Both Morgan Stanley’s launch of MSBT and Goldman Sachs’ unveiling of its ETF plans come against a difficult environment for cryptocurrency investments. The digital currency’s value has dropped in recent months due to weakening risk sentiment, driven by factors like volatility in precious metals, a broad selloff in tech shares, and the ongoing Middle East conflict.

Also, Goldman Sachs’ upcoming Bitcoin ETF will offer exposure to the currency’s price and enable users to generate income from Bitcoin options transactions.

Bitcoin, the world’s largest cryptocurrency, has seen its price tumble nearly 15% so far in 2026 to USD 74,591. It is currently trading 40% below its all-time high of USD 126,223 reached in October 2025.

While assets under management (AUM) for cryptocurrency ETFs have continued to grow, the journey has been full of headwinds. In fact, both the Grayscale Bitcoin Covered Call ETF (BTCC.P) and the Global X Bitcoin Covered Call ETF (BCCC.Z) recorded net outflows since the beginning of 2026.

Goldman Sachs’ upcoming ETF will be the first filed by the Wall Street giant since completing its USD 2 billion acquisition of ETF provider Innovator Capital Management earlier ⁠this month.

Innovator’s takeover was a strategic victory for Goldman Sachs, as the company pioneered developing ETFs using options to determine outcomes or generate income.

As per the data of asset manager CoinShares, the debut of Morgan Stanley’s MSBT also came amid the strongest week for crypto investment products in three months, as crypto funds globally attracted USD 1.1 billion in net inflows till April 11.

The turnaround followed five straight weeks of outflows that drained roughly USD 4 billion from the market and left investor sentiment battered heading into April. CoinShares head of research James Butterfill, while interacting with NEWSBTC, cited early ceasefire signals from the Iran theatre and a softer-than-expected US inflation reading, behind the crypto investment rally.

However, due to the Iran conflict and ceasefire, the first round of talks between Washington and Tehran failed to come up with a fruitful solution, and another round is expected to be held shortly.

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The offering, named “Schwab Crypto,” will be operated through Charles Schwab Premier Bank. The implementation model will also see the venture taking a different path than its prior crypto exposure model, which routed clients through ETFs, futures, and crypto-adjacent equities.

Charles Schwab rolling out direct Bitcoin and Ethereum crypto trading to its brokerage client base will also test whether direct digital asset ownership can integrate into the digital workflow of a mainstream brokerage platform at scale, and whether it will generate the kind of demand signal that will reshape competitive dynamics across the retail brokerage industry.

“Qualifying clients will access direct BTC and ETH trading through a dedicated account tied to the firm’s affiliated banking subsidiary, a structural boundary that separates crypto holdings from the stocks, bonds, and ETFs clients already hold under SIPC coverage. Crypto assets held through the new product carry neither SIPC nor FDIC protection, a disclosure Schwab is making explicit in its rollout materials,” Coinspeaker reported.

“The initial cohort is narrow by design. The pilot begins with Schwab employees, followed by a small early-access group drawn from a waitlist currently open on Schwab’s crypto page, before broadening through the remainder of the first half of 2026. Geographic restrictions apply at launch: the product is available across all US states except New York and Louisiana. Asset scope is limited to Bitcoin and Ethereum only, with no additional cryptocurrencies announced,” it added.

However, Schwab currently accepts no external crypto deposits and does not support withdrawals to self-custody wallets, staking, recurring purchases, or limit orders, features that separate native crypto platforms from their brokerage-integrated counterparts. The company also hasn’t discussed things like pricing and fee structure either. The pilot product currently resembles a basic buy-and-sell interface.

However, as per the reports, Schwab is not looking to compete with Coinbase on feature depth. It is testing whether the mere availability of direct ownership, inside a familiar brokerage interface, generates measurable demand from the company’s client base.

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Bitcoin (BTC) saw a brutal sell-off in early 2026 as it plunged from a peak of $126,000 to below $63,000. This has led people to try deciphering the market realities, as the crash exposed the cracks in the mythology of Bitcoin as an ever-booming asset.

Most analysts believe it was a new financial era. The digital asset broke the six-figure threshold in late 2024, and by early 2025, it was seen as the most coveted asset in this new financial landscape. The spot exchange-traded funds (ETFs) brought Wall Street money into the crypto market, and the Trump administration, which was initially hostile to cryptocurrencies, became incredibly friendly.

Of course, there was also the halving cycle. Bitcoin’s four-yearly supply shock was as punctual as always. By October 2025, the price touched $126,000, and the faithful acolytes and crypto billionaires were already mapping $200,000 and beyond.

Then the bottom fell out. Prices have been slashed in half from their October peak, with the price plunging way below the $63,000 mark in February 2026 for a staggering fall of around 50% in just four months. This crash has caused significant panic in the market as billions of dollars disappeared over a handful of sessions, and many leveraged traders were flushed out. Furthermore, the Spot ETF, which was intended to legitimise the cryptocurrency as a stable asset, instead forced sellers to mechanically dump coins in a market that was already collapsing.

Yes, it was a bloody season, even by crypto’s permissive standards, but this article is not about how bad it was, but what it reveals. Is crypto the new digital gold, or is it just a speculative asset with institutional backing?

Modern crypto crash

Bitcoin has come a long way from being one of the riskiest assets in the world. It has slowly garnered a reputation as something that will keep increasing in value.

To understand this sell-off and why it hit so hard, we need to look at how the market was built over the last two years and examine the structures that drove the last rally and its inevitable collapse.

Firstly, let’s examine leverage. The crypto derivatives market is a paradise for aggressive traders, and the latest cycle drew hordes of them. When the digital currency eroded from its $80,000 to $90,000 range in early February, the markets saw almost $279 million in leveraged positions liquidated within a single day. Almost $170 million of that was concentrated in long positions.

Just a few days later, within a single hour, $80 million in liquidations were produced, and $48 million of it was Bitcoin alone.

While the data is not record-breaking or particularly alarming in isolation, it remains significant due to the feedback loops and self-fulfilling prophecies it creates.

Academic research specifically examining Bitcoin futures markets at BitMEX revealed that daily forced liquidations average approximately 3.5% of open interest for long positions, largely because many traders utilise effective leverage levels of 60x or more. In an environment like that, even a moderate price decline leads to those margin calls. Exchanges then dump collateral to cover those calls, and the prices dwindle further, liquidating more positions. This cascade is fast, mechanical, and transforms something that is otherwise manageable into a rout.

But we can’t blame everything on leverage. It was just an amplifier and not what started this domino effect. The foundational reasons for this crash were a structural shift in the behaviour of a new and yet consequential set of players. Namely, the ETF complex.

New buyers become sellers

Experts say that the US spot Bitcoin ETF launch was a watershed moment. It allowed retail and institutional investors to access the digital currency through a regulated, familiar vehicle without managing balances or private keys for the first time.

Within the first two trading days of 2026, $1.2 billion in net inflows were recorded on US ETFs. It is an extraordinary pace, which reassured investors that the historic run of 2024 and 2025 probably might not end anytime soon.

Then the rhythm broke. The shockwaves emerged with ETF flows flipping negative by January 6. Research by Binance reported that, in 2026, demand had turned into a net negative, with year-to-date flows of roughly minus 4,595 BTC. This meant that the funds, on balance, were being sold into the market rather than bought.

A separate analysis claimed US spot Bitcoin ETFs recorded $4.5 billion in net outflows in 2026, which was the longest sustained outflow streak since early 2025.

It’s different this time around because in previous cycles, after every halving, retail enthusiasm fades, and the tourist capital is usually invested in offshore derivatives or speculative altcoins. This is referred to as altseason.

Most traders who make big money during the sell-off re-divert that wealth into up-and-coming coins. But this season, there was no altseason rally. The cryptocurrency kept booming indefinitely. There was even talk that an altcoin season might not happen again.

ETFs have changed the equation. When investors redeem ETF shares, the fund must sell underlying altcoins to meet these demands. It is programmed that way and is non-discretionary. It happens in large blocks and hits a market which, despite its growth, has relatively thin spot liquidity compared to traditional assets.

The ETF paradox is visible. The institutionalisation of BTC was supposed to stabilise the asset and broaden the ownership base. Instead, it created a new system where retail fear can rapidly and efficiently transmit into largescale spot selling. This legitimisation was celebrated by bulls, yet that same mechanism has handed a button for self-annihilation to the market.

The macro context

And to top it all off, the macroeconomy couldn’t be more hostile to Bitcoin. The wars in Europe, Israel and possible geopolitical crises in Taiwan and Iran, along with the tariff wars, have killed the appetite of central banks around the world. Markets have been tightening and de-risking globally.

The same fears that cause volatility in traditional markets are more profound now. Gold has surged above $5,500 per ounce, serving as a safe haven for assets as it has for thousands of years. Meanwhile, the digital asset (which was supposed to be a storehouse of wealth and was dubbed the ‘digital gold’) has fallen roughly 20% year-todate as of early February. It is a development that is impossible to miss.

