Key Insights

• GENIUS Act defines state-regulated stablecoin compliance, allowing smaller issuers to operate locally while meeting federal oversight standards.
• OCC guidance establishes federal benchmarks, guiding stablecoin issuers transitioning from state to federal supervision after $10 billion circulation.
• Monthly reserve disclosures and uniform branding rules ensure consistent transparency and regulatory alignment across state and federal stablecoin frameworks.

The U.S. Department of the Treasury has released an 87-page proposal implementing the GENIUS Act. The notice opens a 60-day public comment period and outlines how stablecoin oversight will function across both state and federal systems.

The proposal details how the Treasury will determine whether state-level regulatory frameworks are “substantially similar” to federal standards. Smaller issuers can remain under state supervision if their systems meet the defined benchmarks.

State Stablecoin Oversight Must Meet Federal Standards

Issuers with less than ten billion dollars in circulation may opt for state-level regulation, provided their frameworks align with federal rules. The proposal separates requirements into two categories: uniform rules covering reserves and anti-money laundering and state-calibrated rules where local regulators control supervision, licensing, and risk management.

This approach allows states to maintain flexibility while ensuring all systems comply with the federal baseline, preventing gaps in regulation.

OCC Guidance Shapes Federal Stablecoin Compliance

The Treasury relies on the Office of the Comptroller of the Currency to define the federal benchmark. Nonbank issuers that exceed the $10 billion threshold will transition toward federal supervision guided by OCC standards.

The rule also clarifies that state frameworks may exceed federal requirements, but they cannot conflict with federal law or reduce regulatory comparability.

Stablecoin Disclosure and Branding Rules Enforced

Issuers must publish monthly reserve composition reports to maintain transparency across state and federal systems. This ensures that disclosure practices remain consistent for all regulated stablecoins.

In addition, naming restrictions apply uniformly to prevent misleading branding. These rules align compliance across jurisdictions and maintain public confidence in dollar-backed stablecoins.

GENIUS Act Implementation Drives Regulatory Alignment

The rulemaking represents a key step in turning the GENIUS Act into an operational framework. Passed in July 2025, the law introduced mandatory reserve backing, regular disclosures, and anti-money laundering compliance for payment stablecoins.

Meanwhile, Congress continues advancing complementary measures, including the Clarity Act, to define SEC and CFTC oversight, although disputes over stablecoin yield have slowed broader market reforms.

A U.S. enforcement case against alleged crypto market manipulation is once again putting the spotlight on wash trading and the blurry line between market makers and market manipulators.

Federal prosecutors in California this week charged 10 individuals tied to firms including Gotbit, Vortex, Antier and Contrarian, accusing them of coordinating trades to inflate token prices and volumes before selling into the artificial demand. The case stemmed from an undercover FBI operation in which agents created their own token to identify firms offering manipulation services.

Defendants marketed strategies to boost trading activity that in reality amounted to pump-and-dump schemes and wash trading, leaving evidence that is far more common than expected, crypto experts Jason Fernandes from AdLunam and Stefan Muehlbauer from Certik told CoinDesk via Telegram interviews..

“Yes, despite increased enforcement, wash trading continues to be a pervasive issue, particularly among lower-cap tokens and on unregulated exchanges,” Muehlbauer said, while Fernandes stated, iIt’s far more common than most investors realize,”. They both agreed the scale remains high.

Gotbit Founder Aleksei Andriunin, included in the recent Department of Justice indictments, pleaded guilty to two counts of wire fraud and conspiracy to commit market manipulation last year, and agreed to forfeit $23 million. U.S. prosecutors described his crimes as a “wide-ranging conspiracy” to manipulate token prices for paying clients.

Inflating volumes becomes a shortcut

The details of market manipulation exposed by the DOJ are impactful, but the underlying behavior is not.

“Wash trading exists because in crypto, liquidity is perception,” said Jason Fernandes, co-founder of AdLunam. “Volume attracts attention, listings and capital, so inflating it becomes a shortcut to relevance.”

The mechanics are straightforward: coordinated accounts trade back and forth to simulate demand, often outsourced to market makers paid to create the illusion of organic flow.

