Fidelity Calls on SEC to Expand Crypto Broker-Dealer Framework – Focus on Tokenized Securities and Alternative Trading Systems

Key Takeaways

Fidelity Responds to SEC Crypto Task Force on Broker-Dealer Rules

Fidelity Investments has formally asked the US Securities and Exchange Commission to continue refining the regulatory framework that governs how broker-dealers can offer, custody, and trade crypto assets. The request was made in a letter responding to a call for comments issued earlier in March by the SEC’s Crypto Task Force.

According to Fidelity, it is critical for the regulator to establish a comprehensive set of rules for tokenized securities trading. This includes not only tokenized instruments issued directly by market participants but also tokenized securities issued by third parties and traded on alternative trading systems, commonly referred to as ATS.

Alternative trading systems operate as regulated trading venues that differ from traditional exchanges. Fidelity’s letter focuses on how broker-dealers should be allowed to use these systems when dealing with crypto-based instruments and tokenized versions of traditional financial assets.

Tokenized Securities Require Clear and Specific Regulatory Treatment

In its submission, Fidelity emphasized that tokenized instruments vary significantly in their structure, legal characteristics, and valuation models. Tokenized real-world assets can represent different asset classes, including equities, real estate, bonds, and private credit.

The company noted that tokenization models differ in the rights they grant to holders. In some cases, a crypto asset may represent an indirect interest in an underlying security through what is described as a securities entitlement. In other cases, a tokenized instrument may qualify as a securities-based swap. Under existing rules, such swaps may only be offered to eligible contract participants.

By outlining these distinctions, Fidelity signaled that a single, generalized approach to crypto regulation may not sufficiently address the complexity of tokenized financial products. The company’s position is that clear and tailored rules would help broker-dealers understand how to structure offerings and comply with securities laws when listing or trading tokenized assets.

For market participants, including platforms that integrate tokenized instruments or rely on broker-dealer infrastructure, regulatory clarity directly affects how products can be structured and who can access them.

Bridging the Gap Between Centralized and Decentralized Trading Venues

Another central element of Fidelity’s letter concerns the regulatory differences between centralized trading platforms and decentralized finance systems.

Fidelity urged the SEC to consider how intermediated and disintermediated trading venues can evolve and coexist within the same regulatory environment. Centralized platforms typically operate under identifiable management structures and can comply with detailed reporting and recordkeeping requirements. Decentralized systems, by contrast, often lack a central authority capable of producing the type of financial reports currently required by the SEC.

The company argued that existing reporting rules should be updated to reflect this technological reality. According to the letter, decentralized platforms and other disintermediated systems cannot generate the same forms of detailed financial reporting because no single entity controls the system.

Fidelity also recommended that the SEC issue guidance allowing broker-dealers to use distributed ledger technology for alternative trading systems and other recordkeeping purposes. In its view, adapting reporting obligations to blockchain-based infrastructure would remove undue burdens from decentralized systems while maintaining regulatory oversight.

For crypto users and platforms operating in regulated markets, these discussions are relevant because reporting standards and infrastructure requirements determine how trading venues can legally function and what level of transparency regulators expect.

Regulators Maintain Capital Rules for Tokenized Assets

Fidelity’s request comes at a time when US regulators have signaled support for innovation in capital markets. Under SEC Chairman Paul Atkins, the agency has expressed openness to the concept of 24-7 capital markets and has approved certain experiments with tokenized trading.

At the same time, US banking regulators have clarified that tokenized securities are subject to the same capital treatment as their underlying assets. In a joint policy statement published in March by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, the agencies stated that the technology used to issue or transact in a security does not generally change its capital requirements.

This means that whether an equity, debt instrument, real estate investment trust, or other asset is held in traditional form or as a tokenized representation, the same capital rules apply. For broker-dealers and financial institutions, this clarification establishes continuity between traditional securities regulation and tokenized markets.

Implications for Crypto Market Infrastructure

Fidelity is the third-largest asset manager in the United States, and its engagement with the SEC adds institutional weight to ongoing regulatory discussions around crypto market structure. The company’s focus on alternative trading systems, tokenized securities, and decentralized platforms highlights areas where traditional financial regulation intersects with blockchain-based infrastructure.

For international users evaluating crypto trading or tokenized asset exposure, developments in US regulatory policy can influence product availability, platform design, and compliance standards. Broker-dealer permissions, reporting obligations, and capital treatment rules shape how regulated entities participate in digital asset markets.