The whole idea of the blockchain asset was ‘gold but better’ because someone could steal your gold from your house, banks might collapse, and gold is harder to transport from one country to another. It also had all the good properties of gold in the sense that no one could take it from you. It was in a hidden, encrypted wallet that the government had no access to, and the prices always kept booming.

It was considered a reliable and safe asset, but the global crisis has proven that the digital currency might not be as reliable an asset as people thought it was, and is definitely not a dependable replacement for gold.

The policies that have been baked in place by governments around the world are not conducive either. Since COVID-19, near-zero rates, and quantitative easing, banks have made a coordinated retreat from their usual yet extraordinary monetary accommodation.

The US Federal Reserve drained $2.8 trillion from its balance sheet between the pandemic peak and late 2025, only taking a slight U-turn in December. The European Central Bank was no different and shed $3 trillion since mid-2022. Even the Bank of Japan (which was a perennial holdout historically) has embraced inflation and is shrinking its own balance sheets.

It’s not all doom and gloom. Some rate cuts are set to return in 2026. However, there has been a generational shift. Real yields are positive, and even cash offers dependable returns. The dollar is firm despite day-to-day volatility. Bitcoin, which had thrived in the era of free money, unprofitable growth companies, and speculative tech, is a natural casualty of this change in philosophy.

The cryptocurrency is correlated with the Nasdaq and other high-beta risk assets (assets with high volatility relative to the market). It is telling of what the asset has evolved into, which is a macro trading instrument.

It only rallies when there is abundant liquidity and a great appetite for risk, and is dumped the moment traders have cold feet.

The digital gold question

Now let’s get to the heart of the matter. In a world of uncertainty, war, fatigue, plague, and zero-sum games, gold seems like the most reliable asset to hold on to. Everyone wants it, and no culture would deny it.

The digital gold thesis is underpinned by two important claims, the first being that Bitcoin acts as a store of value that builds and retains purchasing power across full cycles despite its inherent volatility. And the second claim suggests that during a crisis, the cryptocurrency behaves like gold, and serves as an effective hedge against both monetary debasement and geopolitical uncertainty.

“Bitcoin is sensitive to liquidity. In phases when capital becomes cautious, BTC often behaves not like a protective shield, but like a real risk asset,” according to the views of analysts on the website of Aequifin, a Germany-based fintech platform for litigation funding.

There are no arguments about the first claim. The digital asset has proven its resilience across years, seeing highs and lows but coming back up every halving cycle. Previously, it had lost 70% to 80% of its value, yet it has soared to new heights every time. Long-term holders have been rewarded in a way that no other asset has rewarded its holders.

Research on post-halving dynamics has confirmed that speculative cycle and supply shock patterns are broadly intact.

It is when it comes to the second claim (the idea of the cryptocurrency as a go-to asset during a crisis) that things get murky.

Research across multiple methodologies, including VAR models, GARCH analysis, and multi-factor frameworks, has concluded that BTC cannot function as a safe haven akin to gold. Studies examining correlations between the digital currency, gold, oil, and equities indicate that Bitcoin is the second riskiest asset in the sample, and significantly more volatile than gold, making it more comparable to crude oil or leveraged growth stocks than to defensive instruments.

Furthermore, Quantile VAR spillover methods reveal that under normal and bullish conditions, BTC acts as a net transmitter of risk to other assets, while in times of crisis, it amplifies shocks rather than absorbing them, such as gold and treasuries.

The crash of 2026 exposes an uncomfortable reality. The conditions that ought to have been quite attractive, like geopolitical risk, currency uncertainty, and distrust of institutional finance, have not made it soar to new heights. Instead, there has been a 50% depreciation. Gold, however, has reached new heights. It’s not that Bitcoin didn’t rally; it crashed.

Nations that bet big

No one has bet bigger on the digital currency than El Salvador and the Central African Republic. Two nations, continents apart, that granted the blockchain asset full legal tender status. Both nations, as a consequence, have struggled considerably.

El Salvador decided to gamble in September 2021, presenting itself as a visionary. It sounded like a small, dollarised economy was going to leapfrog traditional financial infrastructure to reduce remittance costs and attract crypto- tourists, much like Dubai.

It was going to be a financial laboratory, but the experiment went awry. Research has found that BTC was only used for 1.9% of transactions in the first year. A lot of Salvadorans downloaded the government’s Chivo wallet to collect a one-time $30 incentive, but didn’t open it again.

There were many problems, including technical friction, price volatility, and patchy internet access; consequently, many ordinary citizens saw it as absolutely impractical. However, tourism got a boost, with a rise of 22% in 2024. The digital asset was one of the primary attractions for international visitors, but the macro picture was collapsing. The IMF flagged the legal tender arrangement, citing risks to financial stability, consumer risk, and fiscal integrity.

“El Salvador’s Bitcoin experiment has failed. Public distrust, low adoption, technological problems, and volatility are leading to a rollback of the legal tender policy in 2025,” tweeted Ricardo V. Lago, an independent commentator on Latin American economics, on X in November 2025.

In early 2025, El Salvador sought a $1.4 billion loan from the IMF. One of the conditions laid down by the IMF for loan eligibility was the demotion of Bitcoin and the revocation of its legal tender status. El Salvador received the loan and revoked the legal tender status of the crypto asset. Now, merchants aren’t required to accept the digital currency. The government still has its digital currency holdings, but the experiment has failed. El Salvador is now just another crypto-friendly jurisdiction, not a Bitcoin economy.

The Central African Republic had an even worse crypto journey. CAR adopted the digital asset as legal tender in April 2022, despite having a population where only 11%-14% have internet access.

The government launched a partially Bitcoin-backed national cryptocurrency called Sango Coin, and promised foreign investors citizenship, land rights, and access to natural resources in exchange for token purchases. However, the country’s constitutional court pushed back against selling citizenship via crypto, calling it unconstitutional.

Sango Coin made less than €2 million, which is far short of its target, and collapsed. Researchers who investigated the experiment described the programme as opaque, poorly designed, and constructed for the benefit of speculators and politically connected intermediaries rather than ordinary CAR citizens.

Global Initiative Against Transnational Organised Crime (GI-TOC) stated in its report that the opaque nature of the schemes benefited a small circle of insiders and transnational criminal organisations looking for ways to launder money.

“The CAR regime is effectively trading away the country’s sovereignty at the expense of the wider population,” states the report from the Switzerland-based network of some 600 experts tracking international organised crime.

Both these countries were brave, considering that their economies are on the weaker end of the spectrum. Their experiment might have paid dividends if they had sold the assets during historic highs, but these are nations, and not speculating investors or ‘crypto bros’.

For El Salvador, Bitcoin’s volatility created fiscal and reputational risks that brought about a mild U-turn in policy. In CAR, it added more tension and instability to an already fragile economy.

Liquidity shock or structural red flag?

This crash can be seen in two ways, with the simple reading being that it represents the usual cyclical fluctuations of a speculative asset. Bitcoin has encountered this situation many times before, such as the 2018 crash, where prices fell below 80% and caused significant panic, as well as the 2022 crash, which was almost as severe. The pattern remains consistent every time.

“BTC’s well-known four-year cycle may no longer define its long-term behaviour,” Cathie Wood, CEO of ARK Invest, stated in a Fox Business interview in December 2025. Yet, she acknowledged past cycles featured ‘sharp crashes, often 75% to 90%’, now steadied by institutions.

There is euphoria followed by leverage, a macro or idiosyncratic shock, a cascade of forced selling, capitulation, and an eventual recovery to new heights. From this perspective, the recent violent crash is considered routine, and long-term holders who are habituated to these cycles will likely continue to hold while awaiting new horizons.

The second way to look at it is through the structural lens. What has changed since 2018 and 2022?

The major change is that there are new players in the market. First, ETFs now represent a major share of institutional BTC exposure. Additionally, derivative markets are deeper and more interconnected, and leverage in the system is larger in absolute dollar terms, even if the percentage of open interest remains similar.

The digital asset’s price is now heavily conditioned by the same liquidity plumbing that governs equity markets, including ETF flows, repo conditions, and prime brokerage leverage.

It is no longer bound to slow-moving fundamentals like on-chain adoption or long-term holder accumulation. If you look at it like that, the decentralised financial asset is more like a leveraged Nasdaq constituent than a traditional monetary asset that is separate from the financial system. This may not be permanent. Markets can deepen, ownership will broaden, and volatility could decline, which may shift all these correlations in the future. But, as of now, empirically, we understand that BTC isn’t gold.

So the practical takeaway for investors is that the cryptocurrency isn’t a safe haven or a hedge, but a high-beta, liquidity-sensitive position. It’s more like a tech asset than a gold bar.

It still might boom and reach new all-time highs, but it isn’t an asset that’s stable enough to bet on when the world around you is burning down.

