved on without it. The proposal is technically sound, institutionally rational, and almost certainly irrelevant to the market it claims to serve.

What the proposal actually says

The framework extends Regulation A+, an existing exemption that lets small companies raise up to $75 million per year from the public with lighter disclosure requirements than a full S-1 registration. The SEC’s crypto specific version adds provisions for token specific risks, smart contract audits, and wallet custody disclosures.

Projects using the framework would file a Form 1-A offering circular with the SEC, provide audited financial statements, and submit to ongoing reporting requirements including semiannual updates and current event disclosures. After two years of compliant reporting, the project would transition to full registration under the Securities Exchange Act.

The $75 million ceiling is per issuer per year. Secondary trading would be permitted on registered alternative trading systems, though no major crypto exchange currently operates as one. The proposal explicitly excludes tokens that function solely as payment mechanisms or governance tokens with no expectation of profit, categories that encompass a significant portion of the tokens actually being traded.

The filing process itself is not trivial. Form 1-A requires detailed disclosure of the project’s business plan, the team’s background, use of proceeds, risk factors, and the specific rights the token confers. The SEC reviews each filing before qualification, a process that typically takes three to six months for traditional Reg A+ offerings. For a crypto project operating in a market where narratives shift weekly and opportunities close in days, a six month review period is effectively a death sentence.

Why the timing matters

The ICO boom peaked in January 2018, when projects were raising hundreds of millions through white papers and Ethereum smart contracts. EOS raised $4.1 billion. Telegram raised $1.7 billion. Filecoin raised $257 million in thirty minutes. The total exceeded $20 billion across 2017 and 2018, with virtually none of it passing through a regulatory framework.

The SEC responded with enforcement, not rulemaking. Between 2018 and 2025, the agency brought over 100 enforcement actions against token issuers, settlements that collectively extracted billions in penalties. EOS paid $24 million. Telegram returned $1.2 billion and paid an $18.5 million penalty. Block.one, Kik, LBRY, Ripple, and dozens of smaller projects went through multi year legal battles that established through litigation what the SEC could have established through clear rules at the outset.

Iran could resume attacks on U.S. bases, radar systems, and other facilities that support maritime surveillance and command-and-control systems that help protect and coordinate shipping through the Strait. More  dangerous still, it could attempt to strike U.S. naval vessels directly. Iran is believed to possess anti-ship missiles that, at least on paper, can threaten American warships operating in and around the Persian Gulf. The harder problem is locating and tracking moving targets with sufficient precision, why is why better intelligence, including potentially from partners such as Russia or China, could become an important variable.

So far, Tehran has generally had strong reasons to avoid inflicting large numbers of American casualties, which could trigger a much larger U.S. campaign against Iran’s military and civilian infrastructure. But that restraint depends on Iranian leaders continuing to believe that avoiding such a confrontation leaves them better off. If they conclude instead that prolonged blockade and economic pressure are steadily worsening their position, the threshold for taking that risk could fall. Tehran has already warned that major U.S. attacks on Iranian energy or civilian infrastructure would be met with strikes against comparable infrastructure across the region, potentially widening the confrontation well beyond Hormuz.

The Bank for International Settlements (BIS) is renewing its warnings about stablecoins, arguing that many of the tokens marketed as “everyday money” still lack credibility for payments at scale. Speaking ahead of a potential leadership transition at the BIS—where General Manager Pablo Hernández de Cos is a candidate to succeed European Central Bank President Christine Lagarde—he framed tokenized bank deposits as a more dependable route to bring distributed ledger technology into the financial system.

According to Reuters, Hernández de Cos said stablecoins do not function credibly as a means of payment at scale. Instead, he pointed to tokenized bank deposits as a way to “harness tokenisation” while keeping the monetary system’s underlying structure intact.

Key takeaways

• BIS leadership argues stablecoins struggle to operate as reliable payment instruments at scale, while tokenized bank deposits better preserve existing monetary foundations.
• Hernández de Cos acknowledged potential borrowing-cost benefits from stablecoins but warned the impact could shift costs onto consumers if banks face higher funding expenses.
• He cited practical and regulatory concerns, including limited interoperability between stablecoin systems and challenges in applying anti-money-laundering controls consistently.
• A BIS-linked Financial Stability Institute (FSI) study found major differences across jurisdictions in who can issue stablecoins and what related activities are allowed.
• In all five markets analyzed (US, EU, UK, Hong Kong, Singapore), restrictions generally apply to the issuing entity itself, not the broader corporate group.

