You can audit smart contracts. You can’t audit yourself. And AI just made human manipulation infinitely more convincing.

The Security Problem Nobody Wants To Admit

The crypto industry has spent billions on smart contract audits, multi-signature wallets, hardware security modules, penetration testing, and bug bounties.

All of it assumes the attack vector is technical.

It’s not.

The Solana Foundation’s new CISO Michael Coates said it publicly this week: crypto’s biggest security threats in 2026 are increasingly coming from AI-powered social engineering and compromised credentials. Not smart contract exploits. Not protocol vulnerabilities.

People.

The attackers shifted targets. They’re not trying to break the code anymore. They’re trying to break you.

And AI just gave them tools to do it better than ever.

What Social Engineering Actually Means

Social engineering is the art of manipulating humans into doing things that compromise security.

It’s not new. Con artists have always existed. Phishing emails have been around for decades. Fake customer support calls are as old as telephones.

But here’s what changed in 2026:

AI made social engineering indistinguishable from reality.

Before AI: A phishing email had grammatical errors, strange formatting, a slightly off email address. Trained eyes could catch it.

After AI: A phishing email is grammatically perfect, emotionally calibrated to your specific psychology, sent from a domain that looks exactly right, at a time when you’re most likely to be distracted, referencing real details from your public profiles.

Before AI: A fake customer support call had an accent, a script, tell-tale signs of inauthenticity.

After AI: A deepfake voice replicates your exchange’s actual support team. The conversation flows naturally. It knows your account details because it scraped your public information. It knows how to build rapport before asking for anything.

Before AI: A fake emergency message from a colleague was detectable because it didn’t sound like them.

After AI: It sounds exactly like them because AI trained on their communication style, their LinkedIn posts, and their email patterns.

The human brain evolved to detect threats from other humans. It didn’t evolve to detect threats from AI systems trained specifically to exploit human psychology.

Why Crypto Is The Perfect Target

Every industry faces social engineering. But crypto has properties that make it uniquely vulnerable.

Irreversibility. When someone tricks a bank customer into a wire transfer, there’s a chance, small but real, of reversal. When someone tricks a crypto user into sending funds, it’s gone—permanently. No chargeback. No fraud department. No appeal.

Pseudonymity. Attackers are harder to trace. The accountability that discourages fraud in traditional finance is weaker in crypto.

High Stakes In Individual Wallets. A single compromised wallet can contain life-changing sums. The ROI on targeting a crypto user versus a traditional bank customer is significantly higher.

Community Of Sophisticated Users Who Think They’re Immune. This is the most dangerous property. Crypto users tend to be technically sophisticated. They know about phishing. They know about scams. They think they’re too smart to fall for it.

That confidence is the vulnerability.

The most effective social engineering targets people who think they can’t be manipulated because they’ve stopped being vigilant.

The Attack Pattern That’s Working Right Now

Coates described the shift clearly: attackers are targeting people, not protocols.

Here’s what that looks like in practice in 2026:

The Fake Emergency: You receive a message, voice, text, or email that appears to be from your exchange’s security team. There’s been suspicious activity on your account. You need to verify immediately or face suspension. The urgency is real. The consequences feel immediate. You act without thinking carefully.

The message was AI-generated. The voice was deepfaked. The urgency was engineered.

The Compromised Colleague: Someone in your organization receives what appears to be a message from a trusted colleague—perhaps your CFO, your CTO, your CEO—asking for a wallet transfer. The tone is right. The context makes sense. The request is urgent because there’s a deal closing.

The colleague never sent it. Their communication style was scraped and replicated.

The Too-Good-To-Be-True Opportunity: You’re approached on LinkedIn, Discord, or Telegram by someone who seems genuinely informed about your project, your portfolio, your interests. They have an opportunity—an early investment, an exclusive access, a partnership. The conversation feels real over days or weeks.

It’s AI maintaining a relationship at scale, designed to eventually extract something.

The Recovery Scam: You posted publicly about a crypto problem. Someone, AI or AI-assisted, found it immediately and reached out offering help. They’re helpful, knowledgeable, and patient. They walk you through “recovery steps” that actually compromise your wallet.