It is far more common than investors believe or expect, particularly in long-tail tokens and on smaller exchanges where oversight is limited, Fernandes added.

“In many cases, it’s not just rogue actors. It’s projects, market-making firms and even venues themselves, all benefiting from higher reported volume.”

The DOJ said the firms included in their indictment used coordinated trading to inflate volumes and prices, ultimately selling tokens at artificially high levels to unsuspecting investors.

Recent research has repeatedly pointed to inflated activity across crypto markets. A Columbia University analysis of Polymarket found roughly 25% of historical volume showed signs of wash trading, while earlier Dune Analytics data suggested tens of billions in NFT volume on Ethereum stemmed from similar activity.

Wash trading still a ‘pervasive issue’: Certik

“The recent actions by the U.S. Department of Justice send a clear signal,” said Stefan Muehlbauer, head of U.S. government affairs at CertiK. “The ‘wild west’ era of crypto market manipulation is facing a coordinated, global crackdown. While these indictments represent a major victory for market integrity, wash trading remains a significant concern.”

Despite years of scrutiny, the incentives behind the practice remain intact, he said. Token issuers often face pressure to meet exchange listing requirements tied to trading volume, leading some to turn to market makers to simulate activity or deploy bots that trade against themselves.

“The ‘why’ is simple: illusion of value,” Muehlbauer said. “That illusion has real consequences,” particularly because artificial volume distorts price discovery, masks weak liquidity and can funnel capital based on signals that are not real. “High volume signals to investors and exchanges that a token is hot and liquid.”

“Victims are investors relying on that liquidity and high volume data,” Fernandes said. “Wash trading distorts markets, leading to “mispriced risk and capital flowing based on signals that aren’t real.”

Enforcement will benefit the market

The latest DOJ case stands out may bring a glimmer of hope to the industry.

“What’s notable isn’t just the charge but the method,” Fernandes said. “When the FBI is creating tokens to catch market manipulation, you’re no longer in a grey area. This is the U.S. signaling that crypto market structure is now firmly in enforcement territory.”

For market participants, the line between legitimate liquidity provision and manipulation is coming under sharper scrutiny, said the AdLunam co-founder.

Efforts to detect and reduce wash trading are improving. Regulated exchanges are deploying more sophisticated surveillance tools, while analysts are increasingly looking beyond headline volume to metrics such as order book depth, slippage and counterparty diversity.

Enforcement may ultimately push the market forward, although for now, the DOJ case shone a light on just how pervasive wash trading continues to be, undermining trust in crypto markets.

“Crypto is moving from a loosely policed frontier market to something that has to withstand institutional scrutiny. An irony is that enforcement like this may ultimately strengthen the asset class,” Fernandes said.

In Muehlbauer’s words, “the message to the industry is clear: what was once brushed off as ‘market making’ is now being prosecuted as wire fraud and market manipulation.”

Key Takeaways:

• Grewal’s signal: Coinbase CLO Paul Grewal publicly stated FIT21 would see legislative progress within 48 hours, the most direct timing claim from a major industry actor in the current cycle.
• What FIT21 defines: A decentralization test that determines whether digital assets fall under SEC (securities) or CFTC (commodities) jurisdiction – the central unresolved question in U.S. crypto regulation.
• The SEC vs CFTC boundary: Post-passage, sufficiently decentralized tokens become CFTC-regulated digital commodities; centralized issuances remain SEC-regulated securities.
• Market liquidity implication: Institutional market makers, RIAs, and hedge funds currently avoiding altcoins due to enforcement risk get a codified compliance standard – unlocking capital that has been on the sideline.
• What to watch: Senate Banking Committee markup targeted for April 2026; stablecoin yield compromise must resolve by end of week to keep the floor vote timeline intact.

BitGo has rolled out a new financing platform that allows institutions to borrow and lend against a range of crypto holdings.

According to the announcement, the platform brings together features like borrowing, lending, and collateral management to eliminate the need for multiple counterparties and fragmented workflows.

Instead of setting aside collateral for each individual loan, the platform uses a portfolio-based structure that allows clients to access liquidity from a combined pool of assets held in custody.

