Ongoing discussions over court size

Student-loan infrastructure startup Pencil Finance says it has completed a fully onchain lending cycle worth $1 million, financing education borrowers in Southeast Asia and repaying investors via smart-contract-recorded cash flows.

In a Thursday announcement shared with Cointelegraph, Pencil described the milestone as its first “fully onchain” student loan cycle—one where the protocol deployed $1 million of lender capital on-chain and borrowers’ repayments flowed back to funders through a structured yield distribution.

Key takeaways

• Pencil Finance completed a $1 million student-loan cycle recorded on-chain, marking its first fully onchain deployment for this use case.
• The July 2025 bundle was funded by Animoca Brands, Open Campus, and New Campus, with senior fixed returns and a junior variable tranche tied to first-loss risk.
• The loans supported around 6,600 students across 118 schools and universities in Southeast Asia, with about 1,050 receiving direct funding.
• Pencil says the majority of borrowers were women (50%) and that 93% came from lower-income households—targeting students underserved by traditional lending.
• The announcement highlights growing interest in tokenized real-world assets (RWAs) for lending, including examples outside education.

How Pencil’s first onchain loan cycle worked

Pencil Finance said the protocol launched the $1 million loan cycle as an onchain bundle that functioned like a lender-to-borrower pipeline. Instead of keeping core loan accounting off-chain, the platform recorded the cycle on a blockchain network, where capital was deployed by lenders and later repaid by borrowers to distribute yield back to funders.

The project framed this as a proof point for transparency in credit: because the lending cycle is executed and tracked on-chain, investors and participants can follow the protocol’s operations through recorded transactions rather than relying entirely on traditional reporting channels.

What the tranche structure covered

According to the announcement, the $1 million bundle was funded in July 2025 by Animoca Brands, Open Campus, and New Campus. Pencil said the financing was organized into two tranches with different risk and return profiles.

The senior tranche offered fixed returns, while the junior tranche carried variable returns and bore first-loss risk. This type of waterfall structure is commonly used in tokenized and structured finance to allocate losses first to the riskiest portion of capital, potentially improving the risk profile of senior participants—while still exposing junior investors to performance variability.

Scale, eligibility, and who received support

Pencil Finance said the onchain student loan cycle financed approximately 6,600 students across 118 schools and universities in Southeast Asia. The company noted that around 1,050 of those students received direct funding under the cycle.

As for borrower demographics, Pencil reported that 50% of funded students were female and that 93% came from lower-income households. The company positioned these figures as evidence that the program is reaching applicants who are often overlooked by conventional lending, where credit access can be constrained by documentation requirements, limited credit history, or geographic and income barriers.

Notably, Pencil claimed the project is the first-ever “fully onchain” lending cycle financing student loans with transparent recording on a blockchain network—an emphasis that matters because tokenized RWA lending is still frequently debated on how transparent and auditable it truly is compared with established financial processes.

Why tokenized loans are gaining attention

Tokenized RWAs are increasingly being used to issue or collateralize loans, and Pencil’s announcement fits into a broader trend of trying to bring more of the lending lifecycle on-chain. The education-focused milestone also echoes how other markets are experimenting with onchain representations of real-world exposures.

For example, earlier coverage from Cointelegraph noted that in July, Brazil’s B3 stock exchange issued a 100,000 Brazilian reais (about $19,600) loan secured by 10 tokenized cows. In that structure, each cow was linked to a unique digital token tied to an encrypted digital identity, while AI-powered smart collars from agriculture tech company Cowmed monitored animal health.

While student loans and farm-asset-backed credit are fundamentally different, both examples point to the same underlying goal: encode key parts of credit risk and reporting into tokenized systems to improve traceability and potentially reduce the friction between traditional assets and onchain capital.

What to watch next

With Pencil Finance now pointing to a completed first fully onchain student loan cycle, the next questions for readers and potential participants are whether subsequent cycles sustain repayment performance at scale and how tranche design evolves as more borrowers—especially underserved groups—enter the system.

Kraken’s parent company, Payward, has signed a partnership with SoFi aimed at linking Kraken’s exchange infrastructure with SoFi’s dollar settlement rails and bringing the SoFiUSD stablecoin into Kraken’s ecosystem. The deal connects SoFi’s 24/7 US dollar settlement network with Kraken Prime, Kraken’s institutional-grade execution venue.

