Senators Ruben Gallego and Thom Tillis sent a proposed revised ethics provision to the White House on Thursday, after drafting the compromise the day before, an industry source familiar with the talks told CoinDesk. As of midafternoon on Friday, the White House had not officially responded to the proposal.

Ethics remains the biggest outstanding issue to be resolved before the Clarity Act can advance. There are ongoing negotiations around other issues, including stablecoin reserves and yield, law enforcement authorities and some of the Agriculture Committee provisions addressing the Commodity Futures Trading Commission’s total remit, but these are relatively uncomplicated compared to ethics, two industry sources said. One added that they expected those other issues to be resolved relatively quickly should negotiators come to a deal on ethics.

If the White House signs off on the counter-proposal from Tillis and Gallego, that could speed the way to at least the first part of the cloture process, the other source told CoinDesk. The Senate would still need to follow the cloture process laid out in last week’s edition of this newsletter, but the timelines involved mean that it would be difficult to get the bill all the way through by the end of the week. Still, getting through that first procedural vote would be a visible win for the crypto industry, should it happen.

Strategy Inc. kept the annual dividend rate on its STRC preferred stock at 12% for August 2026, even though the Nasdaq-listed security ended July more than 10% below its $100 stated amount.

The company’s official STRC information page confirms that the variable annualized rate for record dates beginning in August remains 12%. Executive Chairman Michael Saylor promoted the product on Aug. 1 as a way to “stretch your income,” emphasizing its twice-monthly payment schedule.

STRC closed at $89.46 on July 31, down $0.25 during the session. At that price, the $12 annualized payout based on the security’s $100 stated amount produces an effective yield of about 13.41%. Because Saylor announced the unchanged rate during the weekend, no post-announcement market reaction will be available until Nasdaq trading resumes.

Strategy’s STRC dividend no longer rises automatically

Strategy raised STRC’s annual dividend from 11.5% to 12% for record dates beginning in July. The increase followed a sharp June decline that took the shares as low as $71.25 and moved them far below the $100 level the company wants to maintain.

However, the company changed its rate-setting policy on June 29. Under the revised framework, management considers STRC’s market price, credit spreads, competing yields, Bitcoin volatility, cash-reserve coverage and the wider capital structure. The filing specifically states that Strategy will not necessarily raise the dividend solely because STRC trades below its stated amount.

That policy explains why July’s discount did not produce another 50-basis-point increase. Strategy instead said during its second-quarter results that it would maintain the 12% rate until STRC shows “sustained, healthy trading” near $100. The language describes management’s objective and does not guarantee that the shares will return to par.

The decision also prevents Strategy’s cash obligations from rising further while the company attempts to repair demand through other measures. Every additional 50 basis points would increase the annual cash cost across more than $10.46 billion in outstanding STRC stated value.

Buybacks now carry more of the price-support burden

Strategy has shifted part of its response from dividend increases to preferred-share repurchases. Between July 20 and July 26, the company bought back 288,930 STRC shares for approximately $25 million, paying an average of $86.53 per share. The purchase represented a 13.47% discount to the shares’ stated amount.

About $975 million remains under Strategy’s $1 billion preferred-securities repurchase authorization. Management said it intends to purchase more STRC at deeper discounts and reduce its activity as the security approaches $100. The authorization does not require Strategy to spend the remaining amount and has no fixed expiry date.

Repurchasing shares below par reduces the number of preferred shares requiring future cash distributions. It also lets Strategy retire $100 of stated value for less than $100. However, buybacks use capital that could otherwise remain available for dividends, debt interest or Bitcoin purchases.

As previously reported, Strategy funded its first $25 million STRC repurchase while increasing its U.S. dollar reserve and keeping Bitcoin purchases paused. The company raised much of that liquidity through sales of MSTR common stock rather than new STRC issuance.

The $3.75 billion reserve supports the 12% payout

Strategy reported a $3.75 billion U.S. dollar reserve as of July 26. The company said that amount covers approximately 2.1 years of expected preferred-stock dividends and interest on outstanding debt. The reserve can only be used for those obligations unless the board approves another purpose.

The cash cushion has become more important because Strategy’s preferred-stock commitments have expanded. The company recorded $400.7 million in preferred dividends during the second quarter, compared with $49.1 million one year earlier. It has paid or declared more than $1 billion in cumulative preferred distributions.

