Cointelegraph

Around 70% institutional investors believe Bitcoin is undervalued when priced between $85,000 to $95,000, as it continues to underperform against precious metals and the stock market, Coinbase has found.

Coinbase said in its Charting Crypto Q1 2026 report that its survey of 75 institutional investors and 73 independent investors was taken between early December to early January, found 71% of institutions and 60% of independent investors “feel that [Bitcoin] is undervalued.” 

A quarter of institutional investors said Bitcoin (BTC) was fairly valued, with its price almost entirely staying within the $85,000 to $95,000 range during the survey period, while the remaining 4% said Bitcoin was overvalued.

Survey on whether Bitcoin is undervalued, fairly priced, or overvalued. Source: Coinbase

Bitcoin is currently priced at $87,600, down over 30% from its $126,080 all-time high in October, CoinGecko data shows. Crypto prices have mostly trended sideways and downward since a major market crash on Oct. 10 wiped out more than $19 billion worth of leveraged positions.

Crypto market sentiment hasn’t improved since, with prices struggling to regain momentum amid renewed tariff threats from the Trump administration and intensifying tensions between the US and the Middle East.

Coinbase said this trend could continue, saying that “geopolitical tensions have flared up in several parts of the world, and any escalation of unrest, particularly one that disrupts energy markets, could negatively impact investor sentiment.”

Meanwhile, gold and silver have soared, with gold hitting a record high above $5,000 on Monday and silver doubling in market value since October, while the Standard & Poor's 500 stock market index has risen a modest 3%.

Institutions to hold, buy dips if price falls further

Of the institutional investors surveyed, 80% said they would either hold their crypto positions or buy more in response to another 10% crypto market fall, signaling long-term conviction in the asset class.

Institutional and independent investor responses to a scenario where crypto market prices fall 10% or more. Source: Coinbase

More than 60% said they have either held or increased their crypto positions since October, when Bitcoin set its current high.

Related: US Bitcoin ETFs bleed $1.72B in five-day outflow streak

The institutional investors also see more opportunity ahead, with 54% viewing the current crypto market cycle as either in an accumulation phase or a bear market.

Potential economic tailwinds ahead for crypto

Although monetary policy remains uncertain, Coinbase expects the Federal Reserve to deliver two rate cuts (50 basis points) in 2026, potentially providing a tailwind for risk-on assets like crypto.

More broadly, Coinbase said the “economy looks to be on solid footing,” potentially playing into the crypto market’s favor,  with consumer inflation holding steady at 2.7% in December and the real gross domestic product growing at over 5% in the fourth quarter.

Magazine: A ‘tsunami’ of wealth is headed for crypto: Nansen’s Alex Svanevik

Gold prices have topped $5,000 amid rising geopolitical and global trade tensions, while Bitcoin has fallen toward $86,000 as the divergence between the two assets widened. 

Gold surged to a record high of $5,080 on Monday following a 17% gain so far this year, according to Gold Price, with traders flocking to the precious metal amid fears of a potential US government shutdown and uncertainty over the Trump administration’s escalated tariff threats.

“A likely government shutdown just added fuel to the fire for precious metals,” the Kobeissi Letter said on Monday.

Trade tensions have also increased with another weekend round of tariff threats as US President Donald Trump threatened Canada with a 100% tariff over a China trade deal.

Gold beat Ether (ETH) to the $5,000 milestone, closing out a Polymarket bet placed in early October on which asset would reach it first. ETH prices tanked below $2,800 on Sunday and are now more than 40% down from their August all-time high of $4,946. 

Silver has also surged above $107 per ounce for the first time in history and is up 48% so far in 2026.

Bitcoin and gold correlation crumbles

Bitcoin (BTC) has lost 1.6% on the day, erasing all the gains it made so far this year as it fell to a five-week low just below $86,000 on Coinbase late on Sunday, according to TradingView.

Bitcoin is now 30% below its October peak of $126,000 as the divergence between the digital asset and gold continues to expand. 

Gold prices have surged 83% since the same time last year, while Bitcoin has declined 17%. Source: Google Finance

Investors more interested in gold than treasuries 

Gold is rallying, and cryptocurrencies are down because of the increasing likelihood that the US government will face a shutdown at the end of the month, says Jeff Mei, chief operations officer at the BTSE exchange.

“Additionally, markets are pricing in the likelihood that the Fed will maintain current interest rate levels, given that the economy has been showing stronger growth and employment numbers,” Mei told Cointelegraph. 

“Normally, in uncertain times, capital moves towards safe-haven assets such as US Treasuries and gold, but because of the potential government shutdown and Trump’s recent tariff threats over Greenland, global investors are less inclined towards Treasuries and more towards gold,” he added.

