Crypto World
Kelp DAO exploit may force big banks to rethink their blockchain plans, Jefferies warns
A major decentralized finance (DeFi) hack could prompt Wall Street firms to reassess the pace of their blockchain and tokenization efforts, a Jefferies analyst wrote in a report.
The note follows a $293 million exploit of Kelp DAO on April 18, in which attackers minted unbacked tokens and used them as collateral to borrow other assets across lending platforms.
The incident, potentially linked to North Korea’s Lazarus Group, has already rippled through crypto markets, triggering sharp token sell-offs and a liquidity crunch in key protocols.
Jefferies analyst Andrew Moss said the fallout may extend beyond crypto-native firms to traditional financial institutions, which have been accelerating efforts to tokenize assets such as funds, bonds and deposits.
“TradFi tokenization initiatives are proliferating as institutional investment accelerates,” Moss wrote. However, the exploit and its “cascading implications” could “temporarily slow TradFi adoption as security risks are re-evaluated.”
The attack exposed vulnerabilities in blockchain “bridges,” which enable the transfer of assets between networks. In this case, the hackers exploited a verification setup that relied on a single validator, raising concerns about single points of failure in systems meant to be decentralized.
For banks and asset managers, these risks matter. Many tokenization efforts depend on cross-chain infrastructure to move assets and maintain liquidity across platforms. Without secure bridges, Moss warned, markets could become fragmented, limiting the usefulness of tokenized assets.
‘Nascent’ industry
The immediate impact has been severe inside DeFi.
Lending platform Aave was left with roughly $200 million in bad debt, while total value locked dropped by about $9 billion as users withdrew funds. Liquidity in key markets has tightened, with some pools frozen or near full utilization, raising the risk of forced liquidations.
While Moss does not expect the incident to spill into traditional financial markets, it said the loss of trust could weigh on adoption in the near term. Firms may pause or slow deployments as they review vulnerabilities and rethink system design.
At the same time, the longer-term outlook remains intact.
Regulatory progress and infrastructure improvements continue to support institutional interest. Stablecoins, in particular, are expected to play a growing role in payments, with use cases expanding from trading into areas such as cross-border transfers and payroll.
Still, the report highlights a key challenge: as Wall Street moves deeper into crypto, it must rely on infrastructure that is still maturing.
“The nascent digital asset industry still requires time to mature,” Moss said, pointing to the need for more robust systems before tokenization can scale safely.
Read more: ‘DeFi is dead’: crypto community scrambles after this year’s biggest hack exposes contagion risk
Coinbase lobbying activity for Q1 2026 totaled $1.07 million, the company disclosed in a new Lobbying Disclosure Act filing, targeting the Digital Asset Market Clarity Act, the GENIUS Act stablecoin law, and digital asset tax treatment legislation.
Summary
- The filing covers lobbying on the CLARITY Act’s market structure provisions, implementation of the GENIUS Act stablecoin law, and general crypto policy discussions across multiple congressional committees.
- The Q1 spend comes after a turbulent period in Coinbase’s relationship with the CLARITY Act, which began with CEO Brian Armstrong withdrawing support hours before a January markup, followed by a reversal after a Treasury-brokered compromise on stablecoin yield.
- Coinbase derives roughly one-fifth of its total revenue from stablecoin-related activity, making the terms of the CLARITY Act’s yield provisions a direct financial stake rather than a policy preference.
Coinbase lobbying in the first quarter of 2026 reached $1.07 million as the company pressed Congress on the two pieces of legislation most directly affecting its business model. The LDA filing lists multiple specific topics covered, including general discussions on digital asset tax treatment, market structure provisions of the CLARITY Act, and all provisions of the GENIUS Act stablecoin law signed into law as P.L. 119-27.
The filing provides a concrete dollar figure for Coinbase’s Washington engagement during one of the most consequential quarters in US crypto legislative history. The GENIUS Act passed and became law. The CLARITY Act stalled and restarted. Coinbase first killed and then revived its support for the market structure bill within the span of three months.
