Welcome to our institutional newsletter, Crypto Long & Short. This week:

• Maxime Seiler notes that weak crypto prices mask adoption, making yield strategies the main trade.
• Kavita Maharaj‑Alexander writes on crypto’s next phase being driven by proving compliance in practice, elevating the infrastructure providers that enable it.
• Top headlines institutions should pay attention to by Francisco Rodrigues.
• PENDLE rallies on demand for on-chain STRC yield exposure in Chart of the Week.

-Alexandra Levis

Expert Insights

In quiet crypto markets, yield is the trade

By Maxime Seiler, co-founder and chief executive, STS Digital, Ltd.

For much of the last six months, crypto markets have felt unusually quiet. Not dead, but tired. While bitcoin has held up better than most, much of the altcoin market has remained in what can only be described as a bear market. Liquidity has been thinner, follow-through has been weaker and the risk appetite that typically fuels broad-based crypto rallies has been missing.

That is the surface-level story. Underneath it, however, the picture looks very different.

Institutional adoption of digital assets continues to move at record pace. Across mainstream financial services, the build-out is no longer theoretical. Banks, asset managers, payment companies, custodians and infrastructure providers are developing products and capabilities to support tokenization, stablecoins, digital asset custody, trading, settlement and portfolio access. In previous cycles, institutional involvement was often discussed as something that might happen one day. Today, it is happening, but much of it is not yet reflected in token prices.

That disconnect is important. The market has been pricing short-term disappointment, while infrastructure is being built for long-term adoption.

Part of the recent weakness is understandable. The U.S. government created significant expectations around digital assets, but the pace of follow-through has slowed. Markets do not like uncertainty, and crypto markets in particular are quick to discount momentum when policy clarity fails to arrive as fast as expected. At the same time, a meaningful amount of global technical and investment talent has shifted toward artificial intelligence. AI has become the dominant narrative in technology, pulling attention, capital and brainpower away from crypto in the short term.

But these two worlds are unlikely to remain separate forever.

One of the most interesting open questions is how AI agents will eventually transact. If autonomous software agents are going to pay each other, pay merchants, access services, settle invoices, move value across borders or interact with financial applications, they will need payment rails that are programmable, global and available 24/7. Stablecoins and permissionless financial infrastructure are often discussed as potential candidates. DeFi may end up playing a role not because it is ideological, but because it is practical. Machines do not need bank branches. They need APIs, instant settlement and reliable liquidity.

That future may still be a year or more away from meaningful scale. For crypto asset holders, the more immediate question is simpler: what do you do while waiting?

This is where quiet markets can be useful. Bear markets are uncomfortable, but they often create some of the best conditions for disciplined yield generation. When spot prices move sideways and speculative momentum fades, investors are forced to focus less on direction and more on income, carry and risk management. In that environment, options become one of the most useful instruments available.

Options allow investors to monetize volatility, express views with defined parameters and generate yield on existing dollar or crypto holdings. For holders who are not looking to sell long-term positions, structured options strategies can be used to generate income while markets consolidate. For dollar holders, they may offer a more systematic approach to earn enhanced yield while waiting for better entry points. For crypto holders, they can turn otherwise idle assets into productive collateral.

This is exactly the type of environment where volatility selling and structured yield enhancement strategies may perform well in certain conditions, provided they are implemented with proper risk controls. The goal is not to chase yield blindly. The goal is to harvest quiet markets in a disciplined way.

At STS Digital, we have seen growing client demand for these types of strategies. Investors are not necessarily trying to call the exact bottom of the altcoin market. They are looking for ways to stay engaged, earn income and position themselves for the next phase of adoption without relying purely on spot price appreciation.

Crypto has always rewarded patience, but patience does not have to mean inactivity. The next wave of adoption may already be forming beneath the surface. For now, until it shows up in price, yield is the trade.

Disclaimer: For information purpose only. Not financial advice. Client acceptance subject to conditions.