Magazine: GameStop ‘likely to sell’ Bitcoin holdings, Ethereum preps for quantum: Hodler’s Digest

Crypto start-up Entropy is closing down and handing funds back to investors, citing issues with scaling and struggling to find product-market fit.

Entropy founder and CEO Tux Pacific posted to X on Saturday that the crypto automations platform doesn’t have a viable path forward after years of operation.

“After four years, several pivots, and two rounds of layoffs, I’ve decided to wind-up Entropy and return capital to our investors,” Pacific said. 

Source: Tux Pacific

Entropy launched in late 2021 initially as a decentralized self-custody solution, with crypto venture capital giant Andreessen Horowitz backing it alongside Coinbase Ventures as part of a $25 million seed funding round in June 2022.

Pacific said that over the second half of 2025, Entropy was developing a crypto automations platform integrated with artificial intelligence, in a similar fashion to mainstream workflow platforms such as Zapier. 

Related: How AI crypto trading will make and break human roles

However, Pacific said that “after an initial feedback request revealed that the business model wasn’t venture scale, I was left with the choice to find a creative way forward or pivot once more.”

“After four hard years working in crypto, I decided that the best I could do has already been done: it was time to close up shop.”

Another a16z project hands back funding 

Entropy’s wind-up comes after the  a16z-backed decentralized social networking protocol Farcaster said on Thursday it would return $180 million in capital to investors amid a takeover by infrastructure provider Neynar.

Farcaster co-founder Dan Romero quashed rumours that the platform was shutting down via X, noting Neynar would steer the project in a more developer-focused direction, with Farcaster still having strong usage metrics. 

Magazine: ‘If you want to be great, make enemies’: Solana economist Max Resnick 

Around $100 billion was wiped from the crypto market late on Sunday, as uncertainty around another potential partial US government shutdown caused traders to sell off.

Senate Democrats threatened to block a funding package if it included money for the Department of Homeland Security, which oversees Immigration and Customs Enforcement, after federal agents shot and killed a man in Minneapolis on Saturday.

“Democrats sought common sense reforms in the Department of Homeland Security spending bill, but because of Republicans’ refusal to stand up to President Trump, the DHS bill is woefully inadequate to rein in the abuses of ICE. I will vote no,” said Senate Democrat Leader Chuck Schumer.

“Senate Democrats will not provide the votes to proceed to the appropriations bill if the DHS funding bill is included,” he added.

TradingView data shows the crypto market cap dropped from $2.97 trillion to $2.87 trillion in six and a half hours by Sunday at 9:30 pm UTC, pushing Bitcoin (BTC) down 3.4% over the last 24 hours.

Altcoins were hit even harder, with Ether (ETH) down 5.3% in the last day.

Over $360 million worth of leveraged crypto positions have also been flushed in the past day, with $324 million worth of long positions liquidated, Gate data shows.

Odds of shutdown by end of January rise

Bettors on prediction markets Kalshi and Polymarket have backed up to 80% odds of the US government shutting down by Saturday, Jan. 31.

Kalshi odds on a government shutdown by Jan. 31 surged from below 10% on Saturday to 78.6% on Sunday, while Polymarket odds showed a similar surge to 80%.

Odds of a US government shutdown by Saturday, Jan. 31, are at 80% on Polymarket. Source: Polymarket

Adding to traders' fear of a downturn was US President Donald Trump threatening to raise tariffs on Canada to 100% if the country strikes a deal with China, and the US military deploying warships to the Middle East amid rising tensions with Iran.

Crypto prices fell during the last shutdown

Crypto investors have a fresh memory of how market prices fare during US government shutdowns.

During the record 43-day US government shutdown spanning from Oct. 1 to Nov. 12, Bitcoin fell from its all-time high of $126,080 to below $100,000, driven in part by prolonged disagreements in Washington but also the Oct. 10 crypto market crash, which was in part sparked by Trump’s tariff threats with China.

Bitcoin’s change in price during the last US government shutdown. Source: CoinGecko

Related: US Bitcoin ETFs bleed $1.72B in five-day outflow streak

Since Oct. 10, gold has strongly outperformed Bitcoin, suggesting that most investors continue to favor traditional safe-haven assets during heightened geopolitical and macroeconomic uncertainty.

Meanwhile, the Crypto Fear & Greed Index, tracking Bitcoin and crypto market sentiment, fell five points on Monday to 20 out of 100, marking six days straight stuck in the “Extreme Fear” zone.

Magazine: A ‘tsunami’ of wealth is headed for crypto: Nansen’s Alex Svanevik

The hashrate of FoundryUSA, a digital asset advisory firm with the world’s largest Bitcoin (BTC) mining pool, has curtailed its hashrate by about 60% since Friday in response to the severe winter storm impacting large swaths of the United States.

