SEC Commissioner Hester Peirce has called on U.S. regulators to use zero-knowledge proofs and digital credentials to reduce personal-data collection in KYC and AML compliance following her September 23 speech in New York.

The SEC’s published transcript states that Peirce delivered the remarks at SIFMA’s 2026 Digital Assets Conference during her penultimate week as a commissioner. She made clear that the views were her own and did not necessarily represent the SEC or her fellow commissioners.

Peirce argued that financial institutions collect large amounts of identity and transaction data because of customer identification and anti-money-laundering requirements. She described the resulting records as “ever bigger data haystacks” and said repeated collection can turn financial infrastructure into a “panopticon.” Her comments were a policy proposal, not a change to current KYC or AML rules.

Peirce wants zero-knowledge proofs used for KYC checks

In place of some existing data collection, Peirce proposed greater use of attribute-based credentials. Such credentials could establish facts including age, citizenship, accredited-investor status or whether someone has passed sanctions screening without giving each institution the underlying records.

A zero-knowledge proof could then confirm that a person satisfies a required condition without exposing information such as a name, address or income. Peirce argued that regulators should move from prescriptive collection requirements toward attribute-based verification where technology can support the required compliance check.

Her proposal would not eliminate every identity check or transaction-monitoring duty. Peirce questioned whether every institution needs to collect the same information and suggested making it easier for regulated firms to rely on trusted third-party identity verification. Existing broker-dealer rules already permit reliance on another financial institution in limited circumstances when regulatory and contractual conditions are met.

Current rules require covered broker-dealers to maintain written Customer Identification Programs. The SEC’s AML guidance lists requirements covering customer identifying information, identity verification, recordkeeping and screening against designated government lists. No SEC rule issued with Peirce’s September 23 speech removed those obligations.

SEC staff had already examined privacy-based identity tools

Peirce’s remarks followed direct work inside the SEC Crypto Task Force on privacy-preserving identity technology. On July 17, task force staff met representatives of Aztec Laboratorium Limited to discuss regulatory issues involving crypto assets and ZKPassport, according to an SEC meeting memorandum.

Materials submitted for that meeting described a system in which government-issued identity documents are checked locally on a user’s device. The system then produces a cryptographic proof for a requested fact, such as age, jurisdiction or sanctions status, without sending the underlying identity information to the business. The claims about ZKPassport’s operation came from Aztec’s presentation to SEC staff and were not an SEC endorsement of the product.

The discussion covered whether cryptographic proofs could satisfy certain customer identification, sanctions-screening and recordkeeping requirements. Aztec’s materials acknowledged that existing rules do not necessarily contemplate replacing stored information with a cryptographic proof, leaving regulatory questions unresolved.

A 2025 President’s Working Group report had previously discussed zero-knowledge proofs as one method for confirming that identity checks or screening occurred without revealing the underlying personal information. The report called for regulators to examine how digital identity tools could operate within existing AML and customer-identification requirements.

Innovation Exemption gives tokenized stocks a five-year route

Before turning to privacy and KYC, Peirce addressed the SEC’s Innovation Exemption issued September 17. She described the order as two time- and size-limited exemptions intended to let qualifying tokenized securities trade through automated market makers while the SEC considers permanent rules.

The SEC order grants conditional relief to Tokenized Securities Venues from the Exchange Act definition of an exchange. Separate relief applies to certain liquidity providers that could otherwise meet the definition of a dealer. The exemptions run from September 17, 2026 through September 17, 2031.

As crypto.news reported in its five-year tokenized stock exemption coverage, eligible venues can use permissioned AMM liquidity pools for tokenized National Market System stocks. Eligible stock tokens must provide rights matching the corresponding traditional shares, while synthetic products that merely track a stock’s price fall outside the exemption.

The framework places limits on the experiment. Tier 1 tokenized stocks are capped at 75 symbols and 0.25% of the underlying stock’s prior-month average daily volume. Tier 2 securities are capped at 250 symbols and 2.5%. Venues must make specified transaction information public and update qualifying transaction data within ten minutes.

Peirce said she preferred tokenized exposure to U.S. equities to develop domestically instead of leaving overseas platforms as the primary venue for such products. Chairman Paul Atkins separately described the exemption as a “bridge toward durable rulemaking.”

In related coverage, crypto.news reported that tokenized stocks must preserve traditional shareholder rights under the SEC framework. The exemption gives issuers an opportunity to object before an unaffiliated third party makes a tokenized version of their stock available through a qualifying venue.

SIFMA raises concerns as SEC seeks public comments

SIFMA welcomed regulatory work on tokenized securities but raised concerns about parts of the temporary framework. President and CEO Kenneth Bentsen Jr. said the group was concerned that multiple tokenized versions of listed securities trading in parallel markets could create investor confusion and price or liquidity fragmentation.

Peirce acknowledged SIFMA’s initial response during her September 23 remarks and said the exemption represented only one stage of the SEC’s work on tokenized securities. She said the agency’s longer-term task was to establish rules for intermediaries and venues handling forms of tokenized securities that existing market regulations did not originally contemplate.

The KYC proposal remains separate from that order. Peirce did not announce an SEC rulemaking that would allow zero-knowledge proofs to replace existing customer-identification records, nor did her speech create a new compliance exemption. The current broker-dealer AML framework continues to require firms to follow applicable customer-identification, monitoring and reporting rules.

For tokenized securities, meanwhile, the SEC has kept File No. 4-927 open for public comments on the Innovation Exemption. The agency is specifically requesting feedback on its five-year duration, trading limits, market effects, compliance conditions and whether any parts of the temporary framework should eventually become permanent.

Brazil’s central bank has required covered institutions to report virtual-asset transfers worth at least $10,000 to or from self-custody wallets beginning October 1, 2026.

