The CLARITY Act has moved closer to defeat ahead of its Sept. 15 Senate vote as lawmakers remain divided over presidential ethics rules and stablecoin rewards.

CLARITY Act ethics talks remain stalled

Semafor reported on Sept. 8 that Republican senators expect the crypto market structure bill to fail when the chamber returns, citing little progress on an ethics provision sought by Democrats.

The proposed restriction would address whether a sitting president and immediate family members could profit from crypto businesses while federal policy affecting the industry is being written. According to two Democratic aides cited by Semafor, negotiators have made little movement on the demand.

Sen. Mike Rounds, R-S.D., offered a brief assessment of the talks, saying the situation “does not look good right now.”

Sen. Thom Tillis, R-N.C., who has participated in bipartisan negotiations over the legislation, tied its survival directly to the White House’s willingness to compromise.

“If there’s no interest in the White House in trying to bridge the gap on the ethics language, it is going to fail,” Tillis said.

At the White House, an administration spokesperson told Semafor that Trump remained “unequivocal” in calling on Congress to pass the bill so the United States could compete with other countries in digital-asset development.

The spokesperson also said the administration had worked with Congress and accepted what it considered “the most comprehensive and wide-ranging ethics provision in history.” Democrats have disputed that description, arguing that the language does not sufficiently cover businesses controlled by a president’s relatives.

Questions about Trump’s crypto ties have followed the legislation through Congress. In August, crypto.news covered renewed ethics demands after Public Citizen called for the bill to require a sitting president and immediate family members to divest from crypto ventures.

Trump and members of his family have been linked to several digital-asset projects, including World Liberty Financial and the Official Trump meme coin. Public Citizen argued that federal crypto policy could not be separated from the president’s private financial interests, adding another source of pressure on senators seeking Democratic votes.

Sept. 15 vote requires bipartisan support

Senate Majority Leader John Thune filed cloture on the motion to proceed before lawmakers left Washington for their August recess. Under the scheduled Senate test, the motion will ripen at 2:15 p.m. ET on Sept. 15, one day after the chamber returns for regular business.

The vote will not decide final passage. Instead, senators will determine whether to open debate on the CLARITY Act, with supporters needing 60 votes to advance the measure.

Republicans hold 53 Senate seats, meaning they would need support from at least seven Democrats or independents even if every Republican backed the motion. Opposition within the Republican conference could raise the number of cross-party votes required.

Senators Josh Hawley of Missouri and Rand Paul of Kentucky have been identified as possible Republican opponents. Hawley has raised concerns about provisions governing stablecoin rewards, while community banks have warned that interest-like payments on stablecoins could draw deposits away from insured lenders.

Some Republican senators have sought additional protections for banks before agreeing to support the bill. Democrats, meanwhile, have pressed for state attorneys general to retain enforcement powers because they question whether federal agencies alone would enforce the framework effectively.

Earlier crypto.news coverage identified three unresolved provisions, presidential ethics restrictions, protections for decentralized finance developers, and the treatment of stablecoin rewards, as possible barriers to reaching 60 votes.

A successful cloture vote would allow senators to debate the legislation and offer amendments. Final passage would generally require a simple majority, but any Senate version that differs from the House-approved text would need further action before it could reach the president.

The House passed its version of the Digital Asset Market Clarity Act in July 2025 by a 294-134 vote, including support from 78 Democrats. Senate negotiations have since produced separate proposals addressing the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

For U.S. investors and crypto businesses, the legislation would determine how federal agencies divide oversight of digital assets and trading platforms. The framework would also establish processes for deciding when a crypto asset falls under securities rules and when it qualifies as a digital commodity subject to CFTC authority.

Crypto groups increase pressure before the vote

As support remains uncertain, the Fairshake-linked Cedar Innovation Foundation has announced three national advertisements backing the CLARITY Act ahead of the Senate vote.

The campaign seeks to build public and political support during the final week before senators return. Fairshake and other crypto-aligned political groups have spent heavily in congressional races, giving the industry another way to pressure lawmakers if the bill fails.

Semafor reported that defeat could prompt crypto groups to direct additional funds toward competitive House and Senate races. Sen. Roger Marshall, R-Kan., questioned whether the measure carried much weight among voters in his state.

“There’s nothing I can do with the crypto bill,” Marshall said. “Haven’t heard a peep about it. Nobody back home is asking about it.”

Prediction-market traders have also reduced their expectations for passage. Polymarket odds on the CLARITY Act becoming law in 2026 have fallen from earlier highs as the Sept. 15 vote approaches and the available congressional calendar narrows.

A prediction-market price represents traders’ positions rather than an official forecast, and it can change as negotiations continue or senators announce their votes. Recent readings have nevertheless placed passage well below an even chance.

House calendar leaves little time for final passage

Even if the Senate clears cloture, lawmakers will have limited time to debate amendments, pass the bill, and resolve any differences with the House version.

The Senate will have about 15 session days before election campaigning takes priority ahead of the November midterms. Leadership would need to manage debate while Congress also faces other deadlines competing for floor time.

House leaders have canceled sessions during the final two weeks of September and plan to begin the chamber’s midterm recess by Sept. 17. The schedule leaves little room for representatives to consider Senate changes during the same month.

If senators amend the legislation, the House would need to approve the revised text or the two chambers would have to reconcile their separate versions. The Constitution requires both chambers to pass identical language before a bill can be sent to the president.

Meanwhile, the SEC has continued work on crypto rules without waiting for Congress. In an Aug. 18 statement, SEC Chair Paul Atkins said legislation remained necessary to establish durable rules and prevent a future regulator from easily reversing the agency’s current approach.

The CFTC has also been examining how it can use its existing authority while lawmakers debate an expanded federal framework. Its current powers do not provide the complete spot-market oversight contemplated by the CLARITY Act, which would give the agency a larger role in supervising digital commodities and related intermediaries.

Robinhood has signed a multi-year deal to route selected event contracts through OG.com while taking equity stakes priced against $20 billion and $5 billion valuations for Crypto.com and OG.com, respectively.

Robinhood adds OG.com as an event-contract provider

Robinhood and OG.com announced the agreement on Sep. 8, confirming that the prediction market operator will provide exchange, clearing and infrastructure services for Robinhood’s event-contract business.