For governments and policymakers, the digital currency narrative might be appealing, but lessons from CAR and El Salvador are humbling. The volatility of BTC is treated as a feature of its immaturity, but it is not dependable enough for long-term public policy. Small economies with very limited fiscal space to operate cannot absorb a 50% drawdown. When the banks come knocking, arithmetic prevails over ideology.

It is not to say the digital currency isn’t appealing. It still is, just as it was 10 years ago. There are several factors that remain remarkable, including its supply constraint, an ongoing adoption curve, and a consistent history of full cycles.

But the 2026 crash has an important lesson to teach us. Cryptocurrency as an asset class has not matured like gold. We are, without a doubt, in an early and volatile chapter of the Bitcoin story.

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The note further echoed the bitcoin allocations recommended by other major asset managers. Recently, Bank of America greenlit wealth advisors to recommend a BTC allocation of up to 4%, while BlackRock has pointed to 2%. The guidance further emphasises Bitcoin’s role as a complementary portfolio component rather than a core holding.

Eid emphasised a measured approach, not turning crypto into the centrepiece of a portfolio but using it as a complementary asset that can help absorb shocks from currency depreciation and global volatility. It is worth mentioning that Brazilian investors experienced heightened volatility as the real strengthened approximately 17% against the dollar in 2025. This currency volatility also amplified local losses for investors holding dollar-denominated assets like Bitcoin.

Bitcoin (BTC), the virtual currency, had a turbulent 2025, which saw the cryptocurrency surge to an all-time high above USD 125,000 in October before retreating to current levels around USD 90,000.

“An asset distinct from fixed income, traditional stocks, or domestic markets, with its own dynamics, return potential, and — due to its global and decentralised nature — a currency hedging function. The idea is not to make crypto assets the core of the portfolio but to include them as a complementary component — sized appropriately to the investor’s risk profile,” Eid wrote.

Products like BITI11, a bitcoin ETF traded in Brazil, saw their performance in reais affected by the weakening fiat currency. But in periods of stress, like the one seen in late 2024, the global nature of BTC provided some insulation.

Eid, however, warned against trying to time the market and suggested a disciplined, long-term mindset. A small, steady exposure to bitcoin can act as a partial hedge and offer access to global returns, especially as traditional asset correlations become less reliable.

“It calls for moderation and discipline: set a strategic slice (for example, 1%–3% of the total portfolio), keep a long-term horizon and resist the temptation to react to short-term noise,” Eid concluded.

Talking about Itau and the crypto market, the venture, in September 2025, established a specialised unit within its asset management arm, “Itau Asset,” to develop cryptocurrency investment products. Itau Asset is currently led by Joao Marco Cunha, formerly managing director at crypto asset manager Hashdex. Itau is right now managing three regulated cryptocurrency products with combined net assets of RUSD 850 million (USD 156 million).

These include a Bitcoin exchange-traded fund, the “Itau Bitcoin Index Unit Trust Fund” and the “Itau Flexprev Bitcoin Pension Fund.” Through its “Ion Itau” investment platform, customers can directly trade ten cryptocurrencies, including Bitcoin, Ethereum and the USDC stablecoin.

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These include the total cryptocurrency market capitalisation surpassing the $4 trillion threshold, the enactment of the GENIUS Act, which established the first comprehensive federal regulatory framework for stablecoins in the United States, and a parabolic price trajectory for Bitcoin that saw it breach new all-time highs before succumbing to a macro-induced correction in November.

While the breach of the $4 trillion mark signalled a structural re-rating of the asset class and placed it on par with major global equity exchanges, market dynamics revealed a bifurcation between asset performance and infrastructure growth.

Bitcoin’s ascent to a peak of approximately $126,000 was fuelled by the “Trump trade” and massive ETF inflows, yet its subsequent 30% correction underscored the market’s continued sensitivity to macroeconomic shocks, specifically stagflationary signals from the US labour market. Conversely, the stablecoin sector, now buttressed by federal law, decoupled from speculative volatility to process transaction volumes rivalling global payment networks like Visa, which confirms its utility as a settlement layer for the digital economy.

We dissect these trends through six core sections, including a detailed analysis of legislative reform. By synthesising data on regulatory shifts and on-chain metrics, we offer a nuanced perspective on how the industry has transitioned from a speculative fringe to a regulated, albeit volatile component of the global financial architecture.

Welcome to the big leagues

In July 2025, the digital asset sector achieved a historic valuation milestone as the total market capitalisation surpassed $4 trillion for the first time. The event was not merely a psychological victory for early adopters but a quantitative signal of the asset class’s integration into the broader financial system. To contextualise this growth, the market cap effectively doubled from its previous cycle highs, driven by a confluence of retail resurgence and institutional capital deployment.

The ascent to $4 trillion was underpinned by distinct structural factors that differentiate this cycle from the speculative manias of 2017 and 2021. Foremost among these was the deepening of liquidity pools facilitated by the approval of spot ETFs across multiple jurisdictions.

The “ETF wrapper” served as a critical conduit for wealth management platforms and pension funds to allocate capital without the operational burden of custody, effectively unlocking trillions in previously sidelined capital.

Data from the third quarter of 2025 indicates that the rally was supported by extensive institutional demand, which was further catalysed by legislative advancements in the United States. The market did not rise in a vacuum; rather, it was buoyed by a “pro-crypto” administration and a tangible shift in regulatory posture. The correlation between legislative clarity and capital inflows became undeniable, as evidenced by the sharp uptick in valuations following the passage of the GENIUS Act.

However, the composition of this market capitalisation reveals a significant evolution in capital allocation. While Bitcoin retained its dominance as the primary store of value and accounted for over $2.4 trillion of the total market cap at its peak, the 2025 cycle witnessed a broadening of the value spectrum. Capital rotated aggressively into programmable blockchains and stablecoins, reflecting a market that increasingly values utility and yield over pure speculation.

The psychological impact of crossing the $4 trillion mark forced a reassessment of risk models among global macro strategists. At this scale, the asset class becomes too large to ignore for sovereign wealth funds and endowment managers who must now consider digital assets as a necessary component of a diversified portfolio to hedge against debasement and capture technological alpha. Industry analysts noted that crossing this mark signals a “structural re-rating” of crypto, moving it from an asymmetric bet to a staple allocation.

The market demonstrated resilience by holding above the $3.88 trillion level during periods of consolidation, dipping only approximately 2% from peak levels during initial profit-taking phases. Such consolidations are characteristic of maturing markets where rapid appreciation is digested through time rather than deep price corrections. The ability of the market to sustain valuations above the $4 trillion line for extended periods in mid-2025 suggested that the capital base had shifted from highly leveraged retail traders to “sticky” institutional holders with longer time horizons.

As liquidity deepened, it also fragmented across a growing number of venues and chains. Layer 1 has seen good growth, but introducing Layer 2 solutions on top of it means that execution and infrastructure have become as critical as asset selection. And experts reiterate that sustaining this growth would require resilient systems that are adept at handling high-frequency institutional flows and smart risk frameworks to manage the disparate liquidity pockets.
Uncle Sam legalises digital dollar

If the $4 trillion market cap was the quantitative highlight of 2025, the Guiding and Establishing National Innovation for US Stablecoins Act of 2025 (GENIUS Act) was its qualitative cornerstone. Signed into law by President Donald Trump on July 18, 2025, this bipartisan legislation ended years of regulatory purgatory for the digital asset industry. It established a comprehensive federal framework for payment stablecoins, effectively legitimising the sector’s most practical application, which is dollar-denominated digital settlement.

The GENIUS Act is transformative primarily because of its definitional clarity and establishment of a dual-track regulatory system. It amends US federal securities laws and the Commodity Exchange Act (CEA) to explicitly state that a payment stablecoin is not a “security” or a “commodity”. This jurisdictional carve-out is the “holy grail” for issuers who have spent years navigating the aggressive enforcement actions of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Instead of shoehorning stablecoins into 1930s securities laws, the Act places them under the supervision of banking regulators through two distinct pathways. One through the Federal Track for Non-Banks. Federally licensed non-bank stablecoin issuers are now subject to oversight by the Office of the Comptroller of the Currency (OCC). This allows fintech companies to operate with a national charter without becoming full-fledged banks. Secondly, there are subsidiaries of insured depository institutions that fall under the supervision of their primary federal regulator, such as the Federal Reserve or the FDIC.

Crucially, the Act also preserves the state regulatory system. Issuers with less than $10 billion in outstanding stablecoins can opt for regulation under a state-level regime provided that the state’s standards are deemed “substantially similar” to the federal framework. That provision was a major victory for state regulators like the NYDFS, ensuring that local innovation hubs are not crushed by federal preemption while still maintaining a high national standard.

A central pillar of the GENIUS Act is the imposition of strict prudential standards designed to prevent the “bank runs” that plagued the sector in previous cycles. As per the legislation, all stablecoin issuers must maintain 1:1 reserves backed by high-quality liquid assets (HQLA).