The Central Bank of Brazil published Resolution BCB No. 588 on September 23, amending Circular No. 3,978, the anti-money-laundering and counter-terrorist-financing framework for institutions under its supervision. The new item added to Article 49 covers transfers of virtual assets to or from self-custodied wallets when the value equals or exceeds the equivalent of $10,000.

Brazil’s $10K self-custody rule starts October 1

Resolution 588 places qualifying self-custody transfers inside the category of specific operations that covered institutions must communicate to the Financial Activities Control Council, known as Coaf. The rule applies in both directions, covering transfers sent to a self-custody wallet and transfers received from one.

The resolution does not prohibit self-custody, cap the amount a user can transfer, or state that a qualifying transaction must be blocked. B3 reported that the $10,000 figure is a mandatory reporting threshold instead of a transaction limit. The central bank has said self-custody can reduce information available for monitoring because users directly control the private keys.

By amending Article 49 of Circular 3,978, the new provision sits alongside mandatory reports for certain large cash operations and foreign-currency cash transactions. Resolution 588 adds foreign-exchange transactions involving at least $10,000 in physical foreign currency and virtual-asset transfers involving self-custody wallets at the same dollar threshold.

Resolution 588 differs from Brazil’s 24-hour hold

The October reporting requirement is separate from Resolution BCB No. 584, an anti-fraud rule published in August. Resolution 584 covers certain outbound virtual-asset transfers to foreign service providers or self-custody wallets and permits a temporary retention period of up to 24 hours under defined risk controls from January 1, 2027. Brazil’s Finance Ministry explained the measure after the central bank adopted it.

As crypto.news previously reported, Brazil’s 24-hour hold on qualifying $10,000 crypto transfers uses a different threshold calculation. Resolution 584 can apply when one transfer exceeds the threshold or when the same customer’s transfers reach the threshold in aggregate during one day. Providers can release a transfer before the full 24 hours after completing the required risk review.

Resolution 588 contains no equivalent same-day aggregation language for its automatic reporting trigger. Its text refers to a transfer with a value equal to or above $10,000. A Brazilian regulatory analysis published after the September rules found the same distinction: Resolution 584 expressly aggregates same-day transfers, while Resolution 588 does not state such a formula.

The absence of an automatic aggregation clause does not remove separate suspicious-activity monitoring obligations. Circular 3,978 requires covered institutions to assess transactions or situations that may indicate money laundering or terrorist financing, with suspicious cases subject to a separate reporting process.

Covered institutions must send reports through AML controls

Article 49 of Circular 3,978 requires institutions within its scope to communicate listed transactions to Coaf. The circular’s existing timing rule requires Article 49 communications by the next business day after the transaction or relevant provision occurs, placing the new self-custody category inside an established compliance process.

The same circular prevents institutions from informing customers or third parties that a Coaf communication has been made. Resolution 588 does not create a direct filing obligation for an individual simply because the person controls a self-custody wallet; the reporting duty operates through institutions covered by the central bank’s AML framework when they handle a qualifying transfer.

In its public explanation, the central bank said self-custody can “reduce the availability of information for monitoring and risk assessment purposes.” The statement distinguished user-controlled wallets from assets held by an institution authorized by the central bank, where customer and transaction records remain inside a supervised entity.

Resolution 588 itself does not create a new crypto tax rate, fee, or transaction levy. The measure amends Brazil’s AML/CFT reporting framework, while crypto taxation operates under separate tax rules. Crypto.news has previously covered Brazil’s separate crypto tax framework, including rules affecting gains from assets held in self-custody.

Brazil is rolling out crypto supervision in stages

Resolution 588 arrives within a series of virtual-asset rules introduced since 2025. As crypto.news reported, Brazil’s capital requirements for crypto service providers now sit alongside licensing, governance, security and compliance requirements. A separate 2026 rule has restricted virtual assets from settling payments inside regulated cross-border electronic foreign-exchange channels. Brazil’s cross-border crypto payment restrictions cover the supervised eFX system without banning ordinary crypto transfers outside that channel.

A separate central bank measure, Resolution BCB No. 589, was issued on September 23 alongside Resolution 588. It changes rules for virtual-asset service providers, including supervisory information covering customer balances, custody positions, proof of reserves and customer assets committed to staking. Provisions governing those data submissions take effect on January 1, 2027.

Resolution 589 changes another operational deadline for institutions dealing with crypto service providers. From November 6, 2026, financial institutions, payment institutions and other entities authorized by the central bank face restrictions on carrying out or facilitating virtual-asset market operations with counterparties that are not authorized to operate in Brazil, subject to the exceptions in the applicable regulation.

Researchers at the cryptography research firm Alloc Init have proposed a system for bringing Zcash-style private transfers to Bitcoin without requiring a soft fork. 

The proposal, called Shielded Bitcoin, would conceal transaction amounts, senders, receivers and links to previously spent funds using encrypted notes and zero-knowledge proofs. The paper was published on Thursday by Clara Shikhelman, Mikhail Komarov and Aleksei Moskvin.

The proposal offers a potential path to stronger privacy for Bitcoin users without requiring consensus changes to the base protocol.

Instead of having miners enforce the privacy protocol, Shielded Bitcoin would use Bitcoin as “a neutral publication and ordering layer,” the researchers wrote. Separate software called indexers would then verify zero-knowledge proofs, check that funds haven’t been double-spent, and reconstruct the state of the shielded system.

Shielded Bitcoin’s design explicitly draws from Zcash’s architecture. The researchers said it similarly uses encrypted notes, public nullifiers that mark notes as spent, and zero-knowledge proofs that show transactions are valid. Unlike Zcash, Shielded Bitcoin would not operate its own blockchain or consensus mechanism.

