TLDR:

• Iran’s IRGC warned on March 28 that critical undersea cable infrastructure in Hormuz will not be spared from attack.
  
• Cables like FALCON, AAE-1, and 2Africa Pearls carry nearly all global internet traffic through contested waterways.
  
• Google and Meta activated contingency rerouting plans after the threat, raising costs across cable insurance markets.
  
• Starlink’s 9,500-satellite LEO network is gaining traction on rerouted tankers, with SpaceX eyeing a $1.75T IPO valuation.

Undersea internet cables connecting Asia, Europe, the Middle East, and Africa face serious threats. Iran’s Islamic Revolutionary Guard Corps issued a stark warning on March 28.

The statement said critical infrastructure in the Hormuz and Red Sea corridors would not be spared. The cables at risk carry nearly all global internet traffic.

No cable has been cut yet, but Google and Meta have already activated contingency rerouting plans in response.

Cable Networks at the Center of the Standoff

The cables at risk include FALCON, Gulf Bridge International, Europe India Gateway, SEA-ME-WE 6, AAE-1, and FLAG. These run through the Hormuz corridor.

In the Red Sea, EIG, AAE-1, Seacom, SMW-4, SMW-5, SMW-6, IMEWE, and 2Africa Pearls are also exposed. Together, they form the backbone of global digital commerce.

Analyst Shanaka Anslem Perera noted the full scope of what flows through these cables. “Your bank transfers. Your stock trades. Your cloud computing,” he wrote.

The data connects every financial market on earth to every other. Past events show how quickly disruptions can escalate.

In 2008, eight cables were severed off the Egyptian coast. Between 70 and 80 percent of Middle East-to-Europe traffic went dark after that.

Repairs stretched from three to eight weeks. In 2024, Houthi-related anchor drag damaged four cables in the Red Sea, with repairs lasting months.

Both past incidents were likely accidental. A deliberate, state-sponsored cut has never been carried out. Iran’s own connectivity runs through these same cables.

Any confirmed attack would also trigger immediate naval retaliation from the US, UK, and French fleets already in the region.

Satellite Connectivity Gains Ground as Threat Persists

The threat alone is creating real friction in global financial systems. Cable operators are rerouting traffic, and that process carries real costs. Insurance pricing on submarine cable infrastructure is also shifting.

Institutions relying on sub-40-millisecond latency between Asian and European markets are now running new contingency scenarios.

Starlink’s low-earth orbit constellation of over 9,500 satellites is emerging as a direct alternative. The service delivers broadband through phased-array terminals that electronically steer beams to counter jamming.

Iran has used GPS spoofing and radio-frequency noise against Starlink since January. Packet loss spiked to between 30 and 80 percent during those episodes.

Starlink responded with firmware updates and beamforming adjustments. Packet loss then dropped back to workable levels.

Starlink maritime terminals are already active on tankers rerouting around the Hormuz corridor. Speeds range from 100 to 220 megabits per second at low latency.

SpaceX is reportedly preparing an IPO prospectus this week, per Bloomberg, Reuters, and The Information. The target valuation sits between $1.5 and $1.75 trillion.

The filing arrives at a moment when its service directly addresses a gap exposed by geopolitical tension. The Strait of Hormuz carries oil, gas, helium, and a large share of global internet traffic. Markets have not yet fully priced this convergence.

US Senator Cynthia Lummis rejected claims that the Digital Asset Market Clarity Act leaves decentralized finance developers exposed to legal risk. 

Her response came after crypto lawyer Jake Chervinsky said Title 3 of the latest Senate draft could still place some non-custodial software builders under money transmitter rules.

Lummis said the current criticism does not reflect the latest work on the bill. In a post on X, she wrote, “Don’t believe the FUD,” and said recent bipartisan changes to Title 3 would make the measure “the strongest protection for DeFi and developers ever enacted.”

She also said lawmakers must pass the CLARITY Act for those protections to take effect. Her comments came as Senate negotiations continued over the market structure bill and as the wider crypto industry kept close watch on the next version of the text.

Chervinsky said his main concern is that non-custodial software developers could still be misclassified as money transmitters. He argued that this issue remains unsettled and said that point is “non-negotiable for DeFi.”

The debate centers on how Title 3 interacts with the Blockchain Regulatory Certainty Act. The BRCA, introduced by Lummis and Senator Ron Wyden in January, says developers and infrastructure providers who do not control user funds should not be treated as money transmitters under federal law.

Moreover, the DeFi Education Fund said the January Senate draft included the BRCA in Section 604 and self-custody language in Section 605. At the same time, it said the same draft added a new Title 3 with illicit finance provisions that could still affect DeFi technology and developers.

That concern has grown after recent enforcement actions in the United States. The Justice Department said Tornado Cash co-founder Roman Storm was convicted on August 6, 2025, of conspiracy to operate an unlicensed money transmitting business.

Senate talks continue as bill remains under review

The Senate Banking Committee had planned to mark up digital asset market structure legislation on January 15. Chairman Tim Scott then said on January 14 that the markup would be postponed while bipartisan negotiations continued.

Reuters later reported that the bill still faced disputes in March, with banks opposing stablecoin reward features that could draw deposits away from traditional lenders. That wider fight has kept the CLARITY Act under review as lawmakers work on the next step.

Spot Bitcoin exchange-traded funds (ETFs) snapped a four-week inflow streak, posting $296.18 million in net outflows for the week ending Friday.

The reversal follows a sustained run of inflows totaling more than $2.2 billion across four consecutive weeks, including $787.31 million, $568.45 million and $767.33 million in early March, before slowing to $95.18 million in the prior week, according to SoSoValue data.

The weekly outflow followed back-to-back daily withdrawals on Thursday and Friday totaling more than $396 million, including a $225.48 million outflow on Friday alone, their biggest day of redemptions since March 3, when they posted $348 million in outflows.

Notably, cumulative net inflows into spot Bitcoin (BTC) ETFs stand at $55.93 billion, while total net assets have slipped to $84.77 billion from over $90 billion a week earlier. Trading activity also moderated, with weekly volume falling to $14.26 billion from $25.87 billion earlier in March.

Related: Morgan Stanley sets 0.14% Bitcoin ETF fee, lowest in market if approved

Macro calm masks deeper risks

In a statement shared with Cointelegraph, a Bitunix analyst said the current macro backdrop is defined by “surface stability, internal imbalance,” as geopolitical risks remain unresolved while policymakers attempt to maintain outward calm. Developments such as the US–EU trade agreement and delayed tensions in the Middle East have temporarily eased market stress, but underlying risks remain.

In this environment, Bitcoin is behaving less like a breakout asset and more like a reflection of liquidity conditions, the analyst said. The asset remains range-bound between $65,000 and $72,000, with signs of demand absorption but limited follow-through on upside attempts.

“Capital is not exiting the market, but neither is it willing to take directional risk,” the analyst said, adding that price action is likely to remain volatile within established ranges until macro conditions align for a clearer trend.

Related: Morgan Stanley files amended S-1 for MSBT Bitcoin ETF

Ethereum ETFs extend outflow streak

Meanwhile, spot Ether (ETH) ETFs recorded $206.58 million in weekly outflows, marking a second consecutive week of losses and reversing the modest inflow streak seen earlier in March.

Daily data shows consistent outflows throughout the week. Funds saw withdrawals every trading day since March 18. The largest single-day outflow came on Thursday at $92.54 million, followed by $48.54 million on Friday.

Magazine: Bitcoin’s ‘biggest bull catalyst’ would be Saylor’s liquidation — Santiment founder