The company’s relationship with the CLARITY Act in Q1 2026 was the most consequential lobbying story in crypto. Armstrong posted opposition to the bill on X on January 14, hours before the Senate Banking Committee’s scheduled markup, causing the session to be postponed. The central objection was the bill’s treatment of stablecoin yield, which banking industry lobbyists had pushed to restrict.
What the Filing Covers and Why It Matters
The LDA disclosure lists the following subjects: general discussions on digital asset tax and digital asset tax treatment, provisions related to Title I and market structure of the CLARITY Act, all provisions of the GENIUS Act, general discussions on crypto policy and market structure, and discussions on implementing the GENIUS Act. That list covers the full legislative agenda facing the crypto industry in 2026.
The CLARITY Act remains the primary pending legislation. Its market structure provisions would formally define the regulatory division of authority between the SEC and CFTC over digital assets. For Coinbase, which operates the largest US crypto exchange and custody platform, those definitions affect every product it offers. The company’s subsequent reversal on the bill came after Treasury Secretary Scott Bessent published a Wall Street Journal op-ed advocating for a compromise framework on the stablecoin yield question that left room for activity-based rewards while restricting direct interest payments.
The Scale of Coinbase’s Financial Stake
Coinbase reported $355 million in stablecoin-related revenue in Q3 2025. The company derives approximately one-fifth of its total revenue from stablecoin activity, primarily through interest earned on USDC reserves and rewards paid to users. How the CLARITY Act defines permissible stablecoin yield programs determines whether that revenue stream survives in its current form or must be restructured.
The company’s Agentic Market launch on Monday, which routes AI agent transactions through USDC over the x402 protocol, adds a second dimension to its USDC stake. If stablecoin transaction volume from AI agents grows as Armstrong has predicted, the regulatory treatment of USDC’s underlying economics becomes even more valuable to protect. $1.07 million in Q1 lobbying is a modest investment against that exposure.
How the Q1 Spend Compares to the Legislative Outcome
Armstrong reversed his CLARITY Act opposition by March 2026, with Coinbase publicly stating it was “ready to do its part” to get the bill passed. The Q1 lobbying period therefore captures both the opposition and the reversal, along with continued engagement on implementation of the GENIUS Act that was already law. For a company with Coinbase’s revenue base, $1.07 million in quarterly lobbying is a standard operating cost for an industry participant with direct exposure to pending federal legislation. What distinguishes Coinbase’s Q1 from previous quarters is that the legislation being lobbied on was active, consequential, and moving during the period covered.
The nominee to lead the US Federal Reserve, Kevin Warsh, on Tuesday faced criticism and backlash from Democrats questioning his financial disclosures and potential conflicts of interest.
Heading into today’s Senate Banking Committee confirmation hearing, it was clear that the independence of the Fed remains a key issue for many lawmakers concerned about US President Donald Trump’s influence over any Senate-confirmed candidate.
With Jerome Powell’s term as the US Federal Reserve Chair set to expire next month, lawmakers are scrambling replace the long-serving official.
Under questioning from Massachusetts Senator Elizabeth Warren, the committee’s ranking member who repeatedly referred to Warsh as a “sock puppet” for the president’s policies, the prospective Fed chair sidestepped answering whether Trump lost the 2020 US election and identifying any issue on which the two disagree.
Warren said confirming Warsh could result in the Fed “granting special accounts to [the Trump family’s] crypto company or bailouts to his friends on Wall Street if they get into trouble” and create “more opportunities for Trump’s corruption.”
Warsh faced similar questions from Rhode Island Senator Jack Reed and other Democrats on his position on lowering interest rates — an action Trump has repeatedly called for and signaled his pick would push if confirmed.
“The president never once asked me to commit to any particular interest rate decision, period, and nor would I ever agree to do so if he had, but he never did,” said Warsh in response to a question from Republican Senator John Kennedy.