All of these work on smart people. Because intelligence doesn’t protect against emotional manipulation. It often makes it worse—smart people are better at rationalizing why the exception is real this time.

The Quantum Problem In The Background

While social engineering is the immediate threat, Coates also flagged what’s coming: quantum computing.

Post-quantum cryptography is no longer a theoretical concern. Anthropic’s AI recently broke a post-quantum cryptography candidate, raising serious questions about the security assumptions underlying current encryption.

Solana is evaluating post-quantum cryptography. Other chains are doing the same.

This is a technical problem that technical solutions can address. Unlike social engineering, which targets humans, quantum threats target mathematics. Mathematics can be upgraded.

But here’s the uncomfortable overlap: the transition to post-quantum cryptography will itself become a social engineering attack surface.

Users will receive communications claiming they need to “upgrade their wallet security” or “migrate their funds to quantum-resistant addresses.” Some of those communications will be legitimate. Some will be AI-generated attacks designed to look legitimate during the transition.

The technical threat and the human threat converge.

Why “Just Be Careful” Isn’t A Solution

The standard advice: be careful. Verify before you act. Don’t click suspicious links. Check email addresses carefully. Never share your seed phrase.

This advice was adequate when social engineering was low-fi, when attacks were detectable by someone paying attention.

It’s not adequate anymore.

Coates said something important: crypto must “meet users where they are” instead of expecting them to act as security experts.

That’s an acknowledgment that the current model—educate users, hope they stay vigilant—is failing.

Because AI-powered social engineering doesn’t require users to make obvious mistakes. It requires them to make very small lapses in judgment at carefully engineered moments.

You’ve been careful a thousand times. The attack only needs to work once.

What Actually Protects You

If human vigilance is insufficient, what works?

Systems That Don’t Require Perfect Human Judgment.

Multi-signature requirements that mean no single person can authorize a large transfer alone. Time delays on large transactions that create a window for human review. Anomaly detection that flags behavior inconsistent with your patterns.

These aren’t exciting. They’re friction. But friction is the point.

The best security doesn’t make you smarter. It makes the attack harder even when you’re not being smart.

Verification Protocols That Don’t Rely on Communication Channels.

If a “colleague” sends an urgent transfer request, the verification doesn’t happen over the same channel. It happens via a pre-established out-of-band protocol—a specific phone number, an in-person confirmation, a code word.

AI can replicate communication channels. It can’t replicate physical presence or pre-established secrets.

Institutional Humility.

The most dangerous users are the ones who’ve never been fooled because they believe they never will be. The most secure users are the ones who assume they’re vulnerable and design their behavior accordingly.

Security isn’t about being smarter than the attacker. It’s about designing systems that work even when you’re not at your best.

The Industry’s Uncomfortable Admission

Coates’ statement represents something significant: a major blockchain foundation publicly admitting that the threat model has shifted.

For years, the crypto security conversation was dominated by smart contract audits, protocol security, code review. The implicit assumption: the humans are fine, the code needs protecting.

Now the CISO of a major blockchain foundation is saying: the humans are the vulnerability. The code is (relatively) fine.

That’s a meaningful shift, and it has implications for how the entire industry thinks about security.

You can’t audit your way out of this one. You can’t write a bug bounty for human psychology. You can’t patch the vulnerability that makes people respond to urgency.

The security stack has to include the human layer, not just user education, which is clearly insufficient. System design that compensates for human fallibility under pressure.

What This Means For Everyone In Crypto

If you’re a user: your biggest risk isn’t a smart contract exploit. It’s a well-timed, well-crafted message that catches you in a moment of stress, urgency, or distraction. Design your security protocols assuming that moment will happen. Remove single points of human failure.

If you’re building: user education is necessary but not sufficient. Build friction into high-stakes actions. Design for the distracted, pressured, temporarily-fooled user, not the ideal vigilant one.

If you’re in security: the threat model has to include AI-powered social engineering as a primary attack vector, not an edge case. Red team exercises need to include sophisticated AI-assisted social engineering simulations.

If you’re an investor: ask every project you invest in: what’s your human security layer? Not just your smart contract audit. What protects against AI-powered attacks on your team members?