The prohibition on rehypothecation is particularly significant as it prevents the specific type of leverage-driven contagion that caused the collapse of algorithmic stablecoins and unregulated lending desks in 2022. By mandating that reserves be held in bankruptcy-remote accounts with priority claims for holders, the Act effectively creates a digital equivalent of cash that is safer than uninsured bank deposits.

One of the most debated aspects of the GENIUS Act was the prohibition on interest payments. Issuers are explicitly forbidden from passing the yield generated by their reserve assets (such as Treasury bills) on to the holders of the stablecoins. That provision was the subject of intense advocacy from the traditional banking lobby, including the American Bankers Association.

They argued that if stablecoins offered a risk-free yield comparable to Treasuries, they would suck liquidity out of the traditional banking system and destabilise community banks that rely on low-cost deposits.

For the crypto industry, this creates a clear business model trade-off. While issuers cannot compete on yield, they are forced to compete on utility, speed, and integration. This has pushed issuers to focus on building payment rails and merchant networks rather than simply marketing their tokens as savings vehicles.

The GENIUS Act also integrates stablecoins into the national security apparatus. Issuers are explicitly subject to the Bank Secrecy Act (BSA), obligating them to implement rigorous Anti-Money Laundering (AML) and Know Your Customer (KYC) programmes.

The Act grants the Treasury Department enhanced powers to combat illicit finance, including requirements for issuers to possess the technical capability to “seize, freeze, or burn” tokens when legally ordered. That provision addresses the “sanctions evasion” narrative often used by critics, ensuring that compliant stablecoins cannot be used as a tool for rogue states or criminal enterprises.

Issuers are also forbidden from using “deceptive names” or marketing materials that imply their product is backed by the “full faith and credit of the United States” or covered by federal deposit insurance. Such rules prevent the dangerous misconception that a private stablecoin is a government-guaranteed instrument.

Wall Street’s effect on Bitcoin

The year 2025 reinforced a fundamental truth about Bitcoin. It remains a highly sensitive liquidity gauge capable of delivering parabolic returns and devastating corrections in equal measure.

The narrative of “institutional maturation” did not dampen volatility; rather, it introduced new transmission mechanisms for macro shocks to cascade through the market.

Bitcoin’s performance in the first three quarters of 2025 was nothing short of spectacular. Fuelled by the “Trump trade” following the election, favourable regulatory signals and the relentless bid from spot ETFs, Bitcoin embarked on a parabolic run. By October, the asset had breached the six-figure mark, setting a new all-time high of approximately $126,270. The rally was characterised by a palpable sense of euphoria dubbed “Uptober” as market participants anticipated a “super-cycle” driven by the convergence of sovereign adoption and corporate treasury accumulation.

The role of ETFs in this rally cannot be overstated. BlackRock’s iShares Bitcoin Trust (IBIT) alone amassed massive assets under management by 2025, with the fund becoming the most successful ETF launch in history. The “passive bid” from these products created a constant demand shock that stripped supply from exchanges, forcing prices upward in a classic liquidity squeeze.

The euphoria came to an abrupt halt in November. Bitcoin crashed approximately 30% from its peak, sliding to trade near $82,605 on November 21. The correction wiped out over $1.2 trillion in total digital asset value in just six weeks, a destruction of wealth equivalent to the GDP of a mid-sized G7 nation.

The catalyst for the crash was a “stagflationary” shock delivered by the US labour market. A long-delayed US jobs report released confusing data that showed job creation rebounding while the unemployment rate simultaneously climbed to 4.4%. The mixed signal clouded expectations for Federal Reserve rate cuts, triggering a “risk-off” event across all global markets.

The crash revealed the double-edged sword of institutionalisation. While ETFs provided inflows during the rally, they also provided a frictionless exit door during the panic. United States-listed Bitcoin ETFs recorded $903 million in outflows on a single Thursday as the “paper hands” of the new cohort folded at the first sign of trouble.

When code became cash

Bitcoin dominated the macro narrative of 2025 and has matured as an asset class with store-of-value propositions. But the focus is slowly shifting to high-throughput utility, and all eyes are on alt-coins. The “State of Crypto” report highlighted that Hyperliquid and Solana combined to account for 53% of revenue-generating economic activity, signalling a changing of the guard in where value is actually accrued.

Solana emerged as the undisputed leader of the high-performance blockchain sector. In stark contrast to the broader market, Solana’s ecosystem metrics exploded to the upside. Builder interest increased by 78% over the prior two years, making it the fastest-growing ecosystem for developers. That surge in developer activity translated directly into user adoption, with the network processing a significant plurality of the industry’s transaction volume.

The market acknowledged this differentiation. Even during the November crash, Solana-based investment products showed remarkable resilience. While Bitcoin ETFs bled assets, Solana and XRP ETFs recorded consistent inflows, suggesting that investors were actively decoupling their views on “utility” tokens from the macro-driven Bitcoin trade.

If there was one undeniable success story in 2025, it was stablecoins. The total stablecoin supply reached a record high of over $300 billion. More impressively, stablecoins settled $46 trillion in total transaction volume over the year. Even after adjusting for artificial trading volume, the figure stood at $9 trillion, more than five times PayPal’s annual throughput and more than half of Visa’s.

The data proves that stablecoins have found product-market fit beyond crypto trading. They are being used for cross-border B2B payments and remittances in inflation-stricken nations, and as a dollarised savings instrument globally. The GENIUS Act further catalysed this usage by providing the legal certainty needed for banks and multinational corporations to integrate stablecoins into their treasury operations, effectively turning them into a new rail for global commerce.

Patchwork of progress and pain

While the GENIUS Act provided a unified path for the United States, the rest of the world navigated a fragmented and often contradictory regulatory landscape in 2025. The divergence created significant friction for cross-border projects and forced issuers to adopt regional containment strategies rather than global expansion plans.

The European Union (EU) fully implemented its Markets in Crypto-Assets (MiCA) regulation in late 2024 and throughout 2025. While initially hailed as a pioneering framework, MiCA has revealed the steep cost of compliance. Startups faced immense operational burdens to meet prudential and conduct standards, which diverted resources away from innovation. The stablecoin market in Europe faced a specific crisis of relevance. US dollar-denominated tokens continued to hold a 99% market share globally, leaving Euro-denominated stablecoins on the fringes with a market capitalisation of less than EUR 350 million.

In response to this dominance, a consortium of nine major European banks, including ING and Deutsche Bank, formed a new venture in September 2025. Their goal is to launch a fully MiCA-compliant Euro stablecoin to compete with American giants. However, analysts warn that Europe may be “too late” as the network effects of USD stablecoins are already deeply entrenched in global DeFi and payment rails.

In Asia, the regulatory narrative is split between two primary hubs. Hong Kong moved aggressively to capture the digital asset market by enacting the Stablecoin Ordinance, which became effective on August 1 2025. The law introduced a dedicated licensing regime for fiat-referenced stablecoins and required issuers to maintain full reserve backing with high-quality liquid assets. In parallel, regulators proposed new licensing regimes for OTC dealers and custodians to close remaining oversight gaps.

Singapore took a more restrictive approach to offshore risks. The Monetary Authority of Singapore (MAS) enforced a strict deadline of June 30 2025, for Digital Token Service Providers (DTSPs). Any entity providing services from Singapore to customers outside the country was required to obtain a license or cease operations. The move was designed to prevent regulatory arbitrage where firms would set up in Singapore solely to project an image of legitimacy while serving high-risk jurisdictions without local oversight.

Emerging markets continued to drive grassroots adoption, often outpacing regulatory frameworks. Brazil emerged as a leader by establishing a Central Authority for Digital Assets (CADA) in January 2025 and implementing a comprehensive licensing framework that will be fully enforceable by February 2026. The clarity helped boost daily trading volumes in Brazil to USD 1.8 billion.

Nigeria also witnessed a surge in activity after lifting its banking ban on crypto firms. Monthly trading volumes on licensed exchanges rose by 47% in the first quarter of 2025 alone. India similarly saw a recovery in volumes after the initial shock of its tax regime wore off, with the government launching a “Regulatory Sandbox 2.0” to explore tokenised real estate and carbon credits. Together, these developments signal a decisive shift from the “ban and ignore” policies of the past to a “regulate and tax” approach.

The starkest challenge of 2025 remains the lack of global harmonisation. The GENIUS Act in the US and MiCA in the EU operate on fundamentally different principles regarding foreign issuers. The GENIUS Act encourages the US Treasury to pursue mutual recognition, but currently requires foreign issuers to meet US standards to access the American market.

Conversely, MiCA’s strict localisation requirements have forced some global exchanges to delist non-compliant stablecoins for European users. Such a regulatory “spaghetti bowl” threatens to balkanise liquidity and complicate the dream of a seamless global value-transfer layer.