Strategy also reported an $8.22 billion second-quarter net loss, driven mainly by an $8.32 billion unrealized loss on its Bitcoin holdings. The accounting loss did not represent an equivalent cash outflow, but the preferred dividends must be paid in U.S. dollars.

The company has therefore authorized Bitcoin sales to refill the reserve, cover dividends and interest, or finance approved security repurchases. Strategy had sold approximately $218.4 million of Bitcoin during 2026 through July 26 to fund part of its preferred obligations.

As crypto.news reported, Strategy held 843,775 BTC at an average acquisition cost of about $75,476 as of July 26. The company valued that position at $54.77 billion using Bitcoin’s July 27 market price, compared with its $63.69 billion original cost.

STRC holders receive two payments each month

STRC moved from monthly to semi-monthly distributions after shareholders approved the change in June. Record dates now fall on the 15th and final day of each month, with payments generally following around 15 days later.

Strategy has already declared a payment of $0.50 per share for Aug. 15 to investors recorded as shareholders on July 31. The company’s website lists the 12% rate for August record dates, but future cash distributions still require board or committee approval and are not guaranteed.

For U.S. federal tax purposes, Strategy expects the current payments to be treated as returns of capital to the extent of an investor’s tax basis. That is the company’s expectation rather than a guarantee of each shareholder’s treatment, and Strategy advises investors to seek tax guidance based on their own circumstances.

STRC is also unsecured. Strategy states that its preferred securities are not collateralized by its Bitcoin holdings and only hold a preferred claim on the company’s residual assets. The company further warns that STRC is not a bank deposit, is not FDIC-insured and does not carry the same protections as Treasury securities or money-market funds.

What happens next for STRC and Strategy

Chief Executive Phong Le said management’s objective is for STRC to trade between $99 and $100 “over time.” Strategy has not provided a deadline for reaching that range, and the shares’ $89.46 closing price shows that the market continues to demand a yield above the stated 12% rate.

The next confirmed event is the Aug. 15 distribution. Investors will then watch Strategy’s next monthly rate decision, further STRC repurchases and weekly SEC disclosures covering common-stock sales, Bitcoin transactions and changes to the dollar reserve.

Saylor separately posted “Bitcoin Drive engaged” on Aug. 2 alongside the company’s treasury chart. The message may fuel expectations of a new purchase disclosure, but the post does not confirm that Strategy bought Bitcoin or reversed its recent pause. An SEC filing or company announcement would be needed to verify any transaction.

Trump Media & Technology Group’s Truth API became available to institutional customers on Aug. 1, giving trading firms rapid, machine-readable access to posts from influential Truth Social accounts, including U.S. President Donald Trump’s account.

The launch followed a July 16 Form 8-K in which Trump Media said it had already signed customers and was onboarding additional partners. The company has not publicly identified those customers or disclosed how many subscriptions it has sold.

Truth API sells faster delivery of public posts

Trump Media describes Truth API as its first data-licensing product. The feed provides posts through a low-latency connection designed for high-frequency and algorithmic trading firms. It offers continuous coverage, delivery within milliseconds and a searchable archive dating to 2022.

Interim CEO Kevin McGurn said the service provides direct access to the platform’s “most market-moving Truths.” He also said Trump Media expects the product to become an ongoing, high-margin revenue source. Those revenue expectations remain forward-looking company claims rather than reported financial results.

The company has not published an official price list. Senators Adam Schiff and Elizabeth Warren cited reports placing subscriptions between $60,000 and $100,000 per month. Therefore, the widely repeated $100,000 price should be treated as a reported upper estimate, not a company-confirmed standard fee.

Trump Media says the underlying posts remain publicly available. However, automated customers can receive and process them faster than users who refresh the platform, rely on notifications or manually monitor accounts. That speed difference matters when algorithms can react to policy announcements within milliseconds.

Insider trading claims face an uncertain legal test

Writer James Surowiecki argued that the arrangement may involve government information being monetized for private benefit. Former SEC regional director Marc Fagel offered a more cautious assessment, calling insider-trading liability a “defensible argument” but “not slam-dunk.” Both comments are legal opinions, not findings by a regulator or court.