Related: US senator urges delay of CLARITY Act Senate markup until May: Report
The nominee faced at least one direct question on crypto from Wyoming Senator Cynthia Lummis, responding that digital assets were “part of the fabric of our financial services industry in the United States.”
Warsh has pledged to divest from his financial holdings, which include investments in crypto and AI companies, before taking the oath of office if confirmed. The potential conflicts of interest, coupled with Trump’s repeated attempts to oust Powell before his term expires, have many questioning whether any Fed chair picked by the president could remain independent.
“While we want the Fed to be independent, we also recognize that there has to be collaboration between the administration, Congress and the Fed,” said Committee Chair Tim Scott in a Tuesday CNBC interview. “The independence is in making sure they do their job as it relates to the dual mandate.”
Prediction market users don’t anticipate a new Fed chair anytime soon
Powell’s term as chairman is set to end on May 15, giving lawmakers a matter of weeks to confirm Warsh or another Fed chair. He may be allowed to serve in a temporary capacity until his successor’s Senate confirmation, and will remain a member of the Fed’s Board of Governors until 2028.
The likelihood of a delay in Warsh’s confirmation is fueling an active event contract on prediction markets platform Polymarket, where many users are betting that the Senate may not act to confirm him until June. Some 37% of the positions gave took a chance he would be confirmed by May 15, while 78% are betting it won’t happen before June 30.
Economic development officials with links to the U.K. government invited Bybit leadership to London this week in what appears to be a bid to emulate the momentum of Dubai, where the cryptocurrency exchange is based, and the rest of the United Arab Emirates.
CEO Ben Zhou said the message from the U.K. is “they are very eager to invite big business to establish bases and create jobs,” and discuss forthcoming pro-crypto regulation.
Bybit was founded by Zhou in 2018, and four years later moved its headquarters to Dubai from his native Singapore. It is ranked the second-largest crypto exchange by CoinGecko, trailing only Binance, which set up in the UAE in 2025.
The arrival of crypto giants like Bybit and Binance acted as a magnet to attract smaller crypto companies to the region, something the U.K. would like to emulate, Zhou said.
“One interesting thing is there hasn’t been any momentum built in the U.K.,” Zhou said in an interview at Paris Blockchain Week. “If you look at UAE, where there are big exchanges like Bybit or Binance, once we announced we’re going to be there, smaller players followed, and that created this momentum.”
Zhou’s invitation includes meetings with the Financial Conduct Authority and representatives of the House of Lords, and coincides with UK Fintech Week and a Treasury plan to revamp payment systems with stablecoins and the spread of tokenization.
“I have meetings with FCA. I have meetings with the House of Lords just to discuss what do you want to do with crypto,” Zhou said, without naming the U.K. government department that extended the invitation.
“We were invited specifically by some economic development board who said ‘We can get a direct line to the prime minister.’ There is an agenda to push for innovation, especially in crypto,” Zhou said.
Neither the Treasury nor Lucy Rigby, the Economic Secretary to the Treasury, responded to requests for comment. The Department for Science, Innovation and Technology also did not respond to requests for comment. The FCA had not replied by press time.
The invitation’s timing is interesting as the UAE has suffered direct attacks from Iran during the U.S.-Israel war that started Feb. 28, prompting tens of thousands of residents and tourists to leave the country. One in eight British residents has left, the Financial Times reported earlier this month.
The U.K. government has seen “the outflow of money and companies going to the UAE. They want to win it back. Precisely, now is good timing,” Zhou said.
British crypto-friendly fintech firm Revolut notified investors that it was targeting a valuation of up to $200 billion in its stock market listing, the Financial Times reported on Tuesday.
Europe’s largest fintech firm recently said it would not seek a listing before 2028 and that it had not laid out any formal valuation targets, following a share sale in November last year which valued the company at $75 billion.
Revolut had discussed a potential valuation of $150 billion to $200 billion in a future initial public offering (IPO) with investors, according to the FT’s report, citing sources familiar with the matter.