Our Assessment

Fidelity’s letter to the SEC centers on expanding and clarifying the regulatory framework for broker-dealers involved in crypto and tokenized securities trading. The company calls for detailed rules covering alternative trading systems, differentiated treatment of tokenization models, updated reporting standards for decentralized platforms, and explicit permission to use distributed ledger technology for recordkeeping. At the same time, US regulators have reaffirmed that tokenized securities remain subject to the same capital requirements as their underlying assets. Together, these elements show that discussions are moving toward integrating tokenized instruments into existing securities law rather than creating a separate regulatory regime.

SEC and CFTC Issue Digital Asset Taxonomy – New Interpretive Rule Redefines US Crypto Oversight

Key Takeaways

SEC and CFTC Publish Five-Category Taxonomy for Digital Assets

The United States Securities and Exchange Commission has released new guidance that establishes a formal taxonomy for digital assets. Developed in coordination with the Commodity Futures Trading Commission, the framework divides digital assets into five categories: digital commodities, digital collectibles such as non-fungible tokens, digital tools, stablecoins, and tokenized securities.

According to the SEC, the taxonomy clarifies which digital assets qualify as securities. By distinguishing between categories, the agency sets out how it interprets existing statutory provisions in relation to cryptocurrencies and tokens. The majority of cryptocurrencies and tokens fall outside the definition of securities under this structure.

For market participants, including exchanges, token issuers, and service providers, classification determines which regulatory requirements apply. Assets categorized as securities are subject to securities law obligations, while others may fall under different oversight regimes.

Shift From Legislative Rule to Interpretive Guidance

The new framework has been issued as an interpretive rule rather than a legislative or substantive rule. Alex Thorn, head of firmwide research at investment firm Galaxy, highlighted the procedural distinction under the Administrative Procedure Act.

Under previous SEC policy, determinations about which cryptocurrencies met the legal criteria of investment contracts were treated as legislative rules. Legislative rules must go through a notice-and-comment process and carry the force and effect of law. They bind both the agency and regulated parties.

By contrast, interpretive rules are exempt from notice-and-comment requirements. They do not carry the same legal force and instead explain how the agency understands and intends to apply existing statutes. Courts are not legally bound to enforce interpretive guidance in the same way as legislative rules.

Thorn described the new approach as marking a break from the regulatory posture associated with former SEC Chair Gary Gensler. In his view, the interpretive format provides greater flexibility for both regulators and the industry as digital asset markets evolve.

Implications for the Crypto Industry Over the Next 30 Months

The guidance is positioned as providing clarity for approximately the next 30 months. During that period, market participants can refer to the taxonomy to assess how their products or services are likely to be treated under federal securities laws.

However, Thorn noted that longer-term certainty depends on legislative action. Specifically, he referenced the CLARITY crypto market structure bill, which aims to define regulatory responsibilities and market rules more comprehensively. Without codification into statutory law, the interpretive guidance remains subject to future administrative changes.

For international operators and platforms that serve US users, including those in adjacent sectors such as crypto payments or token-based services, the classification framework may influence compliance strategies and product design. Whether a token is considered a digital commodity, a stablecoin, or a tokenized security affects registration, disclosure, and reporting obligations.

Status of the CLARITY Act and Points of Contention

The CLARITY Act stalled in January 2025 following objections from several crypto companies, including Coinbase. Industry concerns focused on provisions that would prohibit stablecoin yield from passive balances and limit protections for open-source software developers.

Additional criticism centered on decentralized finance. Some companies and industry representatives argued that proposed reporting requirements and know-your-customer controls would significantly affect DeFi protocols.

According to a recent report by Politico, there are indications of a tentative agreement between the White House and lawmakers to move the bill forward. Specific terms have not been publicly detailed. Senator Angela Alsoboorks stated that the emerging deal includes a ban on stablecoin yield derived from passive balances.

If enacted, the legislation would provide statutory backing for elements of the market structure and potentially redefine the regulatory perimeter for stablecoins and DeFi services.

Regulatory Coordination Between SEC and CFTC

The joint nature of the taxonomy underscores ongoing coordination between the SEC and the CFTC. The two agencies have historically shared oversight responsibilities in areas where digital assets may resemble both securities and commodities.

By formally categorizing digital assets into distinct groups, the agencies aim to clarify jurisdictional boundaries. Digital commodities and certain other non-security tokens are generally associated with commodities oversight, while tokenized securities remain within the SEC’s remit.