Federal insider-trading cases generally require more than an information advantage. Under the misappropriation theory recognized by the U.S. Supreme Court, prosecutors ordinarily must show that confidential information was taken for securities trading in breach of a duty owed to its source. SEC rules also focus on trading while aware of material nonpublic information.

That creates a key unresolved question. If a presidential post becomes publicly visible at the same time the API distributes it, Trump Media may argue that subscribers are paying for speed and formatting rather than nonpublic information. Many financial-data companies sell faster access to information that is technically public.

However, critics could examine whether paying customers ever receive a post before ordinary users can access it, whether unpublished policy information enters the feed or whether any subscriber knows information was obtained through a breach of duty. Purchasing a data subscription alone would not automatically establish insider trading.

Trump Media rejected the senators’ argument, saying they had created a new insider-trading theory based on publicly available information. That response states the company’s legal position. It does not prevent the SEC from reviewing the product’s design, timing records or customer communications.

Trump’s 41% stake sharpens the U.S. ethics dispute

Trump Media’s latest ownership disclosure says the Donald J. Trump Revocable Trust holds 114.75 million shares, equal to about 41% of the company. Donald Trump Jr. serves as sole trustee, while President Trump is the trust’s settlor and sole beneficiary.

The ownership structure means successful Truth API revenue could benefit the company and, indirectly, the value of the trust’s stake. It does not mean subscription payments go directly to the president. Share prices, operating costs, corporate decisions and other business results determine how product revenue affects shareholder wealth.

Schiff and Warren asked SEC Chair Paul Atkins to investigate whether the feed violates federal securities law or weakens market fairness. They argued that presidential posts may contain policy information capable of moving stocks, currencies and commodities while Trump retains a large financial interest in the platform distributing them.

The senators’ request also adds another political dispute to Trump Media’s expansion into financial and crypto-related services. As previously reported, the company posted a $405.9 million first-quarter loss after large unrealized markdowns on Bitcoin, Cronos and securities. Revenue for the quarter reached $871,200.

Meanwhile, Trump Media-linked wallets moved 2,650 BTC to Crypto.com in May. The company is also exploring wider financial products and a possible Truth Social corporate separation connected to its planned TAE Technologies transaction.

The SEC has not announced an investigation

The SEC acknowledged receiving the senators’ letter but had not publicly announced an investigation, subpoena, enforcement case or formal conclusion as of Aug. 2. SEC investigations are often confidential, meaning the absence of a public notice does not establish whether staff members are privately reviewing the matter.

The next verifiable developments could include an SEC response to Congress, a Trump Media filing describing customer numbers or revenue, or disclosures explaining whether API recipients receive posts simultaneously with ordinary Truth Social users.

Trump Media shares closed at $9.86 on July 31, down $0.52 from the previous close. That session occurred before the Saturday launch, so the move cannot be attributed to Truth API becoming available. U.S. markets were closed during the weekend criticism, leaving no verified post-launch stock reaction.

For now, the central dispute remains unresolved. Trump Media presents Truth API as a conventional paid data service that distributes public information more efficiently. Critics argue that the president’s ownership, government role and ability to move markets make the arrangement unlike an ordinary social-media feed.

Dogecoin community contributor Mishaboar urged Coldcard users on Aug. 1 to move their Bitcoin to wallets controlled by newly generated seed phrases. 

The warning followed Galaxy Research’s estimate that three suspected attack waves drained 1,367.05 BTC, worth about $88.6 million, from 4,585 addresses.

Mishaboar wrote, “If you have ever used a COLDCARD device of any kind, migrate your funds to a new wallet immediately.” He also warned users not to reuse their existing Coldcard seed phrase or enter recovery words into an internet-connected computer. However, his reference to every Coldcard device is broader than Coinkite’s official security advisory, which identifies specific firmware versions and several exceptions.

Coldcard losses rise as attackers target smaller wallets

Galaxy Research’s latest on-chain estimate identified 1,367.05 BTC across three suspected attack waves. The research firm described $88.6 million as its “estimated observed size,” meaning the total has not been confirmed by Coinkite, law enforcement or every affected user.