Media reports have also said that Revolut, which received a full U.K. banking license in March, is preparing for a secondary share sale in the second half of 2026, with expectations of a $100 billion valuation post sale.
Co-founder Nik Storonsky said in December that his stake would be worth about $80 billion in the company if it reached a $200 billion valuation.
In 2025, Revolut’s pre-tax profit surged 57% to 1.7 billion pounds ($2.3 billion), a smaller gain than the previous year’s nearly 150% increase.
In March, Revolut also applied for a banking licence with the Office of the Comptroller of the Currency (OCC), which, if approved, would allow the London-based fintech to operate more like a traditional bank in the world’s largest economy.
While Revolut is targeting a record-breaking IPO, a source close to fintech said no formal valuation has yet been decided, according to FT.
Revolut did not immediately respond to a CoinDesk request for confirmation.
Crypto World
Feds sentence mob royalty Carmine Agnello for lining his pockets with tax dollars and crypto
Carmine Agnello, the mob boss John Gotti’s grandson, was sentenced to 15 months in prison for defrauding the U.S. government’s Covid relief funding system out of $1.1 million, proceeds which he used to invest in crypto, the Department of Justice said.
In a statement released Monday, the U.S. Attorney’s Eastern District of New York office said Agnello fraudulently obtained multiple disaster relief loans from the government’s Small Business Administration (SBA) and used the funds in cryptocurrency investments.
Gotti’s grandson “diverted [the proceeds] for his personal use, including by investing approximately $420,000 in a cryptocurrency business,” the attorney’s office said.
The fraudster, who will turn himself in for imprisonment on July 1, submitted false information to the SBA between April 2020 and November 2021, stating the proceeds were for his autoparts and recycling business in Queens, including for employee salaries.
“During the height of the COVID-19 pandemic, the defendant shamefully lined his own pockets with government and taxpayers’ dollars, which he must repay as part of today’s sentence,” United States Attorney Joseph Nocella said.
“Mr. Agnello defrauded a program designed to assist businesses and employees during the pandemic,” stated United States Postal Inspection Service, New York Division (USPIS) Inspector in Charge Larco-Ward.
Agnello is not the only individual to have defrauded the government’s Covid relief fund. Among several cases that ended up in court, Bruce Choi’s stands out as he illegally obtained $2 million in pandemic-eric business loans on behalf of non-existent companies and used the money to buy cryptocurrency via Kraken. David T. Hines fraudulently obtained $3.9 million from similar relief funds and used some of the proceeds to purchase a Lamborghini.
Based on statistics from the U.S. Government Accountability Office (GAO), fraud against Covid-related relief funds was rampant, with roughly $135 billion, or up to 15% of the total funds, lost to scams.
Agnello’s grandfather exerted power with brutal violence and enjoyed the spotlight. He took over the Gambino, running enterprises that authorities claimed earned him roughly $500 million a year from ventures that included extorting unions, illegal gambling, loan-sharking and stock fraud. In 1992, Gotti was found guilty on 13 criminal counts and sent to federal prison, where he died of cancer at age 61.
Core Scientific (CORZ) is preparing to raise $3.3 billion through a junk bond sale as it continues its transition toward artificial intelligence-focused data center operations.
Demand for AI services has pushed data centers, power supply and advanced chips to their limits. To keep up, firms are tapping riskier parts of the debt market for funds to keep developing their operations. Core Scientific, once a bitcoin miner, sold $175 million in bitcoin last month to further its AI pivot.
Borrowers linked to AI infrastructure have raised $17.9 billion in junk bonds so far this year, Bloomberg reported. CORZ itself is building six data centers that will support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that could bring in around $10 billion in revenue, the report adds, citing sources familiar with the deal.
Core Scientific’s move follows a string of large deals. Recent offerings tied to Google-backed data centers and CoreWeave raised a combined $6.7 billion. Another firm, Edged Compute, is marketing $1.3 billion in bonds to fund facilities leased to CoreWeave and an Alibaba unit.