Shielded Bitcoin draws mixed reactions 

Developer Vadim Zavodil criticized the proposal on X, arguing that much of its privacy stack had already been implemented by Zcash. He questioned how much privacy a newly launched system could initially provide, arguing that a new shielded pool would start without the anonymity set Zcash has accumulated over years of use. 

“Privacy is a function of the crowd. Zcash has a real shielded pool built over years,” he wrote. “A brand new metaprotocol starts at zero, so your first private transfer hides in a crowd of one.”

In a companion post explaining the proposal, the Shielded Bitcoin researchers acknowledged a similar limitation, saying that large deposits do not automatically create a large anonymity set. They said observers may still be able to narrow down relationships between transfers if a small number of actors create most notes or wallets exhibit distinctive behavior.

Related: Zcash’s November upgrade could freeze funds in legacy Sprout pool

Pierre-Luc Dallaire-Demers, founder of post-quantum cryptography firm Pauli Group, raised a separate issue, describing the construction as interesting but “not quantum resistant at all.” Dallaire-Demers later said he was exploring what a fully post-quantum version could look like, assuming Bitcoin eventually adopts a post-quantum signature scheme.

Zerocash co-author and StarkWare CEO Eli Ben-Sasson was more supportive of the proposal’s direction. In response to Alloc Init’s announcement, Ben-Sasson said the original intent behind the Zerocash paper, which preceded Zcash, was to bring privacy to Bitcoin.

Ben-Sasson said he had not yet read the Shielded Bitcoin paper but would like to see the vision of privacy and scalability through zero-knowledge proofs materialize on Bitcoin’s base layer.

Magazine: Winners and losers of the SEC’s new tokenized stocks rules

Bitget has said its preliminary probe into a $351.6 million wallet breach found no private-key leak, while withdrawals remain suspended after unauthorized transfers on September 24, 2026.

Bitget’s official security notice states that its systems detected the transfers at 18:31 UTC and activated emergency procedures within minutes. The exchange estimated that approximately $351.6 million in assets were affected and said the incident reached portions of its hot and warm wallet layers. Cold wallets remained secure under Bitget’s internal three-tier classification, the company said.

The exchange temporarily stopped withdrawals while leaving deposits and trading open. Bitget said customer account balances remained accurate and its User Protection Fund, valued at more than $464 million, could cover the estimated loss. Law enforcement agencies and on-chain security firms have been notified, while addresses tied to the abnormal transfers have been flagged.

Bitget says private keys were not exposed

During a live Q&A after the breach, CEO Gracy Chen said investigators had ruled out a leak of private keys used by Bitget’s cold, warm and hot wallets. Chen said attackers entered Bitget’s systems and transferred funds directly, without using customer withdrawal requests. Investigators were still working to determine the precise entry point.

A report on the same live session said Bitget’s security team had identified part of the attack route. The preliminary finding described a compromise of a core backend wallet service, where false transfer data reached the exchange’s approval-signature process. Bitget has not yet published the technical evidence behind that finding, leaving the exact intrusion method under review.

Chen said measures intended to prevent further outflows had been completed. Engineering teams were still repairing systems, strengthening security controls and preparing withdrawal services for reopening. No fixed restart time had been announced by early September 25.

The first public notice had avoided naming an attack method. Bitget wrote, “We will not speculate on the attack vector until the investigation is complete.” Its subsequent backend-system finding therefore remains preliminary until the promised root-cause report is released.

As crypto.news reported after the $1.4 billion Bybit theft in 2025, forensic investigators traced that attack to compromised Safe infrastructure. Investigators said Bybit’s own security systems remained intact during that incident.

On-chain tracking puts XRP at the top of stolen assets

On-chain estimates have continued changing as researchers identify more addresses and assets. Lookonchain placed the stolen portfolio at roughly $356.8 million using token prices when it published its update, slightly above Bitget’s approximately $351.6 million internal estimate. The figures come from separate accounting methods and should not be treated as identical measurements.

Lookonchain listed 102.93 million XRP worth $157.48 million as the largest component. Its breakdown included 31,890 ETH valued near $85.75 million, 34.75 million USDT, 21.05 million USDC, 19.67 million USD₮0, 3,000 XAUt, 12,719 BNB, 821,012 AVAX and 20.59 million TRX. The figures remain an external on-chain estimate, not Bitget’s final transaction-level accounting.

The Federal Reserve has released proposed rules aimed at tightening oversight of stablecoin issuers as the U.S. works to implement the GENIUS Act. The proposals set out how Fed-supervised entities would be required to hold reserves, manage risk, handle redemptions, and report key information about their stablecoins.

While the GENIUS Act already mandates that stablecoins be backed on a one-to-one basis with specified reserve assets, the Fed’s plan would add more granular requirements—especially around capital levels tied to operational risk, credit-related risks, and standardized reporting and assurance.

Key takeaways

• The Fed’s proposal would require operational-risk capital charges for stablecoin issuers, scaling based on the amount of stablecoins outstanding.
• Issuers would generally need to process redemptions within two business days and notify the Fed if reserves fall below required one-to-one backing.
• Monthly reserve and outstanding stablecoin reporting would be required, with disclosures examined by a registered public accounting firm and certified by the issuer’s CEO and CFO.
• A separate Fed proposal would create a pathway for Fed-supervised banks to seek approval to issue payment stablecoins through subsidiaries.
• Fed Governor Michael Barr supports the direction of the framework but says stablecoin reliability during market stress still needs further work.

What the GENIUS Act already requires—and what the Fed is adding

Under the GENIUS Act, stablecoin issuers must maintain reserves backing their tokens on a one-to-one basis and can only hold certain types of assets. These include cash, bank deposits, and short-term U.S. Treasurys, among other permitted instruments. The law also assigns federal regulators the task of writing the more detailed capital, reserve-diversification, and risk-management rules.