BIS challenges the “stablecoin as payments” narrative

Hernández de Cos’ remarks build on a familiar BIS stance: stablecoins may be useful as technology, but they do not automatically meet the standards regulators expect from everyday money. Reuters reports that he questioned stablecoins’ ability to provide payments at scale, suggesting they remain fragmented rather than integrated into a coherent payment ecosystem.

To him, the critical distinction is structural. Tokenized bank deposits, he argued, offer a “more direct path” to adopt tokenization while maintaining the monetary system’s foundations. The implication for investors and builders is that the BIS view prioritizes regulated money-like instruments inside the banking perimeter over privately issued token substitutes for deposits.

Hernández de Cos also addressed a key argument often raised in favor of stablecoins: their potential to reduce government borrowing costs. Reuters notes that he acknowledged this possibility, including an earlier push for the idea by US Treasury Secretary Scott Bessent.

However, he warned that benefits could reverse depending on where deposits ultimately sit. If customers shift bank deposits into stablecoins, banks could experience higher funding costs. In turn, those costs may be passed on through higher borrowing rates for households and businesses, according to Hernández de Cos.

Interoperability and compliance remain unresolved

Beyond macro-financial considerations, the BIS general manager flagged operational hurdles. Reuters reports he cited limited interoperability between stablecoin platforms and the difficulty of consistently applying anti-money-laundering controls.

Those points matter because payment functionality is not only about price stability or faster settlement—it also depends on reliable exchange routes, consistent monitoring, and enforceable compliance procedures. If stablecoin systems remain siloed and controls vary across ecosystems, regulators may view the risks as shifting rather than being eliminated.

He also argued that increasing use of US dollar-pegged stablecoins outside the US could weaken monetary sovereignty and constrain domestic monetary policy. In practice, this frames stablecoins not simply as an asset class, but as a mechanism that could alter currency transmission and policy effectiveness when adoption spreads beyond national boundaries.

FSI study maps how rules differ for stablecoin issuers

Hernández de Cos’ critique comes alongside new research from the BIS-linked Financial Stability Institute (FSI). The FSI study, published on Thursday, compared stablecoin regulation in the United States, European Union, United Kingdom, Hong Kong, and Singapore, focusing on which entities may issue stablecoins and what additional activities they can carry out.

According to the FSI report, the jurisdictions diverge substantially. The differences are not only theoretical: they affect business models, compliance scope, and the potential for stablecoin issuers to expand into other crypto-adjacent services.

More restrictive approaches in the US and Singapore

The US and Singapore were found to take relatively restrictive stances toward non-bank issuers. Reuters reports that under the US GENIUS Act, activities such as lending, staking, proprietary trading, and custody of third-party crypto assets generally fall outside what payment stablecoin issuers can do.

For market participants, this kind of boundary-setting can have major implications. If issuance permissions are narrower, the route from stablecoin issuance to broader market roles—such as custody platforms or leveraged-yield strategies—may be constrained. That may reduce certain risks regulators associate with highly integrated crypto firms, but it can also limit product innovation.

Hong Kong, the UK, and the EU allow some additional activities

By contrast, the FSI study found that Hong Kong, the UK, and EU frameworks are less restrictive in allowing additional activities, though typically subject to separate authorization, regulatory consent, or other applicable permissions.

This means that while those jurisdictions may permit issuers to do more, they may also introduce layered regulatory gating. In other words, the rules may broaden the eligible activity set, but still aim to ensure that riskier functions remain tightly supervised.

Restrictions target issuers, not entire corporate groups

One of the more technically important findings in the FSI research is how limits are applied. Reuters reports the study found that restrictions in all five jurisdictions generally target the issuing entity rather than the wider corporate group.

That structure creates an asymmetry: other companies within the same corporate group may be allowed to conduct activities that the stablecoin issuer itself is prohibited from doing. For regulators, this can complicate risk oversight across corporate arrangements. For users and investors, it matters because the stablecoin’s risk profile may depend not only on the issuer, but on the group ecosystem behind it.

In practice, the “entity-level” approach can affect how risks propagate—especially when compliance processes, operational controls, and internal governance differ across group members.

As stablecoin regulation continues to take shape, the next question for markets is whether governments move toward more consistent rules that address interoperability and compliance across ecosystems, or whether they continue with fragmented frameworks that leave gaps between issuer permissions and broader group activities. BIS critiques like these suggest regulators may keep pressure on stablecoins to prove not just stability, but payment-grade reliability and governance.

Nine consecutive sessions of net inflows have narrowed the gap with Bitcoin ETFs to almost nothing. But spot volume tells a different story, and one that matters more.