For users of crypto platforms, including those engaging with token-based services, staking mechanisms, or stablecoins, regulatory classification can affect platform availability, product offerings, and compliance requirements. Clearer delineation between categories may reduce uncertainty in how platforms operate within the United States.

Our Assessment

The SEC’s publication of a five-part digital asset taxonomy, issued as an interpretive rule and developed with the CFTC, formally redefines how the agency classifies cryptocurrencies and tokens under existing law. Most digital assets are categorized as non-securities within this framework. The move alters the procedural basis of prior policy and provides interim regulatory clarity. Long-term legal certainty depends on whether Congress advances and enacts the CLARITY Act, which remains under negotiation following earlier industry objections.

Resolv USR Stablecoin Depegs After Exploit – Attacker Mints 80 Million Tokens and Extracts Millions

Key Takeaways

Exploit Allows Minting of 80 Million Unbacked USR Tokens

Resolv Labs’ USR stablecoin lost its US dollar peg after an attacker exploited a vulnerability in the token’s contract and minted tens of millions of tokens without backing.

According to a statement published by Resolv Labs on X, the attacker initially minted 50 million USR. The company said the exploit allowed the creation of unbacked tokens and confirmed that all protocol functions were paused to prevent further malicious activity. The team stated it is actively working on recovery efforts.

On-chain observations shared by the X account “yieldsandmore” indicated that the attacker was able to mint the initial 50 million USR by depositing $100,000 worth of USD Coin (USDC). Crypto security firm PeckShield reported that an additional 30 million USR tokens were minted, bringing the total to 80 million.

Crypto fund D2 Finance stated that the minting function on USR’s contract appeared to be flawed. It cited possible causes including a compromised off-chain signer, a manipulated oracle, or missing validation between request and completion. No definitive technical explanation has been confirmed in the available information.

Rapid Cash-Out Strategy Across DeFi Protocols

Following the minting of the tokens, the attacker moved quickly to convert USR into other digital assets. D2 Finance reported that the 50 million USR initially minted were transferred across multiple crypto protocols and swapped for USDC and USDt (USDT). The funds were then aggressively converted into Ether (ETH).

D2 Finance described the sequence as a typical decentralized finance exploit cash-out pattern. On-chain data showed multiple transactions executed in quick succession. The firm also noted that several failed transactions were visible, indicating urgency during the liquidation process.

Amid the rapid selling pressure, liquidity conditions deteriorated. Slippage increased across protocols where USR was traded. D2 Finance estimated that approximately $25 million was extracted by the attacker before the market stabilized.

USR Loses Peg and Experiences Flash Crash on Curve

The exploit had an immediate impact on USR’s price stability. The token is designed to maintain a 1:1 peg with the US dollar. However, heavy selling pressure following the exploit led to a sharp depeg.

According to data referenced from DEX Screener, USR fell to as low as 2.5 cents in the USR USDC pool on Curve Finance. This pool represents USR’s most liquid trading venue, with a reported 24-hour volume of $3.6 million. The flash crash occurred at 2:38 am UTC, just 17 minutes after the attacker minted the initial 50 million tokens.

The Curve pool later recovered partially, with USR trading at approximately 84.5 cents. CoinGecko data showed the token trading around 87 cents at the time of reporting, representing a roughly 13 percent deviation from its intended peg.

D2 Finance also reported that some trades were executed at around 50 cents as liquidity fragmented and slippage worsened. These price dislocations reflect the impact of sudden, large-scale token supply increases in decentralized markets.

Protocol Response and Market Context

Resolv Labs stated that it paused all protocol functions after detecting the exploit. The pause is intended to prevent additional unauthorized minting and limit further damage. The company did not provide additional operational details in the available statement.

The incident occurred during a period in which crypto-related hacks had declined compared to the previous month. According to figures cited in the report, $49 million was lost to crypto exploits in February, down from $385 million in January. The report also noted that attackers have increasingly shifted toward phishing scams rather than direct protocol exploits.

This case stands out because it directly affected a stablecoin’s core function. Stablecoins are designed to maintain price stability, and contract-level vulnerabilities can undermine that mechanism by altering supply without corresponding backing.

Implications for Stablecoin Users and DeFi Participants

For users interacting with decentralized finance protocols, the incident highlights how smart contract vulnerabilities can impact token value and liquidity within minutes. The rapid depeg and flash crash on Curve demonstrate how automated market maker pools respond to sudden imbalances between supply and demand.