The first wave removed 1,082.65 BTC from 1,196 addresses in about 41 minutes on July 30. A later third wave drained roughly 208 BTC from 1,912 addresses, with the average balance falling to slightly more than 0.1 BTC per address. The changing pattern suggests attackers moved from larger holdings toward smaller wallets.

Galaxy said each wave appeared internally consistent with one operator. However, it could not determine whether one attacker controlled all three waves. The third group used separate destination addresses, batched several victims into individual transactions and checked only the default derivation path, making it different from the earlier sweeps.

The research firm also warned that its known transaction patterns cannot identify every theft. A different attacker could generate valid transactions without repeating the fees, destination formats or collection methods seen in the first three waves.

Official Coldcard warning covers specific firmware

Coinkite said the problem affects seeds generated on Mk2 and Mk3 devices running firmware versions 4.0.1 through 4.1.9. Seeds created on Mk4 and Mk5 devices before standard version 5.6.0 or Edge version 6.6.0X are also covered. For Coldcard Q, the fixed releases are standard version 1.5.0Q and Edge version 6.6.0QX.

Coldcard Mk1 devices are outside the firmware regression identified by Block’s researchers. Coinkite also said TAPSIGNER, OPENDIME and SATSCARD are unaffected because they use different codebases. Therefore, the available technical evidence does not establish that every product ever made by Coinkite is vulnerable.

Block’s Bitcoin engineering and security team traced the flaw to a firmware integration error. The affected software used a deterministic MicroPython fallback instead of the intended STM32 hardware random-number generator when creating wallet secrets. On Mk2 and Mk3 v4 firmware, the affected path added no cryptographic entropy. Later models received a limited secure-element reseed.

Block cautioned that its analysis represented its current technical view and did not include complete empirical testing of every device. Coinkite has also said its investigation remains open and promised a formal technical report.

Firmware updates cannot repair existing seeds

Coinkite has released fixed firmware for every affected model and release track. The patches correct the seed-generation process for new wallets, but they cannot add randomness to a seed phrase created earlier. Moving the same vulnerable phrase into another hardware or software wallet also carries the weakness into the new device.

Affected users should install the correct fixed firmware before generating a replacement seed. Coinkite advises recording and verifying the new backup, checking a receiving address on the device screen and sending a small test transaction. Users should move the remaining balance only after confirming that the test funds reached the new wallet.

The company advises users to keep the old backup until the entire migration is confirmed. Mishaboar separately warned users never to type a seed phrase into a computer and recommended keeping offline copies in separate secure locations. That advice can reduce exposure to phishing, malware and cloud synchronization during a rushed migration.

Coinkite identified a limited exception for users who added at least 50 fair, independent and private dice rolls before the final seed words were produced. The company said those rolls contributed at least 128 bits of independent entropy. Users who entered fewer than 50 rolls, cannot remember the number or exposed the roll sequence should migrate.

A strong, unique BIP-39 passphrase creates an additional barrier, but Coinkite said it does not repair an affected seed. Short, reused or predictable passphrases may be guessable. Even users with strong passphrases are advised to replace the underlying seed as soon as practical.

Coldcard incident renews the self-custody debate

Bitcoin investor Anthony Pompliano said the losses showed how technically demanding self-custody can be, even though individuals retain the right to control their assets directly. He also stressed that Bitcoin itself was not hacked because the failure occurred in third-party wallet firmware rather than the Bitcoin protocol.

That distinction matters because an attacker reportedly reproduced weak wallet keys offline. The incident did not require changing Bitcoin transactions, breaking its cryptography or compromising the network’s consensus rules. Once an attacker obtains a valid private key, the resulting transaction appears on-chain like one authorized by the legitimate owner.

As previously reported, the observed loss estimate rose from an early 594.48 BTC calculation to 1,367.05 BTC as researchers found additional address groups. In related coverage, crypto.news examined how the firmware build error weakened seed generation for more than five years.

The case has also entered the U.S. institutional-custody debate.As crypto.news reported, Bloomberg ETF analyst Eric Balchunas argued that the losses strengthen the case for spot Bitcoin ETFs among investors seeking price exposure without managing private keys. ETFs remove personal seed-management duties, although they replace those risks with institutional custody and counterparty exposure.