Principled Perspectives

The quiet infrastructure powering digital asset maturity

By Kavita Maharaj‑Alexander, deputy general counsel, Ascentium

As digital assets move into more structured environments, the industry’s next phase is being shaped less by new rules and more by the operational realities of meeting them. The shift reflects a broader truth: regulatory frameworks matter, but the ability to evidence compliance matters more. Whether an entity is licensed, exempt or unregulated, expectations around governance, financial crime controls, risk management and demonstrable controls are rising. This has elevated a category of service providers that rarely attract attention but increasingly facilitate the operationalisation of digital asset projects: the regulatory infrastructure providers supporting governance, compliance and operational continuity.

These providers deliver the practical functions that sit between policy and practice, including registered office services, financial crime compliance, independent directorships, administration and governance support. They do not hold client assets or operate trading platforms. Instead, they support the operational spine that enables entities to demonstrate substance, oversight and continuity. As more jurisdictions move from drafting frameworks to supervising their implementation, this infrastructure has become essential to the responsible operation of digital asset businesses.

The distinction between formation, regulatory authorisation and operational readiness is now central. Regulatory authorization, whether registration or licensing, establishes status but does not on its own demonstrate operational capability. Whether an entity is structured as an LLC or a foundation company, or authorised as a VASP, these forms provide legal personality or regulatory status, not governance in the operational sense. Policies and procedures demonstrate awareness, not implementation. Regulators and institutional counterparties increasingly expect evidence of functioning controls, documented oversight, and the practical execution of obligations. This is where regulatory infrastructure providers play their most important role.

The Cayman Islands offers a clear illustration of how this infrastructure functions in practice. The jurisdiction has moved from initial registration to licensing under its Virtual Asset Service Providers Act. This is accompanied by supervisory evaluation of controls, with thematic reviews focused on demonstrable AML/CFT controls, governance and risk‑based internal controls. Recent legislative updates, including the 2026 amendments streamlining tokenised fund structures, further reflect a shift toward practical implementation and operational clarity.

For globally distributed teams, local regulatory infrastructure providers — from AML officers to independent directors and administrators — often provide the practical means to meet these expectations. The same applies to foundation companies, which are increasingly used by DAOs and crypto projects seeking legal personality and operational continuity. Even when these structures fall outside formal regulation, institutional participants still expect governance discipline, conflict management and reliable oversight. Cayman’s digital asset ecosystem is supported by a mature network of governance, fiduciary, compliance and administrative providers who translate regulatory requirements into day‑to‑day practice, enabling entities to demonstrate functioning controls and maintain governance continuity.

The industry has long called for regulatory clarity, and while meaningful progress has been made, clarity alone does not create the conditions for appropriate compliance or operational efficiency. Operational capability does. The firms that succeed in the next phase of digital asset maturation will be those that place early emphasis on appropriate governance, financial crime controls and risk management; and the jurisdictions that thrive will be those with the infrastructure to support consistent, demonstrable implementation.

Digital assets are entering a period where the quality of execution will matter more than the ambition of policy. In that environment, regulatory infrastructure providers are becoming the quiet enablers of which firms, and which jurisdictions, are prepared for the realities of a more institutional market.

Headlines of the Week

By Francisco Rodrigues

Traditional finance and crypto are continuing to converge through tokenization and stablecoin adoption, even as regulators on both sides of the border move to tighten the rules.

• Wall Street giant DTCC plans tokenized securities platform with July pilot, October launch: The Depository Trust & Clearing Corporation, custodian of over $114 trillion in securities, will begin limited tokenized trades in July ahead of an October launch, with input from BlackRock, Goldman Sachs, JPMorgan, Anchorage and Circle.
• Crypto industry backs CLARITY Act yield compromise, pushes Senate Banking for markup: Senators Tillis and Alsobrooks released text barring stablecoin yield equivalent to a bank deposit while carving out rewards tied to “bona fide activities,” prompting Coinbase, Circle and the Blockchain Association to call for a markup.
• Tether posts $1.04 billion Q1 profit, reaches $8.23 billion reserve buffer: The USDT issuer reported $192 billion in assets against $183.5 billion in liabilities, with reserves now including about $20 billion in physical gold and $7 billion in bitcoin.
• Canada proposes ban on crypto ATMs as fraud cases mount: Ottawa’s Spring Economic Update calls for eliminating crypto ATMs nationwide, with officials citing FINTRAC findings that label the machines a “primary method” for scams and laundering.
• The $292 million crypto hack exposed DeFi’s weak spots. Here’s what must change, insiders say: Industry figures told CoinDesk the Kelp DAO exploit is a “speed bump, not a roadblock” for institutional DeFi, but argued zero-trust architectures, timelocks, stricter multi-sig controls and tighter bridge safeguards must become baseline before TradFi giants can scale onchain.