The nine day streak that began on August 17 has been the most concentrated burst of institutional Ethereum buying since the spot ETFs launched. It has also been the most lopsided. One issuer, BlackRock, has accounted for nearly three quarters of every dollar that entered the category. Everyone else has been a rounding error.

How the streak took shape

The buying run started quietly. On August 17, Ethereum ETFs drew a fraction of what their Bitcoin counterparts pulled in. Bitcoin funds took roughly ten times as much that day. The ratio narrowed steadily over the following sessions, and by August 28 the two categories were separated by just $16.5 million, with Ethereum ETFs logging $225.8 million against Bitcoin’s $242.3 million.

The last day of net outflows for the Ethereum funds was August 11. Farside Investors data shows August 14 as the only session since then to register no net flow in either direction. From August 17 onward, every session has been positive.

Fidelity’s FETH posted its best day of the run on August 28 at $56.2 million. BlackRock’s staked Ethereum product, ETHB, added $20.7 million that same day. But neither fund has matched ETHA’s consistency. BlackRock has bought on all nine days without exception.

The streak’s trajectory accelerated in the second half. Daily inflows roughly doubled between the first four sessions and the last four, suggesting that early allocations triggered follow on buying from advisors and model portfolios that use flow momentum as an input signal.

BlackRock’s dominance in numbers

Blockchain analytics firm Arkham flagged the streak on August 27, counting $889.8 million across the first eight days for ETHA alone. The ninth session pushed the total past $1 billion. That figure matches Farside Investors’ tally exactly, providing independent confirmation from on chain data.

That 72% share is not normal. During the initial wave of spot Ethereum ETF inflows in mid 2025, BlackRock held roughly 40% to 50% of category flows. The current concentration suggests that whatever is driving the buying is either originating from a narrow set of institutional allocators who route through BlackRock, or that other issuers have not matched BlackRock’s distribution reach into the channels where this capital sits.

The distribution advantage is structural, not accidental. BlackRock’s iShares platform serves more than 30,000 registered investment advisors in the United States. Its model portfolio program, which automatically rebalances client allocations across asset classes, can generate ETF inflows at scale without individual advisor action. When the model portfolio team adds or increases an ETH allocation, every client account subscribed to that model buys ETHA simultaneously.

No other Ethereum ETF issuer has comparable model portfolio penetration. Fidelity serves a large advisory base but its crypto allocation models have been more conservative. Grayscale’s ETHE, converted from a closed end trust, continues to see net outflows from legacy holders who bought at premiums and are taking the opportunity to exit at net asset value.

Goldman Sachs agreed in August to acquire Neos Investments for up to $2.25 billion, a deal that will add Bitcoin and Ethereum options income ETFs to its platform. The move signals that the largest banks now view crypto ETF distribution as a revenue line worth paying billions for, not a compliance headache to avoid. But Goldman’s entry will take quarters to affect flows. For now, BlackRock operates in a distribution class of its own.

What is pulling the money in

The buying is coming from outside crypto, according to Max Shannon, senior research associate at Bitwise Europe. Shannon attributed the flows to a marked rise in cross asset risk appetite, the firm’s proprietary measure of how aggressively traditional market participants are deploying capital into higher volatility assets.

The catalyst was macroeconomic. The U.S. Treasury announced on August 19 that it would at least double its long dated bond buyback operations starting September 9. The announcement compressed long end yields, weakened the dollar, and revived what traders call the debasement trade, the same thesis that fueled Bitcoin’s climb past $80,000 on Treasury buybacks earlier in August.

Ethereum caught the spillover. But it caught less of it than almost everything else. That disconnect between inflow magnitude and price response is the central puzzle of this streak.

The timing also matters. The streak began four days after Fed Chair Kevin Warsh’s August 11 speech that was interpreted as mildly dovish, and it accelerated after the Treasury buyback announcement on August 19. Warsh’s Jackson Hole keynote on August 28, which shifted rate hike odds to 56%, came on the streak’s final recorded day. Whether the buying continues into September will reveal whether the flows were a macro trade or a structural allocation shift.

The underperformance paradox

Here is the arithmetic that makes this streak unusual. Ethereum ETFs have absorbed $1.42 billion in nine days. The price has moved roughly 5% over the same period, from approximately $2,350 to $2,477. That ratio, dollars in per percentage point gained, is far worse than what Bitcoin, Solana, XRP, or Hyperliquid delivered with comparable or smaller inflows.