“We’ve built this offering to pair responsive, high-touch support from our team with an on-platform experience that makes financing easy to manage. That combination of flexibility, service, and control is what institutions have been missing in digital asset markets,” Adam Sporn, the firm’s head of prime brokerage and institutional sales, said in an accompanying statement.

Support for staked and locked tokens adds another layer, allowing borrowers to access liquidity without exiting positions tied to staking or vesting schedules, while still maintaining oversight of assets held in custody. Clients can also lend assets from the same account, either to generate yield or to free up capital for trading and treasury operations.

All activity takes place within BitGo’s custody framework, where collateral is held in segregated wallets, and credit is extended against assets such as Bitcoin, Ether, Solana, and stablecoins. Funds can be routed into trading via the firm’s brokerage services or used for broader liquidity needs.

Demand for credit against crypto holdings has risen over the past year, and this has led exchanges, institutional providers, and DeFi platforms to expand lending offerings tied to digital assets.

Some of the leading players include firms like Anchorage Digital, which, alongside Mezo, has introduced Bitcoin-backed stablecoin loans and short-term yield strategies, allowing institutions to borrow against BTC held in custody while earning returns on locked positions.

Meanwhile, in the exchange segment, platforms like Kraken have rolled out products such as Flexline, offering fixed-term crypto-backed loans, while Coinbase has reintroduced Bitcoin-backed borrowing in the United States, enabling users to access USDC liquidity against BTC collateral.

Zcash has patched a major vulnerability that would have allowed bad actors to drain funds from the protocol’s deprecated Sprout shielded pool.

A disclosure report from security researcher Alex “Scalar” Sol, published on Tuesday, claims that a critical flaw was discovered in zcashd nodes that resulted in skipping proof verification for transactions involving the legacy Sprout pool.

Zcash’s Sprout pool is the original “shielded pool” that launched with the network in 2016. It was the first implementation of zero-knowledge proofs (zk-SNARKs) in a production cryptocurrency, allowing users to send and receive ZEC privately.

Although the pool was closed to new deposits in November 2020, it still holds approximately 25,424 ZEC, which are yet to be migrated to newer shielded pool versions.

According to the disclosure, the vulnerability spanned releases from July 2020 onward but was fixed through v6.12.0, which was released on Tuesday. So far, the flaw has not been exploited, and user funds remain safe.

Major mining pools, including Luxor, F2Pool, ViaBTC, and AntPool, have already deployed the fix by March 26, the report added.

The report added that the Zebra full node implementation was not affected. In the event of an attempted exploit, it would have resulted in a chain fork, acting as an additional safeguard.

Despite the severity of the issue, the Zcash Open Development Team has clarified that the network’s “turnstile” mechanism, which enforces that any coins exiting the Sprout pool must have previously entered it, would have prevented broader supply inflation.

For the Zcash network, this marks the second time a critical, systemic vulnerability has been uncovered within its shielded pools. In 2019, the Zcash team disclosed a “counterfeiting” bug, a flaw in the underlying cryptography that could have allowed an attacker to create an infinite amount of ZEC without detection.

Bitcoin BTC$66,453.48 gave back a large portion of its recent gains on Thursday, now trading at $66,700 having lost 2.4% of its value since midnight UTC.

Ether (ETH) performed even worse, tumbling by 4.4% as the broader crypto market struggles to deal with continued risk-off sentiment.

The latest plunge was spurred by U.S. president Donald Trump, who said on Wednesday evening that the war in Iran would continue with extensive strikes on Iran.

“Over the next two to three weeks, we’re going to bring them back to the stone ages where they belong,” he said.

The comments led to an immediate spike in oil prices, with brent crude rising by around 10% to $108 per barrel as U.S. equities diverged.

Nasdaq 100 and S&P 500 futures lost 1.5% and 1.1% respectively while the U.S. dollar increased by 0.5% to above 100 points.