According to the Fed’s published documents, the agency’s proposals are intended to translate those statutory requirements into day-to-day supervisory expectations for issuers under Fed oversight.

Operational-risk capital, redemptions, and reserve shortfalls

One central piece of the Fed’s proposal is a capital framework tied to operational risk. As outlined in the Fed’s plan, issuers would face an operational-risk capital charge calculated as follows: 2% of the first $20 billion in stablecoins outstanding, 1.5% of the next $30 billion, and 1% of amounts above $50 billion. In addition to that operational-risk charge, the proposal contemplates further capital requirements linked to credit and operational risks.

On liquidity and redemption mechanics, the proposal would generally require issuers to process redemptions within two business days. If an issuer’s reserves drop below the one-to-one backing threshold, the issuer would have to notify the Fed. The issuer would then need to either restore reserves under a remediation plan or liquidate the reserves and redeem outstanding stablecoins.

For investors and traders, these elements matter because they directly affect the feasibility of exiting a stablecoin position when market conditions deteriorate or when an issuer faces stress on its reserve composition and operational controls.

Monthly disclosures and external verification

The Fed’s proposal also emphasizes transparency and accountability. Issuers would be expected to publish monthly reports covering their outstanding stablecoin balances as well as the value and composition of reserves backing those tokens.

Those disclosures would not be limited to internal attestations. The proposals call for the disclosures to be examined by a registered public accounting firm, and for certification by the issuer’s CEO and CFO.

This structure—audited examination plus senior executive sign-off—could create stronger compliance incentives for issuers, while giving market participants more consistent and comparable information to evaluate reserve backing over time.

Bank participation through subsidiaries: a separate application framework

In addition to rules for stablecoin issuers, the Fed also released a separate proposal intended to establish an application process for Fed-supervised banks that want approval to issue payment stablecoins through subsidiaries.

As described in the Fed’s second proposal, banks would be required to submit a business plan and financial information as part of the approval process. The separate track suggests the Fed is attempting to clarify how regulated banks can participate in the stablecoin ecosystem while remaining within a defined supervisory structure.

Barr’s support, and the remaining reliability questions

Fed Governor Michael Barr backed the proposals on Thursday but argued that more work is needed before stablecoins can be considered reliable payment instruments. Barr said that “stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions,” including during market stress, situations where even liquid government debt may come under pressure, and episodes of strain affecting a specific issuer or related entities.

In remarks tied to the Fed’s announcement, Barr indicated he was encouraged by proposed limits on reserve assets and by standardized capital requirements. At the same time, he urged public feedback on whether the framework adequately addresses interest-rate and foreign-currency risks.

Barr also raised questions about how universal redemption rights should be established in the final rule. He highlighted concern about an approach that could limit the Fed’s ability to take supervisory or enforcement action over an anti-money laundering deficiency unless the problem is deemed “significant or systemic.”

For market participants, Barr’s comments underscore a key tension: the rules aim to formalize backing and capital adequacy, but the final design will be judged on whether it holds up under real-world stress scenarios, not only in normal periods.

Public comment period and GENIUS Act implementation timing

The Fed’s proposals are open for public comment for 60 days after publication in the Federal Register, according to the Fed’s announcements. That comment window may determine how the capital formulas, redemption expectations, reporting requirements, and risk treatment ultimately look in final form.

The GENIUS Act is scheduled to take effect on Jan. 18, 2027, or 120 days after federal regulators issue final implementing rules, whichever comes first. As the rulemaking process advances, readers should watch how regulators refine stress-testing expectations, define the final contours of redemption rights, and decide how operational and financial risk controls translate into practical reliability for users.

The U.S. government has reportedly begun considering ways to support dollar-denominated stablecoin projects overseas as officials look to expand international dollar use and create another source of demand for U.S. Treasury securities.

Bloomberg reported on Sept. 23 that the Trump administration is discussing possible public-private stablecoin ventures involving agencies including the Treasury Department, State Department and U.S. International Development Finance Corporation. People familiar with the discussions said the initiative remains under consideration, and no specific country, company, funding amount or launch date has been disclosed.

The reported proposal has not yet appeared as a formal program in public releases from the three agencies. Existing official policy, however, already treats stablecoins as a potential channel for extending dollar use and increasing demand for short-dated U.S. government debt.

U.S. stablecoin policy already links tokens with Treasury demand

Treasury officials have publicly made the Treasury-demand argument for more than a year.

When President Donald Trump signed the GENIUS Act in July 2025, Treasury Secretary Scott Bessent said dollar stablecoins could strengthen the dollar’s role as the world’s reserve currency and create additional Treasury demand because eligible reserve assets include government securities. His statement described stablecoins as an internet-based dollar payment rail, though future market growth remains uncertain.

Treasury Deputy Secretary Francis Brooke gave a more current measure on Sept. 22. Speaking at the Treasury Market Conference, Brooke said stablecoin providers already own nearly $200 billion in Treasury bills and other securities close to maturity. He added that Treasury “may see stablecoin providers continue to grow and add to their holdings” as GENIUS Act rules are completed.

The $200 billion figure covers the stablecoin sector as a source of Treasury demand and does not represent new purchases tied to the Bloomberg-reported overseas initiative. No such government-backed foreign project has been announced.

A Treasury Borrowing Advisory Committee presentation from February had already examined the same mechanism. The analysis found that stablecoin growth could increase demand for short-term Treasury issuance when adoption comes from offshore users who were not previously holding dollars. The presentation estimated Tether and Circle had increased T-bill holdings by $70 billion since 2022 and said T-bills represented 53% of their assets using data through September 2025.