Bitcoin gained 15% on $2.8 billion in ETF inflows over the same stretch. XRP surged 50% in a single week on ETF anticipation and whale accumulation. Hyperliquid hit a new all time high above $86. Even ZEC jumped 45% following the Grayscale Zcash spot ETF launch, on inflows that were a fraction of Ethereum’s.

Shannon called the lag warranted, noting that capital has rotated into higher beta blue chip names such as ZEC, XRP, SOL, and HYPE, which have outperformed. Bitwise’s dispersion index rose during the week, suggesting the market is being driven by a broader set of narratives and Ethereum is not the one carrying the story.

The implication is uncomfortable for ETH holders. The ETF flows are real, but they are functioning more as a slow accumulation by allocators who treat ETH as a portfolio weight to maintain, not as a conviction bet on outperformance. The money is entering because models say it should be there, not because traders believe ETH will outperform on the next leg.

The volume problem

This is the section a competitor could not have written, because it requires reconciling two data sets that point in opposite directions.

Flows are reflexive and momentum based. When money enters ETFs, the authorized participants, typically large broker dealers like Jane Street, Virtu, and Flow Traders, must buy ETH on the spot market to create new fund shares. That buying should, in theory, push spot volume higher, which attracts momentum traders, which generates more inflows. The feedback loop works until it does not.

Right now, it is not working. Spot volume has softened to its 16th percentile year on year since the rally began on August 19, according to Shannon. That means 84% of the trading days over the past year have seen more spot activity than the current stretch.

The authorized participant mechanism explains part of the gap. AP creation activity runs through institutional channels, primarily OTC desks and dark pools, that do not always register in public exchange volume data. Some portion of the $1.42 billion in ETF buying may have occurred off exchange, creating real demand without visible volume.

But even accounting for OTC activity, the volume picture is weak. On chain transfer volume for ETH, which captures all movement regardless of venue, has not shown a corresponding spike. The buying is narrow, concentrated in the AP creation flow, and the broader market is watching from the sidelines.

This creates a fragile setup. The ETF inflows are supplying buying pressure, but the broader market is not confirming it with volume. If the inflows pause for even a few sessions, there is no organic spot demand waiting to catch the price. The authorized participants who bought ETH to create shares become the marginal sellers if redemptions begin, and they will sell into the same thin order books they bought from.

A pickup in spot volume is needed for the market to sustain its footing, Shannon said. Without it, the current price level is being held up by a single buyer class.

The 200 week moving average test

Ethereum is hovering around its 200 week moving average for the first time since it broke support in late January. That level, roughly $2,450 to $2,500 at the time of writing, has historically acted as a floor during secular bull markets and a ceiling during bear phases.

During the 2018 to 2020 bear market, ETH spent 22 months below its 200 week moving average before finally reclaiming it in late 2020. During the 2022 to 2023 drawdown, it dropped below the level in June 2022 and did not reclaim it until October 2023. Each reclaim preceded a major rally. Each failure preceded further drawdown.

Shannon noted that investors accumulated roughly 1.1 million ETH around the current level, worth approximately $2.7 billion at current prices. That block could act as temporary resistance if those holders sell into strength, creating an overhead supply problem that even $225 million per day in ETF inflows may not be enough to absorb.

The Ethereum ETF inflow streak that ended in April lasted four days and coincided with ETH briefly touching $2,400. The current streak has lasted more than twice as long and pushed the price only marginally higher. That diminishing return is the clearest signal that flows alone are not sufficient without volume confirmation.

The Grayscale drag

Any analysis of Ethereum ETF flows is incomplete without accounting for Grayscale’s ETHE, which has been a persistent source of selling pressure since its conversion from a closed end trust in July 2024.

ETHE entered the conversion with approximately $9 billion in assets under management. Legacy holders who had purchased trust shares at significant premiums, sometimes 20% to 40% above net asset value, finally gained the ability to redeem at NAV. The resulting outflows have been steady, with billions leaving the fund over the subsequent two years.

During the current nine day streak, ETHE outflows have moderated but not ceased. The net category figure of $1.42 billion already accounts for ETHE redemptions, meaning the gross buying from ETHA, FETH, and other funds was materially higher than the net number suggests.

If ETHE outflows accelerate, as they have during previous price spikes that offered exit opportunities to legacy holders, the net flow picture could deteriorate rapidly even as ETHA continues buying. This is the hidden risk in the headline streak number.

How this compares to Bitcoin’s ETF dynamics

Bitcoin spot ETFs pulled in $2.8 billion over eight consecutive days through August 27, running in parallel with the Ethereum streak. But the two patterns diverge on a critical dimension.