Users who provide liquidity or hold stablecoins in decentralized pools may face immediate price exposure during exploit-driven sell-offs. In this case, USR’s deviation from its peg ranged from a brief collapse to a partial recovery within hours.

The attacker’s ability to move minted tokens across multiple protocols and convert them into widely used stablecoins and Ether shows how interconnected decentralized markets can facilitate rapid fund transfers.

Our Assessment

The available facts show that a contract-level vulnerability enabled the minting of 80 million unbacked USR tokens, leading to a sharp and immediate loss of the stablecoin’s dollar peg. Approximately $25 million was reportedly extracted before liquidity conditions stabilized. Resolv Labs has paused protocol functions while working on recovery. The incident demonstrates how exploits affecting token supply mechanisms can quickly impact price stability and liquidity across decentralized trading venues.

Ethereum’s Largest Whales Return to Profit – On-Chain Signals Point to Potential Price Recovery

Key Takeaways

Whale Profitability Turns Positive After February Losses

Ethereum’s native token Ether has entered a new phase according to on-chain data tracking its largest holders. Data from CryptoQuant shows that wallets holding more than 100,000 ETH have shifted back into an aggregate unrealized profit position. This is the first time this group has returned to profitability since early February.

The unrealized profit ratio for this cohort has flipped above zero. In practical terms, this means that, on average, these large holders are no longer sitting on paper losses. In previous market cycles, similar transitions marked the beginning of upward price movements.

According to analysis cited in the report, Ether delivered average gains of nearly 25% within three months after this whale ratio turned positive. Over six months, average gains reached roughly 50%, and over a year, returns approached 300% following the same signal.

The underlying interpretation of this metric is linked to selling pressure. When large holders are in loss, they may be more inclined to sell defensively. Once they return to profit, that pressure can ease. At the same time, a positive shift among the largest holders may strengthen broader market confidence by signaling renewed conviction at the top end of the ownership structure.

Historical Performance and Risk of False Signals

While the whale profitability signal has coincided with recoveries in the past, the data also shows that it is not consistently predictive. In 2018, Ether declined by 17.5% in the month following a similar flip into profitability. The asset later fell by nearly 70% despite the earlier positive signal.

This historical example illustrates that on-chain metrics can align with recovery phases but do not eliminate downside risk. For market participants, including those using Ether for trading, payments, or as collateral, such signals form part of a broader analytical framework rather than a standalone indicator.

MVRV Bands Identify Key Recovery and Resistance Levels

A separate on-chain indicator from Glassnode adds further context to Ethereum’s current position. ETH has rebounded from its lowest MVRV deviation band, a zone associated with undervaluation in past cycles. Similar setups occurred in the second quarter of 2022 and the second quarter of 2025, when price recovered from depressed levels and moved back above its realized price.

At present, Ether remains below its realized price of $2,353. The realized price represents the average on-chain acquisition cost of all circulating coins and is widely monitored as a recovery threshold. A sustained move above this level would signal that the average holder has returned to profit.

If ETH breaks above $2,353, the next reference level derived from the MVRV model lies near the negative 0.5 sigma band around $2,640. This zone defines an area where price previously encountered resistance during recovery attempts.

On the downside, failure to reclaim the realized price could expose ETH to renewed weakness. The lowest deviation band, currently near $1,651, represents a potential retest level if selling pressure increases.

Technical Breakout Targets $2,625 Zone

Beyond on-chain data, chart analysis indicates that Ether has broken above an ascending triangle pattern on the daily timeframe. After the breakout, price action is now retesting the former resistance trendline.

Such retests are common after technical breakouts. Markets often revisit the breakout level to confirm that it has turned into support. If this level holds, the measured upside target derived from the triangle formation stands at approximately $2,625 or higher.

This technical target aligns closely with the $2,640 area highlighted by Glassnode’s MVRV bands, creating overlap between chart-based and on-chain reference points.

However, if the retest fails and the breakout structure weakens, ETH could fall back toward the lower support zone between $1,950 and $2,000. This area represents a near-term support range identified on the daily chart.

What the Current Setup Means for Market Participants

For crypto users, including those active on trading platforms or using Ether in digital services, the combination of whale profitability data, MVRV positioning, and technical breakout levels provides a structured view of the current market phase.

The return of the largest ETH holders to aggregate profit reduces one identifiable source of potential sell pressure. At the same time, key thresholds such as the realized price at $2,353 and resistance near $2,640 define concrete levels that traders and risk managers may monitor.

Because historical signals have produced both recoveries and false starts, price confirmation around these levels remains central to assessing the durability of the current move.