Core Scientific said it will use proceeds to repay existing debt and fund reserves. It also plans to support construction across several states if costs exceed available funds, signaling how capital-intensive the AI buildout has become.
The company still holds “under 1,000 bitcoin,” according to CFO Jim Nygaard.
Big AI pivot
Core Scientific was founded in 2017 and grew into one of North America’s largest bitcoin miners before filing for Chapter 11 in December 2022, squeezed by high power costs and a weak bitcoin price. It emerged from reorganization in January 2024 and was relisted on Nasdaq under the ticker CORZ.
The pivot from bitcoin mining to AI hosting is all about the margins.
The April 2024 halving cut block rewards from 6.25 BTC to 3.125, and by late 2025, the average cash cost to mine one bitcoin rose while the price of BTC itself had been on a downturn, from over $125,000 to around $75,800. With rising power costs and competition, most miners became unprofitable and had to find alternative ways to continue earning revenue.
That’s when AI came to the rescue. Miners’ most valuable assets, already-built data centers and power contracts, meanwhile, gained a new use case: hosting computers that power AI.
Their power contracts, grid connections and cooling-ready sites are attracting hyperscalers, including Microsoft, Google parent Alphabet and others, in the ongoing AI race. Core Scientific was one of the first miners to pivot on a large scale, which caught investors’ attention and sparked the AI push.
Core Scientific’s shares were up about 6% on Tuesday and are up nearly 42% this year, while bitcoin fell 11%.
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A coalition of European financial institutions and industry bodies is urging EU lawmakers to accelerate reform of blockchain rules by treating the DLT Pilot Regime as a standalone law rather than folding it into a broader legislative package. The letter, signed by 39 entities including Nasdaq and Boerse Stuttgart, calls for a quick carve‑out to keep Europe at pace with global developments in tokenized finance. According to Cointelegraph, the missive was addressed to the European Commission and Parliament, highlighting the risk that delaying action could slow Europe’s adoption of distributed ledger technology in financial markets.
The DLT Pilot Regime, launched in 2023, serves as a regulatory sandbox for testing blockchain-based trading and settlement of assets such as stocks and bonds under real-market conditions. It provides temporary exemptions from certain rules to allow firms to experiment with tokenized finance in a controlled environment. The signatories contend that integrating the regime into a wider Market Integration and Supervision Package would push reforms into a protracted negotiations cycle, potentially undermining Europe’s competitiveness as the United States advances its own tokenized-finance initiatives. “Negotiations are likely to be lengthy,” the letter states, adding that delays “risk dampening Europe’s momentum in DLT adoption.”
Key takeaways
- EU industry groups press for treating the DLT Pilot Regime as a standalone legislative act rather than including it in a broader digital finance package.
- Proposals call for expanding the regime’s scope, increasing the asset universe, and raising the overall testing cap to 150 billion euros.
- Efforts include removing time limits on licenses, enabling longer or permanent permission to operate pilot projects.
- Context is shaped by a U.S. regulatory shift: the SEC has clarified custody rules for tokenized securities and signaled support for tokenization services via a DTCC subsidiary under an no-action posture.
- The developments bear on Europe’s cross-border capital markets, licensing regimes, and competitiveness relative to the United States and other jurisdictions.
EU regulators and industry: decoupling the DLT Pilot from broader reform
The joint letter contends that a standalone DLT Pilot Regime would yield faster regulatory clarity and more predictable pathways for firms testing blockchain-enabled trading and settlement. With the European Union pursuing a broader digital-finance reform agenda, the authors warn that binding the pilot to the multi‑year negotiation timeline of other measures could slow practical progress on tokenized markets. The signatories emphasize broad industry support for pragmatic adjustments that could accelerate implementation without compromising safety or investor protection. The letter was directed to Financial Services Commissioner Maria Luis Albuquerque, underscoring a sense of urgency among market participants who fear lagging policy momentum.