Under the collaboration, SoFi will route eligible digital-asset orders through Kraken Prime’s smart order routing to source liquidity across multiple trading venues. Payward, meanwhile, will join SoFi’s SoFi Exchange Network (SEN) and gain access to SoFi’s business banking services, with the companies saying additional custody services could be added as the relationship expands.

Key takeaways

• SoFi plans to use Kraken Prime as an additional liquidity source by routing digital-asset orders through Kraken’s smart order routing.
• Payward will connect to SoFi’s SoFi Exchange Network (SEN) for access to round-the-clock US dollar settlement.
• The partnership introduces SoFiUSD to Kraken, with the stablecoin issued by SoFi Bank and backed by reserves held in cash and short-term US Treasurys.
• Both firms indicated custody-related services could be incorporated later, suggesting an expanding scope beyond execution and settlement.
• The move fits Payward and Kraken’s broader strategy to build deeper ties with traditional finance and tokenized markets.

How the Kraken–SoFi link is designed

Kraken described the collaboration in a Thursday blog post, explaining that SoFi will route digital asset orders through Kraken Prime. Kraken Prime uses smart order routing to assess pricing and market depth across supported venues in real time, then send orders to the venue most likely to achieve the best fill.

Kraken said this matters because it helps SoFi avoid relying on a single order book for execution. With access to liquidity across multiple venues, SoFi can potentially improve execution quality—especially when markets are fragmented or liquidity conditions change quickly.

The partnership also extends to settlement. Kraken’s institutional and business clients will be able to use SEN, according to the companies, enabling US dollar settlement on a 24/7 basis. For participants used to digital-asset trading hours, around-the-clock settlement is a practical improvement: it reduces downtime between trading and funding/settlement cycles and can streamline cross-platform operations.

SoFiUSD arrives at Kraken

A central element of the agreement is the stablecoin itself. SoFiUSD is issued by SoFi Bank and is described as a dollar-backed stablecoin launched in 2026 for payments and settlement. The companies say SoFiUSD reserves are held in cash and short-term US Treasurys.

By bringing SoFiUSD to Kraken, the partnership effectively broadens the set of dollar-denominated settlement and payment options available to traders and institutions interacting with Kraken’s venues. While the article does not specify which custody or issuance workflows will be added first, the direction is clear: SoFiUSD is positioned as a key bridge asset between the banking-oriented settlement network and crypto trading infrastructure.

Kraken also indicated that qualified custody services could be added as the partnership matures. That point is important for institutional users, because custody and settlement capabilities are often treated as linked requirements in digital-asset operations—especially for firms that need compliance-aligned processes across multiple stages of trading and asset handling.

SoFi’s customer reach meets Kraken’s institutional rails

SoFi already has a large consumer base and offers crypto trading through its app, and Kraken Prime is presented as an additional path for sourcing liquidity rather than a complete replacement of existing execution methods. The companies said SoFi routes eligible trades through Kraken Prime, giving SoFi access to liquidity beyond any single execution venue.

Kraken’s role in SEN is similarly framed as an infrastructure upgrade for clients. By connecting to the SoFi Exchange Network, Kraken and its institutional and business customers can potentially take advantage of round-the-clock US dollar settlement through a banking-linked network—an increasingly important capability as more platforms seek to reduce operational friction in digital-asset markets.

From an investor and operator perspective, the practical value of such connectivity is less about headline integration and more about what changes in daily operations: faster and more continuous settlement options, the ability to execute orders against deeper liquidity pools, and a stablecoin that is explicitly designed for payments and settlement.

Part of a wider push beyond pure crypto

This partnership follows other efforts by Payward and Kraken to broaden their connections to traditional finance. Earlier reporting noted that London Stock Exchange Group reportedly partnered with Payward to offer tokenized versions of leading UK equities through LSE 24, a new 24/5 trading venue set to launch in 2027. Separately, Kraken has added round-the-clock exposure to the S&P 500 through its funded trading program, with commodities expected to follow.

Kraken has also expanded into tokenized public markets via xStocks, the tokenized equities platform developed by Backed Finance, which Kraken acquired in early 2026. Kraken has used xStocks to provide eligible users exposure to share-linked offerings tied to SpaceX and Jersey Mike’s IPO activity, in some cases including direct share allocations.

