Minnesota financial institutions can no longer afford to remain on the sidelines as Wall Street aggressively captures digital asset infrastructure, driving a state-level legislative push to halt deposit flight and insulate the local economy, a local legislator and a banker told CoinDesk.

“Over the last several years, I’ve consistently heard concerns about the increasing amount of deposit flight from local financial institutions to crypto exchanges and digital asset platforms,” said Rep. Bernadette “Bernie” Perryman (R-St. Augusta).

The lawmaker, who authored the bill recently enacted by Governor Tim Walz, paving the runway for state banks and credit unions to provide crypto custody service, explained that deposit flight has created significant challenges for Minnesota.

“When those dollars leave local institutions to crypto exchanges outside our state, there are fewer opportunities for those funds to be reinvested locally through small business lending, mortgages, and community development,” Perryman said.

From the state’s bankers’ perspective, the issue is also about remaining competitive, Meggan Schwirtz, chief experience officer at St. Cloud Financial Credit Union, told CoinDesk.

“This is no longer simply a question of ‘belief’ or consumer curiosity,” she said, “it’s a matter of commercial and competitive relevance for financial institutions.”

‘Aggressively positioning’

Schwirtz said the “reality is that large financial institutions and Wall Street firms are aggressively positioning themselves around digital asset infrastructure because they recognize the long-term implications for payments, settlement, custody, and the future movement of value.”

She also said local banks and credit unions could not “afford to ignore that shift if they intend to remain relevant to future generations of consumers.”

And Schwirtz is not wrong. Wall Street giants are increasingly deepening their crypto exposure through stablecoins and tokenization to stay ahead of the competition in the race to adopt blockchain technology.

A recent Jefferies report found that although stablecoins are unlikely to spark a sudden run on U.S. bank deposits, they could steadily erode bank earnings as they gain traction. The firm estimated that privately-issued digital dollar adoption could drive a 3% to 5% runoff in core deposits over five years, cutting average bank earnings by about 3%.

In fact, tokenization and stablecoins were the main topics at Consensus Miami this year, overshadowing all other crypto-related topics. “We’re moving into a world where essentially the entire economy is going to be tokenized,” said Joseph Lubin, CEO and founder. Meanwhile, Circle SVP of marketing Tim Queenan said institutions are increasingly exploring how to move core financial infrastructure onchain, adding that stablecoins are becoming so embedded in payments that many users no longer even think of themselves as crypto users.

Major milestone

Minnesota recently became the first Midwestern state to pass an explicit, unified legislative framework authorizing both state-chartered commercial banks and credit unions to offer cryptocurrency custody services.

The new law was signed by Governor Tim Walz last week and is scheduled to come into full force on Aug. 1, after passing with overwhelming bipartisan support in the legislature earlier this month.

Ryan Smith, chief Advocacy Officer at Minnesota Credit Union Network, said that while the passage of the law is vital, it is not the last word on crypto custody regulation.

“Federal requirements for financial institutions that offer these services will have to comply with a wide variety of federal regulations, as cryptocurrency custodians must specifically implement anti-money laundering (AML) programs, file Suspicious Activity Reports (SARs), and conduct enhanced know-your-customer (KYC) diligence.”

While digital assets remain entirely excluded from federal FDIC or NCUA insurance, local institutions are developing private compliance alternatives. Schwirtz confirmed that St. Cloud Financial Credit Union has proactively secured a strategic underwriting partnership with a Lloyd’s of London-backed insurance solution specifically tailored to their custody operations.

While more work remains to be done, state Representative Steve Elkins (DFL) hailed the new law as a major milestone, marking a significant shift in how digital assets are managed.

“The community banks and credit unions wanted to be able to offer this service for their customers and members as part of a comprehensive array of financial services,” Elkins, one of the three authors of bill HF 3709, told CoinDesk.

The new law coincided with a regulatory clampdown on all crypto ATMs and kiosks across the state. Walz separately signed a bipartisan bill (SF 3868) implementing a statewide ban on the ATMs effective August 1. One of the U.S.’s largest bitcoin ATM providers, Bitcoin Depot, filed for bankruptcy on Monday.

Cardano governance is in crisis as an 81% stake majority opposes a 32.9 million ADA research funding proposal.

A Cardano governance crisis has emerged on-chain as an 81% active stake majority is currently opposing a 32.9 million ADA proposal to fund Input Output Global’s core research team for another year. The opposition is led primarily by Japanese delegated representatives who argue the proposal lacks tight, auditable milestones.

“This doesn’t have anything to do with me. This has to do with destroying the entire core of our ecosystem. Cardano is the science coin. That’s our brand,” Charles Hoskinson said in response to the vote.