Our Assessment

On-chain data shows that Ethereum’s largest holders have returned to aggregate unrealized profit for the first time since early February. In prior cycles, this shift coincided with average gains of 25% over three months and 50% over six months, although past instances also included periods of renewed decline. Glassnode’s MVRV bands identify $2,353 as a key recovery level and $2,640 as a near-term resistance zone, while technical charts point to a potential target around $2,625 if the recent breakout holds. Together, these indicators define measurable upside and downside thresholds without removing underlying market risk.

Dormant Bitcoin Wallet With 2,100 BTC Reactivated After 14 Years – Potential $148 Million Holding Draws Attention to Whale Activity

Key Takeaways

Wallet With 2,100 BTC Becomes Active After 14 Years

A Bitcoin wallet that had remained inactive for 14 years has resumed activity, according to reporting by Cointelegraph. The wallet holds 2,100 BTC, an amount currently valued at around $148 million.

The reactivation of such long-dormant wallets is closely monitored by market participants. When coins that have not moved for more than a decade are transferred, it can signal a potential change in ownership, custody strategy, or selling intentions. In this case, the reason behind the renewed activity has not been disclosed.

Blockchain transactions are publicly visible, which means movements from early-era wallets can be identified and tracked in real time. However, the identity of the wallet holder remains unknown.

Estimated 11,000x Paper Gain Highlights Early Bitcoin Accumulation

The wallet’s holdings represent an estimated 11,000x paper profit. This figure reflects the difference between the likely acquisition cost in Bitcoin’s early years and its current valuation.

A paper profit indicates unrealized gains. It becomes a realized profit only if the assets are sold. At this stage, there is no confirmation that the holder has liquidated any portion of the 2,100 BTC.

Long-term holders who accumulated Bitcoin in its early stages often control substantial balances relative to today’s valuations. When such holdings move, the scale of potential gains draws market attention, particularly when the valuation reaches nine figures, as in this case.

Uncertainty Over Possible Sale of $148 Million in Bitcoin

While the wallet is now active, it remains unclear whether the holder plans to offload the funds. Transfers from dormant wallets can have different purposes. They may involve internal restructuring of assets, movement to new storage solutions, or preparation for sale.

The current valuation of approximately $148 million places the wallet among significant individual Bitcoin holdings. If sold on the open market, a transaction of this size would represent a notable amount of liquidity. However, no confirmed sale has been reported.

Because blockchain data does not automatically reveal intent, observers can only verify that the coins have moved. Any interpretation beyond that would require additional evidence, which has not been made available.

Whale Activity and Sell-Side Pressure in Recent Months

Large Bitcoin holders, commonly referred to as whales, have been partially blamed for contributing to sell-side pressure in recent months. According to Cointelegraph, whale movements have coincided with periods of increased selling activity.

When significant amounts of Bitcoin are transferred from long-term storage to exchanges or other liquid venues, market participants often interpret this as a potential precursor to selling. Even without confirmed sales, the perception of increased supply can influence sentiment.

In this context, the reactivation of a wallet containing 2,100 BTC is relevant beyond the individual transaction. It fits into a broader pattern in which large holders’ actions are closely scrutinized for their potential market impact.

Why Dormant Wallet Movements Matter for Market Participants

For crypto users, traders, and investors, movements from long-inactive wallets serve as data points in assessing market dynamics. Early-era Bitcoin wallets are often associated with substantial holdings due to lower acquisition costs at the time.

When these holdings move, several questions arise: whether the assets are being redistributed, consolidated, or prepared for sale. Even in the absence of confirmed liquidation, such activity can influence short-term trading behavior.

For users of crypto platforms, including exchanges and betting services that accept Bitcoin, large on-chain transfers may indirectly affect liquidity conditions and price volatility. While no direct consequences have been reported in this instance, the scale of the wallet makes it relevant to broader market monitoring.

Our Assessment

A Bitcoin wallet holding 2,100 BTC has become active after 14 years, with the assets currently valued at approximately $148 million and representing an estimated 11,000x paper profit. There is no confirmation that the holder intends to sell the coins. However, given that whale activity has been linked to increased sell-side pressure in recent months, the movement of such a large dormant balance is a development that market participants are likely to continue monitoring.

Morgan Stanley Files for Spot Bitcoin ETF MSBT – CEO Says 2 Percent Allocation Could Mean $160 Billion in Demand

Key Takeaways

Morgan Stanley Advances Plans for Spot Bitcoin ETF

Morgan Stanley has moved forward with plans to launch a spot bitcoin exchange-traded fund, according to a recent amended S-1 filing with the U.S. Securities and Exchange Commission. The proposed fund would trade under the ticker MSBT on NYSE Arca.