Under the multi-year arrangement, Robinhood will send part of its retail event-contract volume through OG.com’s derivatives exchange and clearinghouse. The platform operates under the oversight of the U.S. Commodity Futures Trading Commission, giving Robinhood another federally regulated provider for its U.S. prediction markets business.

Selected football contracts will be among the first products routed through the new provider as the U.S. professional football season begins. OG.com said its contracts will appear gradually in the Robinhood app for eligible U.S. customers, with the phased rollout starting on Sep. 8.

Contracts covering economic indicators, elections, sports, and cultural events could follow, according to the company announcement. Each contract gives traders a yes-or-no position on a defined result and settles according to the outcome specified in its terms.

Robinhood already sources contracts from several providers rather than relying on a single exchange. The brokerage launched its prediction markets hub with Kalshi in March 2025 before adding ForecastEx and Rothera, its exchange venture with Susquehanna International Group.

As crypto.news reported in July, Robinhood had been discussing an agreement with Crypto.com that would add another supplier to its existing network. The completed deal turns the proposed distribution arrangement into an equity relationship involving both Crypto.com and OG.com.

Robinhood receives stakes at $20 billion valuation

Alongside the infrastructure partnership, Robinhood will take initial minority stakes in Crypto.com and OG.com. Neither company disclosed the size of the investments or the amount Robinhood will pay.

Pricing for the stakes will follow Citadel Securities’ recent investment terms, according to the joint announcement. Crypto.com was valued at $20 billion in that transaction, while OG.com received a standalone valuation of $5 billion after separating from Crypto.com.

OG.com now operates as an independent company with its own capital allocation and management focus. Crypto.com retains its main digital asset exchange business, while the separated platform concentrates on prediction markets, futures, perpetual contracts, and related derivatives.

Kris Marszalek, founder and CEO of Crypto.com and OG.com, described the agreement as the start of a longer relationship between the companies.

“We’re looking forward to making OG.com the most liquid venue globally for innovative derivative instruments, starting with prediction markets and quickly expanding into futures and perpetuals.”

Robinhood Vice President and General Manager of Futures and Prediction Markets JB Mackenzie said the equity component gives the brokerage a direct financial interest in the infrastructure supporting its contracts.

“Teaming up with Crypto.com and OG.com strengthens our position as a leader in the prediction markets space and gives us even more skin in the game,” Mackenzie said. He added that customer demand for contracts linked to public events has continued to grow.

Prediction markets become a larger Robinhood business

The agreement adds capacity to a product line that generated $156 million in revenue for Robinhood during the second quarter, according to Reuters. The figure was a quarterly record for the company’s event-contract business.

Robinhood is also preparing a dedicated election hub ahead of the November 2026 U.S. midterms. According to Reuters, the hub will carry contracts linked to state and federal races, with some products potentially routed through Crypto.com and OG.com.

A June Bernstein revenue forecast estimated that Robinhood’s prediction markets could generate $586 million in 2026, up from $150 million in 2025. The research firm based its estimate partly on trading during the FIFA World Cup, when daily prediction market volume reached as much as $4.8 billion.

Bernstein also estimated that the business could contribute about 17% of Robinhood’s transaction-based revenue and 10% of total company revenue during 2026. According to the firm, Rothera processed about 200 million contracts during its first 18 days, with World Cup and Major League Baseball markets producing nearly all of that activity.

Prediction markets are one part of Robinhood’s recent product expansion. The company has also entered underwriting, allowing Robinhood Securities to help bring companies to public markets rather than limiting its role to distributing IPO shares through the brokerage app.

On the crypto side, Robinhood Chain has drawn heavy decentralized trading activity since its July 1 public launch. A Sep. 3 network activity review found that the Ethereum layer-2 network processed about $945 million in DEX volume on Aug. 25 and more than $47 billion in cumulative volume within its first two months.

The same review found that memecoin trading supplied a large share of the activity. Pons alone produced $445 million of the chain’s $874.8 million in volume on Aug. 30, while Robinhood’s tokenized stock products remain unavailable to U.S. residents.

U.S. rules remain contested across states

Although OG.com operates a CFTC-regulated exchange and clearinghouse, prediction market providers continue to face disputes over whether sports contracts fall under federal derivatives law or state gambling rules.

The CFTC has maintained in court filings that registered derivatives exchanges fall under its exclusive jurisdiction. State officials have argued that contracts based on sporting events operate like betting products and should comply with local licensing, age, and consumer-protection requirements.

In July, attorneys general from 44 states challenged the CFTC, asking the regulator to withdraw and rewrite its proposed rules for sports-related event contracts. The coalition said the proposal reached beyond the agency’s authority and entered an area traditionally supervised by states.

Court decisions have produced different results across the country. Judges in Michigan and Washington temporarily restricted certain sports contracts, while a federal judge blocked Minnesota from enforcing its prediction market ban as litigation continued.

Availability on Robinhood will therefore depend on customer eligibility, individual contract terms, and state-level restrictions in addition to OG.com’s federal status. The rollout announcement did not provide a full list of states where the new contracts will be offered.

HOOD traded at $122.02 at 14:52 UTC on Sep. 8, down about 0.07% for the session after moving between $119.51 and $126.51. Crypto.com-linked Cronos gained about 5.3% to $0.0604 over the same daily period, with an intraday range of roughly $0.0565 to $0.0640.

With 38 active cases across 21 states, conflicting federal rulings over Kalshi have raised the risk that U.S. prediction-market access will fragment by location and trading venue, Kalshinomics co-founder Aaron Courtney has told crypto.news.

Courtney, who co-founded prediction-market analytics platform Kalshinomics, said the legal system is dividing access faster than trading data shows any separation in prices or liquidity.

“The legal system is already moving in that direction faster than the price data,” Courtney said in comments shared with crypto.news.

New Jersey filed a petition for a writ of certiorari on Sep. 2, asking the U.S. Supreme Court to review a Third Circuit decision that favored Kalshi. The petition came four days after the Ninth Circuit reached a different conclusion in the company’s Nevada case.

Kalshi rulings have produced conflicting state rules

As previously reported by crypto.news, New Jersey wants the Supreme Court to decide whether the Commodity Exchange Act prevents states from applying sports-gambling laws to contracts traded on a Commodity Futures Trading Commission-registered market.

Kalshi operates a CFTC-regulated designated contract market and argues that its event contracts fall under federal derivatives law. New Jersey considers its sports products wagers that remain subject to state licensing, age limits, and consumer-protection rules.