Coinkite’s promised technical review and further Galaxy address analysis are the next expected updates. Until then, $88.6 million remains the latest public on-chain estimate rather than a final confirmed loss. Users covered by the official advisory face the more immediate task of installing fixed firmware and moving funds to a completely new seed.

The stablecoin market is fragmenting, and onchain capital allocator Spark is betting it can capitalize on the split.

Fintechs, exchanges and banking groups are increasingly launching their own dollar-linked tokens. Each issuer wants to keep users, reserves and transaction activity inside its own network as competition ramps up.

The stablecoin landscape “is about to fragment more and more,” Sam MacPherson, CEO of Phoenix Labs, said in an interview with CoinDesk.

PayPal has PYUSD, Circle has USDC, and Tether has USDT. Robinhood has joined the Global Dollar (USDG) consortium and is building its own chain, while OpenUSD (OUSD) is another large consortium that includes Stripe and Coinbase.

Beyond these giants, there are hundreds of other stablecoins, including Ethena’s USDe, World Liberty Financial’s USD1 and Sky’s USDS.

The result is liquidity scattered across an expanding number of tokens and networks.

Spark is betting those networks will still need to connect. Its aim is to be the layer that moves money between them.

Spark is an affiliated lending and liquidity unit of Sky, the DeFi ecosystem formerly known as MakerDAO and the issuer of the USDS stablecoin. It is developed by Phoenix Labs and supported through Sky’s governance and capital.

Strategy CEO Michael Saylor told investors that the preferred dividend tied to Strategy’s STRC shares will stay at 12% for August, despite STRC trading well below its $100 par value through July.

In a Saturday post on X, Saylor framed STRC as an income-oriented vehicle that he says can help investors “stretch your income,” while indicating that the semi-monthly dividend schedule approved earlier this year will continue. Strategy’s chief then reiterated a longer-term target price range for the preferred shares, even as market pricing suggests investors are still demanding a discount.

Key takeaways

• Strategy’s STRC preferred dividend will remain at 12% for August, according to Michael Saylor.
• August will mark the second month in a row that STRC dividends are paid semi-monthly, following a June shareholder vote.
• STRC shares closed at $89.46 on Friday, trading below $100 par value throughout July.
• Management has continued to state a corporate objective for STRC to reach and hold around $99–$100 over time.
• Strategy says it has built a sizable cash reserve to fund preferred payouts as it monetizes Bitcoin.

Dividend guidance holds steady even as STRC trades at a discount

While Strategy’s STRC preferred shares ended July below their stated $100 par value, shareholders were told that the August dividend will not increase. Michael Saylor made that point in a Saturday X post, continuing the company’s pitch that STRC is designed to provide a steady income stream for investors.

The 12% dividend rate is not a one-off adjustment: it follows a dividend change earlier in the cycle. In June, Strategy shareholders approved changes that moved STRC to a semi-monthly payment cadence. As a result, August will be the second month that the dividend is paid on that more frequent schedule.

On the market side, STRC ended Friday at $89.46, up 5.42% for the month that began with a dividend increase. According to the article, the daily trading volume on Friday was about two-thirds of STRC’s usual daily average—suggesting participation was fairly active, but not at peak levels.

Management’s messaging has also stayed consistent with its longer-term plan. On Friday, Strategy CEO Phong Le reiterated that the company’s “corporate objective is for STRC to trade at $99-$100 over time,” without offering a specific timeline for when that target could be met.

Cash reserve strategy tied to Bitcoin treasury and preferred obligations

Beyond dividend arithmetic, the company’s stability message appears to be supported by its Bitcoin treasury and liquidity planning. Saylor posted on Sunday that “Bitcoin Drive engaged,” a phrase he used alongside a chart of Strategy’s BTC purchases from Saylortracker.com, signaling the company’s ongoing buying activity.

That matters because Strategy’s preferred dividend economics are linked to how it finances obligations while its Bitcoin holdings remain exposed to market volatility. Last week, Strategy reported an $8.22 billion second-quarter net loss, which the report attributed largely to an $8.32 billion unrealized loss tied to movements in the price of its Bitcoin holdings during the quarter.