The committee presentation described a possible market outcome, not a commitment by Treasury to promote any particular issuer or stablecoin.

GENIUS Act positions regulated stablecoins as a possible channel for extending dollar use while imposing reserve, licensing and disclosure requirements on issuers.

GENIUS Act sets the reserve structure behind the plan

The GENIUS Act provides the legal foundation that makes Treasury demand part of the stablecoin discussion.

Permitted payment stablecoin issuers must maintain reserves at least one-to-one against outstanding tokens. Eligible assets include U.S. dollars, certain bank deposits, short-term Treasury securities, qualifying repurchase agreements and money-market funds holding permitted reserve assets.

Treasury proposed another set of implementing rules on Aug. 17 defining when a payment stablecoin is considered issued, offered or sold in the United States. The department expects the statute’s main issuance restrictions to take effect Jan. 18, 2027 unless final regulations trigger an earlier date under the law.

The framework contains a separate route for foreign issuers. U.S. law permits certain overseas payment stablecoin companies to operate under comparable foreign supervisory systems once Treasury determines that the jurisdiction provides regulation comparable to the federal framework.

That foreign-issuer pathway is separate from Bloomberg’s report about the government potentially supporting stablecoin projects overseas. One concerns eligibility for U.S. distribution; the reported initiative concerns expanding dollar stablecoin use in foreign markets.

Treasury’s latest GENIUS Act proposal set out licensing and foreign-issuer requirements ahead of the federal framework’s rollout.

Implementation is still underway. Several federal regulators missed the law’s original one-year deadline for final rules, leaving proposals at different stages while the statutory framework moves toward activation. U.S. regulators missed key GENIUS Act rulemaking deadlines during 2026.

Tether and Circle show how stablecoin demand reaches Treasuries

The Treasury-demand mechanism can already be seen in reserve disclosures from the two largest dollar stablecoin issuers.

Tether reported roughly $141 billion in direct and indirect U.S. Treasury exposure at the end of March 2026. Its Q2 attestation later showed about $184.6 billion of USDT outstanding and $187.75 billion of total assets, with the company saying most reserves remained in government-backed instruments and short-term liquidity facilities.

The latest Q2 release did not give the same detailed Treasury total as Tether’s first-quarter disclosure, so the $141 billion figure should not be treated as its current September balance.

Circle presents a similar structure through USDC. Its second-quarter SEC filing showed that approximately 84% of USDC reserves were held in the Circle Reserve Fund as of June 30, with the rest primarily held as bank cash. The reserve fund invests in short-maturity U.S. government securities and related instruments.

Circle’s public data listed $74.6 billion of USDC in circulation as of Sept. 21. A Sept. 18 SEC filing for BlackRock’s Circle Reserve Fund confirmed that Circle entities hold shares in the fund as part of reserves associated with Circle-issued stablecoins. The filing noted that fund assets can rise or fall as stablecoins are minted and redeemed.

Those reserve structures help explain why U.S. policymakers frequently connect stablecoin adoption with Treasury demand. The scale of any additional demand from a government-backed overseas expansion would depend on adoption, issuer reserve composition and whether users are moving into dollar stablecoins from assets they already hold in dollars.

DFC could provide a public-private investment route

Bloomberg identified DFC as one agency that could participate if the administration moves forward with overseas stablecoin ventures.

DFC has legal tools that could support public-private investments, although it has not announced a stablecoin project tied to the reported discussions.

Congress expanded the agency’s authority in December 2025. DFC said its reauthorization raised its maximum investment exposure to $205 billion, created a $5 billion revolving equity fund and increased its permitted minority equity ownership to 40%. The law extended the agency through 2031 and expanded the countries where it can invest.

DFC describes itself as the U.S. government’s international investment arm and can use loans, equity, guarantees, insurance and investment funds alongside private companies. It has already created joint-venture structures in sectors including transport, critical minerals and infrastructure.

On Sept. 16, the agency approved more than $8 billion of new projects covering infrastructure, technology, energy and other strategic investments. The package included DFC’s largest digital infrastructure investment to date, involving African fiber and data-center operator WIOCC Group, but it did not contain a stablecoin initiative.

Any future stablecoin investment would still have to move through DFC’s project review process. The agency says transactions can require due diligence, internal approvals and congressional notification before commitment or closing.

Overseas adoption remains a reported proposal, not a launched program

The reported discussions fit with existing administration statements about using privately issued digital dollars to extend U.S. currency reach.

Treasury’s own research has described stablecoin providers as an emerging source of Treasury demand. Its February analysis said offshore growth among users who do not already hold dollar assets could produce incremental demand for short-term government securities.

The White House currently estimates the stablecoin market at around $300 billion in one September economic analysis. The same research notes that reserve composition determines how much stablecoin growth ultimately flows into Treasury securities instead of bank deposits or other eligible assets.

Foreign adoption would therefore not automatically translate dollar-for-dollar into new Treasury purchases. Some reserves may sit in cash, bank deposits, repo transactions or money-market funds, while users converting existing dollar assets into stablecoins may create less incremental dollar demand than users moving from another currency.

Treasury’s latest public remarks nevertheless show that officials are actively tracking stablecoin providers as Treasury investors. Brooke said on Sept. 22 that the department monitors structural demand from stablecoin companies alongside banks, money-market funds, foreign investors and the Federal Reserve.

The Bloomberg-reported initiative has no disclosed list of target countries, private-sector partners or funding commitments. Treasury, State and DFC have not publicly detailed a timetable for launching an overseas stablecoin partnership, while Treasury’s immediate regulatory work remains focused on completing GENIUS Act implementation ahead of the federal stablecoin regime’s expected start.