In the background is Payward’s plan to become a public company. The company reportedly submitted a draft registration statement to the US Securities and Exchange Commission in November 2025, though reports indicate the earliest possible listing timing has been pushed to the second quarter of 2027.

Taken together, the Kraken–SoFi deal reinforces a theme: rather than treating stablecoins, execution, and settlement as separate silos, Payward is building bridges between banking-grade settlement networks and crypto trading infrastructure. If that strategy continues, stablecoins like SoFiUSD and networks like SEN could become more central to how institutions operationalize digital-asset trading—particularly for firms that want 24/7 dollar rails aligned with regulated financial workflows.

Going forward, readers should watch how quickly the partnership expands into additional custody services and how widely Kraken’s institutional clients adopt SEN for continuous US dollar settlement. The next question for the market is whether integrations of this kind—linking bank-adjacent settlement, smart order execution, and dollar-backed stablecoins—become the default operating model for large exchanges and financial platforms.

Dubai’s regulator VARA (Virtual Assets Regulatory Authority) has signed a Memorandum of Understanding (MoU) with Securitize, a tokenization platform backed by BlackRock, in a move aimed at accelerating regulated tokenization activity in the United Arab Emirates.

According to a Thursday announcement shared with Cointelegraph, the MoU sets out a collaboration framework designed to support tokenization and digital asset infrastructure in Dubai, encourage institutional participation, and help shape how tokenized financial products can operate within the emirate’s regulatory environment.

Key takeaways

• VARA and Securitize have agreed to work together on a regulatory-and-industry collaboration framework for tokenization in Dubai.
• The MoU is positioned as a broad cooperation model rather than the announcement of a specific tokenized product or technology stack.
• Dubai continues to position tokenization as regulated financial infrastructure, with VARA pointing to its regulatory “perspective” as a key contribution.
• Demand for tokenized real-world assets (RWAs) has increased sharply in recent weeks, with RWA.xyz reporting rising holder counts and total tokenized asset value.
• Dubai’s efforts arrive as other market operators—such as the London Stock Exchange’s reported partnership with Kraken—push tokenized securities toward more established trading schedules.

VARA and Securitize target regulated tokenization in Dubai

Under the MoU, VARA and Securitize said they aim to support regulated tokenization initiatives across Dubai and the broader UAE. The agreement is also intended to cover tokenization projects initiated by VARA, with a specific focus on understanding how tokenized financial products should function inside Dubai’s existing regulatory framework.

When asked by Cointelegraph about the MoU’s infrastructure objectives, a VARA spokesperson said the effort is meant to establish a collaboration structure between the two organizations rather than to deliver a particular technical implementation or a named product.

“The intention is to combine VARA’s regulatory perspective with Securitize’s experience in institutional tokenisation to identify where collaboration can help support the development of trusted, regulated tokenised markets in Dubai.”

The spokesperson added that no concrete projects will be announced “at this stage.” Still, the agreement creates a formal channel for cooperation that VARA said is intended to “support relevant tokenisation initiatives in Dubai.”

Tokenization shifts from concept to “mainstream” infrastructure

Dubai’s push for tokenization is being framed not as an experimental niche, but as a step toward more conventional financial-market infrastructure. Carlos Domingo, co-founder and CEO of Securitize, described Dubai as among the most “forward-looking jurisdictions” for digital asset innovation and emphasized the importance of regulatory collaboration as tokenization matures.

Domingo’s remarks reflected a broader industry narrative: tokenization is increasingly discussed as a pathway for traditional finance to gain on-chain settlement and programmable workflows, but only if regulators can provide clear operating boundaries.

That theme is reinforced by VARA’s licensing activity. Earlier in July, VARA granted its 50th virtual asset service provider (VASP) license to Tribe Tokenisation FZE—an example of how the regulator has been expanding the number of licensed participants in the ecosystem. While the MoU with Securitize does not announce specific licensed activity, it suggests that regulators are looking to institutional-grade platforms as partners in building “trusted” markets.

Rising RWA adoption meets institutional platform scale

Beyond Dubai-specific policy developments, the MoU arrives amid a broader acceleration in tokenized real-world assets. Data provider RWA.xyz reports that the total number of RWA token holders rose 103% over the prior 30 days to 3.2 million. Over the same period, it said the total value of tokenized assets increased by 2% to $38.5 billion.