Scope expansion and licensing: what changes are proposed
Under the current regime, the pilot allows limited testing of certain asset classes and issuance scales. Specifically, it covers relatively small market-test cases, with thresholds such as shares of companies valued under roughly $588 million, bonds with issuances under about $1.17 billion, and investment funds with assets under $588 million. The industry coalition is pushing for a broader menu of eligible assets and a substantial uplift in the testing ceiling to 150 billion euros ($176 billion). Besides widening eligibility, the proponents call for the removal of time limits on licenses, effectively enabling longer or ongoing pilot activity to support scale‑up and learning by doing. They argue these are practical, widely supported adjustments that would foster regulated on‑chain markets across Europe.
US momentum and cross-border regulatory context
The United States has been moving to integrate tokenized securities into the existing financial infrastructure, creating a contrasting backdrop to Europe’s stalled pace. The Securities and Exchange Commission has clarified that broker‑dealers can custody tokenized securities under current investor-protection rules. In another development, the SEC issued a no‑action letter enabling a Depository Trust & Clearing Corporation (DTCC) subsidiary to launch a service that tokenizes real-world assets held in custody. These steps reflect a broader U.S. policy trajectory toward practical, regulated tokenization as part of the mainstream financial system. While these actions are not EU decisions, they influence the regulatory discourse in Europe and shape expectations for how quickly EU rules must adapt to technological and market developments. Cointelegraph has reported on these developments and notes the contrast with Europe’s cautious, negotiations-heavy approach.
Industry calls and the push for a timely fix
Separate but related to the current push, a February letter from a group of nine European tokenization and market-infrastructure firms similarly urged EU policymakers to urgently update the DLT Pilot Regime. The signatories—among them Securitize, 21X, and Boerse Stuttgart Group—warned that strict asset limits, low issuance caps, and time-bound licenses risk constraining the growth of regulated on‑chain markets and could drive liquidity away from Europe toward the United States. This earlier appeal underscores a broader concern that the continent’s financial ecosystem could lose competitive momentum if policy changes are not enacted promptly. The situation is being watched closely by exchanges, custodians, and asset managers seeking regulatory clarity and a scalable path to tokenized capital markets.
These developments sit at the intersection of European harmonization efforts and the need for robust, enforceable frameworks that support institutional adoption. They also touch on MiCA (Markets in Crypto-Assets Regulation) and the EU’s broader strategy for digital finance, raising questions about licensing, cross‑border supervision, and alignment with traditional banking and custody infrastructures. As regulators weigh changes, market participants are looking for predictable rules, clear oversight standards, and scalable pilot programs that can translate into real-market activity without compromising investor protection or market integrity.
Cointelegraph’s reporting indicates a broad desire among European incumbents and new entrants to reduce the frictions that typically accompany regulatory pilots when they are embedded in larger reform packages. The outcome will influence how quickly regulated, tokenized products can be tested and, ultimately, how seamlessly Europe integrates tokenized finance into its existing financial system.
What happens next remains contingent on negotiations among EU institutions, member‑state interests, and the regulatory oversight community. A standalone DLT Pilot Regime could accelerate practical outcomes, but it will need to be carefully calibrated to maintain high standards of investor protection and market integrity while enabling prompt, scalable experimentation.
Closing perspective: As EU policymakers consider next steps, observers should monitor how changes to the DLT Pilot Regime align with MiCA timelines, licensing processes, and cross‑border supervision frameworks. The balance between speed, safety, and systemically important oversight will shape Europe’s role in global tokenized markets and determine whether the continent keeps pace with U.S. innovations in digital finance.
April appears to be a lost cause for the crypto Clarity Act, but a U.S. Senate committee hearing sometime in May could keep the critical market structure legislation alive, as long as it can reach a final vote of the overall Senate by July, according to lobbyists and a lawmaker aide focusing on the market structure bill’s sluggish progress.
The legislative calendar is running out of room for this year, but a Senate aide told CoinDesk that a potential new delay of a couple of weeks — allowing Republican Senator Thom Tillis to finish discussions with bankers over stablecoin-yield concerns — is not yet pushing this work past the point of no return. The aide also said that earlier negotiations over decentralized finance (DeFi) protections are effectively settled, leaving few other impediments in the way of a committee approval.
