Key Takeaways

• Hours after Trump’s executive order, the Pentagon deployed Anthropic’s Claude AI for operational use in Iran airstrikes
• Military operators utilized Claude for tactical intelligence analysis, target selection processes, and combat scenario modeling
• Presidential directive mandated a six-month timeline to eliminate Anthropic technology, labeling the firm a “supply chain threat”
• Within hours of Anthropic’s removal, OpenAI negotiated Pentagon access for its AI systems on classified infrastructure
• The conflict arose after Anthropic rejected Pentagon requirements for unlimited AI deployment, maintaining restrictions on surveillance and autonomous weapon systems

Operational forces from the United States military deployed Anthropic’s Claude artificial intelligence platform during Saturday’s Iran airstrikes, mere hours following President Trump’s directive prohibiting federal departments from accessing the technology.

According to sources with direct knowledge of the operation, U.S. Central Command utilized Claude to conduct intelligence analysis, identify strike targets, and run combat simulations during the military action. The operation was executed as a joint effort with Israeli forces.

The strikes resulted in the death of Iran’s Supreme Leader Ayatollah Ali Khamenei. State-controlled Iranian media outlets reported his death after his office in Tehran was hit. Iranian authorities subsequently announced a 40-day national mourning period.

One day prior to the operation, Trump had issued an executive order requiring all federal departments to “immediately cease” utilizing Anthropic’s technology platforms. In his statement, the President referred to company leadership as “leftwing nut jobs” and alleged their practices endangered “American lives.”

Simultaneously, Pentagon leadership classified Anthropic as a “supply chain risk” and unveiled a six-month transition strategy to eliminate its systems from military infrastructure. Defense Secretary Pete Hegseth stated that American military personnel would not be “held hostage by the ideological whims of Big Tech.”

Tensions between Anthropic and Defense Department officials had escalated over several months. Military leadership sought unrestricted access to Claude for any operation deemed “lawful” under military protocols. Anthropic declined these terms, maintaining safeguards preventing domestic surveillance applications and autonomous strike capabilities without human authorization.

In a Friday statement, Anthropic declared that “no amount of intimidation or punishment from the Department of War will change our position.”

Claude had become integrated into military systems through existing partnerships with Palantir Technologies and Amazon Web Services. The AI platform was also deployed during January operations that resulted in the apprehension of Venezuelan President Nicolás Maduro in Caracas.

OpenAI Secures Pentagon Partnership

Within hours of the Pentagon severing its relationship with Anthropic, OpenAI CEO Sam Altman revealed an agreement to integrate OpenAI’s AI models into the Defense Department’s classified computing infrastructure.

Altman characterized the partnership as consistent with OpenAI’s ethical framework, which prohibits domestic mass surveillance and mandates human control over weapons deployment. He urged Pentagon officials to extend identical contractual terms to competing AI providers.

OpenAI representatives declined to confirm whether their technology would directly substitute for Anthropic’s military applications.

The Defense Department had previously established multi-year artificial intelligence contracts valued at up to $200 million with multiple technology firms, including Anthropic, OpenAI, Google, and Elon Musk’s xAI.

Financial Backing and Corporate Competition

OpenAI disclosed a $110 billion capital raise on Friday, establishing a corporate valuation of $730 billion. Anthropic had previously secured $30 billion in funding during February.

Both organizations are reportedly preparing for initial public offerings potentially scheduled for later this year. Anthropic CEO Dario Amodei departed from OpenAI in 2020, citing disagreements over the company’s approach to AI safety protocols.

Industry analysts project that completely removing Claude from military operations will require several months, considering the technology’s deep integration with defense contractors including Palantir.