The filing outlines a structure that directly mirrors the design of existing U.S.-listed spot bitcoin ETFs. The trust would hold bitcoin directly rather than relying on derivatives or futures contracts. Creation units are set at 10,000 shares, and the initial seed basket consists of 50,000 shares, with an expected value of about $1 million. The bank also disclosed that it purchased two shares earlier this month for audit purposes.

Key service providers named in the filing reflect established arrangements within the ETF market. BNY Mellon is assigned the roles of cash custodian, administrator, and transfer agent. Coinbase is designated as both prime broker and custodian for the trust’s bitcoin holdings.

The SEC has not indicated when it will decide on the application. As with other ETF filings, approval is not guaranteed.

Wealth Management Scale and Allocation Framework

The potential scale of the product has drawn attention due to Morgan Stanley Wealth Management’s size. The division oversees approximately $8 trillion in assets under management. According to Phong Le, President and CEO of Strategy, the firm recommends bitcoin allocations ranging from 0 percent to 4 percent, depending on client profile.

In a public statement, Le highlighted what a mid-range allocation could represent in absolute terms. A 2 percent allocation across $8 trillion would equate to $160 billion. He described the proposed ETF as a “Monster Bitcoin” bet in reference to this potential demand and noted that such a figure would be roughly three times the size of BlackRock’s iShares Bitcoin Trust.

Le’s calculation is based on a hypothetical allocation scenario and reflects the scale of capital managed by Morgan Stanley rather than a confirmed investment commitment. The comment nevertheless underscores how allocation decisions within large advisory platforms can materially influence flows into regulated bitcoin investment products.

From Distribution to Issuance

Morgan Stanley has previously allowed brokerage clients to access spot bitcoin ETFs and has expanded that availability over time. The MSBT filing marks a shift from distributing third-party products toward issuing its own.

If approved, the ETF would place Morgan Stanley among the issuers of spot bitcoin funds in the United States. This move would deepen the bank’s involvement in the bitcoin market beyond advisory access and into product sponsorship and management.

Since the launch of U.S. spot bitcoin ETFs in 2024, the category has attracted more than $50 billion in inflows, according to the source material. Much of that demand has come from self-directed investors. Within advisory channels, adoption has been described as uneven, influenced by internal policies, risk frameworks, and client demand.

The filing therefore comes at a time when large financial institutions are still determining how to position bitcoin within standard portfolio construction models.

Structure and Market Positioning of MSBT

The operational framework described in the S-1 reflects established market practice. Listing on NYSE Arca aligns the product with other exchange-traded vehicles in the digital asset segment. The 10,000-share creation unit structure and the use of a seed basket are consistent with mechanisms used to manage liquidity and facilitate primary market transactions.

The designation of Coinbase as both prime broker and bitcoin custodian places custody and execution functions with a provider already active in the ETF ecosystem. BNY Mellon’s role as cash custodian and administrator adds a traditional financial institution to the trust’s operational setup.

For investors evaluating regulated bitcoin exposure, these structural elements determine how the fund will hold assets, process creations and redemptions, and safeguard client funds.

Regulatory Status and Next Steps

The SEC review process remains ongoing. The regulator has not provided a public timeline for its decision on MSBT. Approval would be required before the trust can begin trading.

The filing represents a notable development in the U.S. market, as a major bank seeks to issue its own spot bitcoin ETF after earlier phases of cautious engagement with digital assets. Whether MSBT proceeds to launch will depend on regulatory clearance.

Our Assessment

Morgan Stanley’s amended S-1 filing formally positions the bank as a prospective issuer of a spot bitcoin ETF structured to hold BTC directly. The product would rely on established service providers and list on NYSE Arca under the ticker MSBT.

Statements by Strategy CEO Phong Le highlight the scale of capital within Morgan Stanley Wealth Management and quantify how a 2 percent allocation across $8 trillion in assets would equal $160 billion. While this figure reflects a hypothetical allocation scenario, it illustrates the magnitude of potential flows if bitcoin becomes a standard portfolio component within large advisory platforms. Final approval now rests with the SEC.