Chart of the Week

PENDLE rallies on demand for on-chain STRC yield exposure

PENDLE is up 44% over the past 11 days, coinciding with the launch of the Saturn sUSDat pool. sUSDat is the staked version of USDat — a tokenized claim on STRC’s dividend stream and price exposure. The pool has scaled to $22 million since launch, making Pendle one of the few venues to express the Strategy Stretch (STRC) trade on-chain

Listen. Read. Watch. Engage.

Looking for more? Receive the latest crypto news from coindesk.com and market updates from coindesk.com/institutions.

MIAMI, FL — Kevin O’Leary says Wall Street’s tokenization boom is mostly hype until Congress finally gives the crypto industry the rules it has been waiting for.

“Tokenization will never be adopted by institutional indexers, ever. Neither will bitcoin, which is still a fringe asset to the big guys,” O’Leary said at Consensus in Miami, arguing that large investors still see most digital assets as uninvestable without clear federal regulation.

Speaking at Consensus Miami 2026, the investor and “Shark Tank” personality argued that regulatory uncertainty is still preventing large financial firms from fully embracing blockchain-based assets.

He said the turning point will come only when the U.S. establishes a formal legal framework for digital assets. “It has to become compliant globally within the [Securities and Exchange Commission] with an actual passage of a bill,” he said. “When that occurs, it’s going to change everything.”

The comments come as Wall Street firms increasingly experiment with tokenization — the process of turning assets like stocks, bonds or funds into blockchain-based digital tokens that can trade continuously and settle instantly. Advocates argue the technology could modernize financial infrastructure by reducing settlement times and lowering costs.

But O’Leary said institutions still need legal certainty before committing significant capital.

He pointed to stablecoins as an example of how regulation can accelerate adoption. Referring to recent U.S. legislative efforts, O’Leary said stablecoins were adopted “almost immediately” once policymakers passed the GENIUS Act.

“Instead of wasting three days, we’re transacting in minutes at a fraction of the cost with full compliance and transparency,” he said, describing cross-border payments using stablecoins.

O’Leary also argued that institutional investors have sharply narrowed their focus within crypto markets. “97% of the entire value of the entire market is simply BTC and ether (ETH),” he said, adding that many smaller tokens have been “slaughtered.”

He described a growing divide between speculative crypto assets and blockchain infrastructure with real enterprise adoption.

The biggest long-term opportunity remains finding a blockchain platform that large corporations standardize around for applications such as logistics, contract management or inventory systems, according to O’Leary.

“You show me the adoption onto the platform that becomes a moat,” he said.

The investor also tied the future of blockchain and AI to infrastructure more broadly, arguing that energy and data centers may ultimately prove more valuable than the digital assets themselves.

“Power is more valuable than bitcoin,” O’Leary said.

Coinbase engineering head Erik Reppel offered a glimpse into how artificial intelligence could reshape the economics of the internet, arguing that AI agents may force a shift away from the web’s ad-driven business model.

Speaking onstage at Consensus Miami 2026, Reppel, the founder of the x402 payments protocol and head of engineering at Coinbase Developer Platform, said the internet was originally built around humans interacting with websites, not software interacting with software.

“The internet was designed for humans to use,” Reppel said. “We now live in a world where both humans and computers operate and computers operate computers.”

Today’s web economy depends heavily on advertising revenue generated when humans visit websites and view ads, according to Reppel. But AI agents, he said, bypass that system entirely.

“Agents don’t see those ads. They just ignore those ads completely,” he said.

That dynamic could push the internet toward new monetization models built around native digital payments, particularly stablecoin-powered micropayments.

“If a human visits a website, show them an ad. If an agent visits a website, charge them five cents,” Reppel said.

He framed x402, an open payments protocol built around the long-unused HTTP 402 “Payment Required” status code, as infrastructure for that future. The protocol is designed to let AI agents make automatic payments for APIs, content and digital services using crypto rails.