TLDR

• Bitcoin remains range-bound in the mid-$60,000 zone while ether hovers around $2,000, with trading activity subdued on leading platforms.
• According to JPMorgan, the Clarity Act represents a significant potential driver for cryptocurrency markets heading into late 2026.
• The proposed legislation would establish a dual regulatory framework with the SEC and CFTC overseeing different asset classes, while permitting projects to raise $75 million without standard SEC registration.
• Progress on the bill has slowed following Coinbase’s decision to withdraw endorsement, expressing concerns about its impact on innovation and market dynamics.
• Morgan Stanley is pursuing a federal trust charter from the OCC to provide digital asset custody services as part of its expanding crypto operations.

The cryptocurrency market has experienced prolonged consolidation, with Bitcoin holding steady near the mid-$60,000 level for several weeks. Ether continues to trade in the vicinity of $2,000, while exchange volumes remain notably muted. Market participants are actively seeking developments that could spark fresh momentum.

Analysts at JPMorgan believe they’ve identified a significant catalyst. A research note authored by Nikolaos Panigirtzoglou and his team highlighted the Clarity Act — proposed legislation aimed at establishing clear crypto regulations in the United States — as a potential driver for market appreciation in the latter half of this year.

“We continue to believe that a potential approval of the market structure legislation most likely by mid year could serve as a positive catalyst for crypto markets,” the analysts wrote.

The Clarity Act would establish a bifurcated regulatory framework between the Commodity Futures Trading Commission and the Securities and Exchange Commission. Digital assets would receive designation as either commodities or securities based on their fundamental characteristics.

According to JPMorgan’s analysis, transferring oversight of prominent tokens to the CFTC would eliminate significant regulatory ambiguity. A provision in the legislation would enable specific tokens — such as XRP, Solana, Litecoin, Hedera, Dogecoin, and Chainlink — to receive commodity classification when connected to spot ETFs listed prior to January 1, 2026.

Additionally, the proposed framework would permit emerging cryptocurrency ventures to secure up to $75 million in annual funding without completing comprehensive SEC registration, provided they meet disclosure standards. JPMorgan’s team suggested this provision could revitalize domestic token launches and venture capital deployment that has migrated to foreign jurisdictions.

Clarity Act Hits a Wall

The legislation’s trajectory has encountered obstacles despite its potential benefits. A planned Senate Banking Committee review was delayed in early 2026 following Coinbase‘s announcement that it would no longer support the measure. The nation’s largest cryptocurrency exchange expressed concerns that the current legislative language might constrain technological advancement, diminish competitive forces, and impose limitations on stablecoin reward mechanisms.

Brian Armstrong, Coinbase’s chief executive, attributed the legislative delays primarily to banking industry lobbying organizations rather than individual financial institutions. The bill remains stalled as congressional members negotiate contentious elements of the proposal.

In parallel developments, traditional financial institutions are advancing their digital asset strategies. Morgan Stanley has submitted documentation to the Office of the Comptroller of the Currency requesting authorization for a national trust bank charter. The proposed institution, designated as Morgan Stanley Digital Trust National Association, would establish its headquarters in Purchase, New York.

Morgan Stanley Goes All-In on Crypto Custody

Upon receiving regulatory approval, the subsidiary would provide custody solutions for digital assets, facilitate token transactions related to client portfolios, and deliver staking capabilities. The entity would operate without accepting deposits or extending credit facilities.

With approximately $9 trillion in assets under management, Morgan Stanley initially introduced Bitcoin investment vehicles to its wealth advisory clients in 2021 and subsequently broadened cryptocurrency trading access via its E*Trade platform during 2025.

The firm filed applications for spot Bitcoin, Solana, and Ethereum exchange-traded funds in January 2026 and appointed Amy Oldenburg to lead its digital asset strategy division. A federally regulated trust charter would enable Morgan Stanley to internalize custody and staking operations, diminishing dependence on external service providers such as Zerohash.

The OCC’s public feedback window extends through March 20, 2026. Upon approval, Morgan Stanley would join an established group of institutional custody providers that includes BNY Mellon and State Street.