Stablecoin Issuers and Fintech Firms Launch Payment-Focused Blockchains – Control of Settlement Infrastructure Becomes Strategic Priority

Key Takeaways

Shift From General-Purpose Blockchains to Payment-Focused Networks

Stablecoin issuers and fintech-linked companies are building a new generation of blockchain networks designed specifically for institutional payment flows. According to research cited by Delphi Digital, this marks a structural shift away from general-purpose layer-1 networks that support broad token issuance and smart contract activity.

Instead of relying on established public blockchains for settlement, several firms are developing their own infrastructure optimized for stablecoin transfers, particularly US dollar-denominated tokens. The focus is on improving efficiency for cross-border payments and large-scale settlement activity rather than supporting diverse decentralized applications.

This development reflects growing competition to control the infrastructure layer that underpins stablecoin transactions. Stablecoins are widely regarded within the industry as one of crypto’s most established real-world use cases, particularly for cross-border payments and digital dollar transfers.

Tether-Backed Plasma and Circle’s Arc Target Stablecoin Finance

Among the projects highlighted is Plasma, a public layer-1 network backed by Tether. Plasma is optimized for cross-border transactions involving USDt (USDT). The project raised $24 million in February 2025 and launched its mainnet on Sept. 25, 2025.

Circle, another major stablecoin issuer, introduced the public testnet for Arc in October 2025. Arc is described as an open layer-1 blockchain purpose-built for stablecoin finance. The initiative signals Circle’s intent to operate not only as a token issuer but also as a provider of underlying settlement infrastructure.

By building proprietary networks, stablecoin issuers aim to reduce reliance on external ecosystems and gain greater control over transaction processing and associated fees.

Fintech Companies Expand Into Stablecoin Settlement Infrastructure

The push to control payment rails is not limited to crypto-native firms. Fintech companies are also moving into stablecoin settlement infrastructure.

Tempo announced that its mainnet is live, describing the network as a merchant-focused settlement layer built for high-throughput stablecoin transactions. The project states that it is incubated by Paradigm and Stripe.

Stripe has made several acquisitions related to stablecoin and crypto infrastructure. In October 2024, it acquired stablecoin infrastructure startup Birdge for $1.1 billion. In June 2025, Stripe acquired crypto wallet infrastructure provider Privy. On Jan. 14, it also purchased billing platform Metronome.

According to Delphi Digital, these acquisitions position Stripe to control more of the issuance, wallet, billing, and settlement layers surrounding stablecoin payments. This approach integrates multiple components of the payment workflow under a single corporate structure.

Why Control of Payment Rails Is Considered Strategically Important

Industry executives describe ownership of payment rails as increasingly important from a revenue perspective. Ran Goldi, senior vice president of payments and network at Fireblocks, said that instead of relying on external networks and paying fees to ecosystems such as Ethereum, companies are seeking to capture more value by building or controlling their own settlement layers.

For payment companies, owning the underlying infrastructure allows them to avoid paying external network fees for mint and burn operations of stablecoins. This shifts economic benefits from public blockchain ecosystems to private or specialized networks.

Alvin Kan, chief operating officer at Bitget Wallet, described stablecoin payment infrastructure as a new revenue layer. As protocol-level settlement costs decline, he noted that value capture moves toward orchestration layers surrounding the rail. These include compliance services, foreign exchange conversion, wallet infrastructure, onramps and offramps, local payout connectivity, and merchant integration.

Irina Chuchkina, chief growth officer of Wallet in Telegram, stated that stablecoin payment rails could become a defining revenue driver for the current market cycle. She compared the role of settlement infrastructure to that of traditional card networks, which derived influence from owning payment processing systems rather than issuing currency.

Chuchkina also pointed to interoperability with agentic artificial intelligence as a potential differentiator for companies building settlement rails, suggesting that integration with automated systems may influence how value flows through these networks.

Implications for Crypto Payment Users and Platforms

For users of crypto payment services, including those interacting with online platforms that accept stablecoins, the development of specialized settlement networks may affect how transactions are processed behind the scenes. While the source material does not specify changes to user fees or transaction speeds, the emphasis on high throughput and cost control indicates that infrastructure providers are targeting efficiency and scalability.

For platforms that rely on stablecoin transactions, such as online merchants or service providers, control of settlement layers may influence fee structures, compliance processes, and integration options. As companies consolidate issuance, wallet services, billing, and settlement within integrated ecosystems, operational workflows could become more centralized within specific infrastructure providers.

The competition to build and operate these networks underscores that stablecoin payments are no longer limited to token issuance alone. Instead, infrastructure ownership is emerging as a focal point in the broader crypto and fintech landscape.

