Circle said trust in digital assets depends on security, accountability, and the rule of law. The company made the case after the April 1 exploit at Drift Protocol. Public reports placed losses at more than $270 million. Circle said the event renewed debate over controls and open access in crypto.

The company said stablecoin issuers should not act as private police. It said legal process must guide any freeze action.

Circle also said open financial systems need better protection across the crypto stack. The statement placed the issue within current U.S. stablecoin policy work.

Circle Says Asset Freezes Follow Legal Orders

Circle said it freezes USDC only when the law requires action. It said sanctions, court orders, and law enforcement requests drive those decisions. The company said this is a compliance duty, not a discretionary move. It also said the process protects user rights and privacy.

Circle described USDC as a regulated financial instrument under U.S. and EU laws. It said that framework prevents arbitrary interference with user funds. The company argued that legal limits matter as much as technical controls. It said privacy and property rights remain core design goals.

Drift Exploit Renews Debate on Shared Security Duties

Circle linked its comments to the Drift Protocol exploit on April 1. It said bad actors do more than steal funds during such attacks. They also test weak points between wallets, protocols, exchanges, issuers, and regulators. Circle said those gaps let attackers move quickly.

The company argued that no single part of crypto can carry the full burden. It said security and accountability must be shared across the ecosystem. That includes protocols, wallet providers, infrastructure firms, exchanges, and stablecoin issuers. Circle said each layer needs defenses that match its role.

It also warned against rushed policy responses that could harm open systems. Circle referenced debates over self-hosted wallets and permissionless DeFi. It said poorly designed restrictions could weaken innovation and open blockchain access. At the same time, it said openness without accountability creates risk.

Circle suggested added technical safeguards at the protocol level. It pointed to circuit breakers that could pause activity under set conditions. The company said such tools may help during fast-moving cyber threats. It added that threats can include social engineering and physical security risks.

Circle Backs New Legal Frameworks for Faster Action

Circle said the tools for faster intervention already exist in many cases. Yet it said the legal framework for coordinated action remains incomplete. The company argued that regulation has not kept pace with internet-based finance. It said this gap is a policy issue that needs a policy answer.

The firm said it is working with policymakers in the United States and abroad. It wants safe harbor rules and updated laws for digital asset markets.

Circle said those rules should let firms act faster against illicit activity. It also said any new framework must protect privacy and property rights.

Circle stated, “The goal is not a system where private companies unilaterally decide who loses access to their assets.” It added that the aim is lawful intervention that can move at the speed of threats. The company said that balance matters for both safety and openness. It framed the issue as central to trust in digital assets.

Circle tied that work to stablecoin legislation now under discussion in the United States. It referenced the GENIUS Act and broader market structure rules under the CLARITY Act. The company said these efforts offer an opportunity to establish standards before another major incident. It said those standards should protect due process, privacy, and legal accountability.

Digital assets have moved well beyond the hype cycle. What began as an experiment in decentralized value transfer has evolved into a serious conversation about how capital markets, custody, settlement and asset ownership could be re-imagined for the digital age. Tokenization, programmable money and distributed ledgers may deliver faster settlement, greater transparency and new efficiencies across the financial system.

The opportunity is both real and transformative, but accelerated adoption of digital assets is not guaranteed.

The ecosystem’s success will not be determined by any single technology, protocol, innovator or platform. Instead, it will hinge on whether the industry embraces a principle that traditional markets have relied on and come to expect for more than a century: choice.

If investors, issuers and intermediaries are forced into narrow paths and left without options, the promise of digital assets risks being constrained by the very silos they were meant to dismantle. For Web3 to flourish, market participants must be able to choose how, where and when they engage.

Choice in blockchain networks: avoiding silos

One of the most pressing challenges facing digital assets adoption today is fragmentation. New blockchains and networks continue to emerge, each optimized for different use cases, governance models or performance requirements. While innovation is healthy, disconnected ecosystems can quickly become a barrier to scale.

Without interoperability, assets risk being locked into isolated environments, limiting liquidity, mobility and investor access. The result is a digital version of the same inefficiencies that have historically plagued financial markets, with the added benefits of being faster and more complex.

Interoperability has the potential to change that result. A “network of networks” approach enables assets to move securely across platforms, enabling market participant firms and investors to take full advantage of tokenization’s potential while preserving market integrity and scale. It simplifies use cases, unlocks new business models and supports regulatory consistency, without forcing the industry to converge on a single chain.

Indeed, some investors may prefer open, public blockchains, while others may gravitate toward private blockchains. It’s not a matter of ‘or’ – both can and should be available.

Achieving this vision will require collaboration. Market infrastructure providers, technology firms and regulators must work together to establish frameworks that prioritize compatibility and interoperability over control. In a recent white paper authored by The Depository Trust & Clearing Corporation (DTCC) in collaboration with Clearstream, Euroclear and BCG, we explored how shared standards and coordinated governance could help advance interoperability while maintaining trust and resilience. The message was and remains clear: interoperability is foundational to scale and the future growth of digital markets.