The Real Arms Race

Everyone talks about crypto’s AI arms race as a trading problem. AI trading against AI. Faster algorithms, better predictions.

The real arms race is in security. Attackers using AI to exploit human psychology at scale. Defenders using AI to detect anomalous behavior and flag suspicious communications.

One side is attacking a fixed vulnerability: human cognitive limitations under pressure.

The other side is defending a moving target: human behavior across thousands of employees, users, and community members.

The attackers have a structural advantage. They only need to succeed once.

The defenders need to succeed every time.

That asymmetry is the actual security crisis in crypto. Not the code. The people.

Bitwise has disclosed NRR as the ticker for its proposed spot NEAR ETF in an amended filing with the US Securities and Exchange Commission.

Bitwise NEAR ETF discloses NRR ticker

Bitwise submitted the third amendment to its Form S-1 registration statement on July 31, advancing its plan to offer a US-listed investment product backed by NEAR.

The latest filing identifies NRR as the proposed ticker. Bitwise intends to list the shares on NYSE Arca, although the product cannot begin trading until the necessary registration and exchange approvals are completed.

Bitwise Asset Management, the sponsor’s parent company, also provided $200 in seed capital. The investment covered eight shares priced at $25 each, according to the filing.

The amendment does not disclose the fund’s management fee or any introductory fee waiver. Those details may be added in a later filing as Bitwise prepares the product for a potential launch.

Bitwise originally filed the registration statement for the NEAR product in May 2025. The proposed fund is legally structured as an exchange-traded product rather than a conventional investment company ETF.

Staking could generate additional income

NRR would primarily seek to track the value of NEAR held by the trust, minus its operating costs and other liabilities.

Bitwise has also added staking as a secondary objective. The trust intends to stake up to 100% of its NEAR holdings, allowing it to earn protocol rewards that could increase the amount of NEAR backing each share.

Staking would distinguish the proposed fund from products designed only to track spot cryptocurrency prices. However, the arrangement introduces additional risks related to validator performance, liquidity, custody and the time required to unstake tokens.

The filing does not guarantee that all assets will remain staked at all times. The trust may need to retain liquid NEAR to process redemptions, cover expenses or respond to changing market conditions.

The Bank of New York Mellon would serve as the fund’s cash custodian, administrator and transfer agent. Coinbase Custody Trust Company would safeguard its NEAR holdings.

Bitwise is not alone in pursuing the asset. Grayscale has also amended its filing for a proposed NEAR investment product, reflecting a broader push by US asset managers to expand beyond Bitcoin and Ethereum.

US crypto products move beyond Bitcoin

The Bitwise filing comes as Wall Street firms broaden their digital asset offerings. Morgan Stanley Investment Management launched exchange-traded products tracking Ethereum and Solana in late July.

The Morgan Stanley Ethereum Trust and Morgan Stanley Solana Trust trade on NYSE Arca under the MSSE and MSOL tickers. Both charge an annual management fee of 0.14%.

These launches show that US brokerage investors are gaining access to a wider range of cryptocurrencies without managing digital wallets or private keys. An approved NEAR product would extend that expansion to another proof-of-stake network.

Still, securing approval does not ensure commercial success. Hashdex plans to close and liquidate its US-listed Bitcoin ETF, DEFI, after the fund struggled to attract sufficient assets and trading activity.

DEFI managed about $14.7 million as of July 30 and will stop trading after the market closes on Aug. 17. Its closure shows that fees, liquidity and investor demand remain critical even for funds tracking Bitcoin, the largest cryptocurrency.

NEAR price rises as derivatives demand grows

NEAR traded around $1.73 after gaining approximately 4%, with an intraday range between $1.69 and $1.73. The move followed the amended ETF filing and the rollout of the Nearcore 2.13 network upgrade.

Spot trading volume fell about 10% over the previous 24 hours, suggesting the price recovery had not yet attracted broad market participation.

Derivatives positioning was stronger. CoinGlass data showed NEAR futures open interest rising nearly 6% to $365.17 million, indicating that traders increased their leveraged exposure.