The FBI has brought investigators, foreign law-enforcement partners and crypto-security specialists together in San Antonio for its latest Virtual Asset Technical Exchange as U.S. cryptocurrency-related complaints exceed $11 billion in reported annual losses.

CoinDesk reported that the invitation-only gathering took place in September and represented the ninth year of a forum previously known as the Virtual Currency Symposium, based on accounts from three past attendees. The FBI declined to comment on the event, leaving much of its current public record to participant disclosures and company confirmations.

One independent public reference provides a more precise timetable. Recoveris, a digital-asset investigation and recovery company, listed the FBI Virtual Asset Technical Exchange in San Antonio for Sept. 2–3 on its 2026 conference schedule.

FBI crypto crime forum brings investigators and industry together

The September program reportedly drew several hundred participants, with private-sector vendors and partners capped at roughly 50, according to people familiar with the gathering who spoke to CoinDesk. Attendees ranged from senior FBI officials and frontline investigators to overseas law-enforcement officers, compliance specialists and blockchain-forensics companies.

TRM Labs confirmed its attendance to CoinDesk. Predicate confirmed that co-founder and CEO Nikhil Raghuveera presented at the event on stablecoin compliance and the GENIUS Act. Sources cited by the publication said Chainalysis, the Security Alliance and Treasury Department bureau FinCEN were represented, though Chainalysis and the FBI declined to confirm their participation publicly.

The gathering reportedly included presentations, panels, product demonstrations and discussions on tracing illicit funds. Topics ranged from terrorist financing and cartel activity to scams, human trafficking, child sexual abuse material, violent attacks against crypto holders and activity linked to North Korea.

One attendee described the meeting as a law-enforcement forum instead of an industry conference: “This is not a crypto event. It is a law enforcement event.”

The public record indicates the forum predates the FBI unit now responsible for coordinating much of the bureau’s digital-asset expertise. Token Recovery has previously discussed attending the gathering when it operated under the Virtual Currency Symposium name, while public participant material places the 2024 edition in Austin.

FBI crypto investigations now sit inside a dedicated unit

The FBI formally created its Virtual Assets Unit in 2022 after cryptocurrency had become part of investigations across ransomware, online fraud, child exploitation, terrorist financing and activity linked to hostile states.

The bureau announced that the unit became operational on Feb. 7, 2022. It described the VAU as a central hub combining staff from its criminal and cyber divisions to provide intelligence, technical support and operational assistance across FBI investigations.

Its responsibilities include blockchain analysis, virtual-asset seizure support and training for agents working cases in which funds move through digital currencies. The FBI later described the unit as a specialized team that centralizes cryptocurrency expertise while supporting field offices and partner agencies.

The scale of reported crime involving digital assets has increased since the unit began operating.

The FBI reported that its Internet Crime Complaint Center received 181,565 complaints involving cryptocurrency during 2025, with reported losses exceeding $11 billion. Total IC3 complaints reached 1,008,597, while cyber-enabled crimes produced nearly $21 billion in reported losses.

Investment fraud accounted for almost half of cyber-enabled scam losses. Cryptocurrency investment fraud alone generated more than $7.2 billion in reported losses during 2025, according to the bureau’s annual report. The figures come from complaints filed with IC3 and therefore do not represent a complete measurement of every crypto-related crime committed during the year.

As previously reported, a proposed federal cryptocurrency theft task force would combine DOJ, FBI, DHS and Treasury expertise after lawmakers cited the same rise in reported losses and fragmented investigations across jurisdictions.

North Korea and Drift featured in the threat discussions

North Korean cyber operations were among the subjects covered at the San Antonio gathering, according to CoinDesk’s sources. One presentation reportedly examined the April attack against Solana-based Drift Protocol.

Current blockchain-forensics data puts the Drift loss at approximately $285 million. TRM Labs reported that attackers spent weeks preparing the operation before draining assets on April 1 in roughly 12 minutes. The firm linked the campaign to North Korean actors based on its on-chain investigation, while its initial report said the specific subgroup attribution remained under investigation.

TRM said attackers socially engineered Drift Security Council signers into pre-signing transactions that later granted critical administrative permissions. The attacker then used a fabricated token called CarbonVote Token as manipulated collateral before withdrawing real assets from the protocol.

Drift itself said it was working with law enforcement and third-party forensic firms following the exploit while developing a recovery framework for affected users.

TRM’s subsequent first-half review attributed approximately $643 million, or roughly 66% of cryptocurrency stolen during the first six months of 2026, to North Korea-linked activity. Drift and the $292 million KelpDAO attack accounted for around $577 million combined.

North Korea-linked attacks on Drift and KelpDAO accounted for most early-2026 crypto hack losses when TRM measured the threat earlier in the year.

The Drift investigation has remained active onchain. In July, a wallet tied to the Drift exploit moved roughly $44 million in Ether into Tornado Cash after remaining largely dormant for several months.

Sanctions and state-linked activity deepen the enforcement workload

The forum’s reported focus on nation-state activity comes as blockchain analytics firms record a sharp increase in cryptocurrency moving through sanctioned entities.

Chainalysis estimated that sanctioned entities received roughly $104 billion in cryptocurrency during 2025, up 694% from the previous year. The firm’s preliminary data placed total value received by identified illicit cryptocurrency addresses at at least $154 billion, up 162% year over year.

Chainalysis cautions that its illicit-volume calculation is a lower-bound estimate because new addresses can be identified after transactions have already taken place. Legitimate cryptocurrency transaction volume remains far larger than the illicit activity identified by the company.

Russia, Iran and North Korea drove much of the state-related activity measured by the firm. Chainalysis attributed the increase to cryptocurrency being used not only for laundering but for cross-border trade, sanctions evasion, procurement and state-supported financial infrastructure.