TLDR:

• Crypto ecosystem in Iran hit $7.78B in 2025, with IRGC controlling over 50% of all inflows.
• Russia’s new law lets courts seize Bitcoin and virtual assets classified as intangible property.
• South Korea’s NTS accidentally leaked a seed phrase, leading to a suspected $4.8M crypto loss.
• Japan’s Progmat plans to migrate $2B in tokenized securities to Avalanche by end of June 2026.

Crypto activity across Asia reached new levels in early 2025, with governments and institutions responding in varied ways.

From Iran’s $7.78 billion ecosystem to South Korea’s stablecoin regulatory gaps, the region is shifting fast. Russia’s court-ordered confiscation law and Japan’s corporate Bitcoin purchases also mark major moves.

Together, these developments paint a clearer picture of where Asian crypto policy and adoption are heading this year.

Iran and Russia Reshape Crypto Through Government Control

Iran’s crypto ecosystem reached $7.78 billion in 2025, according to blockchain analytics firm Chainalysis. The country has built a parallel financial system centered on Bitcoin mining and stablecoins. This system allows Iran to operate outside the U.S. dollar framework.

Addresses linked to the Islamic Revolutionary Guard Corps accounted for over 50% of crypto inflows. The IRGC received more than $3 billion throughout the year. Iran’s central bank also accumulated at least $507 million in USDT, likely to stabilize the rial and settle trade.

Meanwhile, Russian President Vladimir Putin signed a law allowing courts to seize virtual currencies in criminal cases.

The law formally classifies virtual currencies as intangible assets. Law enforcement can transfer seized assets to designated safe addresses via hardware wallets.

South Korea and Japan Advance Crypto Frameworks at Different Speeds

South Korea’s National Tax Service accidentally exposed a hardware wallet seed phrase in a news photo. Blockchain data showed that around 4 million PRTG tokens were subsequently transferred. The estimated value of the transfer was approximately $4.8 million.

The Bank of Korea renewed its call for commercial banks to lead Korean won stablecoin issuance. The central bank warned that private issuance could pose risks to monetary policy and foreign exchange stability. It recommended prioritizing banks subject to capital and compliance regulations.

As South Korea delayed stablecoin rules, Tether and Circle moved to expand in the Korean market. Tether began recruiting local staff, including government relations and public relations roles.

Circle’s USDC also reached around 10% market share on South Korean crypto exchanges.

🇯🇵 Japan FSA announced support for private-sector AML crypto trials running March–May 2026. The project, submitted by Hitachi, involves exchanges, stablecoin firms, and blockchain analytics providers. — FSA Japan, Feb. 27

Japan and China Push Crypto Into Institutional and Legal Arenas

Japan’s Financial Services Agency announced support for anti-money laundering proof-of-concept trials in crypto. The trials are scheduled to run from March to May 2026. They will test an industry-wide wallet-sharing framework for suspicious activity monitoring.

Japan’s largest security token platform, Progmat, plans to migrate over $2 billion in tokenized assets to Avalanche.

The migration covers tokenized real estate and corporate bonds currently on the Corda platform. The Avalanche L1 integration is expected to complete by the end of June 2026.

In addition, Japanese listed company Daido Tokushu Metal announced board approval to purchase Bitcoin worth up to 1 billion yen.

The purchase is part of a mid-term management plan running through March 2029. The company cited Bitcoin’s limited supply and low correlation with traditional assets as key reasons.

China’s Supreme People’s Court also stated plans to study judicial responses to virtual currency cases. The court aims to strengthen financial judicial protections for new asset classes.

A report from Artemis and Stablecon placed China second in global stablecoin inflow volume, receiving around $71 billion monthly.

Mutuum Finance raises more than $20.6m as it builds a non-custodial lending protocol on Ethereum.

Mutuum Finance (MUTM), a new cryptocurrency project building decentralized lending infrastructure on Ethereum, continues expanding its protocol development as fundraising surpasses $20.6 million. The non-custodial platform is designed to allow users to lend and borrow digital assets directly through smart contracts, without relying on centralized intermediaries.

