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Citi (C) says CLARITY Act momentum builds, but DeFi fight could stall crypto bill

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Citi (C) says CLARITY Act momentum builds, but DeFi fight could stall crypto bill

Citi (C) said the CLARITY Act remains the key catalyst for legitimizing digital assets in the U.S., but progress is slowed by negotiations over its most contentious provisions.

While the Senate Agriculture Committee has advanced its version of the bill, the bank noted the Banking Committee still controls the toughest issues, leaving timelines uncertain.

Lawmakers are expected to keep working even during a potential shutdown, with target dates in the coming months still attainable, though there is a rising risk that talks delay final passage beyond 2026.

“We see the passage of the CLARITY Act as the essential catalyst for advancing/legitimizing digital assets,” analysts led by Peter Christiansen said in the Friday report.

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Crypto market structure legislation aims to define who regulates digital assets in the U.S., how tokens are classified and which activities fall under securities or commodities law. The framework is critical to giving crypto firms and investors legal clarity, reducing regulatory overlap and bringing activity back into the country after years of enforcement-driven oversight drove companies abroad.

The bill’s supporters argue that clear rules will unlock institutional adoption, encourage innovation and curb offshore risk, while critics warn that poorly drawn lines could stifle decentralized technologies.

The analysts flagged decentralized finance (DeFi) definitions as the biggest hurdle, with debate focused on defining the point at which decentralized protocols, software and developers become regulated service providers.

An overly restrictive framework could weigh on Web3 development, decentralized exchanges, derivatives, stablecoin yield and layer-2 networks, with any compromise likely to hinge on custody and surveillance rather than pure software neutrality, the analysts said.

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The analysts also said they see more scope for compromise on stablecoin rewards, suggesting options such as time-limited yield or alternative incentive structures, even as banks warn of regulatory arbitrage and crypto firms argue rewards are key to adoption. Citi said the issue does not undermine its longer-term view on cross-border and business-to-business stablecoin use.

On tokenized equities, the report said fears of bypassing traditional market infrastructure have driven resistance, but potential workarounds include clearly classifying tokens as securities, keeping distribution within existing rails, using hybrid settlement models or launching an SEC pilot. Such approaches could support innovation without upending the securities value chain, the report added.

Coinbase’s (COIN) decision to end support for U.S. market structure legislation won’t derail the process, investment bank HSBC said in a report earlier this week, suggesting that while the exchanges CEO, Brian Armstrong, prefers no bill over a bad bill, he would probably accept a sensible compromise.

Read more: Coinbase opposition won’t stymie U.S. crypto market structure bill, HSBC says

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Ethereum Foundation starts 70,000 ETH staking process to fund operations, bolster network

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Ethereum Foundation starts 70,000 ETH staking process to fund operations, bolster network

The Ethereum Foundation has started staking part of its treasury holdings, putting around 70,000 ETH to work as part of its plan to support ongoing operations in the Ethereum ecosystem.

The staking commenced with a 2,016 ETH deposit, and uses Dirk and Vouch, open-source validator tools developed by infrastructure firm Attestant, the Foundation said.

Dirk functions as a distributed signer that allows for coordination across multiple jurisdictions and reduces single points of failure, while Vouch handles validator duties.

The decision follows the public release of the Foundation’s treasury policy last year to manage crypto and fiat holdings in a way that balances long-term sustainability with Ethereum-aligned values such as decentralization, open-source access and user privacy.

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Rather than letting ETH sit idle, the Foundation now plans to earn staking rewards and redirect those back into funding protocol research, ecosystem development, and community grants.

Based on the CoinDesk Composite Ether Staking Rate (CESR), the current staking yield of the Ethereum validator population is around 2.808%. Data from Arkham Intelligence shows the Ethereum Foundation currently has 172,650 ETH it could deploy, along with an additional 10,000 wrapped ether (WETH).

The staking setup uses a combination of hosted infrastructure and self-managed hardware, including minority clients, spread across several countries, the Foundation said.

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Hashgraph Group Launches Hedera Tool for EU Digital Product Passports

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Hashgraph Group Launches Hedera Tool for EU Digital Product Passports

The Hashgraph Group, a Swiss technology company building on the Hedera network, launched TrackTrace, a platform aimed at helping prepare for upcoming European Union product-compliance requirements tied to digital product passports.

TrackTrace is designed to improve supply-chain visibility by tracking goods and recording product data, including emissions-related information, in a way that can be used for compliance reporting and authenticity checks, the company said in a Tuesday announcement.

The platform builds verifiable audit trails for product-specific data, sustainability credentials, durability and reparability, while incorporating agentic artificial intelligence (AI) to automate workflows for compliance reporting.

The blockchain-based solution comes in response to the EU’s Ecodesign for Sustainable Product Regulation (ESPR), which went into effect on July 18, 2024. The ESPR creates a framework for product-specific rules that can include a Digital Product Passport (DPP) to standardize how key product information is recorded and shared across multiple supply chains.

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A major early milestone is the EU’s battery passport requirement under the EU Battery Regulation, which is set to apply from Feb. 18, 2027, for certain categories including electric-vehicle and industrial batteries above 2 kilowatt-hours.

DPP requirements will extend to textiles, apparel, iron, steel and other priority items starting July 2027.

Related: EU to ban anonymous crypto accounts and privacy coins by 2027

EU climate targets drive data demands

The EU’s Green Deal aims to transform the bloc into a more resource-efficient economy and cut emissions by at least 50% by 2030. It also aims to reach net carbon neutrality by 2050 through the European Climate Act.

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“The European Green Deal strives to establish the first climate-neutral continent by 2050 and needs infrastructure it can trust to transform Europe into a modern, efficient, and sustainable economy,” wrote Stefan Deiss, co-founder and CEO at The Hashgraph Group.

“With TrackTrace built on Hedera, we deliver that critical trust data infrastructure layer that enables companies to comply with DPP regulation, while strengthening global supply chain integrity and fostering the transition to a sustainable, transparent, and circular economy.”

Businesses targeting EU markets will have to rely on solutions such as TrackTrace to ensure compliance with the ESPR.

The Hashgraph Group said it is working with PwC on digital product passport implementations for enterprise clients and that TrackTrace can support traceability across a product’s lifecycle. Cointelegraph reached out to The Hashgraph Group for more details on the collaboration.

Related: Bitcoin treasuries log rare selling streak as BTC trades near $66K

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TrackTrace builds on identity tools

TrackTrace has integrated The Hashgraph Group’s existing decentralized identity solution, IDTrust, to provide verifiable credentials in a decentralized manner.

This enables the linkage between physical events and digital records in a tamper-proof environment, where digital business processes and immutable data audit trails are anchored on the Hedera network.

Hedera claims to be the world’s most energy-efficient distributed ledger technology (DLT) that is governed by a council of leading global organisations including Dell, Deutsche Telecom, EDF, FedEx, Google, Hitachi, IBM, Mondelēz and Standard Bank, among over 30 Hedera Council members.

Competing supply chain traceability solutions include the blockchain-based IBM Sterling Transparent Supply, TraceX, Circular for batteries and plastics, and TrusTrace for fashion and textile traceability.

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