Even with that drawdown, Strategy said it has built a cash reserve intended to help cover preferred stock payouts after the launch of its BTC monetization program. The figures cited in the article include a $3.75 billion U.S. dollar reserve. Strategy also stated that the reserve is enough to cover more than two years of preferred dividend payments and interest obligations.

In practical terms, that guidance is meant to reduce concerns that near-term Bitcoin price fluctuations could immediately disrupt the dividend. Traders may still price STRC based on expected returns and relative risk, but a defined liquidity buffer can influence how investors interpret the sustainability of the payout.

Discount-to-par repurchases and the $99–$100 over-time goal

Another point investors are watching is how Strategy manages the preferred share discount. The article says Strategy recently repurchased $25 million of its STRC preferred shares at a discount to par and intends to continue buying the securities while they trade below $100.

This approach aligns with management’s public objective for STRC to trade closer to par over time. However, the market continues to price the shares significantly lower: with Friday’s close at $89.46, the gap to $100 remains substantial. That spread reflects uncertainty about timing—how quickly any pathway to par could play out, and whether dividends alone are enough to close the valuation gap.

Le’s repeated comment that the objective is $99–$100 over time, without specifying when, highlights the central tension: Strategy is emphasizing financial buffers and ongoing BTC-driven support, while the preferred market is still setting prices around a discount that persists through July.

Investors therefore have two parallel items to track. First is the dividend rate itself—now confirmed to stay at 12% for August. Second is whether Strategy’s buybacks and any treasury policy changes translate into steady demand for STRC preferred shares that could narrow the discount.

What to watch next for STRC holders

Going forward, STRC investors should monitor the next dividend payment cycle for August and pay close attention to whether Strategy follows through on continued preferred repurchases while the shares remain below par. At the same time, any updates related to “BTC monetization” and treasury allocation could influence how markets assess the company’s ability to fund preferred obligations during periods of Bitcoin volatility.

Ripple Director of Engineering Vijay Khanna urged XRP Ledger node operators on Aug. 2 to install xrpld version 3.2.1 after developers observed a validator manifest flood on July 31. 

The hotfix limits how nodes process, store and share data received from unknown validator identities. 

The XRP Ledger continued closing ledgers normally during the event, according to XRP Ledger Operations. The available evidence therefore points to pressure on node resources and peer-to-peer communications rather than a confirmed loss of funds, altered transactions or failure of ledger consensus. Developers have not published a CVE identifier or financial-loss estimate connected to the incident.

Bloomberg Intelligence senior ETF analyst Eric Balchunas said on Aug. 2 that the Coldcard security failure strengthens the case for U.S. spot Bitcoin ETFs, especially for investors who want long-term price exposure without managing private keys. 

His comments followed Galaxy Research’s estimate that three suspected attack waves drained 1,367.05 BTC, worth about $88.6 million, from 4,585 addresses.

Balchunas wrote, “Yes, an ETF fixes this,” while noting that some self-custody advocates dismiss the funds as “paper bitcoin.” That is his view on custody, not evidence that investors have moved money into ETFs because of the incident. U.S. markets were closed when he posted the weekend comments, leaving no verified post-comment fund-flow reaction.

Coldcard drain renews the Bitcoin ETF argument

Block’s Bitcoin engineering team found that a firmware integration error routed random-number generation through a deterministic MicroPython fallback instead of the intended hardware source. Its report said Mk2 and Mk3 devices on vulnerable firmware added no cryptographic entropy through that path. Later models used a limited secure-element reseed.

Coinkite’s security advisory covers Mk2 and Mk3 firmware from version 4.0.1 through 4.1.9, plus seeds generated on Mk4, Mk5 and Q devices before their fixed releases. The company released corrected firmware, but warned that updating software does not repair seeds created earlier. Users must generate a new seed and move their funds.

Galaxy’s latest estimate covers three suspected draining waves. The third removed 207.7294 BTC from 1,912 addresses and followed a different transaction pattern. Galaxy called $88.6 million its “estimated observed size,” meaning the figure remains an on-chain estimate rather than a final total confirmed by Coinkite or law enforcement.

Balchunas also questioned whether a reportedly small hardware-wallet company should protect life-changing sums. He called the reported staffing level “a red flag.” Coinkite has not publicly confirmed the headcount cited in his post, and company size alone does not establish whether a security system is adequate.