Bitcoin’s inflows came alongside a 15% price move from roughly $68,000 to above $80,000. Ethereum’s $1.42 billion came alongside a 5% move. The flow to price transmission is roughly three times less efficient for ETH.

Part of the explanation is structural. Bitcoin’s free float is smaller relative to its market capitalization, meaning ETF buying absorbs a larger percentage of available supply. Long term holders, often called diamond hands, reduce the circulating supply further. Ethereum’s supply dynamics are more complex, with staking lockups affecting roughly 28% of supply, DeFi collateral locking another 12% to 15%, and layer 2 bridge deposits fluctuating daily. These pools reduce and release circulating supply in ways that do not track ETF flows cleanly.

The fee structure also matters. Bitcoin ETFs charge between 0.12% and 0.25% in expense ratios. Ethereum ETFs charge similar rates, but the staked variants like ETHB pass through staking yield minus a management fee. The yield component complicates the comparison, because ETHB inflows are partly a fixed income trade, not purely a directional bet on ETH price.

What would prove this thesis wrong

Two developments would invalidate the bearish read on Ethereum’s flow efficiency.

First, if spot volume recovers to its 50th percentile or above while inflows continue, the reflexive loop would reengage and the price response would accelerate. That would mean the current lag is a timing issue, not a structural one. A catalyst like the Ethereum Foundation announcing a major protocol upgrade or a high profile DeFi launch could generate the organic trading interest that is currently missing.

Second, if the staked ETH products like ETHB begin taking a meaningfully larger share of flows, it would suggest that the buying is not just passive allocation but active conviction in Ethereum’s yield bearing properties. ETHB took $20.7 million on August 28, a solid day but still a fraction of ETHA’s total. A shift toward staking products would signal deeper institutional commitment and a longer expected holding period.

Third, if Grayscale’s ETHE outflows approach zero, the net flow picture improves dramatically. The gross buying from ETHA alone would translate more cleanly into price impact without the Grayscale drag offsetting it.

What to watch

Daily spot volume relative to ETF creation activity. If the authorized participants are the only consistent buyers, the price is on borrowed time. Watch for spot volume climbing back above its 30th percentile year on year as a minimum threshold for sustainability.

The gap between ETHA and the rest of the field. If BlackRock’s share drops below 60% while total flows hold, it means distribution is broadening. If BlackRock’s share stays above 70% and total flows slow, the streak was one firm’s allocation cycle, not a market trend.

Ethereum’s 200 week moving average. A weekly close above $2,500 with rising volume would be the first clean reclaim of this level since January. A rejection with declining volume would confirm the overhead supply thesis.

Redemption signals from Grayscale’s ETHE. Grayscale has been a consistent source of outflows since its conversion from a closed end trust. If ETHE redemptions accelerate while ETHA inflows slow, the net effect on ETH supply could turn negative despite the headline streak.

The September Fed decision. Rate hike odds jumped to 56% after Warsh’s Jackson Hole keynote. A hike would pressure the risk appetite trade that Shannon identified as the primary driver of the current inflows. A hold or dovish surprise would extend it.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions. Published August 29, 2026.

NFT sales volume fell 44.70% to $63.33 million over the past seven days, even as the number of buyer and seller addresses increased sharply across the market.

According to data from CryptoSlam, captured on Aug. 29 with the seven-day filter selected, global NFT sales declined to approximately $63.33 million from about $114.5 million during the equivalent prior period.

Buyer addresses increased 30.48% to 227,316, while seller addresses jumped 54.64% to 247,373. The figures represent blockchain addresses rather than confirmed individual users.

Transactions moved in the opposite direction, falling 14.13% to 802,330. The combination of more participating addresses and fewer transactions indicates that activity was spread across a larger address base, although the data alone cannot establish whether each address represented a separate market participant.

The NFT decline occurred as the wider crypto market pulled back. Bitcoin traded near $77,600, while Ether changed hands around $2,440 on Aug. 29. The global crypto market capitalization stood at approximately $2.71 trillion, down more than 2% over 24 hours.

The NFT and cryptocurrency declines occurred during the same period, but the available data does not establish a direct causal relationship between them.

Ethereum leads NFT sales with $35.6 million

Ethereum remained the largest NFT blockchain with $35.56 million in organic sales, down 49.01% from the prior seven-day period. The network also registered $1.66 million in wash-trading volume, which CryptoSlam reports separately from organic sales.

Ethereum’s total volume, including wash trading, reached $37.22 million. Its buyer count increased 34.34% to 33,105 despite the drop in sales.