The ETF remains subject to the SEC process, and Bitwise has not announced a launch date. Future amendments could disclose the management fee, fee waivers, and final operating terms.

Expectations for the US Digital Asset Market Clarity Act (CLARITY) are fading as the Senate prepares to begin its summer recess at the end of this week, according to wealth manager Bernstein. With lawmakers stepping away from the calendar, Bernstein warns that the bill’s stalled progress could weigh on crypto valuations again—even as it may also open the door to more active regulator-led rulemaking.

In a Monday report shared with Cointelegraph, Bernstein framed the near-term risk as a possible “industry knee-jerk reaction” if Congress fails to advance CLARITY. At the same time, the firm argued that a legislative setback might prompt the US Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) to intensify policy work under their existing authorities through Project Crypto.

Key takeaways

• Bernstein says odds for CLARITY passage appear to be declining as the Senate heads toward summer recess, increasing near-term downside risk for crypto.
• The firm expects a market bottom and improving momentum toward late Q3 or early Q4, but only if conditions evolve as anticipated after the recess.
• Even without congressional progress, Bernstein expects Project Crypto activity—such as interpretive releases and DeFi-related guidance—to accelerate.
• Prediction market activity on Polymarket currently implies only a 31% chance that CLARITY is signed into law by the end of 2026.
• Banking industry pushback remains a key factor behind legislative friction, particularly around stablecoin yield provisions.

Why summer recess could hurt crypto sentiment

Bernstein’s analysis centers on congressional timing. The firm notes that the Senate’s scheduled move into summer recess could reduce the likelihood of CLARITY being passed before lawmakers pause their work. If that happens, Bernstein expects an immediate negative reaction from the industry—an event-driven sentiment hit that could translate into further declines for Bitcoin and the broader market.

However, Bernstein also provided a tactical view of the trade-offs. The analysts suggested that, despite a potential near-term drop, the crypto market could stabilize and start regaining momentum toward late Q3 and early Q4 ahead of the mid-term cycle.

Regulators may move faster under Project Crypto

While Bernstein warned about the consequences of legislative inaction, it also argued that regulatory outcomes could shift in parallel. In the firm’s view, Senate failure on CLARITY may lead the SEC and CFTC to adopt a more proactive stance, accelerating rulemaking and guidance initiatives under Project Crypto.

Project Crypto was first announced by SEC Chairman Paul Atkins in July 2025, and later expanded into a joint staff effort between the SEC and CFTC in September 2025, according to the SEC’s announcement and the CFTC filing describing the initiative. The objective is to create an operational regulatory structure for digital assets using existing agency authority while Congress finalizes broader market legislation under the CLARITY Act.

Bernstein said the two agencies could publish more interpretive materials tied to token taxonomy, develop clearer rules relevant to decentralized finance (DeFi), and speed up an “innovation exemption” for token issuers seeking temporary relief from securities classification during a finite period.

Prediction markets price in lower CLARITY odds

External market signals appear to be aligning with Bernstein’s caution. Polymarket data, cited by the firm, shows odds of the CLARITY Act being signed into law before the end of 2026 at 31%. That represents a drop of 7 percentage points over the past week and 9 percentage points over the past month, with roughly $3.7 million wagered on the outcome, according to Polymarket’s event page: Clarity Act signed into law in 2026.

This is not the first time odds have been revised downward. Earlier coverage from Cointelegraph noted that Galaxy Digital cut its 2026 CLARITY odds to 50% on June 26, warning that the Senate was running out of time to pass the market structure bill before its August recess.

Ethics and banking opposition add to the legislative drag

Beyond scheduling risk, the politics around CLARITY may be influenced by other developments. White House officials are reportedly weighing a bipartisan ethics counterproposal received on Thursday following negotiations between Republican Senator Thom Tillis and Arizona Democrat Ruben Gallego. The proposal would reportedly allow state attorneys general to sue the Department of Justice if it fails to enforce ethics laws against federal officials, according to sources cited by crypto journalist Eleanor Terrett in reporting at Crypto in America.

Separately, the bill continues to face industry pushback—particularly from banking groups. The CLARITY Act is intended to create the first US regulatory framework for digital assets, but banking-sector concerns have focused on how stablecoin yields would be treated. Critics argued that the draft could allow crypto firms to offer yields on stablecoins without being subject to the same requirements as traditional financial institutions.