In April, a divided Third Circuit panel upheld a preliminary injunction that stopped New Jersey from enforcing its gambling laws against Kalshi’s sports contracts. The panel found that Kalshi had shown a reasonable chance of succeeding on its claim that the contracts qualify as swaps under the Commodity Exchange Act.

The decision did not settle the underlying lawsuit. It assessed Kalshi’s likelihood of success while preserving the injunction during litigation.

On Aug. 28, however, the Ninth Circuit rejected Kalshi at the same preliminary stage. Its unanimous panel found that the company’s sports contracts were likely bets rather than swaps, allowing Nevada regulators to enforce state gaming rules while the case continues.

“The CFTC is not a national gambling regulator,” Circuit Judge Ryan Nelson wrote in the Ninth Circuit opinion.

New Jersey’s petition points to the opposing appellate decisions as a reason for Supreme Court review. The filing itself does not mean the justices have agreed to hear the case, and Kalshi will have an opportunity to respond before the court decides whether to accept it.

Courtney said the unresolved divide could leave traders with different products depending on their home state and the federal circuit covering it.

“Until there is a uniform answer, prediction-market access could increasingly depend on which state and federal circuit a trader happens to live in.”

Prediction-market litigation now covers 21 states

According to Casino.org’s Prediction Market Litigation Tracker, 38 active cases are pending across 21 states, while exchanges have received cease-and-desist letters in at least 10 jurisdictions.

The tracker lists New York, Minnesota, Nevada, and Arizona among the states mounting the strongest challenges. Regulators generally argue that sports event contracts operate as unlicensed gambling products, while exchanges rely on federal registration and the CFTC’s authority over designated contract markets.

Court disputes also involve tribal gaming rights, state taxes, and local enforcement powers. Casino.org identifies New York, New Jersey, Minnesota, and California as several of the main venues for litigation.

Separate state orders are already creating different access rules. A Michigan court ordered Kalshi to keep sports contracts unavailable to residents under a Sep. 1 preliminary injunction. The Michigan geofencing requirements carry possible fines of $500,000 for each day the court finds Kalshi out of compliance.

Washington has imposed restrictions covering sports, elections, politics, entertainment, culture, technology, and science contracts. Commodities, climate, economics, and financial markets remain available to users in the state.

The Washington court order required Kalshi to introduce initial geofencing by Aug. 19 and a system using several location sources by Sep. 2. Kalshi maintains that federal law prevents states from regulating contracts offered on its CFTC-registered exchange.

Washington data shows no clear liquidity shock

Because Kalshi’s public application programming interface does not identify each trader’s location, Courtney said outside researchers cannot directly calculate Washington-only volume. He instead used Seattle-linked contracts as proxies for local participation.

The analysis compared the 48 days before the initial Aug. 19 geofence with the following 18 days. Courtney examined Seattle Mariners game contracts against contracts involving the other 29 Major League Baseball teams, along with Seattle’s daily temperature markets against 19 other U.S. cities.

Mariners’ contract volume performed 2.8% better relative to the rest of MLB after the cutoff, placing Seattle near the league’s midpoint. Seattle weather volume declined by 17.7% compared with the other cities.

Courtney said the weather decline remained within normal variation because Philadelphia and Phoenix each fell by more than 30% during the same period without a similar geofence. Median MLB volume per game also dropped 29.6% across the league.

“My takeaway is that any Washington effect is currently smaller than the ordinary seasonal and cross-market noise visible in Kalshi’s public data. That isn’t the same as saying the impact was zero.”

Public data also cannot show whether affected Washington users stopped trading, reduced their activity, or moved to another platform. Seattle weather contracts, which remain available in the state, did not record an increase after Kalshi removed sports and political markets.

Courtney said the evidence did not support a one-for-one move into permitted categories. In his view, sports traders may not consider inflation, finance, or climate contracts suitable replacements for Seahawks game markets.

Washington presents another complication because the state agreed in August to refrain temporarily from enforcement against OG while related appeals proceed, Courtney said. Formerly known as Nadex and operated by Crypto.com, OG also uses a CFTC-designated contract market.

The arrangement offers a possible alternative for displaced traders, although Courtney said account-level information from Kalshi and competing platforms would be needed to measure where their activity went.

Local Kalshi markets face the highest liquidity risk

For heavily traded national contracts, Courtney said excluding Washington alone is unlikely to cause a major disruption. The state accounts for about 2.3% of the U.S. population, while professional market makers and arbitrage traders support many national markets.

Trader quality may matter more than the raw number of excluded accounts, according to Courtney. Removing one active market maker or well-informed participant can affect liquidity and price discovery more than losing several occasional retail traders.

Local markets appear more exposed. In a Sep. 7 snapshot, Courtney found that two Kalshi markets covering Washington Supreme Court races had spreads of about 20 cents, with only one contract traded between their quoted prices. Major MLB and National Football League game markets generally showed spreads of around 1 to 1.5 cents.

According to Courtney, state restrictions can remove residents who have the strongest reason to follow local races and events. Thin local markets may then experience larger spreads, shallower order books, and less dependable market-implied probabilities.

Access restrictions do not yet appear to have separated prices across the largest venues. Courtney compared eight MLB moneyline contracts available on Kalshi and Polymarket on Sep. 7. Five carried identical prices to the cent, while the other three differed by one tick, producing a mean absolute price difference of 0.38 cents.

Courtney said evidence of true fragmentation would include persistent price gaps of several cents between equivalent contracts after accounting for fees and minimum price increments. He would also monitor bid-ask spreads, order-book depth, slippage, active-trader counts, market-maker concentration, and volume by state and exchange.

CoinCorner has launched a Bitcoin custody service for UK customers that charges a 1.5% annual fee and uses keys held separately by CoinCorner and AnchorWatch.

CoinCorner said its new Vault uses multi-signature technology to divide control of customers’ Bitcoin between two companies operating in different jurisdictions. CoinCorner holds one key, while insurance and custody provider AnchorWatch holds the other.

Neither company can independently approve a transfer from the Vault, according to CoinCorner’s support documents. Requiring multiple keys removes the single point of control found in a conventional custodial wallet, where one company can authorize transactions on its own.

Bitcoin held through the service is insured under a policy underwritten through the Lloyd’s of London market. CoinCorner said the cover applies to losses caused by lost keys and unauthorized access, although specific policy conditions and exclusions have not been published on the product page.