Those figures help explain why institutional platforms are increasingly positioning tokenization as a serious revenue and infrastructure layer rather than a purely experimental technology. Securitize is described in the announcement as the world’s largest tokenization platform by tokenized assets under management (AUM), with $4.9 billion. Ondo Finance is reported as second, with $3.5 billion.

For investors and market participants, the practical implication is that regulatory discussions are increasingly happening alongside measurable growth in both participation and capital in tokenized asset categories—particularly RWAs, where compliance and asset governance are central concerns.

Dubai’s move mirrors broader tokenized securities momentum

Dubai’s MoU also lands as tokenization continues to spread across market structures in other jurisdictions. Days earlier, Cointelegraph reported that the London Stock Exchange reportedly partnered with crypto exchange Kraken to launch tokenized stock trading on the operator’s night-time trading venue, aiming to offer 24/5 trading.

While the Dubai agreement is focused on regulated tokenization infrastructure and the operation of tokenized financial products under VARA’s oversight, the parallel is clear: both developments signal that tokenization is moving from issuance and experimentation toward distribution and market access—where regulatory fit, liquidity, and operational reliability become decisive.

As VARA and Securitize begin working under the MoU framework, the key next question for participants will be whether the collaboration produces specific pilot programs or licensing pathways—and how Dubai’s regulatory approach will translate tokenization activity into durable market infrastructure as demand for RWAs continues to grow.

A case involving a supposed “lost fortune” in Bitcoin has become a cautionary tale about how often crypto recovery isn’t just a technical challenge—it can also be a problem of scams, misunderstandings, and missing context about what exactly is stored in a wallet.

In 2021, Chris Brooks, founder and chief executive of Crypto Asset Recovery, was contacted by a client identified as “Rusty.” Rusty and two other men claimed they had won roughly 5,000 Bitcoin in a court case (worth about $53 million at the time) and said they could withdraw up to $300,000 per week. Brooks and his son traveled to help crack the wallet, only to find that the information provided pointed in a very different direction.

Key takeaways

• Crypto “recovery” often means reconstructing access information (seeds, passwords, or missing words), not recovering funds from the blockchain.
• A correct seed phrase can still lead users to think funds are gone if a passphrase was forgotten—wrong passphrases may not trigger errors.
• If a seed is truly destroyed and truly random, there is no practical recovery path—self-custody has a hard limit.
• Recovery firms can be targeted by scammers, and choosing a provider is itself a security decision.
• Unsourced promises, upfront payments, and pressure to move quickly or through nonsecure channels are major red flags.

When “millions in crypto” turns out to be something else

Brooks recounted that Rusty initially presented what he described as a Bitcoin address containing about $53 million. During the first call, Brooks says he realized something was off when Rusty showed another balance—presented as about $1 billion in ETH.

Rusty then drove Brooks and his son to a strip mall office and handed them notebooks containing dozens of recovery seeds. The work involved opening wallets throughout the day, but Brooks says they ultimately found only around $10 in Bitcoin.

The record of what the notebooks represented—and whether they corresponded to any of the claimed balances—was never clarified. Brooks was also not reimbursed for travel costs. With the benefit of hindsight, he suspects Rusty was likely misled by scammers who convinced him he had a large crypto holding that didn’t exist.

Brooks described the episode as an early lesson for his business: sometimes crypto is lost, sometimes the wallet or password is lost, but sometimes the money was never there to begin with.

What wallet recovery specialists actually do

For firms that focus on recovery, “lost crypto” can mean several distinct scenarios. According to Bruno Krauss, co-founder and chief technical officer at recovery firm ReWallet, specialists generally aren’t “undoing” transactions on-chain. Instead, they aim to regain the information required to access an existing wallet—information that may be incomplete, forgotten, or corrupted.

In many cases, missing access material can be reconstructed. Krauss explained that Bitcoin’s BIP39 standard uses a list of 2,048 words, so if someone remembers most of the seed phrase, recovery work may involve systematically testing the remaining unknown words. The fewer elements missing, the smaller the search space becomes.

Password recovery can follow similar logic, including reconstructing likely characters when users recall patterns or context around how they created a password.

Krauss also described a behavioral approach: understanding how individuals tend to choose secrets. In one example, a customer believed her password used her children’s names. Eventually, she realized the password was actually tied to a phone number connected to a local delivery service—an association she remembered when she thought about when a package was delivered to a store.