Why the IOG vote matters for Cardano’s long-term roadmap

The IOG research lab is responsible for Cardano’s peer-reviewed development approach, including the Ouroboros consensus protocol. A failure to renew its funding would leave the protocol without its primary academic development engine.

Several dReps want competing teams to bid against IOG through open RFPs rather than automatic renewal. ADA was trading near $0.25, down approximately 60% over the past 200 days.

Crypto.news has reported on Hoskinson’s earlier warning that crypto markets would get “redder,” made during a February 2026 livestream where he positioned Cardano as entering a commercialisation phase.

What the milestone controversy reveals about decentralised governance

Critics of the IOG proposal argue it lacks specific, time-bound deliverables that a decentralised treasury process should require. The sentiment reflects a broader tension in Cardano’s Voltaire governance era between institutional efficiency and community accountability.

Crypto.news has tracked Hoskinson’s January 2026 warning that White House crypto czar David Sacks should resign if the Clarity Act failed to pass. Both episodes reflect the same impatience with institutional processes that fail to deliver tangible outcomes on a predictable timeline.

The voting period runs through June 8. If the proposal fails, scientists could leave, ending the peer-reviewed research model that defines Cardano’s identity. Crypto.news has covered analysis examining the gap between Hoskinson’s ambitions and Cardano’s on-chain adoption metrics, a tension the governance dispute now makes impossible to ignore.

Institutional adoption continues to reshape the digital asset landscape, even as geopolitical tensions underscore crypto’s sensitivity to broader macro conditions. This week saw digital asset investment products suffer more than $1 billion in outflows as traders pared risk amid fading hopes for a durable U.S.-Iran ceasefire. At the same time, Tether tightened its grip on Twenty One Capital by purchasing SoftBank’s stake, Bernstein highlighted a shift in Bitcoin mining toward AI infrastructure, and Polymarket teamed up with Nasdaq to launch prediction markets tied to private companies. The week’s developments illustrate how institutions still sit at the heart of the evolving crypto ecosystem, even as macro shocks drive short‑term sentiment swings.

Key takeaways

• Digital asset funds posted over $1 billion in outflows last week as geopolitical tensions fueled a risk-off environment, led by Bitcoin and Ether products tracked by CoinShares.
• Despite the weekly pullback, crypto exchange-traded products (ETPs) have recorded nearly $4.9 billion in year-to-date inflows, signaling ongoing institutional interest on a longer horizon.
• Tether extended its influence in the Bitcoin market by acquiring SoftBank’s roughly 26% stake in Twenty One Capital for an undisclosed amount, consolidating a major corporate vehicle for Bitcoin treasury exposure.
• Twenty One Capital has amassed a substantial Bitcoin position, reportedly over 42,000 BTC, bolstering Tether’s strategic footprint in the space. BitcoinTreasuries.NET pegs the position at about $3.34 billion.
• Bernstein argues that Bitcoin miners are increasingly becoming strategic AI infrastructure partners, leveraging large-scale power access and data-center capacity to host AI workloads as block-reward economics evolve.
• Polymarket partnered with Nasdaq to launch prediction markets focused on private, pre-IPO companies, expanding event-based forecasting into the venture-capital arena and underscoring growing institutional openness to non-traditional price-discovery tools.

Geopolitics weigh on crypto funds while institutions stay engaged

Recent data from CoinShares shows digital asset investment products experiencing more than $1 billion in outflows during a week shaped by renewed tensions in the Middle East. The sell-off was broad, with Bitcoin- and Ether-linked products accounting for the bulk of redemptions, as investors reassessed risk allocations in a volatile macro environment. While this marks a sharp contrast to the earlier resilience seen in some markets, it also reaffirms a fundamental dynamic: macro shocks and geopolitical headlines can rapidly pivot sentiment around crypto, even for assets with perceived hedging properties.

Nevertheless, the longer-term trend remains nuanced. CoinShares noted that year-to-date inflows into.crypto ETPs remain constructive, totaling close to $4.9 billion, suggesting that institutional allocators continue to differentiate between short-term volatility and longer-term strategic exposure to digital assets.

Tether strengthens Bitcoin treasury exposure via Twenty One Capital

In a move that tightens the convergence between stablecoins and Bitcoin treasuries, Tether acquired SoftBank’s roughly 26% stake in Twenty One Capital for an undisclosed amount. Twenty One, led by Strike founder Jack Mallers, launched with support from Tether, Bitfinex, Cantor Fitzgerald and SoftBank, and has built a balance sheet of more than 42,000 BTC.