Customers can also set their own identity checks, which must be completed before a transaction can proceed. The available controls allow account holders to add verification steps that match their security needs, with CoinCorner’s support team handling the setup.

CoinCorner Vault charges a 1.5% annual fee

Vault costs 1.5% per year, with CoinCorner calculating and billing the fee monthly. The company charges customers on the first day of each month based on the amount of Bitcoin recorded in their Vault at that time.

No long-term commitment is required, and users can move Bitcoin into or out of the product. Withdrawals return funds to a customer’s standard CoinCorner Bitcoin balance, which the company describes as an instant process.

Deposits follow a different monthly schedule. According to CoinCorner’s Vault guidance, Bitcoin added after the first day of a calendar month does not enter the recorded Vault balance until the following month. The company says any Bitcoin remaining within Vault after a withdrawal continues to be insured.

CoinCorner also says it does not lend out or otherwise use Bitcoin placed in the service. The product therefore differs from interest-bearing crypto accounts, where a platform may deploy customer assets through loans or other transactions in return for yield.

Vault does not advertise a return on deposited Bitcoin. Customers instead pay for the custody structure, transaction controls, and insurance attached to assets held within the product.

Multi-signature custody splits control between two firms

Multi-signature wallets require more than one private key to approve a Bitcoin transaction. Under CoinCorner’s setup, the relevant keys are held by independent entities rather than stored by a single platform.

AnchorWatch provides the second part of that arrangement through Trident, its Bitcoin custody infrastructure. The AnchorWatch platform uses Bitcoin scripts and time locks to apply security, recovery, and governance rules at the protocol level.

Time locks can make an alternative method of moving funds available after a specified period when a key is lost or a participant becomes unavailable. AnchorWatch says the design allows recovery conditions to be built into a vault without giving one party immediate control over the Bitcoin.

The US company is also a Lloyd’s coverholder, which allows it to arrange policies backed by underwriting capacity in the Lloyd’s market. AnchorWatch says its other custody products can obtain as much as $100 million of cover per vault, while institutional customers may seek limits of up to $500 million. CoinCorner has not disclosed the limit attached to its UK Vault product, so figures advertised for AnchorWatch’s other services should not be treated as the coverage available to every CoinCorner customer.

AnchorWatch separately offers a three-institution custody configuration involving AnchorWatch, BitGo, and CoinCorner. Its website describes that product as a two-of-three wallet, meaning two institutions must sign a transaction. CoinCorner’s UK-facing documents describe Vault as a two-entity service in which CoinCorner holds one key and AnchorWatch holds the other.

Insurance does not provide FSCS protection

The private insurance attached to Vault is separate from the protection provided through the UK’s Financial Services Compensation Scheme.

CoinCorner states in its legal notice that investments in cryptoassets through its platform are not regulated by the Financial Conduct Authority. Customers also cannot take complaints about the crypto service to the Financial Ombudsman Service, while their Bitcoin is not eligible for FSCS protection.

The distinction matters because private policies cover named events under agreed terms and exclusions. CoinCorner identifies lost keys and unauthorized access as covered events, but its public Vault material does not say that the policy protects customers from a fall in Bitcoin’s price, insolvency, or every possible operational loss.

CoinCorner Ltd is based in the Isle of Man and is registered with the Isle of Man Financial Services Authority under the Designated Business Act 2015. The company is also registered with the Isle of Man Office of Fair Trading as a moneylender.

Its electronic money and payment services have a separate structure. CoinCorner acts as a distributor for Mercury Foreign Exchange Limited, an FCA-authorized electronic money company, but the authorization attached to those payment services does not extend FCA protection to CoinCorner’s cryptoasset products.

Founded in 2014, CoinCorner says it serves more than 350,000 users across 15 markets. The company previously entered the UAE market through a 2022 partnership with Dubai-based Seed Group covering Bitcoin trading, storage and payment services.

UK crypto custody faces new FCA rules in 2027

CoinCorner has introduced Vault as the UK prepares to place crypto custody under a full authorization system.

As crypto.news reported in June, the FCA’s new cryptoasset regime is scheduled to take effect on Oct. 25, 2027. The rules will cover custodians, trading platforms, stablecoin issuers, staking providers and other intermediaries.

Firms seeking to conduct regulated crypto activities will have an application window running from Sept. 30, 2026, through Feb. 28, 2027. Existing registrations under the UK’s anti-money laundering rules will not automatically become authorizations under the new Financial Services and Markets Act framework.

The regulator plans to apply requirements covering custody, capital, operational resilience, disclosures, market conduct and consumer protection. Companies may also need to show that they can withstand market stress and maintain financial resources against risks carried on their balance sheets.

In August, US trading platform Robinhood secured FCA registration under the existing anti-money laundering system before the new framework takes effect. More than 50 companies were listed on the FCA’s cryptoasset register at the time, including Kraken, Ripple, BlackRock and BNY.

For American customers, AnchorWatch advertises a separate multi-institution service using a two-of-three arrangement with CoinCorner and US custodian BitGo. Its website says insurance for that configuration is optional for US users, with indicative pricing beginning at $4,000 for every $1 million of coverage and final premiums subject to underwriting review.

StablecoinX has named Christopher Jensen as its new chief executive officer, a move that places the former Franklin Templeton digital asset executive at the helm of the biggest corporate holder of Ethena’s ENA token. The appointment underscores how quickly leadership in publicly traded crypto vehicles is shifting toward personnel with traditional asset-management experience.

Jensen replaces Ted Chen, who led StablecoinX through its public listing in June and will continue as chairman of the company’s board. StablecoinX trades on Nasdaq under the ticker USDE and is closely tied to Ethena’s synthetic dollar product, USDe.

Key takeaways

• StablecoinX appointed Christopher Jensen as CEO, bringing in leadership experience from Franklin Templeton’s digital asset efforts.
• Jensen’s mandate includes oversight of StablecoinX’s large ENA position, which the company says is about 3.03 billion tokens (roughly 20% of supply).
• Ted Chen transitions from CEO to chairman after guiding StablecoinX through its June Nasdaq listing.
• Ethena’s ecosystem developments continue in parallel, including the recent rollout of Ethena Pay.
• ENA has struggled on a year-to-date basis but has rebounded sharply in the past month, according to CoinGecko.