“Bitcoin hashrate on FoundryUSA alone is down by nearly 200 exahashes per second (EH/s), or 60%, since Friday amid continued curtailment. Temporary block production has slowed down to 12 minutes,” according to TheMinerMag. 

FoundryUSA still commands about 198 (EH/s) of hashing power, accounting for about 23% of the global mining pool hashrate, data from Hashrate Index shows. 

A breakdown of hashing power controlled by different Bitcoin mining pools. Source: Hashrate Index

The Bitcoin network’s hashrate is the total amount of computing power deployed by Bitcoin mining operators to secure the proof-of-work protocol.

The curtailment has affected other mining pools serving users in the US, including Luxor, TheMinerMag reported on Saturday, as winter storm Fern sweeps through the US and forces miners to adjust their energy usage to remove stress from grid infrastructure. 

Related: Tennessee city clears path for crypto mining, data centers with new zoning rules

Bitcoin miners can balance the energy grid in times of emergency

Bitcoin miners act as a controllable load resource for public electrical grid infrastructure, adjusting their energy needs to balance the grid during times of peak demand and low consumer usage.

Too much energy within an electrical grid system can damage energy infrastructure during times of low demand, and must be safely dumped to prevent harm to grid components and individuals.

Bitcoin miners can power their mining machines on when demand is too low, siphoning otherwise dangerous levels of power away from the grid. Conversely, they can turn their machines off during times of peak demand to allow energy to flow to consumers.

Winter storm Fern is impacting large swaths of the US. Source: The Weather Channel

The current winter storm in the US features a mix of snow, ice and freezing rain throughout the Southeastern US, the Northeast, and parts of the Midwest, according to radar forecasts from The Weather Channel.

The storm is projected to extend about 1,800 miles, with widespread power outages affecting more than 1 million residents, The Weather Channel reported. 

Magazine: AI may already use more power than Bitcoin — and it threatens Bitcoin mining

GameStop moves entire Bitcoin stash, signaling potential sale: CryptoQuant

GameStop has transferred its entire Bitcoin holdings to Coinbases institutional trading platform, sparking speculation that the video game retailer may be reconsidering its Bitcoin treasury strategy.

GameStop throws in the towel? blockchain intelligence platform CryptoQuant asked in a post to X on Friday after noticing that GameStop moved its entire 4,710 Bitcoin stash worth more than $422 million to Coinbase Prime.

CryptoQuant said the transfer was likely to sell the holdings, noting that a sale with Bitcoin at $90,800 would mean GameStop realizing around $76 million in losses from its Bitcoin bet.

GameStop accumulated 4,710 Bitcoin across several investments in May at an average purchasing price of $107,900. 

Ethereum prepares for quantum era with new security team and funding

The Ethereum Foundation has made post-quantum security a central focus of the networks long-term roadmap, announcing the formation of a dedicated Post Quantum (PQ) team.

The new team will be led by Thomas Coratger, a cryptographic engineer at the Ethereum Foundation, with support from Emile, a cryptographer closely associated with leanVM, according to crypto researcher Justin Drake.

After years of quiet R&D, EF management has officially declared PQ security a top strategic priority, Drake said in a Saturday post on X. It’s now 2026, timelines are accelerating. Time to go full PQ.

The researcher described leanVM, a specialized, minimalist zero-knowledge proof virtual machine, as a core building block of Ethereum post-quantum strategy.

UBS weighing crypto trading for private banking clients: Report

The worlds biggest global wealth manager, UBS, is reportedly exploring a move to open crypto trading to its wealthiest clients. 

Bloomberg reported Friday, citing a person familiar with the matter, that the Swiss banking giant aims to let select private banking clients in Switzerland trade Bitcoin and Ether first, with a possible rollout to the AsiaPacific region and the United States later.

The person also reportedly said that UBS was currently selecting partners for its crypto offering, although the bank has not publicly confirmed the details.

UBS already runs tokenization pilots such as the uMINT tokenized US dollar money market fund on Ethereum and a Swift-UBS-Chainlink tokenized fund settlement trial, experimenting with putting traditional fund products on blockchain rails even before considering offering spot crypto trading.

CertiK keeps IPO on the table as valuation hits $2B, CEO says

Blockchain security company CertiK is keeping the door open to a future initial public offering, according to co-founder and CEO Ronghui Gu.

Speaking in an interview with Acumen Media on Thursday at the World Economic Forum in Davos, Switzerland, Gu said CertiKs valuation stands at about $2 billion and that pursuing a public listing would be a natural step for the company. However, the CEO said the company would need investment, lots of strategic partnerships to achieve this goal.