The MUTM token is currently priced at $0.04, with more than 19,000 holders participating in the ongoing token distribution. According to project data, the protocol’s Sepolia testnet environment has now exceeded $150 million in simulated total value locked (TVL), reflecting user engagement during the testing phase.

Mutuum Finance V1 protocol live on testnet

Mutuum Finance’s V1 protocol is currently live on the Sepolia testnet, where users can simulate lending and borrowing by supplying supported assets to liquidity pools for yield or locking collateral to access other tokens. The system executes these functions through smart contracts with predefined risk parameters, allowing users to interact directly with on-chain lending markets in a test environment.

Safe-mode borrow presets introduced

In a recent update shared on X, the team announced the release of Safe-Mode Borrow Presets. The feature introduces one-click borrowing options aligned with predefined Stability Factor targets labeled Safe, Balanced, and Aggressive. The preset system adjusts borrowing capacity automatically based on the selected risk profile.

The team also shared a short demonstration video illustrating how the feature operates within the interface. According to the update, additional releases and protocol improvements are planned in the coming period.

In the current version of the protocol, users can mint testnet assets such as ETH, USDT, LINK, and WBTC. After minting, these assets can be supplied into the platform to participate in lending or borrowing activity, and they can also be used within the staking module available in the test environment.

When a user deposits an asset such as USDT, the protocol issues a corresponding mtToken, for example, mtUSDT, representing proof of deposit on a 1:1 basis. These mtTokens reflect the user’s position in the liquidity pool. By staking mtTokens, users become eligible to receive MUTM tokens distributed as part of the protocol’s dividend model.

The current release also includes debt tokens, which are minted when a user borrows and track the outstanding principal along with accrued interest. An automated liquidator bot monitors collateral positions and initiates liquidation if required thresholds are breached. In addition, a stability factor metric provides a real-time indicator of how well-collateralized a borrowing position is relative to protocol requirements.

Before the V1 protocol launch, on X, the team announced that the Halborn security audit had been completed. The team stated, “HalbornSecurity has completed the independent audit of Mutuum Finance’s V1 lending & borrowing protocol.”

With fundraising exceeding $20.6 million and the protocol now live on testnet, Mutuum Finance continues to expand its decentralized lending infrastructure on Ethereum. Ongoing feature releases, including risk-based borrowing presets, indicate continued development as the project progresses through its roadmap toward a planned mainnet launch.

TLDR:

• Bitcoin’s Q1 2026 return of -23.21% is the third-worst since 2013, trailing only Q1 2018 and Q1 2014 losses.
  
• Ethereum recorded a -32.17% Q1 2026 return, falling well below its historical quarterly average of +66.45%.
  
• Bitcoin’s Q1 average of +45.90% is heavily skewed by extreme years like 2013’s record gain of +539.96%.
  
• Around $1.8 billion in sell orders hit derivatives books in one hour, linked to rising US-Iran geopolitical tension.

Bitcoin Q1 2026 return has dropped to -23.21%, marking one of the weakest first-quarter performances since 2013.

Ethereum also recorded a -32.17% decline during the same period. Data from CoinGlass shows both assets are trading well below their historical quarterly averages.

The numbers reflect broader stress across digital asset markets, driven by macro pressure and rising geopolitical tensions that have rattled investor confidence heading into the second quarter.

Bitcoin Falls to Third-Worst Q1 Since 2013

Bitcoin’s Q1 2026 return stands at -23.21%, placing it among the worst quarterly performances on record. Only Q1 2018 and Q1 2014 recorded steeper losses, at -49.7% and -37.42% respectively.

Both of those periods played out during confirmed bear-market cycles. The current result sits far below the historical Q1 average of +45.90%.

That average, however, is skewed by extreme years like 2013, when Bitcoin gained +539.96% in the first quarter. The 2021 Q1 also returned +103.17%, further pulling the average higher.

Source: Coinglass

The historical Q1 median sits at -2.26%, meaning negative quarters are not unusual. Still, a -23.21% return points to conditions well outside normal seasonal weakness.