Passphrases: the part that can hide funds without any warning

Even when users have the correct seed phrase, forgetting a passphrase can effectively make funds inaccessible. Tom Bennet, a Bitcoin educator who has studied wallet security, said that passphrases add a layer of information on top of the seed: enter the wrong passphrase and you can end up with another valid wallet rather than an explicit error.

“A wrong passphrase doesn’t throw an error; it succeeds and shows you a zero balance.”

That means users may reasonably conclude their Bitcoin has vanished when the underlying issue is simply that they entered the wrong passphrase. Bennet also argued that passphrases do not provide the same built-in protections as seed phrases—no fixed word list and no checksum equivalent. If the passphrase was sufficiently random and is fully forgotten, recovery can be effectively impossible.

There are also practical nuances with hardware wallets. Even if a device is broken, the keys may still be restorable if the seed backup survives. In other words, recovery specialists may not need the original hardware, but they do need enough information to reconstruct access to the keys.

Recovery can even involve repairing mistakes. Brooks said the firm has been contracted to crack more than 3,000 wallets for around 1,500 people, and that it has cracked passwords for about 63% of them. Some cases may depend on understanding what chain assets were sent to and whether the receiving wallet is under the client’s control.

The hard limit: when randomness is gone, recovery may be impossible

While many cases are solvable in some form, there is a boundary beyond which recovery becomes unrealistic. Bennet said that if a wallet seed is truly random and is completely lost, the Bitcoin is gone.

Bitcoin’s self-custody model is built around that trade-off: there is no centralized account recovery system, no bank-style mechanism to verify identity and restore access. If the information needed to derive keys is irrecoverably destroyed—and the wallet containing those keys is inaccessible—then no recovery service can help.

Lucien Bourdon, a Bitcoin analyst at hardware wallet maker Trezor, put it bluntly: if both the backup and the wallet are lost or inaccessible, “no recovery company can help.” He warned that if it were feasible to recover such wallets, the concept of self-custody would be fundamentally compromised.

That said, technical reality sometimes creates unusual opportunities. In the recent Coldcard hardware wallet context, for example, a firmware bug was reported to have weakened seed randomness on some wallets, making seeds brute-forceable without physical access—an example of how hardware and implementation flaws can change what’s recoverable. Broader historical issues with weak randomness were also cited as not being new.

Still, Krauss emphasized that specialists sometimes find technical “edge cases,” such as recoveries enabled by old wallet software, corrupted files, poorly generated passwords, or hardware vulnerabilities. But those are exceptions; the baseline remains that truly destroyed, truly random secrets can’t be brute-forced in practice.

Recovery as a security risk: scammers can move first

The Rusty story highlights a difficult irony: the information needed to recover someone else’s funds is the same information that can control those funds. That means selecting a recovery specialist is not just an administrative decision—it’s part of the security model.

Bourdon said users should do due diligence. He recommended looking for firms with a verifiable track record and reviews tied to actual customers. He also advised confirming that the provider charges on success rather than requesting money upfront, and to move funds to a new wallet with a fresh backup after recovery is completed.

He further warned users to be skeptical of unsolicited messages claiming someone can recover their crypto. Krauss echoed this concern, pointing to red flags such as pressure to communicate via WhatsApp, contact from personal email addresses, demands for upfront payments, and requests to open accounts on an exchange.

Percentage-based fees tied to recovered assets are common in the industry, but Brooks’ account makes clear why upfront payment promises should trigger alarm bells—especially when the “recovery” story is built around inflated balances.

What users should focus on before reaching out

After moving away from in-person processing for high-sensitivity cases, Brooks said Crypto Asset Recovery now handles investigations remotely and processes sensitive wallet information through automated and air-gapped systems. He also noted that many of the cracked wallets involved far smaller balances than clients expect: around 71% contained less than $100, and the company does not charge for asset recovery below that threshold.

In Brooks’ view, the simplest way to avoid needing recovery services at all is understanding what a recovery seed is and why it matters—because the biggest vulnerabilities often come from human gaps rather than cryptographic weaknesses.

Going forward, readers should watch for more public discussions of wallet randomness and hardware implementation issues, as those technical details are often what determine whether “recovery” is feasible at all—or whether the most important step is preventing loss in the first place.

Hyperliquid has introduced a preliminary HIP-3 testnet upgrade that lets independent deployment teams control access to perpetual futures markets through deployer-managed on-chain allowlists.

