Top Stories
Flight to Safety Drives USDT Surge
Tether’s USDT supply hit a new all-time high as capital rapidly rotated into perceived safer assets following DeFi stress events. While overall stablecoin supply stayed flat, funds exited higher-risk, yield-bearing stablecoins and flowed into USDT, highlighting its role as a defensive refuge. The shift underscores how market shocks continue to consolidate liquidity into trusted issuers, while also boosting Tether’s revenue through increased deployment of reserves. See similar: Western Union to launch stablecoin next month, with 'Stable Card' planned for global consumers
Source: DefiLlama, The Block
State-Level Hackers Target DeFi Infrastructure
A $285M exploit on Drift Protocol has been linked to a North Korean–affiliated group, highlighting a shift in crypto security threats from opportunistic hacks to long-term, intelligence-style operations. Attackers spent months building trust, integrating into the ecosystem, and compromising developer tools before executing the attack and erasing evidence. The incident underscores a growing vulnerability in crypto: not just smart contracts, but human processes and development environments are now primary attack surfaces. See more/similar: LayerZero Pins $292M KelpDAO Bridge Hack on North Korea’s Lazarus Group See more/similar: Aave Leads ‘DeFi United’ Push to Contain $292M KelpDAO Fallout
Bitcoin Faces Quantum Tradeoff Debate
A new proposal suggests phasing out Bitcoin’s current cryptography and forcing users to migrate to quantum-resistant addresses or risk losing access to their funds. While framed as a necessary defense against future quantum attacks, critics argue it introduces protocol-level intervention that challenges Bitcoin’s core principles around ownership and immutability. The debate highlights a fundamental tension between long-term network security and preserving Bitcoin’s original trust model.
Coinbase Builds “App Store for AI Agents”
Coinbase launched Agentic Market, a platform where AI agents can discover, pay for, and use services autonomously without human intervention. Powered by crypto-native payment rails like x402, the system enables instant, low-cost machine-to-machine transactions and removes the need for accounts, APIs, or billing setup. As agent-driven commerce grows, Coinbase is positioning itself as the default infrastructure layer for how software agents interact, transact, and access services online.
Prediction Markets and Perps Are Merging
Prediction markets and perpetual futures are converging into a single trading layer, as platforms like Polymarket and Kalshi move into leveraged derivatives while venues like Hyperliquid expand into outcome-based contracts. This shift is driven by regulatory alignment, shared infrastructure, and the need for more efficient capital usage. As both product types begin to operate under similar frameworks, the distinction between betting on outcomes and trading price exposure is fading, setting up a battle over which platforms capture the combined flow.
Source: Dune
Regulation
Stablecoin Control vs Decentralization Tested
Circle is facing a lawsuit after failing to freeze stolen USDC during a major DeFi exploit, reigniting debate over the role of stablecoin issuers in crisis scenarios. While critics argue issuers should act quickly to stop illicit flows, Circle maintains it can only intervene under legal orders. The case exposes a core tension in crypto: stablecoins act as critical infrastructure, but their centralized control introduces expectations and risks that clash with DeFi’s permissionless ethos.
Morgan Stanley Expands Into Tokenized Finance
Morgan Stanley is moving beyond Bitcoin ETFs toward a broader digital asset strategy, with tokenized money-market funds emerging as a key next step. The firm is exploring products that combine traditional finance with blockchain infrastructure, including tokenized treasuries, digital asset tax strategies, and crypto trading services. With a large advisor network and growing institutional demand, the focus is shifting from simple access to building integrated, yield-generating financial products onchain.
SEC Eases Rules for DeFi Interfaces
The SEC introduced a policy allowing certain DeFi frontends to avoid broker-dealer registration, provided they remain non-custodial, neutral, and do not influence user transactions. This marks a significant shift from prior enforcement-heavy approaches and signals growing regulatory acceptance of decentralized infrastructure. By reducing compliance friction for interfaces, the move lowers barriers for builders and increases competition with traditional intermediaries, even as broader market structure legislation remains unresolved.
Crypto VC Resets Around Real Fundamentals
Crypto venture capital is shifting from hype-driven investing to a more disciplined model focused on real users, revenue, and sustainable growth. With weaker token performance and tougher fundraising conditions, investors are prioritizing equity, better token design, and sectors with clear product-market fit like stablecoins and financial infrastructure. The result is a more competitive but healthier environment, where capital flows to higher-quality projects and long-term fundamentals over speculation.
Other Domestic Regulation Updates
- Charles Schwab Is Gearing Up to Offer Bitcoin, Ethereum Spot Trading
- Strategy’s BTC Holdings Reach 780,897 After $1B Purchase
- Potential Next Fed Chair Has Crypto Portfolio
- Justin Sun Sues Trump-Backed World Liberty Financial Over Frozen Tokens
Other International Regulation Updates
- EToro Acquires Crypto Wallet, Zengo
- Ripple Builds Government Bonds Platform with Korean Insurance Giant
- Iran Scammers Demand Bitcoin, USDT for Transit Through Strait of Hormuz: Report
- French Weather Agency Alerts Police to Sensor ‘Interference’ After $35K Polymarket Payouts
- Brazil Issues Sweeping Ban Against Prediction Market Platforms
Pain & Gain
Pain
- Drift Protocol, $285M Drained in 12 Minutes
- World Liberty Wants WLFI Locked Beyond Trump's Second Term
- Binance and Bitget to Investigate Rave Manipulation
- Block’s Cash App Launches Accounts for Young Kids—Without Bitcoin Access
- Fake Ledger app on App Store drains American musician's bitcoin stash
- Bitmine posts $3.8 billion quarterly net loss driven by unrealized ETH decline
Gain
- Adam Back Denies He's Satoshi Nakamoto After NYT Names Him as Bitcoin Creator
- Aave V4 Goes Live on Ethereum
- Ether.fi commits $3 billion in ETH as 'validator liquidity' to ETHGas over three years
- Kraken parent Payward agrees to acquire Bitnomial for up to $550 million
- Metaplanet issues $50 million in zero-interest bonds to buy more bitcoin
Important Legal Notices
This reflects the views MJL Capital LLC (“MJL”), but it should in no way be construed to represent financial or investment advice. Nothing in this correspondence is intended to constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite, or otherwise acquire or dispose of any security, including any interest in any private investment fund managed by MJL. Any such offer may only be made pursuant to a formal confidential private placement memorandum of any such fund, which may be furnished to potential investors upon request and which will contain important information to be considered in connection with any such investment, including risk factors associated with making any investment in any such fund. Further, nothing in this correspondence is, or is intended to be treated as, investment or tax advice. Each recipient should consult their own legal, tax and other professional advisors in connection with investment decisions.
Domenic Salvo is a Managing Partner at MJL Capital, helping lead Portfolio Research and Investor Relations.