Cointelegraph previously reported that banking and related groups pushed back on stablecoin yield provisions, including in an article that can be found here: ABA, state banking groups push back on CLARITY Act stablecoin yield provisions.

For investors and builders, the near-term question is whether CLARITY becomes another casualty of legislative timing—or whether regulatory agencies can partially offset congressional delay through Project Crypto releases that clarify token categories and reduce uncertainty for DeFi and token issuance. Over the next few weeks, market participants will likely watch what, if anything, the Senate manages to advance before recess, and whether the SEC and CFTC accelerate guidance in response to a stalled vote count.

The CLARITY Act remains stuck in the Senate after the White House reportedly failed to respond to a bipartisan ethics proposal, pushing its 2026 passage odds back down to 27%.

White House has not answered ethics proposal

Crypto journalist Eleanor Terrett reported Monday that the White House had yet to respond to the ethics counterproposal submitted by Republican Sen. Thom Tillis and Democratic Sen. Ruben Gallego.

The proposal would reportedly give state attorneys general a role in enforcing restrictions on crypto activity involving federal officials. Under the compromise, state officials could sue the Department of Justice if it failed to enforce the ethics rules.

Democrats opposed an earlier version accepted by the White House because it left enforcement solely to the DOJ. The Tillis-Gallego proposal is intended to address those concerns and secure enough Democratic votes for the bill to advance.

Although the headline issue centers on Trump, the reported development concerns the White House’s response to the compromise rather than the president signing the legislation itself. The bill must still pass the Senate and clear any differences with the House before reaching Trump’s desk.

CLARITY Act faces shrinking Senate timetable

Senate Majority Leader John Thune has not filed a cloture motion for the CLARITY Act, leaving lawmakers with limited time to begin the procedural process before the chamber’s expected recess.

The Senate’s published Monday schedule instead included a cloture vote on the motion to proceed to H.R. 6500, a legislative vehicle for a continuing resolution. It listed no scheduled action on H.R. 3633, the Digital Asset Market Clarity Act. The Senate previously recorded a floor speech by Sen. Cynthia Lummis in support of the bill but no cloture filing.

Even if Thune files cloture, Senate rules require time for the motion to mature before an initial procedural vote can occur. The bill would also need 60 votes to overcome a likely filibuster, requiring support from several Democrats.

The ethics dispute is not the only obstacle. Prosecutors and law enforcement organizations have raised concerns about provisions protecting some non-custodial blockchain developers from Bank Secrecy Act registration requirements.

Treasury Secretary Scott Bessent has rejected that interpretation, arguing that non-custodial developers have never been subject to those obligations and that the bill would codify existing Treasury policy.

Passage odds fall back to 27%

Polymarket traders now assign a 27% probability that the CLARITY Act will be signed into law before the end of 2026. The market had climbed above 80% in February before Senate delays and disagreements over ethics and decentralized finance weakened expectations.

The falling odds reflect the bill’s narrowing legislative path rather than a formal defeat. Negotiations could continue during or after the recess, although a delay would leave less time before the U.S. midterm elections complicate the congressional calendar.

The legislation would establish a federal market-structure framework and clarify how the Securities and Exchange Commission and Commodity Futures Trading Commission divide oversight of digital assets.

Bernstein warns of another crypto sell-off

Bernstein analysts warned that a Senate failure to advance the bill could trigger an immediate decline in Bitcoin and the broader crypto market. They described the potential response as an industry “knee-jerk” sell-off capable of driving digital asset valuations through another leg lower.

“From a tactical standpoint, we expect the crypto market to bottom and start showing momentum towards late Q3 and early Q4 prior to the mid-terms,” the analysts wrote in a Monday client report.

Bernstein expects a legislative delay could also pressure the SEC and CFTC to issue more guidance through Project Crypto. That effort could cover token classifications, decentralized finance and a potential exemption for qualifying token issuances.

Regulatory guidance could provide temporary relief for U.S. crypto companies, but it would not carry the same permanence as a law passed by Congress. The White House’s response to the ethics compromise, and any cloture filing from Senate leaders therefore remain the next developments to watch.