Hyperliquid co-founder Jeffrey Yan said in a testnet proposal that deployers will be able to create permissioned markets and manage their participant lists without handing access decisions to Hyperliquid’s core development team.

Hyperliquid HIP-3 adds optional on-chain allowlists

Under the preliminary design, a deployer can maintain an on-chain list of approved participants or appoint a sub-deployer to handle access. Market operators that do not need permissioning can continue using the existing HIP-3 structure without changing how their markets work.

Hyperliquid has made the first version available on the testnet, where developers can examine the design before any production release. Yan said the specifications remain preliminary, allowing the team to adjust the system after receiving technical feedback.

HIP-3 already allows outside teams to deploy perpetual futures markets on HyperCore without seeking approval from Hyperliquid’s core developers. Each deployer selects the assets offered through its market and controls several operating terms, including oracle inputs, leverage limits, and fees.

Responsibility also remains with the deployment team. Independent operators manage their markets, oversee settlement, and address problems tied to the products they list, while Hyperliquid supplies the underlying blockchain and trading infrastructure.

Adding permissioning extends the tools available to the same operators rather than transferring market control to Hyperliquid. A team could use an allowlist when its business model, legal obligations, or internal policies require it to limit participation, while another deployer could keep its market open under the present framework.

The design also separates infrastructure governance from market-level access. Hyperliquid would maintain the underlying network, but each participating team would decide whether to activate an allowlist and who qualifies to enter its deployment.

Independent deployers retain operational responsibility

HIP-3 was built to support markets launched by third parties instead of limiting product creation to Hyperliquid’s own team. Deployers can list perpetual contracts linked to crypto assets and other reference markets, provided they manage the technical and operational duties attached to their products.

A perpetual futures contract does not carry a fixed expiry date. Recurring funding payments help keep its price close to the referenced asset, while traders can maintain a position as long as they meet the applicable margin requirements.

Through HIP-3, independent teams can determine how those contracts are structured. Oracle selection affects the reference price used by the market, leverage rules determine how much exposure traders can take, and fee settings establish what participants pay for trading.

Permissioned deployments would add participant screening to that list of controls. Hyperliquid has not said that all HIP-3 operators must use the feature, and the testnet release does not change existing markets automatically.

Such separation is consistent with Hyperliquid’s description of itself as a neutral infrastructure provider rather than the operator of every market built on its systems. Deployers remain responsible for the products they introduce and the access rules they choose to apply.

Operational control can also leave deployment teams responsible for failures linked to their own market configuration. Oracle quality, leverage settings, settlement procedures and access management sit with the operator rather than Hyperliquid’s central development group under the structure described by Yan.

During the testnet stage, participating developers can assess how allowlists interact with trading accounts, market permissions and sub-deployer roles. Hyperliquid has not announced a date for moving the feature to mainnet, and feedback could alter the final specifications.

Permissioned markets could support compliance controls

On-chain allowlists provide a technical method for restricting participation, but the proposal does not state that activating one makes a deployment compliant with any particular jurisdiction. Legal obligations depend on the assets, customers, operator, and countries involved, while an allowlist only controls which blockchain accounts can enter a market.

For U.S.-facing operators, derivatives access is generally tied to Commodity Futures Trading Commission rules and the licenses held by the venue, clearing organization, and intermediary. Permissioning software by itself does not replace registration, customer-protection, reporting, or market-surveillance requirements imposed by the regulator.

In July, the Hyperliquid Policy Center and Phantom requested tailored rules for decentralized trading systems. As crypto.news reported, the groups argued that software developers and non-custodial wallet providers should not automatically face the same registration duties as traditional financial intermediaries that control customer assets.

An Aug. 26 filing from the Hyperliquid Policy Center and trade[XYZ] later proposed energy perpetuals tied to West Texas Intermediate crude, Brent crude, and Henry Hub natural gas. The filing said trade[XYZ] had operated third-party perpetual markets on Hyperliquid since October 2025 and recorded more than $500 billion in cumulative volume across several asset classes.

According to the filing, any regulated U.S. operator would still need to comply with CFTC rules covering customer protection, market integrity and recordkeeping. The groups also proposed asset-specific leverage limits, plain-language funding disclosures and controls addressing benchmark reliability and manipulation risks.

The CFTC has not approved the requested energy products. Its review covers price reliability, surveillance, position limits, margin, clearing, and the possible effects of continuous derivatives trading on physical commodity markets.