One of the chief problems the crypto industry faces (if it can leap the stubborn hurdle of the banking sector’s objections about stablecoin rewards) is that the Senate Banking Committee hearing that the bill needs to clear would be only a first step of many.
Here’s the scheduling maelstrom the effort is now circling: The Senate will essentially flee Washington in August and be in election mode until the November congressional midterms arrive. It’s currently scheduled for about a dozen weeks of DC work before the elections, and it has some pressing matters on its plate during that time, including the funding battle over the Department of Homeland Security, clashes over the Iran war, the debate on voter identification and addressing nominations such as President Donald Trump’s pick to run the Federal Reserve, Kevin Warsh.
If the bill manages to finally get signoff from the Senate Banking Committee, the text needs to be merged with the version that passed the Senate Agriculture Committee. That merger work is the timing cushion that these current delays are eating into, the aide said.
The final legislation would likely be revised further as lawmakers add their final compromise on an ethics piece in which Democrats wanted to limit senior government officials (most pointedly President Trump) from profiting off of crypto interests. The aide said that language is now circulating back and forth on that point but that it won’t be in the banking panel’s version and would be added later. If they can get past that dispute and another demand about appointing a full slate of commissioners to oversee markets regulation, the bill may win enough Democratic support to pass.
Then the House would need to approve it again, because it’s very different from the version that chamber already advanced last year. But that would be expected to go quickly, as long as further disagreements don’t arise.
The last step, Trump’s signature, is expected to be the easiest, though he inserted some uncertainty in March when he said he wouldn’t sign any bill until he gets legislation approved that would demand voters prove their citizenship before they can cast ballots.
The Digital Asset Market Clarity Act, if approved, would become the second major crypto bill to become law, joining last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. But it’s an unresolved stablecoin matter from the GENIUS Act that has delayed progress on the Clarity Act since the start of the year, as bank lobbyists have drawn enough support from senators to back their worry that stablecoin rewards programs could be close enough to deposit yield that it jeopardizes the banks’ business model.
The debate — far afield from the central aims of the Clarity Act — has raged through White House interventions and tough rhetoric from crypto insiders. Coinbase, which stands to take a substantial hit if stablecoin reward programs are curtailed, has been at the forefront, and Chief Legal Office Paul Grewal posted Tuesday on social media site X with another push.
“You can’t be for CLARITY and against rewards,” he wrote. “It’s one or the other. Time to choose.”
Though key Senate negotiators had recently said they had an “agreement in principle” to move forward with a compromise, Republican Senator Tillis told reporters that earlier hopes for April progress was likely slipping into May. The White House has leaned into the crypto position on allowing some rewards that don’t look like interest on core bank deposits.
“It’s hard to explain any further lobbying by banks on this issue as motivated by anything other than greed or ignorance,” Patrick Witt, a top crypto adviser in Trump’s White House, said in how own recent posting on X. “Move on.”
In the current version, insiders say that the compromise has hovered steadily around an approach that would ban payment of yield on any product that looks or acts like insurance on a deposit, but it would still let firms such as Coinbase structure rewards programs that would be more akin to credit-card incentives. But the lawmakers have been shy about releasing text that could spark further negotiation drama, after letting both crypto and banking industry representatives review language last month.
“We’re too close to let this effort fail,” said Cody Carbone, CEO of the Digital Chamber, in a statement to CoinDesk. “A markup must happen to move this forward. It’s been three months since it was initially scheduled, and given the progress on all issues, especially the bipartisan stablecoin yield agreement, now is the time.”
Every day that passes without progress marks a decline in the odds for eventual Clarity Act success. The very next action should be the scheduling of the markup hearing and the sharing of the long-awaited bill text that the negotiators have been wrestling over.