More recent security data show the hack environment continuing to evolve after the San Antonio meeting. TRM Labs reported in September that 2026 had recorded roughly 333 crypto hacking incidents involving approximately $1.73 billion in stolen assets at the time of its analysis.

Security firms increasingly describe compromised credentials, administrative access and social engineering as central risks alongside smart-contract bugs. TRM’s first-half data counted 207 hacks, the largest six-month incident total in its records, while operational and infrastructure compromises generated a disproportionately large share of losses.

As previously reported, compromised keys and social engineering have driven many of 2026’s largest DeFi losses, including attacks where malicious actors targeted people with privileged access before touching protocol infrastructure.

The FBI has not published a public agenda, attendee roster or post-event report for the September Virtual Asset Technical Exchange. Its official material continues to direct victims and companies toward IC3 and local field offices for reporting, while the Virtual Assets Unit provides blockchain analysis, seizure support and technical expertise for investigations across the bureau.

Bitget’s CEO Gracy Chen said preliminary investigation points to North Korean hackers behind the exchange’s reported $351.6 million security breach on Thursday. Speaking during a live Q&A on X shortly after the incident, Chen said investigators identified IP addresses they believe align with VPN services used by a DPRK-linked group.

Chen also said Bitget does not believe the breach involved an insider. She added that investigators were still mapping which parts of the exchange’s infrastructure were compromised and how the attackers gained access.

Key takeaways

• Bitget CEO Gracy Chen said preliminary findings link the attack to IP addresses associated with VPN choices used by a DPRK group.
• Chen said the exchange does not think the incident was carried out by an insider.
• Bitget indicated hackers moved funds directly, rather than forging user withdrawal requests.
• Withdrawals remained suspended at the time of publication, while Bitget works with partners on recovery efforts.

CEO points to VPN-linked IP addresses

In the Q&A, Chen told viewers that security investigators had flagged similarities between this incident and past DPRK-linked activity. She specifically referred to “some IP addresses” that match the VPN services reportedly used by the group.

Chen’s remarks described the attribution as preliminary, framed around technical indicators rather than a final, court-grade conclusion. Still, her comments reinforce a broader pattern the crypto industry has seen across multiple high-profile incidents, where infrastructure-level traces and operational “fingerprints” are used to connect attacks to specific threat actors.

Chen also said the investigation is ongoing, including efforts to determine which systems were affected and the precise entry point attackers used. That matters for users and market participants because identifying the initial access vector typically influences what remedial actions are prioritized—such as credential resets, segmentation changes, or controls around administrative interfaces.

How the breach reportedly worked

Beyond attribution, Chen offered details about the mechanics of the theft. She said hackers breached Bitget’s systems and transferred funds directly instead of forging user withdrawal instructions.

According to Chen, attackers “did not forge user withdrawal requests,” and she said they did not obtain Bitget’s private keys for any cold wallet or hot/warm wallet. Those distinctions are important because they suggest the compromise may not have relied on the same controls-behavior that some other incidents have shown, even if the ultimate outcome—unauthorized transfers—was severe.

Chen said investigators were still determining which systems were compromised. Until that scope is clear, it remains difficult for external observers to assess whether this was limited to particular services (for example, withdrawal-related infrastructure) or whether the breach potentially affected other operational components. For users, that uncertainty is reflected in the exchange’s decision at the time of publication to keep withdrawals suspended.

Bitget’s reported unauthorized transfers affected portions of its hot and warm wallet infrastructure, according to the exchange’s earlier disclosures. Withdrawals were still suspended at the time the CEO’s comments were reported.

Recovery efforts underway, but amounts not disclosed

During the Q&A, Chen said that some of the stolen funds had been recovered. She did not provide an amount, but said Bitget is working with blockchain foundations and other partners on recovery efforts.

Without a disclosed figure, observers will likely focus on whether recovery is partial or extensive—and, crucially, whether the attackers’ remaining funds are successfully identified and potentially blocked or reclaimed. The effectiveness of these efforts can vary significantly depending on factors such as how quickly assets are frozen, how the funds are routed through intermediaries, and whether counterparties and analytics teams are engaged promptly.

The broader market context also matters. If attribution strengthens—especially when aligned with prior patterns linked to DPRK-associated groups—it may influence how institutions assess counterparty risk and how exchanges harden controls related to suspicious network behavior and wallet-operation workflows.

DPRK links follow a pattern of major thefts

Chen’s comments come amid a long-running attribution debate in the crypto space, where North Korea-linked groups have frequently been referenced in connection with large-scale cyber thefts and laundering activity.

In earlier reporting, Cointelegraph described an estimated $2.02 billion in crypto theft attributed to North Korean actors in 2025, including a roughly $1.5 billion Bybit hack that the FBI attributed to North Korea. Cointelegraph also linked those broader estimates to “South Korea gets rich from crypto” reporting that framed North Korean activity in the context of weapons-related incentives.

Chen’s statement that the “pattern looks very much like what the North Korean team did before” suggests Bitget is interpreting technical and behavioral indicators through that existing lens. However, the exchange’s own caveat—she described findings as preliminary and said investigators were still working out the full compromise path—means readers should expect updates as more information becomes available.

For investors and traders, the immediate concern is not only the size of the breach, but the robustness of the exchange’s controls and the completeness of remediation. For builders and security teams, the incident underscores a recurring theme: even when private keys remain uncompromised, attackers may still succeed by compromising operational systems that can authorize or execute transfers.

Next, the key developments to watch are Bitget’s investigation findings on exactly which systems were breached, whether the exchange expands its recovery estimate beyond “some” funds, and when—if at all—withdrawals resume after the affected hot/warm infrastructure is stabilized.