Derivatives positioning

• BTC’s price has dropped over 2% since midnight UTC hours alongside a slightly uptick in open interest in major USD- and USDT-denominated futures. Plus, perpetual funding rates have dropped to their most negative since March 12. This combination suggests that traders are bearish and shorting the falling market.
• In ether’s case, funding rates are most negative since October last year, a sign of strong bias for bearish bets. Meanwhile, bearishness in solana (SOL) is surprisingly more measured despite the overnight hack.
• Privacy-focused zcash (ZEC) and ADA$0.2378 have seen a notable decline in open interest (OI) in 24 hours, a sign of capital outflows.
• Nearly $400 million in futures positions have been liquidated due to margin shortfalls. That’s a 17% increase in losses compared to the previous day.
• Despite renewed risk-off tone, bitcoin and ether’s 30-day implied volatility indices remain flat in recent ranges. It points to orderly selling in the spot market rather than panic.
• There is little scope for panic because traders are already positioned for market swoon. They have been consistently chasing bitcoin and ether put options (downside hedges) since the start of the year. As of writing, bitcoin and ether puts remained pricier than calls across all tenors on Deribit.
• Block flows featured demand for ether straddles, a volatility strategy, and put spreads and bitcoin call spreads.

Token talk

• The worst performing benchmark on Thursday was CoinDesk’s DeFi Select Index (DFX), which lost 5.9% since midnight UTC, closely followed by the CoinDesk Computing Select Index (CPUS) that tumbled by 5%.
• Ethena (ENA) led the downside move as it fell by more than 10% on Thursday, there was also a heavy drawdown among DeFi tokens UNI, LDO, SKY and AAVE – all shedding between 4.2% and 6.5% during Asian and European hours on Thursday.
• Algorand (ALGO) bucked the bearish market trend, rising by around 0.8% on Thursday as it continues its rich vein of form having rallied by 22% in the past week.
• CoinMarketCap’s “altcoin season” index is down from 50/100 to 42/100 since March 30, highlighting relative weakness across the sector.

Coinbase chief legal officer Paul Grewal said the US Digital Asset Market Clarity Act is “moving toward” a markup hearing in the US Senate Banking Committee and could eventually move to a floor vote if senators resolve the stablecoin yield dispute and schedule a markup.

Speaking in a Wednesday interview on Fox Business, Grewal said lawmakers are nearing agreement on core elements of the crypto market structure bill, even as debate continues over stablecoin yield. “I think we’re very close to a deal,” he said.

The remarks point to possible movement on one of the last major sticking points in Senate talks over crypto market structure legislation: whether stablecoin issuers or platforms should be allowed to offer yield or similar rewards. The dispute has helped delay a Senate Banking Committee markup, leaving the broader effort to set federal rules for digital asset oversight still unresolved.

US banks have pushed for restrictions, arguing that such incentives could draw deposits away from traditional institutions and disrupt the banking system. Grewal pushed back on that claim, saying there is no evidence to support fears of deposit flight.

The US House of Representatives passed the CLARITY Act on July 17, 2025. In January, Senate Banking Committee Chair Tim Scott delayed a planned markup, which has yet to be rescheduled.

Related: Crypto investor sentiment will rise once CLARITY Act is passed: Bessent

Trump blames banks for stalling crypto bill

Last month, US President Donald Trump accused banks of undermining efforts to pass crypto market structure legislation, saying they are blocking progress over disagreements on stablecoin yield payments. “The Banks should not be trying to undercut The Genius Act, or hold The Clarity Act hostage,” he wrote.

It was later reported that Trump met privately with Coinbase CEO Brian Armstrong just hours before issuing the statement.

In January, Armstrong said Coinbase could not back the market structure bill “as written,” pointing to draft amendments that would eliminate stablecoin rewards and let banks restrict competition.

Related: CLARITY Act 2026 odds ‘extremely low’ if not passed before April: Exec

CLARITY delay could expose crypto to crackdowns

Last week, Coin Center executive director Peter Van Valkenburgh warned that failure to pass the CLARITY Act could leave the crypto industry vulnerable to a future US administration taking a tougher stance. He argued that rejecting developer protections in favor of short-term business interests risks creating a system shaped by political shifts rather than clear law.

“The point of passing CLARITY is not to trust this administration. It is to bind the next one,” he said.

Magazine: Bitcoin may take 7 years to upgrade to post-quantum — BIP-360 co-author