As we look toward 2026, the trajectory is clear. The infrastructure is ready for prime time, and the regulatory wars are largely over, yet the challenge now shifts from survival to scale in a high-stakes macroeconomic environment.

The post The great crypto reckoning appeared first on International Finance.

Bitcoin fell to USD 80,553, and ether hit a four-month low, as cryptocurrencies led a broad flight from riskier assets, spurred by investor worries over lofty tech valuations and uncertainty over near-term US interest rate cuts.

Cryptocurrencies are often viewed as a barometer of risk appetite, and their slide highlights the market’s “fragile mood.” At the same point in time, high-flying artificial intelligence (AI) stocks are tumbling too, with volatility spiking. Bitcoin went down 12% in the middle week of November, following a stellar run in 2025 that propelled it to a record high above USD 120,000 in October, buoyed by favourable regulatory changes towards the virtual assets globally.

According to analysts, the market remains scarred by a record single-day slump in October that saw more than USD 19 billion of positions liquidated. As it plunged through USD 100,000 in November and closed in on the USD 80,000 level on 21 of the month, some analysts told Reuters that bitcoin was reaching levels that corporate and institutional investors on average paid for their tokens, and where they might have to sell to prevent losses.

“Bitcoin has erased all its year-to-date gains and is now down 12% for 2025, while Ether has lost close to 19%. If it’s telling a story about risk sentiment as a whole, then things could start to get really, really ugly, and that’s the concern now,” Tony Sycamore, a market analyst at IG, said of the fall in bitcoin.

The latest plunge will compound problems for so-called crypto treasury companies, which have been big buyers of bitcoin and other cryptocurrencies so far in 2025. These companies hold the crypto on their balance sheets in the hope that the price rises.

Standard Chartered has estimated that a drop below USD 90,000 for bitcoin could leave half of these companies’ holdings “underwater,” a term which typically refers to holding assets worth less than what was paid for them.

Analysts say the companies could be forced to raise new funds or sell down their crypto holdings, putting further downward pressure on prices.

Listed companies collectively hold 4% of all the bitcoin in circulation, and 3.1% of ether, Standard Chartered estimates.

“The procyclical nature of bitcoin treasury companies is fully obvious now, if it wasn’t obvious six months ago. They buy high, and now some of them are selling low,” Brent Donnelly, president at analytics firm Spectra Markets, said in a note.

The post Bitcoin drops to seven-month low, analysts predict ‘heavier losses’ appeared first on International Finance.

The Republican also enacted legislation establishing a regulatory framework for dollar-pegged cryptocurrencies, commonly known as stablecoins, a milestone that could help normalise their use for everyday transactions and money transfers. The bill, called the GENIUS Act, was passed by the House of Representatives in July with a vote of 308 to 122, earning support from nearly half of the Democratic members and a majority of Republicans. It had previously cleared the Senate.

Treasury Secretary Scott Bessent said the new technology would buttress the dollar’s status as the global reserve currency, expand access to the dollar economy, and boost demand for American Treasuries, which back stablecoins. Stablecoins are designed to maintain a constant value, usually a 1:1 US dollar peg, and their use has exploded, notably among crypto traders moving funds between tokens. The industry hopes they will enter mainstream use for sending and receiving payments instantly.

The new law also requires stablecoins to be backed by liquid assets, such as US dollars and short-term Treasury bills, and for issuers to disclose publicly the composition of their reserves monthly. Yet a stark contradiction lies at the heart of these plans, and we will use the Bitcoin example to explain this. Even as Trump champions an all-American “Crypto Vision,” he has unleashed steep import tariffs that jack up the cost of the very hardware US Bitcoin miners depend on, most of which is made in China.

This policy double-edged sword has left US miners, including the Trump family’s own mining company, caught between patriotic rhetoric and harsh economic reality. Industry experts warn that unless this contradiction is resolved, Trump’s dream of US dominance in Bitcoin mining may be undercut by the practical challenges his trade war has created.

Trump’s push for a Bitcoin mining empire

Trump’s recent policy moves mark a stunning 180-degree turn in the crypto world. After once calling Bitcoin a scam, he now openly courts the crypto industry. In his first months back in office, Trump fulfilled key crypto pledges by establishing a US Strategic Bitcoin Reserve, stockpiling seized Bitcoins as national reserves, and replacing regulators seen as hostile to crypto with crypto-friendly figures.

For example, Trump ousted the prior Securities and Exchange Commission leadership, known for its aggressive stance on crypto, and installed former commissioner Paul Atkins, a pro-Bitcoin advocate, as SEC Chair. He also named tech investor David Sacks as “crypto and AI czar” to coordinate digital asset strategy and scheduled the White House’s first-ever crypto policy summit. All these steps signal that Trump’s administration is throwing its weight behind Bitcoin mining and blockchain businesses.

“Our country must be the leader in the field,” Trump has said of cryptocurrency. A centrepiece of Trump’s vision is for the US to dominate Bitcoin mining, the energy-intensive process that secures the Bitcoin network and mints new coins.

In July 2024, Donald Trump clearly addressed an enthusiastic crowd at the Bitcoin 2024 conference. He reiterated that America would become the undisputed Bitcoin mining capital of the planet. He explicitly called for an all-American Bitcoin: one mined on US soil with US-made equipment. To back miners, Trump has even floated using energy policy as a lever, hinting at measures to provide abundant, cheap power for mining farms.

All told, the administration’s message is clear. It wants Bitcoin’s future to be written in red, white, and blue, with American firms reaping the rewards of the crypto boom.

Global hardware arms race

Grasping the challenge requires first understanding how Bitcoin mining works. Bitcoin mining is a global hardware arms race. Miners worldwide run specialised computers (called ASICs) that race nonstop to solve cryptographic puzzles; the first to succeed earns the right to add a block of transactions to the blockchain and collect newly minted Bitcoins as a reward. The faster and more efficient your machines, the better your odds of winning this race and profiting.

Mining companies must constantly upgrade to cutting-edge hardware and newer rigs with more computational power and better energy efficiency or risk falling behind rivals. “To ensure their fleet is sufficiently powerful to beat out competitors, miners must constantly replace old and weather-beaten hardware with the latest, most advanced machines,” explains one industry report.

In short, access to top-notch mining rigs is crucial for any hope of profitability. Lagging in hardware is a quick road to being edged out of the market.

Here lies a fundamental tension for Trump’s “made in the USA” mining dream. The world’s best mining machines are not made in America. In fact, the global mining rig market is overwhelmingly dominated by Chinese manufacturers. Two companies from China, Bitmain Technologies and MicroBT, are kingpins of mining hardware, together accounting for an estimated 97% of all Bitcoin mining machine sales. A third Chinese-origin firm, Canaan, makes up much of the remainder.

These firms produce the popular Antminer and WhatsMiner series ASICs that power a huge share of Bitcoin’s network. According to the Cambridge Centre for Alternative Finance, this Chinese duopoly controls virtually the entire market for Bitcoin rigs. Bitmain and MicroBT’s near-monopoly didn’t happen by accident. They had an early start in developing specialised mining chips and achieved massive economies of scale, fending off countless would-be Western challengers.

“The road is lined with the corpses of people who tried,” jokes Chris Bendiksen, a Bitcoin research lead at CoinShares, about past failed US mining rig ventures. The result is a lopsided reality. While the United States now hosts a large share of Bitcoin mining operations (over 30% of global mining power is in North America), more than 90% of the physical machines powering the network are built in China.

This imbalance in geographic supply and demand means American miners remain heavily reliant on imported gear, and it’s not only an economic factor but also a strategic one. “Hundreds of thousands” of Chinese-made mining rigs are plugged into the US electrical grid, notes Sanjay Gupta, chief strategy officer of US-based manufacturer Auradine. It’s something that he and others consider a security risk if tensions with China worsen. In essence, China dominates Bitcoin’s hardware supply chain, and any American bid for mining supremacy must contend with that fact.

Tariffs backfire on US miners

Trump’s trademark policy tool—tariffs on imports—has now been extended to this supply chain, with far-reaching consequences. On April 2, 2025, the president shocked the crypto mining sector by announcing punitive new tariffs on dozens of countries, including those crucial to mining equipment production.

China was the primary target in Trump’s so-called “Liberation Day” tariff package. Shipments of high-tech goods from China were set to face a whopping 55% import duty. But the measures went further. Trump also slapped tariffs in the range of 24–36% on imports from countries like Malaysia, Indonesia, and Thailand. These were the locations where Chinese companies often assemble mining rigs or route shipments to evade direct China–US duties.

In short, the administration moved to seal off any backdoor for Chinese-made miners, ensuring that whether a machine comes directly from Beijing or through a third country, it would incur steep US tariffs.

For US Bitcoin mining firms, which collectively import hundreds of thousands of ASIC rigs, these levies landed like a sledgehammer. Suddenly, the cost of new hardware could spiral by 25%, 50%, or even higher for Chinese-origin machines. “The tariffs included a levy on shipments from China, later revised to 55%, and tariffs between 24 and 36% on Indonesia, Thailand, and Malaysia,” WIRED reported, noting that many American miners “faced the prospect of spiralling hardware costs” as a result.