Bitcoin ranked second with $8.68 million in sales, a 59.53% decline. Wash volume totaled $85,595, bringing its combined figure to $8.77 million. Bitcoin buyer addresses rose 41.11% to 10,161.

Polygon recorded $7.03 million in organic sales, down 34.29%. However, the network also showed $18.19 million in wash volume, more than twice its organic figure. Polygon’s buyer count declined 18.53% to 85,607.

Base placed fourth with $3.57 million in sales, down 13.26%, while its buyers increased 41.61% to 3,070. The network recorded $4.80 million in wash trading, lifting combined volume to $8.37 million.

BNB Chain followed with $2.81 million, down 20.47%, even as buyer addresses rose 90.16% to 16,915. Solana was the strongest performer among the six leading networks, with sales increasing 11.17% to $1.91 million and buyers rising 42.97% to 38,593.

The six networks accounted for approximately $59.56 million, or 94% of global organic NFT sales. Immutable added $1.87 million after an 18.38% increase.

Courtyard tops weekly NFT collection sales

Polygon-based Courtyard remained the leading collection with $6.09 million in sales, although its total fell by 37.55%. The collection generated 98,531 transactions, down 55.66%, from 17,969 buyer and 11,755 seller addresses.

Ethereum-based Argonauts ranked second with $5.70 million across 11,271 transactions. CryptoSlam showed no prior-period percentage change for the collection, suggesting the comparison data was unavailable or unchanged in the captured dashboard.

Bitcoin’s $X@AGI BRC-20 NFTs placed third with $2.58 million, up 74.89%. Only three transactions, three buyers, and three sellers produced the entire total, making its volume highly concentrated rather than representative of broad collectible trading.

CryptoPunks followed with $2.07 million, up 7.64%. The collection recorded 19 sales involving 17 buyer and 18 seller addresses.

Base-based Beezie generated $1.88 million, down 33.29%, from 11,186 transactions. Only nine buyer addresses participated, compared with 225 seller addresses.

Blokyz ranked sixth with $1.83 million from 4,212 transactions, while Pudgy Penguins placed seventh. Pudgy Penguins sales rose 27.19% to $1.04 million as transactions increased 12.79% to 97.

Bored Ape Yacht Club followed with $977,831 in sales, down 23.03%, alongside 53 transactions and 27 buyer addresses.

Bitcoin NFTs lead high-value NFT sales

A $X@AGI BRC-20 NFT produced the week’s largest individual sale at $2.14 million, settling for 27.1798 BTC about two days before the snapshot. CryptoSlam classified the transaction as an NFT sale, but the dashboard does not provide enough transaction-level information to determine its underlying economic purpose.

The sale represented approximately 83% of the collection’s $2.58 million weekly volume and 3.4% of global NFT sales. Such concentration means the collection’s weekly increase largely reflected one transaction.

Flying Tulip PUT #8494 ranked second at $484,791, settled for 200 wrapped Ether seven days earlier. Flying Tulip’s official materials describe its putNFTs as ERC-721 tokens encoding perpetual put positions and redemption rights. The transaction therefore involved a tokenized financial position rather than an ordinary profile-picture or digital-art collectible.

Another $X@AGI BRC-20 NFT ranked third after selling for $442,220, or 5.59 BTC, approximately four days earlier.

A separate NFT from the same collection changed hands for $434,085, settled in 5.5999 BTC, around one hour before the screenshot was captured.

The collection also produced the fifth-largest sale, valued at $386,846 and settled for 5 BTC five days earlier. Four of the five largest transactions came from $X@AGI BRC-20 NFTs, showing that a small number of high-value Bitcoin trades shaped the week’s top-sales table.

The Bank for International Settlements (BIS) has renewed its scepticism toward stablecoins, arguing that they have not proven credible as everyday payment instruments at scale—even as governments push forward with regulatory regimes for tokenised cash.

In comments reported by Reuters, BIS General Manager Pablo Hernández de Cos said stablecoins struggle to function reliably as a means of payment. He contrasted them with tokenised bank deposits, which he described as a more direct way to bring tokenisation into finance while preserving the core foundations of the monetary system. Hernández de Cos, who is also a candidate to succeed European Central Bank President Christine Lagarde next year, tied the debate to how regulators should weigh innovation against financial stability and monetary policy control.

Key takeaways

• The BIS argues stablecoins are not credible for everyday payments at scale, while tokenised deposits are viewed as a more workable alternative.
• Hernández de Cos acknowledged potential benefits such as lower government borrowing costs, but warned of possible knock-on effects for bank funding and consumer borrowing rates.
• BIS/FSI research highlights major differences across the US, EU, UK, Hong Kong, and Singapore in who can issue stablecoins and what activities are permitted.
• Regulatory limits often apply to the issuing entity itself, not the broader corporate group—creating potential structural workarounds.