Choice in what assets to tokenize (and when!)

Tokenization is often discussed as an inevitability, but inevitability should not be confused with immediacy. Not every asset will tokenize, and those that do will not do so at the same pace.

For example, while The Depository Trust Corporation (DTC), as a securities depository, facilitates the post‑trade settlement of securities representing over $100 trillion in value, we are not advocating for broad, indiscriminate, or immediate tokenization. Particularly in the early stages of this ecosystem, disciplined sequencing, intentionality, and caution are essential.

Certain asset classes, especially those with clear operational inefficiencies, high reconciliation costs or settlement frictions, are natural early candidates for tokenization. Others may follow as technology matures, regulatory clarity increases, and market demand evolves. Giving issuers and investors the ability to decide what makes sense for their needs, and on their timeline, reduces risk and builds confidence.

Choice, in this context, is about sequencing and needs. It allows the market to learn, adapt and scale responsibly rather than forcing adoption before the infrastructure is ready.

Choice in how investors want to hold real-world assets

Digital transformation does not mean abandoning established investing principles and processes.

For many institutional investors, tokenized assets will coexist with traditional holdings for many years to come. Some will prefer onchain representations for their operational efficiency or programmability. Others will continue to rely on established custody models, particularly as compliance and risk frameworks evolve.

A successful digital asset ecosystem can support both. Investors should be able to hold assets in tokenized form alongside traditional securities – and even switch back and forth between them – without sacrificing legal certainty, operational continuity or even the feeling of being in control. Flexibility ensures participation is driven by value, not obligation, and that trust is earned, not assumed.

Choice in wallets: empowering the client

Perhaps the most tangible expression of choice is the wallet.

As digital assets enter mainstream financial markets, participants will bring different preferences, risk tolerances and operational requirements. Some will prioritize self-custody. Others will rely on institutional-grade solutions. Many will want the freedom to change over time.

Wallet selection should belong to clients (market participant firms). No prescribed wallet. No mandated standard. This model empowers market participants to choose based on their own security needs, regulatory considerations, geographic requirements or internal controls.

This flexibility is essential for adoption at scale. Markets will thrive when financial institutions have the opportunity to engage on their own terms and can make decisions based on their clients’ and investors’ strategies, needs and preferences.

The path forward

The success of the digital assets ecosystem will not be built on constraints and limitations. Instead, it will be built on options: choice in blockchain, in assets, in custody and in wallets. These are practical requirements for facilitating growth.

If the industry gets this right, digital assets can deliver on their promise: more inclusive, efficient and resilient markets. If it gets it wrong, it risks recreating the limitations of the past on faster rails.

Choice is the key to making digital assets work for everyone.

The White House warned staff against improperly using confidential information to place bets in futures markets after suspicious oil trades ahead of President Donald Trump’s March 23 Iran announcement drew scrutiny, according to Reuters.

Reuters reported on Thursday that the White House sent the internal email on March 24, a day after Trump ordered a five-day delay in attacks on Iran’s energy infrastructure.

The warning followed a roughly $500 million bet on Brent and West Texas Intermediate crude futures placed in a one-minute burst shortly before Trump’s March 23 announcement, according to Reuters calculations based on exchange data. Oil prices fell about 15% after the policy shift.

The episode has intensified scrutiny of whether officials or politically connected traders could profit from nonpublic information tied to military or policy decisions. It has also added momentum to a broader push in Washington to tighten rules around prediction-market trading.

The STOCK Act amendment in the Commodity Exchange Act (CEA) prohibits federal officials, congress members, executive staff and judicial officers from using non-public information derived from their positions to trade commodity, futures or options markets. The amendment was signed into law on April 4, 2012.

Cointelegraph has approached the White House for a copy of the internal email.

Related: US Senate bill targets prediction markets on war and assassinations

Lawmakers respond to prediction market insider trading concerns

Lawmakers have also stepped up scrutiny of prediction markets, where well-timed bets tied to military and political events have raised similar concerns about the misuse of privileged information. Polymarket traders netted around $1 million by accurately betting when the US would strike Iran.

In response to the concerns, Congressman Adrian Smith and Congresswoman Nikki Budzinski introduced the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act (PREDICT Act) on March 25, a bipartisan bill seeking to ban members of Congress and federal officials from prediction market trading.

On March 26, US lawmakers Todd Young, Elissa Slotkin, John Curtis and Adam Schiff unveiled the bipartisan Public Integrity in Financial Prediction Markets Act of 2026, a bill aimed at curbing prediction market insider trading by government officials.

The same day, Senator Jeff Merkley introduced the End Prediction Market Corruption Act, seeking to ban event contract trading by government officials with “material non-public information,” including the president, vice president and members of Congress.

Magazine: Crypto traders ‘fool themselves’ with price predictions — Peter Brandt