U.S. perpetual futures plans require regulatory clearance

Separate discussions involving Hyperliquid Labs and Kraken parent Payward could place selected crypto perpetual futures on Bitnomial, a regulated U.S. derivatives exchange. Payward has presented the proposed structure to the CFTC, according to the supplied report, but no authorization has been confirmed.

Under the discussed arrangement, eligible Bitnomial customers could trade selected crypto-linked futures using Hyperliquid technology. Bitnomial would provide the regulated venue, while the proposed technical and operating roles would depend on the final structure accepted by the companies and the CFTC.

Payward already owns Bitnomial, which holds U.S. exchange, clearinghouse, and brokerage licenses. Kraken launched regulated perpetuals for eligible American clients through Bitnomial in June, allowing users to manage spot, margin, conventional futures, and perpetual contracts from a Kraken Pro account.

The proposed Hyperliquid arrangement concerns selected contracts using its technology and remains distinct from Kraken’s existing Bitnomial products. Any launch would depend on the CFTC’s assessment of the contracts, market structure and safeguards presented by Payward.

A separate legal dispute could also affect how such products reach American customers. CME Group has challenged the CFTC’s treatment of perpetual contracts, arguing that they should be governed as swaps under the Dodd-Frank Act rather than listed as ordinary futures.

The perpetuals classification dispute began after the CFTC cleared Kalshi’s Bitcoin perpetual contract in May. CME’s position would place the products under a different regulatory framework, while the CFTC has argued that federal law does not require a futures contract to carry a fixed expiry date.

Payward’s proposal involving Hyperliquid technology remains before the CFTC, with no confirmed launch date, approved contract list, or final eligibility requirements for Bitnomial customers.

Privacy coins are gaining a place in regulated investment markets even as direct access to their underlying assets becomes harder. Grayscale’s Zcash ETF now trades on NYSE Arca, while major centralized exchanges have reduced support for Monero and other privacy-focused cryptocurrencies. THORChain’s latest upgrade shows how decentralized infrastructure could help close that access gap.

Privacy is reaching Wall Street as exchange access shrinks

Privacy in crypto is moving in two directions at once.

On one side, it is entering the financial mainstream. Grayscale’s Zcash ETF, ZCSH, began trading on NYSE Arca on Aug. 25. Grayscale described it as the first exchange-traded product to offer spot exposure to Zcash (ZEC).

The fund gives US investors a way to gain ZEC exposure through a regular brokerage account. They do not need to open a crypto exchange account, manage private keys, or hold the asset in a personal wallet.

On the other hand, directly buying, selling, and moving privacy coins has become more difficult in several markets. Centralized exchanges have removed assets or restricted access as regulators apply tighter anti-money-laundering standards.

The contradiction is hard to miss. Wall Street can now package exposure to a privacy-focused asset inside a regulated fund, while parts of the crypto market are becoming less willing or less able to support the underlying coins.

THORChain’s v3.20 upgrade matters within that divide. The release laid technical groundwork for native Monero (XMR) and Zcash swaps alongside assets such as Bitcoin (BTC), Ethereum (ETH) and stablecoins.

However, THORChain said after the upgrade that the Monero and Zcash rollout had been delayed while contributors focused on network stability. The protocol’s interface for supported cross-chain trades is available through its native swap platform, with XMR and ZEC access dependent on their final activation.

Monero delistings show the cost of centralized access

Monero provides the clearest example of how a permissionless cryptocurrency can remain operational while becoming harder to reach.

Binance removed XMR in February 2024, while OKX also ended support for Monero trading pairs. Kraken later stopped XMR trading and deposits for customers in the European Economic Area, citing regulatory changes.

Those decisions did not shut down Monero. The blockchain continued processing transactions, and users could still send XMR between compatible wallets. What changed was access to the services that many people use to enter or leave the market.

Monero is private by default. Its design conceals the sender, receiver, and transaction amount. Supporters see those protections as the digital equivalent of the privacy available when paying with physical cash.

The same design creates problems for centralized exchanges responsible for customer checks, transaction monitoring, and anti-money-laundering controls. Exchanges may struggle to collect the information expected by regulators when transaction details are hidden at the protocol level.

Europe is making that conflict more direct. The European Union’s Anti-Money Laundering Regulation addresses crypto accounts that allow transactions to be anonymized or made harder to trace, including through “anonymity-enhancing coins.”