From Franklin Templeton to StablecoinX’s ENA stewardship

Christopher Jensen’s background is rooted in mainstream asset management and early institutional research into blockchain markets. Before joining StablecoinX, he served as a portfolio manager and director of digital asset research at Franklin Templeton, where he helped build the firm’s digital asset group after its launch in 2018.

According to the company, Franklin Templeton’s blockchain venture fund participated in Ethena’s seed round. That connection matters because it suggests Jensen was exposed to Ethena’s development before USDe scaled into one of the better-known synthetic stablecoins in DeFi.

StablecoinX’s corporate role within the Ethena ecosystem is especially relevant because of its concentration in ENA. The company holds approximately 3.03 billion ENA tokens, which it says represents about 20% of the token’s total supply—making it ENA’s largest corporate holder. ENA, as Ethena’s governance token, provides voting rights over protocol changes, meaning StablecoinX is not only an investor in Ethena’s ecosystem but also an influential governance participant.

Leadership change after StablecoinX’s Nasdaq listing

The CEO transition comes as StablecoinX continues operating as a publicly listed entity rather than a private crypto vehicle. Ted Chen, the outgoing CEO, previously led the company through its public listing in June via a reported merger process and will remain chairman of the board.

The arrangement—Jensen taking day-to-day executive control while Chen retains board leadership—often signals continuity in strategy while adjusting operational leadership. For shareholders and token-adjacent investors, the key question is how Jensen’s background in traditional asset management will shape risk controls, governance posture, and the company’s engagement with Ethena’s evolving roadmap.

StablecoinX trades on Nasdaq under the ticker USDE and focuses on the Ethena ecosystem. Its core linkage to Ethena stems from USDe, a synthetic dollar that DefiLlama data ranks as the fifth-largest stablecoin by market size, with nearly $4.4 billion in circulation. (Source: DefiLlama data.)

Ethena’s product push and what it implies for ENA holders

StablecoinX’s CEO appointment arrives roughly a week after Ethena launched Ethena Pay, a self-custodial app designed to let users spend, save, and transfer USDe across 48 countries. Earlier coverage from Cointelegraph described the rollout as expanding real-world utility for the synthetic dollar rather than restricting it to on-chain settlement and DeFi interactions (see this report).

For ENA governance and corporate holders like StablecoinX, broader USDe accessibility can affect expectations around protocol usage—especially if demand for spending and transfer flows increases. While governance token prices are not directly guaranteed by product launches, a sustained increase in end-user adoption can influence how markets interpret the protocol’s growth trajectory and the value of governance rights.

That said, governance tokens typically reflect a wider mix of factors than product announcements alone, including liquidity conditions, broader stablecoin sentiment, and DeFi market cycles. Investors should be cautious about assuming cause-and-effect between a payment app rollout and near-term ENA performance.

ENA market performance: rebound after a weaker start

On the market side, ENA has had a turbulent recent profile. CoinGecko data cited in the source indicates the token remains down about 20% year to date, but has rebounded sharply over the past month—gaining more than 80% and trading around $0.16.

This type of pattern—weak longer-term performance followed by a sharp short-term rally—often reflects shifting liquidity and risk appetite rather than a single fundamental change. The new leadership at StablecoinX will likely be watched by market participants for signs of whether corporate governance and capital allocation around ENA and USDe will become more active as Ethena expands its distribution.

Still, the immediate timeline for how Jensen will influence governance votes, treasury strategy, or engagement with Ethena’s development team is not yet clear. The move itself signals intent to align the company’s executive oversight with people who understand both regulated finance structures and on-chain market mechanics.

What to watch next

Readers should watch how Jensen’s appointment translates into StablecoinX’s governance engagement with ENA, as well as whether Ethena Pay’s rollout leads to measurable increases in USDe usage. The near-term test will be less about headlines and more about whether corporate governance activity and ecosystem adoption move in tandem over the coming weeks.

A range-proof cache bug in the Elements codebase let an unknown actor mint unbacked L-BTC, drain 95% of the federation reserve through SideSwap, then negotiate its return on-chain via OP_RETURN messages. The network remains frozen, 598.5 BTC sits in the attacker’s wallet, and the entire federated sidechain model faces the hardest questions it has ever had to answer.

Sunday afternoons are not supposed to feel like bank runs. Yet on Sept. 6, 2026, anyone watching the Liquid Network federation wallet saw something that looked a lot like one: 3,996 BTC leaving in a single peg-out transaction at 14:28 UTC, collapsing the reserve from 4,205 BTC to 202 BTC in less than half a minute. At prevailing prices, that was roughly $320 million. Gone.

What followed over the next 30 hours was one of the strangest episodes in Bitcoin’s history. The person or group behind the drain did not disappear into a mixing service. They wrote “we are whitehats. contact us on chain” in an OP_RETURN field, opening a public negotiation with Blockstream that anyone with a block explorer could read in real time. Nine messages went back and forth. A PGP key was verified. Bridge nodes were patched. And then 3,400 BTC came back, leaving 598.5 BTC, about $47 million, sitting in an address that nobody controls except the attacker.

The mechanics of what happened are technical. The implications are not. Liquid is the oldest Bitcoin sidechain, operated by a federation of 15 functionaries running tamper-proof hardware security modules in an 11-of-15 multisig arrangement. It has processed billions in volume for exchanges, traders, and tokenized asset issuers since its launch in 2018. Now its reserves are short by $47 million, its reputation is in intensive care, and the broader question of whether federated sidechains can be trusted with real money is louder than it has been at any point in the past eight years.

How the range-proof cache bug worked

To understand the exploit, you need to understand how Liquid hides transaction amounts. Liquid uses confidential transactions, a cryptographic scheme where the value in each output is hidden behind a Pedersen commitment. Range proofs verify that the hidden amount falls within an allowed range without revealing what the amount actually is. This is computationally expensive, so Elements, the Bitcoin Core fork that powers Liquid, caches successful verification results for reuse.

The problem was in how the cache stored those results. Before the patch, the cache key was derived from the proof bytes and hidden amount alone. Asset type and scriptPubKey context were not included. That meant a previously verified proof could be replayed in a context where it should not have been valid.

The attacker exploited this by planting 68 identical range proofs across 14 hours between Liquid blocks 4,049,384 and 4,050,246, spending 41 satoshis per transaction. Each carried an OP_RETURN output with L-BTC written plainly but the amount hidden, using a commitment to zero with the simplest possible blinding key. Once those proofs were cached, the attacker constructed an invalid output that matched the cache key of a previously valid check. Federation nodes retrieved the cached result and skipped the verification that should have rejected the inflationary output.