Reppel said the rise of autonomous AI systems, or what he called the “agentic economy,” could create a massive new market for internet-native payments. He cited estimates projecting the sector could grow to between $3 trillion and $5 trillion within four years.

The comments reflect a broader effort within the crypto industry to position stablecoins and blockchain-based payments as foundational infrastructure for AI-driven commerce.

“Agents really are the browser of the future,” he said.

Read more: AI agents are breaking web economics, but Cloudflare says x402 can help

MIAMI — The long-awaited legislation to establish U.S. regulations for the crypto markets won’t survive the Senate if it doesn’t include a contentious ethics provision that bans senior government officials from personal interests in the industry, said U.S. Senator Kirsten Gillibrand.

“There will be no one voting for this bill if we don’t have an ethics provision,” Gillibrand, a New York Democrat who has been engaged in bipartisan crypto legislation for years, said Wednesday at Consensus Miami 2026. The inclusion of that section — aimed largely at the business interests of President Donald Trump — remains one of the few major sticking points on the bill negotiation, which is coming to a head this month.

“We cannot allow members of Congress, senior administration officials, presidents or vice presidents to get rich off of these industries because of their insider status,” Gillibrand said. “It is the worst form of pay-for-play; it is the worst form of campaign finance violations; it’s a violation of the Constitution.”

The Digital Asset Market Clarity Act — the crypto industry’s top policy aim in Washington — is awaiting a necessary Senate Banking Committee hearing in order to advance to the Senate floor for a vote.

Gillibrand said the ethics negotiation needs to be resolved in the next week to get a bipartisan approval in the hearing, which is expected as soon as next week. She said the negotiators are also working on consumer protection and illicit finance elements. So far on the ethics provision, White House officials have denied that Trump’s business interests represent a conflict, and they’ve said they won’t tolerate a bill that targets him.

“We cannot let greed and corruption in Washington tear this industry down, and without that provision, that’s exactly what will happen,” Gillibrand argued.

The window for legislative action is narrowing considerably, and the needed Senate bandwidth to move the legislation will be at a premium, with about 10 weeks of Senate calendar time remaining before Congress pivots to the midterm elections.

Gillibrand predicted a final vote could happen in the first week of August, “if we’re lucky.” That would mark the last chance before Congress’ summer break.

However, in another Consensus panel, Summer Mersinger, the CEO of the Blockchain Association who served on the Commodity Futures Trading Commission, suggested a legislative window may never permanently close.

“There’s a window of opportunity, and that’s always important that you, you act when you find that window of opportunity,” she said. “But I always say that that doesn’t mean the window’s not going to open again.”

Read More: Ripple CEO Brad Garlinghouse says Clarity better than chaos as Senate hits key moment

Strategy Bitcoin Dividend Sales Signal Treasury Strategy Shift

• Strategy Bitcoin dividend sales reshape how the company manages treasury obligations through 2026.
• Michael Saylor signaled flexibility as Strategy weighs bitcoin sales to support STRC dividends.
• Investors now track Strategy Bitcoin dividend sales as market expectations shift after earnings.

STRC Growth Changes Capital Management Options

Strategy launched STRC as part of its broader digital credit framework. The preferred stock has already raised $8.5 billion since launch. Company executives said this capital structure supports long-term bitcoin accumulation while creating new income obligations.

Michael Saylor noted that bitcoin would need to appreciate by 2.3% annually for current holdings to cover dividend obligations indefinitely without requiring sales of common stock. This benchmark now shapes how analysts assess Strategy Bitcoin dividend sales.

Saylor also said the company could choose to sell bitcoin directly if market conditions support that decision. He added that limited sales could help demonstrate operational flexibility. This statement moved Strategy Bitcoin dividend sales from theory to a practical possibility.

Shift From Never Sell to Strategic Flexibility

For years, Strategy maintained a clear message that it would not sell bitcoin. That position helped define investor expectations around the company’s treasury model. The latest comments suggest management now prioritizes balance sheet efficiency over fixed public commitments.

Chief Executive Officer Phong Le reinforced this approach. He stated that Strategy intends to remain a net bitcoin accumulator while using selective sales when they benefit the company. This clarification placed Strategy Bitcoin dividend sales within a broader financial strategy rather than a reversal of conviction.