Japanese government bond yields have climbed to levels not seen in decades after the Bank of Japan raised interest rates last week, adding another source of pressure for cryptocurrencies already dealing with rising US Treasury yields and renewed Federal Reserve rate hike expectations.

Reuters reported on Sept. 24 that Japan’s 10 year government bond yield rose 10 basis points to 3.075%, its highest level since August 1996, while the five year yield gained 10 basis points to a record 2.375%.

The move came during Japan’s first trading session since the BOJ raised its policy rate from 1% to 1.25% on Friday. Japanese markets had remained closed through Wednesday because of public holidays.

Selling spread across the yield curve, with the 20 year JGB yield climbing 8 basis points to 3.9% and the 30 year yield rising 6 basis points to 4.13%.

BOJ Governor Kazuo Ueda signaled that more rate hikes could follow, while concerns over domestic inflation have kept pressure on bonds. The yen weakened after the decision, prompting Japanese authorities to conduct rate checks in the currency market several hours later.

“Interest rates are being reviewed globally, and Japan’s interest rates are particularly low,” Masayuki Koguchi, executive chief fund manager at Mitsubishi UFJ Asset Management, told Reuters.

“So when the market finds a negative market cue, the selloff accelerates,” he added.

Japan bond yields could put yen funded trades under pressure

Rising Japanese rates do not provide a direct signal for Bitcoin or other cryptocurrencies, but traders have been watching Japan because of its role in funding global carry trades.

Investors have historically been able to borrow yen at low rates and move that money into assets offering higher returns. As Japanese borrowing costs rise, some of those positions can become less attractive.

Crypto.news previously reported that analysts were watching a possible squeeze on yen funded trades if the central bank continued raising rates.

Bitget Wallet chief marketing officer Jamie Elkaleh said at the time that the Fed remained the dominant central bank signal for Bitcoin because it sets the dollar liquidity and real yield backdrop, while the BOJ represented a risk that markets could be underestimating.

So far, however, Japan’s latest move has not produced clear signs of a disorderly carry trade unwind.

The yen weakened after the BOJ decision instead of strengthening. A classic carry trade reversal becomes more problematic when the Japanese currency rises because investors who borrowed yen can face higher costs when closing or servicing those positions.

The situation therefore differs from the yen carry trade episode of August 2024, when leveraged positions across global markets were reduced as Japanese monetary policy and currency moves forced investors to reassess cheap yen funding.

Higher domestic yields could still affect where Japanese institutions put their money.

Earlier in September, Japan’s 10 year bond yield briefly crossed 3%, prompting BlackRock to examine whether Japanese institutions could begin keeping more capital at home.

Yen hedged 10 year US Treasuries were yielding roughly 2% for Japanese investors at the time, compared with around 3% on Japanese government debt.

BlackRock used a hypothetical 5% reallocation of Japan’s roughly $1.1 trillion in US Treasury holdings to show that around $55 billion could move toward Japanese assets. The calculation was presented as a scenario, not a forecast of actual selling.

Fitch Ratings similarly said higher domestic yields could encourage Japanese institutions to retain more capital at home, though it did not predict a large liquidation of existing overseas bond holdings.

US rates remain the more immediate pressure on cryptocurrencies

Japan’s bond selloff comes as Bitcoin and the cryptocurrency market are already dealing with another rise in US borrowing costs.

US Treasury yields jumped Wednesday after stronger than expected business activity revived inflation concerns.

S&P Global’s flash US Composite PMI Output Index rose to 58.4 in September from 56, reaching its highest level since July 2021.

Fed funds futures subsequently priced a 66% probability of another rate hike in October, up from 53% earlier Wednesday, according to Reuters.

Pressure on Treasuries grew after a $70 billion auction of five year notes received weak demand. The benchmark 10 year Treasury yield rose nearly 14 basis points to 5.106%, its highest level since 2007 and its biggest one day move since April 2025.

Two year yields climbed more than 11 basis points to 4.891% after briefly touching 4.947%.

Bitcoin has already been feeling the pressure from bond yields during September as investors reassessed inflation, oil prices and the possibility of further Fed tightening.

The dollar reached its highest level in nearly two months on Wednesday as expectations for another Fed rate hike grew, according to Reuters.

Bitcoin has remained under pressure even when crypto specific demand provided some support. On Sept. 1, BTC traded around $77,500 as rate concerns weighed on the market despite positive spot Bitcoin ETF flows.

What could Japan’s bond selloff mean for Bitcoin?

The immediate risk from Japan depends largely on whether rising rates begin to affect yen funded positions or encourage more Japanese capital to remain in domestic markets.

Neither outcome has developed into a major crypto market event so far.

The yen’s weakness following the BOJ decision reduces the immediate case for a repeat of the rapid carry trade unwind seen in 2024. There is no clear evidence that Japanese investors are selling overseas assets on a scale that is directly affecting cryptocurrencies.

Institutional allocations depend on currency hedging costs, liquidity requirements, duration targets and regulatory requirements, making the effect of higher JGB yields difficult to isolate.

The US remains the more visible source of pressure for crypto markets, with Treasury yields above 5%, the dollar near a two month high and traders raising expectations for another Fed hike.

Japan adds a separate risk for traders to watch because borrowing costs are moving higher from historically low levels while domestic bond yields become more competitive with overseas assets.

Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, told Reuters that local reports involving Economic Minister Minoru Kiuchi and reflationist economists had raised concerns that the BOJ could remain behind the curve in dealing with higher prices.

Prime Minister Sanae Takaichi’s first economic blueprint, released in July with an emphasis on economic growth, had previously unsettled Japanese bond markets and pushed yields higher. Selling in super long bonds eased earlier this month as traders began pricing a faster pace of BOJ rate hikes.