Hashdex has announced plans to wind down its spot Bitcoin exchange-traded fund, the DEFI product listed on NYSE ARCA, and return value to shareholders. In a filing made public Monday, the fund issuer said the liquidation will occur later this month, with cash proceeds distributed to remaining investors and the fund’s approximately 225 BTC holdings sold.

The decision is tied to an internal review of the fund’s business and market conditions, including trading liquidity, ongoing operating expenses and investor interest, according to the filing.

Key takeaways

• Hashdex will liquidate its DEFI spot Bitcoin ETF later this month and distribute cash to remaining shareholders.
• The fund is expected to sell its roughly 225 BTC position as part of the wind-down process.
• Hashdex cited trading liquidity, operating costs, and investor demand as reasons for the liquidation decision.
• The DEFI fund has traded on NYSE ARCA under the DEFI ticker since March 2024.
• At the time of publication, the ETF reported net assets of about $14.25 million and sat far below the scale of the largest U.S. Bitcoin ETF products.

Why Hashdex is liquidating the DEFI spot Bitcoin ETF

Hashdex’s plan centers on a straightforward liquidation and distribution. In an SEC filing, the issuer stated that it has determined the fund should be wound down after assessing multiple operational and market-related factors.

The filing points to three key considerations that frequently influence whether an ETF can operate efficiently: how liquid the product is in the market, the costs of running the fund, and whether investor participation is strong enough to justify continued operations. Those factors, taken together, are described as the basis for Hashdex’s decision.

The fund, which trades on NYSE ARCA under the DEFI ticker, has 200,000 shares outstanding and reported net assets of $14.25 million, per the fund’s website. The issuer’s filing also indicates that the ETF has been trading under the DEFI ticker since March 2024.

Scale and timing: a spot ETF that arrived after the rush

DEFI is often framed as a “late entrant” into the broader wave of U.S. Bitcoin ETFs. The first wave of competing Bitcoin ETF launches began months before Hashdex’s spot product began trading, and the issuer later launched the fund with a narrower runway relative to larger, already-established peers.

That timing mattered in a market where investor flows quickly concentrated into the most widely held products. The fund’s assets and liquidity are reflected in the comparatively small net asset base. SoSoValue data indicates DEFI’s highest asset level reached $17.54 million on May 9, 2025.

By contrast, WisdomTree Bitcoin Trust (BTCW) is currently much larger. According to the figures cited via the article’s reference, BTCW had $140.37 million in net assets as of Friday’s market close, underscoring the wide gap between DEFI’s reported size and that of the next-largest U.S.-traded Bitcoin ETF after the major leaders.

Industry commentary at the time of the spot ETF expansion suggested that competitive positioning was possible even for late entrants—if fees were attractive and the product could find demand. In a March 27, 2024 post cited in the article, Bloomberg Senior ETF analyst Eric Balchunas said: “The getting is so good right now I could see this one getting some bites (if the fee is competitive) despite being so late.”

From futures ETF origins to a spot ETF wind-down

Hashdex’s Bitcoin fund story did not start with a spot product. The issuer previously launched the Hashdex Bitcoin Futures ETF in 2022. Over time, Hashdex shifted into the U.S. spot-ETF landscape, and DEFI began trading in March 2024 under NYSE ARCA’s DEFI ticker.

The fund’s lifecycle now appears to be ending just over a year after it began trading as a spot ETF. While the filing does not cite a market-wide issue, it is clear that the issuer’s internal assessment concluded that continuing the fund was no longer justified given the operational economics and demand signals.

For investors, that matters because liquidation changes the practical mechanics of exposure: instead of holding shares in a continuously operating ETF, remaining shareholders will receive cash after the fund sells its underlying Bitcoin holdings. That can alter tax and portfolio planning considerations depending on each investor’s jurisdiction and circumstances.

What to watch next for DEFI shareholders and the broader ETF lineup

Hashdex’s liquidation announcement may also serve as a reminder that even in a bullish macro narrative around Bitcoin ETFs, product viability can differ significantly across issuers. Liquidity, cost structure and sustained investor demand can determine whether an ETF remains competitive enough to justify continued operation.