The company currently holds 818,334 bitcoin, equal to about 3.9% of total supply. Its holdings remain among the largest corporate bitcoin reserves globally.

What Comes Next

Prediction markets reacted quickly after the earnings call. Expectations for Strategy Bitcoin dividend sales before the end of 2026 rose sharply within 24 hours of Saylor’s remarks.

Strategy also reported a $14.5 billion operating loss for the first quarter, largely due to bitcoin mark-to-market adjustments. Despite that result, the company increased bitcoin-per-share by 18% year over year.

Investors now watch upcoming shareholder decisions and future treasury updates closely. Any action involving Strategy Bitcoin dividend sales could influence broader sentiment around corporate bitcoin treasury models.

NOW: MSTR CEO Phong Le said at least five times during today’s earnings call that the company is open to selling Bitcoin if it benefits the business, such as for tax advantages or to increase Bitcoin per share. pic.twitter.com/ZsTeuFTkRK

— Bitcoin News (@BitcoinNewsCom) May 5, 2026

Nine months ago, Congress passed the GENIUS Act, establishing the first federal regulatory framework for payment stablecoins. The results have been demonstrative: the stablecoin market grew 49% in 2025, reaching $306 billion by year’s end. Circle, Ripple and other digital asset companies received provisional national banking charters from the OCC. Institutional capital that had been sitting on the sidelines moved into these markets. Recruiters, who a year earlier described an industry in which “every protocol foundation was bailing to the Caymans [tradingview.com],” now report that 90% of senior crypto leadership searches are U.S.-based. Clear rules produced exactly what their advocates said they would: investment, institutional engagement and onshoring of activity that had been migrating elsewhere.

That outcome sharpens the task before the Senate Banking Committee: applying a clear framework to the broader digital asset market. The crypto market is currently worth $3.2 trillion. Nearly 70 million Americans, one in five, own crypto. This is a significant and growing market.

The GENIUS Act addressed payment stablecoins. The CLARITY Act sets the rules for everything else: registration and oversight of trading venues and intermediaries, jurisdictional lines between the SEC and CFTC, disclosure and compliance across the token lifecycle, and the protection of non-custodial technologies under U.S. law.

These are the foundational rules that determine whether the next generation of financial infrastructure gets built here in America – or elsewhere. Within the last 10 years, the number of developers in the U.S. dropped by 51%. Nearly 90% of global CEX volume is offshore. America needs foundational rules because without them, the same dynamic that preceded GENIUS would apply to the rest of the market. Trading activity, protocol development and institutional engagement in digital asset markets will continue to flow toward jurisdictions that have already provided the regulatory clarity Congress has yet to deliver. Other jurisdictions, including the EU, Singapore, and the UAE, have already enacted market structure regimes and are providing the regulatory clarity yet to be delivered.

The Senate Banking Committee, alongside offices on both sides of the aisle, has spent the better part of two years building toward this moment. Senators Tillis and Alsobrooks deserve credit for resolving the stablecoin yield question in a bipartisan manner, the single most contested provision in months of negotiations. The compromise substantially expands the scope of the prohibition framework in GENIUS across digital asset market participants. The digital assets industry made significant concessions. The resulting approach is restrictive in several respects – ultimately, the broader and most critical objective remains advancing comprehensive market structure legislation, and this agreement moves that process forward.

Nothing is perfect in this process, and legislating is complex, but it’s a result reached through the kind of sustained bipartisan engagement that serious legislation requires. Chairman Scott has managed a difficult process across deep disagreements between the banking industry and the digital asset sector, and the Committee is closer to a durable outcome than it has been at any point in that process.

The window to act is narrow. The legislative calendar leaves limited time to move a bill of this scope through committee, floor consideration and final passage. A markup in the near term is necessary to keep this effort on track and ensure there is a viable path to the President’s desk before year-end.

The CLARITY Act passed the House with 294 votes. That breadth of bipartisan support reflects genuine congressional judgment that clear rules for digital asset markets serve the public interest. The Banking Committee should schedule a markup as soon as possible. The case for moving forward has never been stronger.

The United States should finally establish the clear, durable, fit-for-purpose framework this market – and this country – needs. America has long led the world because it has embraced innovation, markets and the rule of law. Now is the time to do so again.