Even American Bitcoin, the new mining venture started by Trump’s sons Eric and Donald Jr., was not spared, as it too planned to source cutting-edge machines from the dominant Chinese suppliers. The irony was palpable. The president’s family business, launched to champion US mining, was now pinched by his trade policy.

Existing orders that US mining companies had placed with Bitmain or MicroBT suddenly became much more expensive, as any unfulfilled deliveries would be hit with the new import taxes. Long-term supply contracts offered no escape clause for tariffs, meaning miners were stuck either swallowing the additional costs or deferring equipment shipments altogether.

US miners, large and small, have decried the tariffs as a serious setback. One industry lobbying group, the Digital Energy Council, has reportedly pressed the Commerce Department to exempt cryptocurrency mining rigs from the tariff lists, warning that the policy could handicap American miners against foreign competitors.

“The tariffs are clearly destructive,” argues Chris Bendiksen of CoinShares, who says they directly undermine Trump’s goal of expanding the US mining sector. The situation indeed seems counterproductive. How can the US lead in Bitcoin mining if its miners struggle to afford the latest equipment?

In effect, Trump’s nationalist tariff policy is colliding with his nationalist crypto ambitions. The cost pressure comes at an already challenging time for miners, as we’ll see, intensifying a broader shakeout in the industry.

On the other hand, Trump officials insist this short-term pain is for a longer-term gain. The White House argues that two things can be accomplished at once. The tariffs can push manufacturing to American soil and use leverage to drive down other costs for mining firms.

“Two things can be accomplished at once,” a White House spokesperson told WIRED, describing the aim to onshore hardware production while using US energy policy to reduce miners’ cost burden.

In theory, by making imported rigs pricier, the tariffs create a protective bubble for United States-based equipment manufacturers to grow. Indeed, as the tariffs took effect, those few companies building Bitcoin rigs in America suddenly found an opening. Chief among them is a Silicon Valley start-up called Auradine.

Energy costs, margins, and competition

Even without tariffs, Bitcoin mining is a brutally competitive, low-margin business, and that has only intensified in 2025. Start with Bitcoin’s own design. The network undergoes a “halving” roughly every four years, cutting the block reward (the new Bitcoins miners earn) by 50%. The most recent halving in April 2024 slashed miners’ Bitcoin rewards from 6.25 BTC per block to 3.125 BTC, squeezing revenue per unit of computing power.

At the same time, network competition has grown fiercer as more miners join, and the Bitcoin algorithm adjusts to increase mining difficulty. This arms race, combined with occasional slumps in transaction fees, has steadily whittled down profit margins for mining operators.

Even though Bitcoin’s price has been rising in 2025, providing some relief, analysts note that many other factors are eroding mining profitability. “Fierce competition, a slump in transaction fees, and diminishing Bitcoin rewards… have whittled down margins for mining companies,” WIRED reports, summarising the challenge.

Above all, energy costs are the dominant factor. Electricity can account for 50–60% of a mining firm’s operating expenses. US miners have historically sought out regions with cheap power, ranging from hydro-rich Washington State to wind-powered West Texas. But the surge of new power-hungry industries is changing the equation.

Artificial intelligence data centres have emerged as a major new competitor for electricity and infrastructure. These AI operations are often backed by deep-pocketed tech companies and venture capital, and they’re willing to pay a premium for power and real estate. “Miners have always been scrappy buyers and vultures of the power grid. The AI companies are outbidding them, as they are just willing to pay more,” said Christopher Bendiksen.

In practical terms, that means some power contracts that might have gone to a Bitcoin mine are now going to a data centre instead, or utilities are raising rates knowing AI firms will pay. The US Department of Energy projects that by 2028, AI computing could consume as much electricity as 22% of US households—a stunning statistic that illustrates how much tighter the energy market could get for miners.

For miners, expensive electricity can quickly turn a profitable operation into a money-loser. Fred Thiel of Marathon has noted that a 5- or 10-percentage-point change in electricity rates has far more impact on a mine’s bottom line than a similar change in hardware costs.

Can the US lead Bitcoin mining?

All of this raises a pivotal question. Will Trump’s policies ultimately help or hurt US leadership in Bitcoin mining? The president’s vision of an all-American Bitcoin, mined on US soil with United States-made hardware, strengthening American economic and energy interests, is a bold nationalist gambit. It appeals to those who worry about US dependence on foreign technology and want to ensure the next generation of financial infrastructure is America-dominated.

In the long run, Trump’s tariffs may indeed spur some domestic manufacturing, as evidenced by Chinese firms localising production and startups like Auradine gaining traction. If the US can facilitate its own resilient supply chain for mining equipment and combine it with abundant low-cost energy, the country could solidify its status as a Bitcoin mining hub in the 2020s and beyond.

However, the current evidence suggests that Trump’s approach is struggling to deliver immediate results for miners. Thus far, the tariffs have introduced more instability than opportunity. US mining companies are pausing expansion plans and delaying hardware purchases while they wait to see how deeply costs will rise.

The initial 90-day suspension of the new levies has many in a holding pattern. But if and when full tariffs kick in, some firms may find it untenable to upgrade their fleets and could capitulate. The broader trend of miners diversifying away from Bitcoin or shifting overseas directly undercuts Trump’s goal of US dominance.

Ultimately, Trump’s dual objectives of onshoring the Bitcoin hardware supply chain and supporting a thriving US mining industry may require a more nuanced balancing act than tariffs alone can provide.

The post Trump’s Bitcoin dream collides with tariff reality appeared first on International Finance.

For example, one former gas “peaker” plant in North Tonawanda (just north of Buffalo) runs almost continuously to power a crypto mine. In the first quarter of 2025, this plant operated 84 out of 90 days, in contrast to just eight days in all of 2021, and it emitted as much CO2 in three months as it had in the previous two years combined.

In effect, mining operations have transformed low-use industrial sites into constant polluters. US officials estimate that nationwide commercial crypto mining already consumes roughly between 0.6% and 2.3% of the country’s electricity, which is a share that could rise rapidly as more facilities begin operation.

Supporters in upstate areas argue that repurposing abandoned plants and tapping into cheap power can help stimulate the struggling upstate New York economy through jobs and increased tax revenue.

However, local regulators and environmental analysts caution that the climate and local impacts may outweigh those benefits. The Energy Information Administration (EIA) has ranked US Bitcoin’s electricity consumption as being comparable to that of an entire medium-sized state. The associated carbon footprint is substantial unless the power comes entirely from zero-carbon sources.

Impact on energy use

Bitcoin mining’s enormous power demands make it a highly energy-intensive industry. Many US operations are powered by fossil fuel plants, which are often ageing coal or natural-gas generators that have been refurbished for crypto use. In New York, miners have acquired decommissioned “peaker” plants and run them at full capacity, resulting in sharply increased greenhouse-gas emissions. At North Tonawanda’s Fortistar plant, which was previously idle, carbon output surged after it was converted into a crypto mining site.

Climate watchdogs warn that adding gigawatts of mining demand typically revives polluting power plants that would otherwise be closed. For example, Texas grid operators have reported that planned large-scale crypto facilities could create up to 43,600 megawatts of new demand by 2027, much of which is expected to be met by newly built gas-fired plants. Indeed, Texas has recently authorised $10 billion in public loans to build or expand plants to satisfy crypto-driven electricity needs.

Across the country, utilities and independent agencies have begun tracking these effects. The EIA and Department of Energy have conducted surveys to measure energy use by mining operations. In 2024, Senator Elizabeth Warren’s office urged the DOE and EPA to mandate energy consumption and emissions reporting for Bitcoin mining, noting that the United States’ share of global Bitcoin mining rose from 4% to 38% between 2019 and 2022.

Environmental groups estimate that even moderate levels of mining usage currently account for about 2% of national electricity consumption. This implies that the carbon and water impacts are equivalent to those of a mid-sized nation.

A United Nations study found that globally, Bitcoin mining consumed 173.4 terawatt-hours in 2020 and 2021, which exceeded Pakistan’s total electrical output. It also required enough water to fill 660,000 Olympic-sized swimming pools. In areas like upstate New York, where climate laws require net-zero emissions by 2040, the use of fossil fuel-based power for mining is viewed as fundamentally incompatible with state goals.

Researchers from Harvard University concluded that Bitcoin mining added more demand to the US electrical grid than the entire city of Los Angeles. The researchers identified corresponding air pollution and environmental concerns in their findings, which were published in March in Nature Communications.

To quantify the energy use of Bitcoin mining, the Harvard researchers analysed data from the 34 largest mining operations in the US, which together account for 80% of the country’s Bitcoin mining capacity. Their database included both the locations of the mines and their energy consumption levels.