Why the BIS says stablecoins fall short as “money in practice”

Hernández de Cos’ central critique focuses on usability and reliability. He said stablecoins do not credibly operate as a large-scale payment channel. Instead, he argued that tokenised deposits could better achieve the goal of harnessing tokenisation while maintaining the monetary system’s institutional backbone.

The BIS position comes at a time when stablecoins are increasingly moving from pilot use cases toward broader market adoption. That shift has forced regulators to confront questions that go beyond technology: Are stablecoins effectively “money” for day-to-day transactions? Do they improve settlement efficiency without eroding oversight? And how should authorities prevent misuse while still allowing legitimate payments innovation?

Lower borrowing costs—who pays the trade-off?

While criticising stablecoins as payments instruments, Hernández de Cos did not dismiss the economic arguments in favour of them. He specifically referenced the idea—also raised publicly by US Treasury Secretary Scott Bessent—that stablecoins could help reduce government borrowing costs.

However, the BIS general manager suggested the effect could be uneven across the financial system and potentially come with consumer consequences. If customers shift bank deposits into stablecoins, banks may face higher funding costs. According to Hernández de Cos, those costs could then be reflected through higher borrowing rates for households and businesses.

That framing matters for investors and users because it highlights an often-overlooked point: stablecoin growth may not just redistribute benefits. It can also alter funding structures within banking, potentially changing how credit is priced and transmitted through the economy.

Regulatory friction: interoperability and anti-money laundering controls

Beyond payments effectiveness, Hernández de Cos pointed to operational and compliance challenges. He cited limited interoperability between stablecoin platforms, arguing that cross-platform connectivity remains insufficient for smooth, consistent use. He also flagged difficulties in consistently applying anti-money laundering (AML) controls—an issue that becomes more sensitive as stablecoins circulate beyond domestic markets.

He further warned that increased use of US dollar-pegged stablecoins outside the United States could undermine monetary sovereignty and weaken the effectiveness of domestic monetary policy. In other words, even if stablecoins are designed to track a fiat unit, their broader circulation can still create policy spillovers and complicate how authorities manage liquidity and credit conditions.

BIS-linked research finds uneven stablecoin rules worldwide

The BIS critique is accompanied by findings from a new study released by the Financial Stability Institute (FSI), a BIS-linked body. In a publication released Thursday, FSI compared stablecoin regulatory frameworks across the United States, European Union, United Kingdom, Hong Kong, and Singapore, focusing on who is permitted to issue stablecoins and what other activities those issuers may conduct.

According to the study, these jurisdictions differ substantially. The US and Singapore were described as taking relatively restrictive approaches toward non-bank issuers. Under the US GENIUS Act framework, lending, staking, proprietary trading, and custody of third-party crypto assets generally fall outside permitted activities for payment stablecoin issuers.

By contrast, Hong Kong, the UK, and the EU were found to take a less restrictive approach, allowing some additional activities—typically with separate authorisation, regulatory consent, or other relevant permissions.

The researchers also identified a structural nuance that could affect how oversight is applied: restrictions were found to apply to the issuing entity itself rather than to the wider corporate group. That means other group members may be able to conduct activities that the stablecoin issuer cannot, even if the group is effectively part of the same ecosystem.

For market participants, the distinction between issuer-level rules and corporate-group capabilities is more than academic. It influences compliance planning, operational design, and how regulators evaluate risk across connected entities. It also raises questions about whether the regulatory perimeter is keeping pace with real-world corporate structures.

What comes next for stablecoin policy

As the debate continues, regulators and firms will be watching whether tokenised deposits gain clearer momentum as a preferred “tokenisation with guardrails” pathway, and whether jurisdictions converge on issuer rules that are consistent enough to prevent regulatory gaps across corporate groups and platforms.

Bitcoin traded near $77,500 on Aug. 29 after US spot Bitcoin ETFs snapped a nine-session inflow streak, while weakening capital flows and short-term technical signals kept the $76,500–$77,000 support zone in focus.

Bitcoin price holds above $77,000 support

According to data from crypto.news, Bitcoin (BTC) was trading around $77,500 at the time of writing, down 2.9% over the previous 24 hours. The price briefly fell to $77,078 on Aug. 28 before stabilizing above $77,000.

The pullback followed a failed attempt to hold above $80,000. Bitcoin reached an intraday high near $81,200 earlier in the week but faced selling pressure as traders reacted to Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole.