Our Assessment

Based on the reported developments, stablecoin issuers and fintech firms are expanding beyond token issuance into direct control of settlement infrastructure. Projects such as Tether-backed Plasma, Circle’s Arc, and Tempo’s merchant-focused network illustrate a shift toward specialized payment blockchains. At the same time, acquisitions by companies like Stripe indicate efforts to integrate issuance, wallets, billing, and settlement under unified control. The available information shows that ownership of payment rails is becoming a central competitive factor in the stablecoin sector.

Gemini Faces Class-Action Lawsuit Over Post-IPO Strategy Shift and Stock Price Decline

Key Takeaways

Class-Action Complaint Filed in Manhattan Federal Court

Gemini has been named in a proposed class-action lawsuit filed in a Manhattan federal court by shareholders who allege they were misled during and after the company’s initial public offering in September. The lawsuit targets the crypto exchange, its co-founders Tyler and Cameron Winklevoss, and other company executives.

The plaintiff, Marc Methvin, claims that Gemini’s IPO documents presented the company as a growing crypto exchange focused on expanding its user base and international footprint. According to the complaint, this representation did not align with what followed in the months after the public listing.

The lawsuit seeks a jury trial and damages for investors who purchased shares at what the complaint describes as “artificially inflated prices” shortly after the IPO.

Alleged Shift to Prediction Market Model

Central to the complaint is the allegation that Gemini made an “abrupt corporate pivot to a prediction-market-centric business model” after going public.

According to the filing, Gemini’s IPO documentation described the exchange as its “core product.” In November, executives reportedly emphasized progress in international expansion and stated that the company remained committed to extending into key global markets.

However, in early February, the Winklevoss brothers announced a strategic pivot branded as “Gemini 2.0,” focused on prediction markets. The lawsuit claims this shift marked a significant departure from the business model described in IPO materials.

The complaint further states that Gemini subsequently announced a 25% reduction in its workforce and its exit from the European Union, the United Kingdom, and Australia. These operational changes form part of the shareholders’ argument that the company’s post-IPO direction differed materially from prior representations.

Stock Price Decline Following IPO and Strategic Changes

Gemini went public in September, listing its shares at $28 on the Nasdaq. Shortly after the IPO, the stock price briefly reached $40.

Since then, shares have declined by more than 80%, trading at around $6 on Thursday, according to the report. The complaint notes that the stock fell to an all-time low of $5.82 by February 20.

Plaintiffs argue that the strategic pivot, executive departures, and increased operating expenses contributed to investor losses. Later in February, Gemini’s chief financial officer, chief operations officer, and chief legal officer all departed the company.

The lawsuit also references a reported 40% increase in operating expenses during the period in question. According to the complaint, these developments led to “significant losses and damages” for the proposed class of shareholders.

Financial Results Show Revenue Growth Despite Turmoil

On Thursday, Gemini reported that its fourth-quarter revenues rose 39% year-on-year to $60.3 million. This figure exceeded analyst expectations of $51.7 million.

The revenue growth comes amid the broader corporate changes cited in the lawsuit, including the strategic shift and cost increases. The complaint does not dispute the reported revenue figures but focuses on the alignment between earlier public disclosures and subsequent business decisions.

For investors and market participants, the combination of revenue growth and a sharp stock price decline highlights the importance of strategic clarity and communication in newly public companies.

Relevance for Crypto Market Participants

Gemini operates as a crypto exchange and has also announced a move into prediction markets under its “Gemini 2.0” strategy. For users of crypto trading platforms and related services, corporate restructuring, market exits, and leadership changes can affect platform availability and long-term positioning.

The announced withdrawal from the EU, UK, and Australian markets is particularly relevant for international users, as it signals a shift in geographic focus. Workforce reductions and executive departures may also influence operational priorities.

While the lawsuit centers on investor disclosures rather than customer-facing services, legal proceedings of this scale can shape corporate governance and strategic planning in publicly listed crypto firms.

Our Assessment

The proposed class-action lawsuit against Gemini focuses on whether the company’s IPO disclosures accurately reflected its subsequent strategic direction. Shareholders allege that a pivot to a prediction-market-centric model, workforce reductions, market exits, increased operating expenses, and executive departures diverged from the exchange-focused growth narrative presented during the IPO. The case follows a stock price decline of more than 80% from its post-listing peak, despite reported year-on-year revenue growth in the fourth quarter. The outcome of the legal proceedings may clarify the standards applied to public communications by crypto companies after going public.