Between August 2022 and July 2023, these 34 facilities consumed 32.3 terawatt-hours of electricity. This is 33% more electricity than the city of Los Angeles uses in the same time frame. Approximately 84% of that energy came from fossil fuel sources. In effect, Bitcoin mining has added a city’s worth of electricity consumption to the grid, together with all the associated pollution.

Noise, water, and local livability

Beyond energy use, crypto mines also create significant local environmental burdens. The thousands of high-powered servers and generators in these facilities produce a vast amount of heat, requiring massive industrial fans that operate constantly.

Farmers and rural residents living near crypto mining sites consistently describe a relentless mechanical noise. In Granbury, Texas, a resident compared the sound to having a jet engine permanently stationed nearby. A farmer in Pennsylvania made the same comparison and said her hens were visibly disturbed by the constant hum.

Journalists have documented numerous complaints about piercing noise from Bitcoin farms. One resident compared the experience to standing at the edge of Niagara Falls when the fans are running.

This nuisance is not minor. Medical experts note that prolonged exposure to noise above 80 decibels can increase the risk of cardiovascular issues and other health problems. In both Texas and Arkansas, local officials have recorded reports of headaches, hearing loss, vertigo, and chronic stress attributed to the incessant hum from crypto fans.

A national study observed that noise issues caused by miners are now so common that they have become a persistent source of frustration in rural, mostly Republican communities. Even if the noise complies with local sound ordinances, the constant low-frequency vibrations can make homes unlivable. In North Tonawanda, New York, residents living more than half a mile away from the plant have reported being able to hear its fans from their porches.

Water use and water pollution are additional concerns. Crypto mines often require fresh water for cooling purposes or for maintaining on-site generators. Experts caution that the water demand of Bitcoin mining is insufficiently studied but potentially significant.

According to the same UN study, a large-scale crypto mining site could use as much water as a small city each year, straining already limited water resources in drought-prone regions. Furthermore, diesel or natural gas generators used at some mining locations can emit local air pollutants. For instance, Pennsylvania mining sites that burn waste coal have released sulphur dioxide and fine particulate matter.

The local costs, including impacts on air quality, water resources, wildlife, and human well-being, are considerable.

Opponents in rural communities have voiced concerns about disappearing wildlife, livestock disturbed by noise, and family members tormented by nonstop humming, even behind closed windows. These consequences have led to public meetings, citizen noise-monitoring campaigns, and legal challenges in multiple states.

Economic trade-offs

Proponents of crypto mining often claim that it brings jobs and economic revitalisation to struggling rural towns. A 2022 Politico report highlighted that advocates promote these facilities as a way to stimulate economic growth in upstate New York by repurposing inactive power plants.

Sometimes, local governments offer tax breaks or discounted electricity rates to attract crypto companies. Yet the actual number of jobs created tends to be small, possibly only a few dozen per large facility, while public costs can be substantial.

In Texas, analysts argue that increased electricity demand from crypto mining ultimately drives up prices for everyone. As one report noted, “ordinary Texans may end up footing the bill on their monthly utility statements” as the grid adjusts to crypto-related demand.

In Arkansas, utility providers have stated that industrial crypto operations often pay reduced electricity rates, effectively passing infrastructure costs onto other customers.

Communities have begun reevaluating the costs and benefits. In some rural counties, initial enthusiasm for economic investment has turned into frustration over higher bills and noise disturbances. Activists have highlighted that utilities and state governments have offered generous incentives to crypto firms. For example, the Texas-based company Riot Platforms received about 136 million dollars in power-related credits between 2022 and 2024, which at times exceeded its own mining revenue.

In response, community organising has intensified. In Georgia, residents living near proposed mining sites successfully lobbied their county government to reject rezoning requests, and neighbouring jurisdictions went further by enacting complete bans. In Wisconsin and Pennsylvania, neighbours have launched coalitions to oppose crypto mining, arguing that a small number of jobs are not worth the disruption to local life and the environment.

Even in relatively affluent areas, local governments have imposed moratoria. In 2024, the city council of North Tonawanda voted unanimously to prohibit new crypto mining projects for two years, although existing operations were allowed to continue.

These battles often defy conventional political divisions. Residents who strongly supported pro-crypto politicians have sometimes led opposition efforts. Hood County, Texas, which gave Donald Trump more than 80% of the vote in 2024, witnessed lawsuits and protests by conservatives against a Marathon Digital mine in Granbury.

In local online groups, residents expressed simultaneous support for Trump and deep frustration with the Bitcoin mine that they felt had “destroyed their peace.” In North Tonawanda, activist Deborah Goldeck argued at a public meeting that had the city acted sooner, “we could have avoided the misery of constant high noise levels” that now affect her neighbourhood.

In rural Arkansas, Gladys Anderson’s description of constant “shrieking and humming” from a nearby mine drew media attention and spurred legislative reforms. These grassroots efforts share a common thread. People feel that an industry backed by powerful crypto interests has altered their quality of life without consent.

Political dynamics

Cryptocurrency mining has become a contentious political issue at the state and national levels. The Republican Party has officially taken a supportive stance toward the industry. In its 2024 platform, the GOP pledged to defend the right of individuals to mine Bitcoin and to ensure that Americans can maintain self-custody of their digital assets.

President Trump has repeatedly endorsed crypto mining as a strategy for achieving US energy leadership. He even claimed that producing all Bitcoin domestically would help make the country “energy dominant.”

Crypto companies have poured funding into political campaigns. One watchdog group estimated that the industry spent more than 119 million dollars on federal races during the 2023–2024 election cycle, accounting for nearly half of all corporate spending in some contests.

Several Republican legislators at the state level have introduced “right-to-mine” bills aimed at limiting the authority of local governments to regulate the industry. Politicians from both parties have tried to win over the industry by promising deregulation.

For instance, in New Hampshire in 2025, Republican lawmakers advanced a proposal to prohibit towns and regulatory agencies from imposing restrictions on crypto mining, with the explicit goal of signalling support to the industry. In Texas, political leaders have introduced incentives such as tax breaks and discounted electricity for mining companies, while some municipalities have approved subsidised power deals.

However, this top-down enthusiasm increasingly conflicts with the sentiments of Republican voters in rural communities. Commentators have described a growing national backlash, with many traditionally conservative voters expressing opposition to crypto mining when it affects their neighbourhoods.

The Week summed up the situation by noting that in some areas, Trump’s crypto-friendly policies have met resistance from the very voters who helped return him to the White House. This tension between party loyalty and local quality-of-life concerns is now playing out across the country.

Conservative state and local leaders have come under pressure from constituents demanding tighter controls. In red states such as Georgia and Pennsylvania, citizen protests have led to legislative debates and political gridlock.

In Virginia and Kansas, lawmakers only took up crypto mining regulations after strong grassroots organising prompted public hearings. In Arkansas in 2024, the state’s new Republican governor signed legislation imposing stricter permitting requirements in response to growing public concern.

Even industry insiders have acknowledged the backlash. Marathon Digital CEO Fred Thiel noted that one of the company’s Texas mining sites had been approved by voters in a pro-Trump region, yet it still faced demands for tighter noise regulations from local residents.

As a result, partisan messaging on cryptocurrency is increasingly split between national and local levels. Republican candidates on the national stage often appeal to crypto investors and tech donors. In contrast, local Republican officials, including mayors, county supervisors, and state lawmakers, in some cases have aligned with environmental activists or citizen groups calling for stronger oversight or moratoriums.

For example, a previous Republican governor of New York (before Kathy Hochul) had questioned the wisdom of expanding crypto mining in the face of community pushback. In Congress, Democrats have sometimes used this internal GOP divide to their advantage. Some House Democrats have proposed new taxes on crypto mining and regulations requiring pollution controls. At the same time, crypto-friendly bills like the proposed federal “Strategic Bitcoin Reserve Act” have met resistance from suburban and rural voters alike.

The net result is a complicated political landscape for the crypto mining industry. On one hand, it enjoys vocal support from high-ranking officials. On the other hand, it increasingly encounters organised local resistance, often within the same communities that elected those officials.

Regulatory experiments

This clash between local resistance and national support has triggered a wave of policy experiments at the state and federal levels. Some jurisdictions have moved to rein in crypto mining in order to protect residents’ health and meet environmental targets.

In November 2022, New York became the first state to impose a temporary ban on new proof-of-work cryptocurrency mining at fossil-fuel power plants. This law prohibited all new permits and the renewal of existing permits, unless the projects could demonstrate that they operated entirely on renewable energy. Governor Hochul’s administration described the law as a limited but necessary pause aimed at balancing economic development with the objectives of the state’s Climate Leadership and Community Protection Act.

New York’s Department of Environmental Conservation has also taken enforcement actions against noncompliant facilities. In some cases, the agency has denied permits or sued companies for violating clean air or climate mandates. One example is Greenidge Generation’s use of waste coal at a plant in Dresden, which came under legal scrutiny due to its environmental impact.