At Liquid block 4,050,336, the attacker created approximately 3,996 L-BTC out of nothing. Those tokens looked valid to every federation functionary running the vulnerable code. The attacker sent them to SideSwap’s peg-out service, which burned the L-BTC and requested payment from the federation. The federation obliged, releasing 3,996.0183 BTC to the attacker’s Bitcoin address.

The fix, which binds the cache verification to both asset type and scriptPubKey, had been committed to the Elements master branch on Aug. 3 and merged on Sept. 2. But it had never appeared in a tagged release. The federation nodes were running version 23.3.3, dated April 13, which did not include the patch. Mononaut, the mempool.space developer, noted that federation functionaries accepted the exploit transactions, approved the withdrawals, and continued building blocks, while other nodes running different code rejected the invalid transactions entirely.

DeFi has lost more than $1.3 billion to hacks in 2026, with compromised private keys overtaking smart contract bugs as the leading attack vector for the first time on record. The Liquid exploit does not fit neatly into either category. No keys were stolen. No smart contract was drained. A caching optimization in transaction verification logic left a gap wide enough for someone to mint $320 million.

The 23 minutes that emptied the vault

The attacker was not reckless, and the on-chain record shows a methodical dry-run sequence that preceded the main event by two full days.

On Sept. 4, two small peg-in transactions totaling 2.15 BTC entered Liquid. Two days later, on the morning of Sept. 6, three dry-run peg-outs moved 0.95, 1.71, and 0.55 BTC through SideSwap between 11:30 and 13:16 UTC. Each one completed without issue. The peg-out mechanism worked. The federation signed. Real BTC arrived on the other side.

At 13:53 UTC, the main event: the minting transaction created roughly 4,000 unbacked L-BTC. At 14:28:56 UTC, the federation processed the peg-out, releasing 3,996.0183 BTC. SideSwap forwarded 3,995.99999857 BTC to the attacker’s final address in the same block. The SideSwap fee of 0.1%, roughly 3.996 BTC, plus the three dry-run payouts of 3.21 BTC combined, were the only friction in the entire operation.

From mint to peg-out to receipt, the elapsed time was approximately 35 minutes. From the moment the federation signed the peg-out to the moment the Bitcoin reached the attacker, it was a single block.

The reserve cliff is visible on any blockchain analytics dashboard. Liquid’s federation wallet held 4,205.29 BTC at 14:27 UTC. One minute later, it held 202.63 BTC. It is the most dramatic single-transaction reserve drain in the history of Bitcoin sidechains.

On-chain negotiation: nine messages in OP_RETURN

What happened next turned a catastrophic exploit into something closer to a hostage negotiation conducted entirely in public.

At 18:30 UTC on Sept. 6, roughly four hours after the drain, the attacker embedded a message in a Bitcoin transaction: “we are whitehats. contact us on chain.” The choice of communication channel was deliberate. OP_RETURN messages are permanent, public, and verifiable. Neither side can fake the origin of a message sent from an address they control.

Blockstream responded at 19:31 UTC with a straightforward request: “Please contact [email protected].” The attacker ignored the email offer.

At 03:30 UTC on Sept. 7, after Liquid had halted block production at 04:49 UTC, the attacker sent a longer message: “Please fix the bug first. The chain is under risk at latest commit right now. Make sure every node is patched. Then we will transfer the money back safely after confirming the fix.”

This was not a ransom demand. It was a security disclosure with $320 million in collateral. The attacker wanted proof that the vulnerability was closed before returning funds that could theoretically be re-exploited by someone else.

Blockstream spent the next several hours patching bridge nodes across the federation. At 09:04 UTC on Sept. 7, Blockstream sent a PGP-signed message: “Bridge nodes are patched, safe to return the funds.” The signature verified against the security key ending 6844 A2D6 published at blockstream.com/pgp.txt. Seven total verified Blockstream messages were sent from fresh addresses over the course of the negotiation.

At 16:09 UTC on Sept. 7, the return transaction landed: 3,400 BTC back to the federation address. The remaining 598.5 BTC stayed in the attacker’s wallet. The final OP_RETURN message from the attacker, sent at 21:03 UTC, contained a single emoticon: “:(“

That frowny face has become one of the most analyzed two characters in Bitcoin history. Was it regret at having to keep any amount at all? Disappointment that the bug existed in the first place? A sardonic comment on the state of sidechain security? Nobody knows, and the attacker has not communicated since.

The $47 million question: bounty or theft

The 598.5 BTC the attacker retained is worth approximately $47 million. There was no formal bug bounty program covering this vulnerability. There was no contract, no prior agreement, and no legal framework governing the situation.

Liquid’s attackers offered to return most of the 4,000 BTC, and they did. But “most” is doing heavy lifting in that sentence. Keeping 15% of a $320 million exploit without any prior agreement is not what most security researchers would call standard white-hat behavior.

Charles Guillemet, CTO of Ledger, was among the first prominent voices to push back on the white-hat framing. His argument was direct: genuine white hats disclose a flaw before moving hundreds of millions in collateral, not after. Draining 95% of a network’s reserves and then demanding a patch before returning anything resembles extortion more than it resembles security research.

The counterargument, and it is not a weak one, runs like this: the attacker found a live vulnerability that could have been exploited by a malicious actor at any time. By draining the funds and holding them, they prevented a black-hat from doing the same thing with no intention of returning anything. The 598.5 BTC is compensation for a service rendered, not a ransom paid under duress.

Both positions have precedent. The 2022 Wormhole exploit saw the attacker keep $320 million with zero returned. The 2023 Euler Finance hack resulted in a full return after on-chain negotiation. The Ronin bridge exploit in 2022 saw state-backed attackers from North Korea’s Lazarus Group take $624 million with no negotiation at all. Against that backdrop, getting 85% back within 30 hours looks like one of the better outcomes in the history of crypto exploits.

The legal question remains open. Unauthorized access statutes in most jurisdictions do not include a “good intentions” exception. Taking funds without authorization and then returning most of them may satisfy the definition of theft regardless of what the attacker writes in an OP_RETURN field. Whether any law enforcement agency will pursue the case, given that the majority of funds were returned, is a different matter entirely.

Why federation nodes ran unpatched code

This is the part of the story that should concern anyone who uses a federated system.