In the near term, the key question for DEFI holders is how the liquidation process will be executed in practice—particularly around the timing of the sale of the fund’s Bitcoin holdings and how cash distributions are calculated and delivered after liquidation. For the wider market, readers should also watch whether other smaller Bitcoin ETF products face similar viability reviews, and whether fee competition continues to reshape which funds capture the most assets.

As Hashdex moves toward distribution, investors should focus on the specific mechanics of the wind-down as described in the SEC filing and any follow-up disclosures, while keeping an eye on how quickly the remaining U.S. Bitcoin ETF ecosystem consolidates further around the largest and most liquid products.

FalconX has reportedly cut about 10% of its global workforce as the digital asset prime broker prepares for an extended cryptocurrency market downturn.

FalconX layoffs affect about 10% of staff

FalconX implemented the workforce reduction across its global operations, Bloomberg reported Monday, citing people familiar with the matter. The company employed approximately 350 people before the layoffs, suggesting that around 35 positions may have been affected.

Its workforce was spread across the United States, the United Kingdom, Singapore and Hong Kong. FalconX has not publicly disclosed which teams, offices or roles were included in the cuts.

The company has not disclosed the expected cost savings, severance expenses or a timeline for completing the restructuring.

FalconX operates as a prime broker for institutional digital asset investors, offering trading, financing and risk management services. Unlike a retail exchange, its core customers include hedge funds, asset managers and other professional trading firms.

FalconX shifts its Singapore strategy

FalconX is also changing its strategy in Singapore, where it plans to concentrate on crypto derivatives trading and withdraw its license application with the Monetary Authority of Singapore.

The withdrawal does not mark a complete exit from Asia. FalconX reportedly plans to retain a presence in the region while expanding its European operations.

FalconX entered Singapore in 2023 and launched an over-the-counter derivatives business aimed at institutional customers across the Asia-Pacific region. At the time, the company said it intended to seek the licenses needed to offer a broader set of prime-brokerage services.

The new approach narrows that plan as FalconX directs resources toward business lines it considers better positioned during the downturn. The company has not provided details about how the change will affect existing Singapore employees or customers.

Bitcoin downturn pressures crypto companies

The cuts come as falling cryptocurrency prices weigh on trading volumes and industry revenue. Bitcoin was trading near $63,500 on Tuesday after reaching an intraday low around $62,200, leaving it nearly 50% below its October 2025 peak above $126,000.

The decline has reduced retail activity and pushed crypto companies to control costs or expand into businesses less dependent on spot-market trading. Derivatives, institutional services and tokenized financial products have become increasingly important as firms seek more stable revenue sources.

FalconX strengthened its institutional and asset-management operations in November 2025 by completing its acquisition of 21shares. The transaction combined FalconX’s prime-brokerage infrastructure with the crypto exchange-traded product issuer’s global business.

21shares currently manages more than $12 billion across over 50 crypto exchange-traded products, including US-listed funds. FalconX has not indicated that the reported layoffs will affect those products or their investors.

Crypto layoffs spread across the industry

The FalconX reduction is the latest in a series of layoffs that have swept through the cryptocurrency industry during the market slowdown.

As reported by crypto.news on July 31, Luno cut about 20% of its global workforce while redirecting resources toward institutional customers and its business-to-business unit. Chief Executive James Lanigan said automation and operational changes had reduced the resources required to run the exchange.

Pump.fun also reportedly dismissed employees shortly before their PUMP token allocations were scheduled to vest. At least one former worker allegedly lost an allocation that later reached a seven-figure value. Former employees also claimed that Baton Corp., the company behind Pump.fun, conducted another round of layoffs in July.

Coinbase, Crypto.com, Gemini and BitGo have also reduced staff during the broader downturn. The growing number of cuts suggests that companies are preparing for weak market conditions to continue, even as many redirect spending toward automation, derivatives and institutional services.

FalconX’s next steps will center on implementing its narrower Singapore strategy while developing its European business. Further details will depend on whether the company formally confirms the layoffs and explains how the restructuring affects its regional operations.