Other states have followed New York’s lead. In Georgia, conservative local governments have passed restrictions or outright bans after public hearings. State legislators have considered measures to regulate noise and limit grid strain from mining operations. In Pennsylvania and Montana, environmental organisations have taken legal action against facilities that keep old coal plants running for mining purposes.

Even in states that are generally favourable toward cryptocurrency, lawmakers have introduced new regulations. In Texas, in 2023, legislators proposed several bills (some of which passed) to require large mining operations to register with grid authorities and to place limits on their use of “demand-response” programmes.

The Electric Reliability Council of Texas (ERCOT) has since implemented rules requiring any mining operation drawing more than 75 megawatts to sign flexible load agreements. These agreements give the grid operator greater control to shut off power during times of high demand, to help stabilise the system.

At the federal level, regulation is still in early stages. In 2024, a bipartisan group of US senators led by Elizabeth Warren called on the Department of Energy and the Environmental Protection Agency to require mandatory reporting of crypto mining’s energy use. They characterised the industry’s rapid growth without oversight as “alarming.”

So far, neither the Biden administration nor the EPA has issued dedicated rules for crypto mining. However, federal agencies have begun monitoring the sector more closely. Mining now appears in national energy and climate assessments, and the Energy Information Administration is considering including it in future data collection surveys.

Meanwhile, other jurisdictions have moved in the opposite direction. Industry lobbyists have drafted and promoted “right-to-mine” bills in several states that aim to preempt local zoning laws and noise ordinances. According to Earthjustice, some of these proposals would block towns from regulating crypto operations altogether.

In 2025, New Hampshire legislators debated a bill that would have made it illegal for any local agency to restrict crypto mining. Libertarian groups and blockchain advocacy organisations praised the proposal, viewing it as a victory for deregulation.

In Missouri, lawmakers introduced bills to classify Bitcoin mining as critical infrastructure. Other proposals aimed to exempt mining facilities from environmental permits, treating them as if they were simply data centres rather than power-consuming industrial sites.

These deregulatory efforts have met strong resistance from environmental advocates and local governments that support home-rule rights. The debate illustrates a growing confrontation between the cryptocurrency industry’s desire for minimal regulation and the communities most affected by its operations.

In practice, the most effective policy responses have come from state and local governments. Measures such as temporary bans, conditional permits, or tailored noise regulations have given municipalities some control over how and where mining occurs. For example, North Tonawanda’s decision to ban new mining projects and conduct noise studies reflects one way that communities can act within their legal authority.

Other examples include the actions of rural counties in Georgia and new state laws in Arkansas, which were enacted after constituents like Gladys Anderson publicly described how crypto noise had affected their lives. These efforts demonstrate how traditional zoning and environmental rules can be applied to this emerging industry.

At the national level, more ambitious proposals are under discussion. One idea is to impose a substantial tax on electricity used for crypto mining. For instance, President Biden had proposed a 30% tax, although it was ultimately dropped. Another option would be to require carbon offsets for mining operations powered by fossil fuels.

Academic researchers and policy analysts have proposed more balanced solutions. These might include requiring crypto companies to pause operations during power emergencies or mandating that they operate only from designated clean energy sources. The broader policy debate is ongoing and has become a staple topic in energy and climate forums.

The post Rural America fights back against crypto appeared first on International Finance.

According to Chainalysis’s annual report, this is not an exact amount and will likely increase over time as new details about past crimes emerge, potentially reaching USD 51 billion.

It is also important to note that this estimate excludes funds from non-crypto-native crimes such as drug sales and money laundering. The 2023 figure was USD 46.01 billion, so if Chainalysis’s projections are accurate, there will be a substantial increase in raw numbers, even though the figure has decreased significantly in percentage terms.

The ratio of crime volume to industry volume was 0.61% in 2023. However, after several spot ETFs were approved in 2024, many large institutions and wealthy investors entered the market, increasing overall volume and reducing the ratio to just 0.14%. Finally, it appears that hackers are shifting their focus from Bitcoin to stablecoins.

Although there are tens of thousands of different cryptocurrencies, most threat actors still demand payment in Bitcoin when a ransomware attack (or something similar) occurs. Four years ago, Bitcoin accounted for about 70% of all illegal transactions; in 2024, that number dropped to 20%.

Stablecoins, a type of cryptocurrency whose value is based on fiat money rather than fluctuating sharply like that of regular cryptocurrency, entered the market at the same time and now hold about 63%.

In 10% of cases, Monero was used, according to Chainalysis. A well-known cryptocurrency with a focus on privacy, Monero is also mined by the notorious cryptojacker XMRig.

Meanwhile, US President Donald Trump boosted the market value of each cryptocurrency by announcing on social media the names of five digital assets he plans to include in a new US strategic reserve.

According to a post on Truth Social, an executive order from Trump in January 2025 will establish a stockpile of various cryptocurrencies, including Bitcoin, Ether, XRP, Solana, and Cardano. The specific names of the currencies have not yet been disclosed.

The post Illicit crypto volume hit a record USD 40 billion in 2024 appeared first on International Finance.

It stated that the number of hacking incidents increased to 303 from 282 in 2023 and that the total hacking amount surpassed USD 1 billion for the fourth consecutive year.

In 2023, hackers had taken USD 1.08 billion. As Bitcoin BTC increased 140% in 2024 to reach the USD 100,000 mark, attracting institutional participation and support from United States President-elect Donald Trump, there has been an increase in cryptocurrency thefts.

“As the digital asset market booms, it is typical to see the illicit use of crypto grow in tandem. Countering the proliferation of these crimes — especially fraud — will undoubtedly be a key challenge for the industry in the new year,” Chainalysis’ cybercrimes research lead Eric Jardine said, as reported by Reuters.

According to the report, the majority of cryptocurrency thefts in 2024 were caused by breaches in the private key that governs access to users’ assets, with centralised platforms being the target of the majority of attacks. The most prominent hacks include the May theft of over USD 305 million from Japan’s cryptocurrency exchange DMM Bitcoin and the July loss of USD 235 million from India’s WazirX.

According to Chainalysis, cryptocurrency hacking associated with North Korea more than doubled in size from a year ago to reach a record high of USD 1.33 billion in 2024.

According to the United Nations, North Korea can evade international sanctions by using cryptocurrency. Participation in cyber hacking or crypto heists is frequently denied by the nation.

Meanwhile, Ethereum wants to hit USD 4,500 in the next cryptocurrency boom, and investors are keeping a careful eye on the market to find ways to increase their profits. Despite Ethereum’s continued dominance in the blockchain market, new initiatives like DLUME are gaining popularity due to their potential to yield even greater profits.

Also, Bitcoin more than doubled in 2024 driven by the American markets regulator’s approval for exchange-traded funds tied to its spot price, and optimism over easing regulatory hurdles with Donald Trump returning to the White House.

The world’s largest and most well-known cryptocurrency hit USD 100,000 in December 2024, a milestone that has ignited ‘animal spirits’ among supporters of the once-nascent asset class.

According to CoinGecko data, there is more than 120% surge in Bitcoin and a nearly 50% jump in ether, the second-largest cryptocurrency, have propelled the sector’s market value to roughly USD 3.5 trillion

“We remain convinced USD 100,000 is not the final milestone. We expect Bitcoin to hit a cycle-high of USD 200,000 in late 2025,” analysts at brokerage Bernstein wrote in a client note earlier this month.

MicroStrategy, a software firm that has become the world’s largest corporate holder of Bitcoin, has seen its shares surge nearly five-fold in 2024. The stock, which joined the benchmark Nasdaq-100 index recently, is now seen as a proxy for Bitcoin, with its movement closely tied to sentiment towards the digital asset. Several smaller companies are following its playbook and allocating portions of their cash to Bitcoin.

“We expect Bitcoin to emerge as the new-age premier store of value asset eventually replacing gold over the next decade and becoming a permanent part of institutional multi-asset allocation and a standard for corporate treasury management,” Bernstein analysts continued further.

In January 2024, the United States Securities and Exchange Commission (SEC) approved the first ETFs to track the spot price of Bitcoin, marking a watershed moment for the broader crypto industry.

The move gave the sector institutional legitimacy and improved its mainstream appeal as traditional finance heavyweights including BlackRock and Fidelity launched the products.

The victory of Donald Trump, who has promised to make the United States the “crypto capital of the planet,” further bolstered the industry’s position by 2024 end. Crypto advocates donated millions during the election, hoping to elect candidates that favour the sector.

While most crypto stocks have also benefited from the industry-wide rally, with the big winners being MicroStrategy, crypto exchange Coinbase and Bitcoin miner Hut 8, several other crypto miners reeled under shrinking margins due to higher energy and hardware costs, thereby missing out from the gold rush. Prominent are Riot Platforms, Marathon Digital and Bit Digital, whose shares lost between 26% and 32% in 2024.

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