The fix for the range-proof cache bug was committed to the Elements repository on Aug. 3, 2026. It was merged into the main branch on Sept. 2. Four days later, the exploit happened. The federation nodes were running version 23.3.3, released on April 13, which predated the fix by nearly five months.

The gap between “fix merged” and “fix deployed to production” is a familiar problem in software engineering. It is also a problem that is supposed to be mitigated by the entire structure of a federated sidechain. Liquid’s 15 functionaries operate specialized hardware security modules. They run tamper-proof servers. They manage an 11-of-15 multisig wallet designed to tolerate up to four compromised or offline signers. The security model assumes that the federation is competent, well-resourced, and running current software.

Running unreleased development code is one kind of risk. Running code that is five months behind a critical security fix is another. Neither inspires confidence.

Liquid Network recovered 3,400 BTC after the bridge exploit, but the recovery came from the attacker’s goodwill, not from any federation safeguard. If the attacker had been a Lazarus Group operator, the 3,996 BTC would have gone through a mixer within hours and the Liquid Network would have been insolvent with no path to recovery.

The question that Blockstream has not yet answered publicly is why a patch that had been merged for four days and committed for over a month was not deployed to federation nodes. Sidechain security is only as strong as the weakest link in its operational chain. For Liquid, that weakest link turned out to be a software update that sat in a repository while the vulnerability it fixed sat in production.

The DAO parallel: when code breaks trust

The comparisons to the 2016 DAO hack started within hours of the Liquid drain, and they are worth taking seriously.

In June 2016, an attacker exploited a reentrancy bug in the DAO smart contract to drain 3.6 million ETH, worth roughly $60 million at the time. The Ethereum community faced a choice: accept the exploit as a valid outcome of the code or hard fork the network to reverse the transaction and return the funds. Ethereum chose the fork. Ethereum Classic, the unforked chain, survived as a philosophical statement that code is law and exploits are just the market correcting for bad code.

The Liquid situation rhymes but does not repeat. Bitcoin’s base layer was never at risk. The exploit happened entirely within the Liquid sidechain, and the peg-out mechanism that released real BTC was functioning exactly as designed. It released funds because the federation nodes told it the request was valid. The federation nodes said the request was valid because their verification cache had been poisoned by a bug that should have been patched.

There is no fork debate here because there is nothing to fork. Liquid is a federated sidechain, not a proof-of-work chain with independent miners. Blockstream can patch the code, restart the bridge nodes, and resume operations. The 598.5 BTC that the attacker kept is gone. It left the Liquid system through a legitimate peg-out and now exists on the Bitcoin base layer, where it is subject to the same rules as any other Bitcoin. No amount of federation governance can claw it back.

But the DAO parallel holds in a deeper sense. Both incidents forced their respective communities to confront the gap between the security model they believed they had and the security model they actually had. Ethereum believed smart contracts were trustless. Liquid’s users believed a federation of 15 functionaries running hardware security modules was safe enough. Both assumptions died on contact with a sufficiently motivated attacker.

The opposing case: federated sidechains still work

It is worth making the bull case for Liquid and federated sidechains at full strength, because the bearish narrative writes itself and the truth is more complicated.

First, the peg-out worked exactly as designed. The federation signed a transaction that looked valid according to the rules it was running. The bug was in the verification logic, not in the signing logic, the key management, or the HSM infrastructure. Blockstream’s core security architecture, the 11-of-15 multisig with tamper-proof hardware, was never breached.

Second, the attacker returned 85% of the funds within 30 hours. Compare that to the Bybit hack in February 2025, where Lazarus Group stole $1.4 billion and returned nothing. Compare it to the Ronin bridge, where $624 million vanished into North Korean laundering networks. Compare it to the Coldcard hardware wallet exploit that drained $130 million in July 2026 with no possibility of recovery. Liquid’s outcome, while painful, is among the best that any exploited protocol has achieved.

Third, the vulnerability was a software bug, not a design flaw. Range-proof caching is an optimization, and the fix is straightforward: include asset type and scriptPubKey in the cache key. The patch already exists. Once deployed, this specific attack vector closes permanently.

Fourth, other assets on Liquid, including USDT, DePix, and tokenized real-world assets, were unaffected. The exploit targeted the BTC peg-out mechanism specifically. Users holding L-USDT or other Liquid-issued tokens did not lose funds.

The counterargument to all of this is simple: “It worked as designed” is cold comfort when the design allowed $320 million to walk out the door. A system that depends on 15 organizations keeping their software up to date has 15 potential points of failure. And the fact that recovery depended on the attacker’s goodwill, not on any protocol safeguard, is not a feature of the security model. It is the absence of one.

What this means for every federated bridge

The Liquid exploit lands at a moment when the Bitcoin sidechain and Layer 2 ecosystem is more crowded and more ambitious than it has ever been.

Stacks, which upgraded to the Nakamoto release in late 2025, uses a different security model tied to Bitcoin finality. The Lightning Network operates as a true Layer 2 with channel-based security that does not depend on a federation. Fedimint, the federated e-cash protocol, uses a similar federation structure to Liquid but for custodial Bitcoin custody rather than a full sidechain. RSK, another federated sidechain, shares many of Liquid’s architectural assumptions.

For every project that uses a federation, the Liquid exploit is a wake-up call. The question is not whether federation members can be trusted with private keys. The question is whether federation members can be trusted to run current software, respond to security disclosures in time, and maintain operational discipline across 15 independent organizations with different priorities, different IT teams, and different levels of urgency.

Protocol halts after exploits are becoming routine across the industry. The Liquid freeze is more consequential than most because it affects a Bitcoin-native sidechain that institutional players have used since 2018. If Liquid cannot guarantee that its federation is running patched software, then the trust advantage that a known, regulated federation is supposed to provide over anonymous validators or decentralized bridges collapses.

The broader lesson is one that the DeFi ecosystem has been learning the hard way since 2020: operational security is not a feature you ship once. It is a process you execute every day. Bugs will be found. Patches will be written. The question is whether the patch reaches production before the attacker reaches the peg-out. On Sept. 6, 2026, the answer was no.