“In our view, the odds of CLARITY being signed into law in 2026 are roughly 50-50, and possibly lower,” according to a research note that crypto investment firm Galaxy is planning on publishing this week. “The uncertainty stems not from any single issue but from the sheer number of unresolved questions that must be settled in sequence under severe time pressure.”
In other words, a single further blowup among the negotiators could be a fatal delay, though the period after the November elections could offer a final low-odds, last-ditch opening. The so-called “lame duck” session of Congress at the end of the year can be a period in which the outgoing Congress can still act, and more than one crypto insider has suggested that it’s not out of the realm of possibility that a hypothetically derailed Clarity Act could reappear then.
While crypto lobbyists are desperate for immediate action on the legislation, the industry is playing the long game on the political front. Crypto PACs have already devoted millions of dollars to keep adding to the list of its friends in Congress from both parties. The sector’s leading campaign-finance arm, Fairshake, is careful to back members of both parties, and many of their political picks will be joining next year’s Congress. If the Clarity Act is law by then, there are likely to be other pressing legislative matters for the industry, potentially including a tax overhaul and the establishment of a federal stockpile of bitcoin .
Bitcoin (BTC) sought to match ten-week highs on Tuesday as market participants bet on a new short squeeze.
Key points:
-
Bitcoin is due a fresh short squeeze as funding rates uniquely stay negative as price grinds higher, say market pundits.
-
Short-term targets include a trip to $85,000 in the coming weeks.
-
Bitcoin bulls still need to clear the nearby 21-week trend line keeping price pinned since October 2025.
“Cannon is loaded” for Bitcoin short squeeze
Data from TradingView showed BTC/USD approaching $77,000 for the first time this weekly candle.
A slight comedown into the Wall Street open meant that price continued to coil below a large area of resistance.
Mixed signals over the US-Iran war continued on the day, with Iran denying that its delegations had arrived in Pakistan for a new round of negotiations with the US. As Cointelegraph reported, markets offered only a muted reaction to the latest closure of the Strait of Hormuz oil route.
Among Bitcoin traders, a sense of cautious optimism was slowly growing.
“A period of consolidation, but clearly upwards pattern,” crypto trader Michaël van de Poppe wrote in an X post.
“This means that there’s likely more upside to come for Bitcoin towards the $85,000 area.”
Van de Poppe gave a time frame of “two to three weeks” for that level to come into focus, reiterating earlier comments about Bitcoin’s correlation with the Nasdaq.
Others focused on ongoing negative funding rates on exchanges, despite price rising.
“We’ve never actually gotten one when the chart was grinding up. NEVER. It only occurred during the local BOTTOMS,” trader Osemka noted on X alongside charts showing past negative funding periods.
Osemka suggested that “something is brewing beneath” the surface, just as BTC/USD eyed a reclaim of lost support.
Responding, crypto market intelligence platform Decode agreed, seeing the potential for another short squeeze.
“What this tells you is that the market is heavily short and bearish, and Bitcoin is setting up for a short squeeze. The cannon is loaded, bulls just need to light the fuse…,” it told X followers.
CME gap thins with BTC up against resistance
Multiple lines in the sand for bulls lie immediately above the spot price.
Related: Bitcoin can grow ‘probably a lot bigger’ than $30T+ gold market — Analysis
These include the 21-week exponential moving average (EMA), true market mean, and average buy-in price for investors of the US spot Bitcoin exchange-traded funds (ETFs).
Trader Daan Crypto Trades observed that price had also filled the latest weekend “gap” in CME Group’s Bitcoin futures market.
“$BTC Closed a big part of the gap from this weekend but still not everything. Market still just following the headlines and no $STRC raises for now. So we will just patiently wait and see,” he commented.
This article is produced in accordance with Cointelegraph’s Editorial Policy and is intended for informational purposes only. It does not constitute investment advice or recommendations. All investments and trades carry risk; readers are encouraged to conduct independent research before making any decisions. Cointelegraph makes no guarantees regarding the accuracy or completeness of the information presented, including forward-looking statements, and will not be liable for any loss or damage arising from reliance on this content.
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