The data suggests the market is dealing with more than routine volatility. Liquidity contraction and macro risk repricing appear to be key factors.

These are patterns typically seen during post-cycle deleveraging phases. Investors are not showing signs of early-cycle accumulation at this stage.

Ethereum’s Q1 performance tells a similar story, though the losses run deeper. Its -32.17% return is the third-worst Q1 since 2016. This is well below its historical Q1 average of +66.45% and median of +4.37%.

Derivatives Market Shows Signs of Forced Selling

Ethereum’s higher beta relative to Bitcoin means it tends to fall harder during risk-off periods. The Q1 2026 data is consistent with that pattern.

Capital rotation away from higher-volatility assets has been visible across the market. Together, Bitcoin and Ethereum’s performance points to a defensive macro posture rather than recovery.

Market analyst CryptoTice flagged a sharp spike in selling pressure through derivatives. The analyst noted that roughly $1.8 billion in aggressive market sell orders hit the books within a single hour.

Rising US-Iran tensions were cited as the catalyst behind the move. The analyst described it as urgency-driven selling rather than a rotation.

When derivatives lead price action, leverage tends to unwind quickly. Liquidations can cascade, and volatility expands rapidly as a result.

CryptoTice pointed to funding rates, open interest, and liquidity gaps as key areas to monitor. Stress in the derivatives market often shows up before spot prices fully react.

The combined picture across spot and derivatives markets reflects a cautious environment. Both retail and institutional participants appear to be reducing exposure rather than adding risk.

Geopolitical factors have added a layer of uncertainty that is difficult to price. Until clarity returns, volatility is likely to remain elevated across the crypto market.

The US military reportedly used Anthropic during a major air strike on Iran, only hours after President Donald Trump ordered federal agencies to halt use of the company’s systems.

Military commands, including US Central Command (CENTCOM) in the Middle East, used Anthropic’s Claude AI model for operational support, according to people familiar with the matter cited by The Wall Street Journal. The tool has reportedly assisted with intelligence analysis, identifying potential targets and running battlefield simulations.

The incident shows how deeply advanced AI systems have become embedded in defense operations. Even as the administration moved to sever ties with the company, Claude remained integrated into military workflows.

On Friday, the Trump administration instructed agencies to stop working with the company and directed the Defense Department to treat it as a potential security risk. The order came after contract talks broke down, with Anthropic refusing to grant unrestricted military use of its AI for any lawful scenario requested by defense officials.

Related: Crypto VC Paradigm expands into AI, robotics with $1.5B fund: WSJ

Anthropic’s Claude AI used for classified operations

Anthropic had previously secured a multiyear Pentagon contract worth up to $200 million alongside several major AI labs. Through partnerships involving Palantir and Amazon Web Services, Claude became approved for classified intelligence and operational workflows. The system was reportedly also involved in earlier operations, including a January mission in Venezuela that resulted in the capture of President Nicolás Maduro.

Tensions intensified after Defense Secretary Pete Hegseth demanded the company permit unrestricted military use of its models. Anthropic CEO Dario Amodei rejected the request, describing certain applications as ethical boundaries the company would not cross, even if it meant losing government business.

In response, the Pentagon began lining up replacement providers, reaching an agreement with OpenAI to deploy its AI models on classified military networks.

Related: Pantera, Franklin Templeton join Sentient Arena to test AI agents

Anthropic CEO pushes back on Pentagon ban

During an interview on Saturday, Anthropic CEO Dario Amodei said the company opposes the use of its AI models for mass domestic surveillance and fully autonomous weapons, responding to a US government directive that labeled the firm a defense “supply chain risk” and barred contractors from using its products.

He argued that certain applications cross fundamental boundaries, emphasizing that military decisions should remain under human control rather than be delegated entirely to machines.

Magazine: Bitcoin may take 7 years to upgrade to post-quantum — BIP-360 co-author