The transaction reinforces Tether’s influence over one of the industry’s largest corporate Bitcoin holding vehicles. Twenty One’s expanded scope signals a continued appetite among institutions to hold and deploy Bitcoin through centralized, treasury-focused vehicles rather than through dispersed, purely retail channels.

Public data tracked by BitcoinTreasuries.NET places Twenty One’s Bitcoin pile at roughly $3.34 billion, highlighting the scale of the networked holdings that backstop institutional strategies in the space.

Miners as AI infrastructure partners, according to Bernstein

Industry researchers at Bernstein have framed Bitcoin miners as more than just energy users — they’re becoming strategic infrastructure players in the AI race. The analysis points to two scarce resources miners typically enjoy in abundance: large-scale power access and data-center capacity. As AI developers demand ever-larger compute grids, mining outfitters are repurposing portions of their energy-intensive operations to host high-performance computing workloads for AI customers.

Bernstein suggests this shift could unlock new revenue streams and lift valuations for miners, particularly as the economics of block rewards wane after future halving cycles. The convergence of crypto mining and AI infrastructure is painting a picture of a broader, multi-use asset class that can weather cyclical crypto dynamics by anchoring itself to two capital-intensive, growth-oriented sectors.

Industry data indicate that a growing share of publicly traded miners has expanded their power portfolios to accommodate future demand, underscoring a tangible trend toward diversification beyond pure mining profitability.

Polymarket teams with Nasdaq to introduce private-company bets

In a move that expands the reach of event-based forecasting, Polymarket has partnered with Nasdaq to launch a new category of prediction markets focused on private companies. The markets will allow participants to bet on milestones such as private company valuations, IPO timing and secondary-market activity, extending Polymarket’s reach beyond elections and macro events into venture-backed ventures.

The collaboration reflects growing institutional interest in forecasting tools as a potential complement to traditional price discovery. By aligning with Nasdaq’s infrastructure, Polymarket aims to lend greater legitimacy and liquidity to prediction markets, particularly in segments tied to venture capital and startup activity.

What comes next

As institutions continue to shape the crypto landscape, investors will watch how geopolitical risk, macro developments, and the evolving economics of mining intersect with the growing role of Bitcoin treasuries and AI-focused data-center use cases. The emergence of private-company prediction markets also raises questions about regulatory contours, risk controls, and the long-term viability of alternative forecasting mechanisms in mainstream financial ecosystems.

The coming weeks could reveal whether these structural shifts translate into sustained demand for Bitcoin treasury exposure, diversified mining revenue streams, and broader adoption of event-based markets by institutional players. In the meantime, readers should monitor policy signals, energy-market dynamics, and the pace of AI compute demand as key drivers of the sector’s trajectory.

Anatoly Yakovenko told an applauding Consensus Miami 2026 conference earlier this month that Solana would be upgrading to Alpenglow, heralding a live testnet within a week as evidence that it’s “basically due sometime this year, I think next quarter.”

According to developers implementing that upgrade, Alpenglow actually broke while going live.

Anza, the Solana development outfit leading the rollout, left that error out of the mainstream press cycle.

Alpenglow is supposed to be the largest consensus change in Solana’s history, and is supposed to replace proof-of-history which has cryptographically ordered Solana’s network since launch.

Validators approved it in September 2025 with 98% voting in support. Anza, the dev shop, marketed the upgrade as a “100x” improvement to transaction finality, allegedly cutting transaction finalization from 12.8 seconds to about 150 milliseconds.

Yakovenko spoke at Consensus Miami on May 5, praising the potential of Alpenglow. Days later, as promised, it went live on a cluster — and promptly broke.

That day, Anza spokesperson Max Resnick broke the news about the testnet launch to Decrypt, claiming it was “a really exciting milestone” while omitting that it had actually failed and restarted.

On the Solana Foundation’s May 14 weekly validator call, Anza engineer Ashwin Sekar admitted to the real story. Over 40 nodes joined the May 11 cluster running Alpenglow.

Then the migration broke.

‘The next go-around, we were able to successfully perform’

“As usual, the first try did not work,” Sekar admitted on a May 14 call to a niche audience.

He went on to describe the incident, “There was a bug in, you know, the most recent master commit of TowerBFT and proof-of-history.”

TowerBFT is Solana’s proof-of-history-compliant consensus algorithm.

Anza pushed a hotfix and tried relaunching. Sekar added that engineers were hard at work, “We patched it.

The next go-around, we were able to successfully perform the migration.” He also disclosed a second bug, a validator that accidentally banned peer connections, which Anza patched as well.

None of those errors made it into mainstream press cycles.