What to watch

• Federation node software versions: Whether Blockstream implements mandatory version checks or automated update mechanisms for functionary nodes will signal how seriously the operational gap is being addressed.
• L-BTC depeg recovery: The reserve backing ratio dropped to roughly 86 cents per L-BTC after the return. Watch for how quickly confidence and peg stability return once bridge nodes reopen.
• The 598.5 BTC wallet: On-chain trackers will monitor the attacker’s retained funds for movement. Any attempt to mix or spend will provide forensic data about the attacker’s identity and intentions.
• Legal and regulatory response: Whether any jurisdiction opens a criminal investigation will set precedent for how self-declared white-hat exploits are treated when no formal bounty agreement exists.
• Competing sidechain and L2 adoption: If institutional users migrate volume from Liquid to Lightning, Stacks, or centralized settlement layers in the wake of the exploit, it will be visible in on-chain metrics within weeks.

Disclaimer: This article was published on Sept. 7, 2026, and reflects information available at the time of writing. The situation around the Liquid Network exploit is developing. Readers should verify current status through official Blockstream channels before making any decisions related to Liquid Network assets.

The Clarity Act has faced a new threat ahead of its Sept. 15 procedural vote, with Republican senators warning that the measure may lack the 60 votes needed to advance.

Clarity Act faces a difficult Senate vote

Semafor reported on Tuesday that Republican senators expect the Clarity Act to fail when the Senate returns from its five-week recess, citing unresolved disputes over ethics rules and other parts of the bill.

Sen. Cynthia Lummis, R-Wyo., responded on X by arguing that Democrats, rather than ethics concerns, would be responsible if the legislation falls short. Lummis has been one of the Senate’s most vocal supporters of federal rules for digital assets.

“If this bill fails it won’t be because of ethics, it will be because Democrats didn’t join Republicans in embracing a bipartisan bill that protected consumers, cements America’s leadership in digital assets, and empowered law enforcement to clamp down on illicit finance,” Lummis wrote.

The Wyoming senator said Democratic negotiators continued to seek provisions that could let later administrations “kill the crypto industry.” While saying the remaining differences could still be resolved, Lummis placed the responsibility for further concessions on Democrats rather than the Trump administration.

“If we can bridge those gaps I’m confident we can pass Clarity, but they require further compromise from Democrats, not the White House.”

Sen. Mike Rounds, R-S.D., told Semafor that the situation “does not look good right now.” Sen. Thom Tillis, R-N.C., offered a different assessment, saying the bill would fail if the White House showed no interest in closing the gap over ethics language.

A White House spokesperson told Semafor that President Donald Trump remained committed to passing the legislation and had accepted what the administration described as a far-reaching ethics provision. Democratic negotiators have disputed whether the proposed language adequately covers crypto businesses linked to a president’s relatives.

Ethics demands remain a central obstacle

Democrats have sought restrictions preventing senior government officials from promoting or earning money from digital assets while holding office. A draft circulated in July included new ethics language, but a group of Democratic senators said the changes did not go far enough.

Their concerns have focused in part on digital-asset businesses connected to Trump and his family. Trump-linked projects include World Liberty Financial and the Official Trump meme coin, while critics have questioned whether a president should be able to profit from an industry affected by White House policy.

Public Citizen previously called for rules requiring a sitting president and immediate family members to divest from crypto ventures, as crypto.news covered in August. The consumer advocacy group argued that leaving family-controlled businesses outside the restrictions would weaken the proposed safeguards.

Lummis has previously said she supported adding ethics provisions and had placed her relationship with Trump under strain to help secure bipartisan backing. Even after those changes, however, Democratic senators continued to seek amendments addressing consumer protection, illicit finance, and presidential conflicts of interest.

The dispute matters because Senate Republicans cannot advance the bill without support from the other side of the aisle. Republicans hold 53 seats, while the procedural vote requires 60 votes to open debate. Supporters would therefore need at least seven Democrats or independents if every Republican voted in favor.

Full Republican support is also uncertain. Some Republican senators have raised separate concerns about stablecoin rewards and protections for banks, which could increase the number of Democratic votes needed.

Stablecoin rewards and DeFi rules add pressure

Apart from ethics, senators remain divided over whether exchanges and related companies should be allowed to provide rewards on stablecoin balances. Banks have argued that interest-like payments could pull deposits away from federally insured institutions, while crypto companies have opposed rules that would block rewards offered by third parties.

The dispute continued even after the GENIUS Act established federal requirements for payment stablecoin issuers in 2025. Under the market structure negotiations, lawmakers have considered separating prohibited interest payments from rewards linked to transactions, payments or liquidity activity.

DeFi protections form another unresolved part of the talks. Crypto industry groups have supported safeguards for developers who publish non-custodial software without controlling customer funds, while critics have sought stronger tools for pursuing illicit financial activity conducted through decentralized protocols.

Recent coverage of the Senate vote identified presidential ethics, DeFi developer liability and stablecoin rewards as the three disputes most likely to prevent the bill from reaching the required 60-vote threshold.

For U.S. crypto holders and businesses, the bill would determine how the Securities and Exchange Commission and Commodity Futures Trading Commission divide authority over digital assets. Its framework would establish a process for deciding whether a token falls under securities law or qualifies as a digital commodity.

Trading platforms handling digital commodities would come under CFTC oversight, while the SEC would retain authority over digital securities and qualifying token offerings. The proposal would also create registration, customer-asset protection, and compliance requirements for digital-asset intermediaries.

House approval does not guarantee passage

The House of Representatives passed its version of the Digital Asset Market Clarity Act in July 2025 with bipartisan support. Senate lawmakers have since worked on their own language, meaning any revised bill would still have to clear several procedural and legislative steps.

Senate Majority Leader John Thune filed cloture before lawmakers left Washington for their August recess. The motion is scheduled to come before the chamber at 2:15 p.m. ET on Sept. 15, one day after senators return.

The first vote will decide whether the Senate opens debate rather than whether it grants final approval. If the measure clears cloture, senators could consider amendments before holding a vote on passage.

Any Senate-approved text that differs from the House version would then require further action. The House could accept the Senate text, or lawmakers from both chambers could negotiate a common version that would need another round of approval before reaching Trump’s desk.

Time on the congressional calendar has added another obstacle. According to an analysis of the timetable, the Senate has limited working days available before campaigning intensifies ahead of the November midterm elections.

Trump pressed Congress to pass the bill in August, arguing that the legislation was needed for the United States to retain its leadership in Bitcoin and crypto. The White House told Semafor that the administration had continued working with lawmakers, while Lummis said passage would require more concessions from Senate Democrats.