The regulation is scheduled to apply from July 2027. Its provisions will prevent crypto-asset service providers from maintaining anonymous accounts or accounts that allow transaction obfuscation through such assets.

The US has not introduced an identical nationwide prohibition on privacy-coin trading. Still, limited support from large exchanges means American users may face fewer options than holders of more widely listed assets. Grayscale’s ZCSH provides regulated price exposure to Zcash, but owning an ETF share is not the same as holding ZEC or using its privacy features on-chain.

THORChain targets the missing bridge between privacy coins and crypto

A blockchain can remain permissionless at the protocol level while becoming difficult to use in practice.

Someone may still receive and send XMR through the Monero network. The larger problem appears when that person wants to move from XMR into Bitcoin, Ethereum, or a stablecoin without using a centralized service that supports both sides of the trade.

Native cross-chain liquidity offers another route. THORChain is designed to exchange assets across their original blockchains instead of requiring users to move wrapped representations onto a separate network.

Under the planned privacy-coin integrations, users would be able to move between native XMR or ZEC and supported crypto assets without first depositing their funds with a centralized exchange. They would not need to create an exchange account or surrender custody for the trade.

THORChain had already tested native Monero swaps before v3.20. As crypto.news reported in June, the protocol said XMR swaps were working from end to end in testing and that Zcash support would follow.

The delay announced after v3.20 shows that technical preparation does not guarantee immediate public availability. Cross-chain systems must manage separate networks, liquidity pools, and security risks, while privacy-focused assets can add further operational and regulatory questions.

THORChain said the delayed rollout would give contributors more time to prepare the Monero and Zcash integrations. Native swaps can reduce reliance on centralized intermediaries, although users must still consider liquidity, network, and implementation risks.

Zcash exposes the market’s privacy contradiction

Zcash makes the split between regulated investment access and on-chain privacy even clearer.

Unlike Monero, Zcash allows users to choose between transparent and shielded transactions. According to the project’s documentation, transparent addresses expose transaction information publicly, while shielded addresses are designed to protect financial details.

Grayscale’s ETF does not give investors access to either transaction type. ZCSH holds ZEC to track the asset’s market value, while investors buy and sell fund shares through a securities exchange.

The product therefore brings the economics of a privacy coin into a regulated US investment structure without giving shareholders its underlying privacy functions. Grayscale’s earlier filings also indicated that the fund would use transparent custody rather than shielded addresses.

For investors, that distinction matters. ZCSH offers price exposure and brokerage convenience, not private payments or direct participation in the Zcash network.

The ETF’s arrival still represents a notable change in how traditional finance treats privacy-focused assets. Crypto.news previously reported that Grayscale’s conversion followed an SEC filing process that began in May. The launch placed ZEC beside other crypto assets available through regulated US exchange-traded products.

At the same time, exchange delistings show that regulatory acceptance is not uniform. Authorities and financial firms may permit a transparent investment vehicle tied to a privacy coin while remaining uncomfortable with direct access to its transaction features.

Decentralized access does not remove every trade-off

THORChain’s planned XMR and ZEC support sits between those two markets.

Version 3.20 also restored support for Solana, Base, and BNB and introduced Protocol-Owned Liquidity and a Stable Reserve. Yet the privacy-coin integrations are more revealing because they address an access problem created outside the underlying blockchains.

Centralized exchanges offer customer support, fiat payment channels, and account protections that decentralized protocols may not provide. They also remain responsible for meeting the laws of every jurisdiction in which they operate.

Decentralized systems remove some of those intermediaries, but they place more responsibility on users. A person making a native swap must manage a compatible wallet, verify addresses, and understand that transactions may not be reversible. Liquidity and execution prices can also differ from those available on a large exchange.

Regulatory questions will remain even if the protocol itself does not require an account. Users are still responsible for following the laws, reporting rules, and tax requirements that apply in their country.

None of those limits change the central issue. A cryptocurrency is only partly accessible when its network remains online, but the main routes connecting it to the wider market disappear.

Privacy coins are now testing the meaning of permissionless finance. If regulated exchanges decide they cannot support certain assets, access will either continue to shrink or decentralized infrastructure will provide another path. THORChain is preparing to offer that path, although its Monero and Zcash swaps must first move from technical groundwork to a stable public rollout.