U.S. spot Bitcoin ETFs remove seed-management risk

A spot Bitcoin ETF removes the investor from seed creation, firmware updates, backups and wallet migration. The fund and its service providers manage those duties. BlackRock says its iShares Bitcoin Trust ETF, or IBIT, simplifies the operational and custody work involved in holding Bitcoin directly. IBIT reported $46.52 billion in net assets on July 31 and charges a 0.25% sponsor fee.

IBIT’s SEC filing says Coinbase Custody holds the trust’s private keys in segregated cold-storage wallets. It also names Anchorage Digital Bank as an additional custodian that BlackRock may use. The filing describes limited employee access, external control reviews and a process in which no single custodian employee has access to complete private keys.

Fidelity uses Fidelity Digital Assets to custody Bitcoin for its Wise Origin Bitcoin Fund. Such products let U.S. investors gain exposure through brokerage, trust and tax-advantaged accounts without operating a hardware wallet. That can matter to advisers and retirement investors who only seek price exposure.

However, the term “regulated ETF” needs context. IBIT is an SEC-reporting, Nasdaq-listed product, but BlackRock states that the trust is not registered under the Investment Company Act of 1940. It therefore does not receive every protection that applies to conventional registered mutual funds and ETFs.

Bitcoin ETFs transfer custody risk instead of erasing it

The ETF structure replaces individual seed risk with institutional custody, operational and counterparty risk. IBIT’s annual filing warns that hackers, employee misconduct, technical failures or unauthorized transfers could still cause losses. It also says Coinbase’s shared insurance may be insufficient for every possible event.

The filing states that shareholders cannot bring direct claims against the Bitcoin custodian under the custody agreement. No party guarantees all trust assets or service-provider obligations. These disclosures do not show that ETFs are less secure than personal wallets. They show that the risk moves to institutions and contractual arrangements.

ETF shareholders also own securities rather than spendable Bitcoin. IBIT shares trade on Nasdaq, and redemptions occur through authorized participants in baskets of 40,000 shares. Retail investors cannot withdraw ETF holdings to a personal address, make Bitcoin payments or transact whenever the network is open.

As previously reported in crypto.news’ Bitcoin ETF explainer, the wrapper offers easier access and professional custody but removes direct ownership and 24/7 use. In related coverage, a technical review of the Coldcard bug found that the failure involved seed generation rather than phishing or physical theft.

The $89M drain is not yet an ETF inflow catalyst

Balchunas’s argument may appeal to investors who only want Bitcoin’s price performance. The incident may also encourage holders to divide funds among personal wallets, multisignature setups and regulated custodians instead of relying on one device or provider. These remain possible responses rather than confirmed investor behavior.

Still, no verified data shows that the Coldcard drain has created new Bitcoin ETF demand. BlackRock’s latest official figures cover July 31, before Balchunas’s Aug. 2 comments. IBIT’s NAV fell 2.78% that day, but the move cannot be tied solely to the wallet incident.

The next U.S. trading session may show whether ETF flows change, although one day of activity would not prove a connection. Bitcoin prices, economic conditions and portfolio rebalancing also drive fund creations and redemptions.

While those applications have become increasingly visible, the infrastructure that enables deposits, withdrawals and settlement has largely remained behind the scenes.

Fun is one of the companies building that infrastructure. The firm said it powers 100% of deposits and withdrawals on Polymarket and deposit flows into Aave’s largest vaults, while processing more than $3 billion in monthly transaction volume.

The company has raised more than $75 million to date.

From payment rails to funding flows

Fine said today’s crypto payments ecosystem remains unnecessarily fragmented, with developers forced to stitch together different card processors, banking partners, crypto assets, blockchains and bridges to create funding experiences.

Instead of relying on individual payment rails, platforms should optimize around the end goal of getting users funded as quickly and seamlessly as possible, he says.

“In Web2, payments are highly fungible,” Fine said. “In Web3, they’re much more complex because every payment method behaves differently. Teams keep rebuilding the same infrastructure over and over again instead of building unified optimized funding flows.”

That shift means many existing crypto payment businesses risk becoming obsolete, according to Fine. Companies built around converting fiat into crypto or moving assets between blockchains are solving an intermediary step that users never cared about in the first place, he argued.