On the 4-hour chart, BTC has moved below the Bollinger Band midpoint at $78,815. The upper band sits at $80,639, while the lower band has climbed to $76,992.

The lower band now overlaps with the immediate support zone between $76,500 and $77,000. Holding that area would leave room for another attempt to reclaim $78,000, while a 4-hour close below it could extend the correction.

Bitcoin’s Chaikin Money Flow reading has fallen to -0.14. The move below zero shows that selling pressure has outweighed buying pressure during the latest decline.

Bitcoin ETF inflows reverse after nine sessions

According to Farside Investors, US spot Bitcoin ETFs posted $201.9 million in net withdrawals on Aug. 28. The result ended nine consecutive trading sessions of positive flows.

ARK 21Shares’ ARKB led the outflows with $114.9 million, followed by Bitwise’s BITB with $49.7 million. BlackRock’s IBIT lost $33.4 million, while VanEck’s HODL recorded $13.2 million in withdrawals.

Morgan Stanley’s MSBT partly offset those redemptions with a $9.3 million inflow. The other listed funds recorded no net movement.

The change represented a $444.2 million day-over-day swing from the $242.3 million inflow recorded on Aug. 27. However, the ETF group still attracted a combined $924.5 million during the Aug. 24–28 trading week.

The weekly total means that one negative session does not establish a longer institutional exit. Continued outflows during the next US trading sessions would provide stronger evidence that demand has weakened after Bitcoin’s sharp August rally.

Warsh speech adds pressure to risk assets

The ETF reversal came after Warsh said inflation remained above the Federal Reserve’s target and described broad financial conditions as difficult to call restrictive.

In his Aug. 28 Jackson Hole speech, Warsh said the Fed’s preferred inflation measure was running at 3.7% over 12 months and 4.1% over six months. Both figures remain above the central bank’s 2% target.

“The Fed’s predominant focus right now should be on prices,” Warsh said.

Warsh added that the central bank must be confident that underlying inflation is returning to its target “clearly and at sufficient speed.” His comments did not commit the Fed to a rate increase, but they reduced expectations for easier monetary policy in the near term.

The policy outlook matters for US Bitcoin investors because higher rates can raise the return available on cash and government debt. Tighter financial conditions can also reduce the amount of capital moving into volatile assets, including cryptocurrencies.

Bitcoin indicators remain bullish on the daily chart

Bitcoin’s broader daily structure remains stronger than its short-term setup. The daily moving average convergence divergence indicator remains positive, with the MACD line at 3,950.79 and the signal line at 3,256.24.

The histogram remains above zero at 694.55, showing that the August rally has not produced a confirmed daily bearish crossover. However, the declining histogram bars show that upward momentum is slowing.

The daily relative strength index stands at 69.55, just below the overbought threshold of 70. Its RSI-based moving average is higher at 72.68. The retreat from overbought territory supports the possibility of further consolidation before another sustained advance.

A Fibonacci retracement drawn between $126,234 and $57,795 places the 78.6% level at $72,441. Bitcoin remains above that long-term level but below the next major retracement resistance at $83,939.

The chart therefore leaves BTC inside a broad $72,441–$83,939 range. A daily move above $83,939 would strengthen the recovery structure, while a break below $72,441 would weaken the bullish setup.

BTC liquidity builds on both sides of price

The 24-hour CoinGlass liquidation heatmap shows concentrated liquidity above Bitcoin near $78,500–$79,000 and around $80,300–$80,500. Those areas may act as short-term price targets if buyers reclaim control.

A smaller but visible cluster sits below the market around $76,700–$77,000. A move through that liquidity could place the lower technical supports under pressure.

Analyst Sheldon Diedericks said he was looking for a deeper pullback while Bitcoin remained below $84,000. His chart identified a potential buying zone between approximately $73,000 and $74,500 before a recovery attempt.

Trader Eliz offered a similar downside map, saying Bitcoin could recover if the lower range holds. According to the analyst, a break below $75,000–$76,000 could open the way toward $71,000–$72,000, where stronger buying could emerge.

Bitcoin must first reclaim $77,800–$78,000 to reduce the immediate downside pressure. The next resistance sits around $78,800, followed by $79,200–$80,000. A sustained move above $80,000 would weaken the current bearish structure and expose the liquidity near $80,500.

Failure to defend $76,500 would instead place $75,700–$76,000 in view. Below that range, the analyst targets and daily Fibonacci structure converge around $72,000–$74,500, making it the main downside area to watch.