We still do not have a very concrete IPO plan, but this is definitely the goal we are pursuing, said Gu, adding that CertiK going public would represent a significant step for Web3 infrastructure companies: 

Many people want to see the success of CertiK, want to see the successful IPO of CertiK, because they view [it as] important not only for CertiK but also for the industry.

SEC dismisses civil action against Gemini with prejudice

The US Securities and Exchange Commissions civil lawsuit against Gemini Trust Company and Genesis Global Capital in the Earn-related unregistered securities case has been dismissed with prejudice.

Court filings show the parties submitted a joint stipulation to dismiss the action on Friday in the US District Court in the Southern District of New York, effectively ending the SECs claim over Geminis crypto lending program with Genesis.

A federal judge still needs to sign off on the joint stipulation to dismiss.

The dismissal comes about nine months after the SEC paused the civil action in April 2024 when then-acting chairman Mark Uyeda was leading the agency.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $88,864 Ether (ETH) at $2,964 and XRP at $1.89. The total market cap is at $3.23 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Kaia (KAIA) at 38.21%, Canton (CC) at 33.% and MYX Finance (MYX) at 32.06%.

The top three altcoin losers of the week are Ethena (ENA) at 20.52%, Arbitrum (ARB) at 18.65%, and ether.fi (ETHFI) at 18.25%. For more info on crypto prices, make sure to read Cointelegraphs market analysis.

Most Memorable Quotations

They need an economic system. They need a financial system. They need a payment system. There is no other alternative, in my view, other than stablecoins to do that right now.

Jeremy Allaire, CEO of stablecoin issuer Circle

Now, Congress is working very hard on crypto market structure legislation Bitcoin, all of them which I hope to sign very soon, unlocking new pathways for Americans to reach financial freedom.

Donald Trump, US President

What stands out is that 2024 and 2025 record the highest annual revived supply from long-term holders in Bitcoins history.

Kripto Mevsimi, CryptoQuant contributor

Im talking with probably a dozen governments about tokenizing some of their assets, because this way the government can actually realize the financial gains first and use that to develop those industries.

Changpeng CZ Zhao, former CEO of Binance

650 million people dont have access to a bank account in Africa. With a smartphone you have access to stablecoins, so you can save in a currency that is not exposed to fluctuations of inflation and making you poor.

Vera Songwe, a former UN under-secretary-general

While crypto networks are borderless, adoption is not.

PricewaterhouseCoopers

Top FUD of The Week

Bitcoin trade is over, Bloomberg strategist says in 2026 macro outlook

Bloomberg Intelligence strategist Mike McGlone said he has reversed his long-term outlook on Bitcoin and the broader crypto market, arguing that investors should sell the rallies across risk assets in 2026.

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In McGlones view, the conditions that once made Bitcoin compelling have changed fundamentally. What began as a scarce, disruptive asset has become part of a crowded and highly speculative ecosystem, increasingly correlated with equities and vulnerable to the same macro forces that drive traditional markets.

He draws parallels with past market peaks, pointing to excessive speculation, the approval of exchange-traded funds and historically low volatility as warning signs. Bitcoin, he argues, has gone from being a hedge against the system to being firmly inside it, and that changes everything.

BitGos IPO pop turns volatile as shares slip below offer price

Shares of digital asset custodian BitGo Holdings have swung sharply since the companys public debut on the New York Stock Exchange on Thursday, with early gains quickly reversing as initial IPO enthusiasm cooled and investors moved to lock in profits.

BitGo priced its initial public offering at $18 a share and it jumped about 25% in its first day of trading, reflecting strong early demand. While the stock closed only modestly higher in its first full session, the rally proved short-lived.

Shares have since fallen below their IPO price, declining as much as 13.4% on Friday, according to Yahoo Finance data.

French authorities investigate data breach of crypto tax platform

Authorities in France have started a preliminary investigation into a breach of cryptocurrency tax platform Waltio that could have compromised users personal data.

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According to a Thursday notice by French cybersecurity authorities, the Paris Public Prosecutor’s Office and the countrys National Cyber Unit were investigating the nature of the stolen data and identities of Waltio users.

The notice warned that users affected by the breach could be targeted in an attempt to move their digital assets under the guise of legitimate security concerns.

According to a Friday report from Le Parisien, a group of hackers called ShinyHunters sent a ransom demand to Waltio following the attack. The hackers obtained personal data from about 50,000 Waltio users, the majority of whom were based in France.

Top Magazine Stories of The Week

A tsunami of wealth is headed for crypto: Nansens Alex Svanevik

Nansen co-founder Alex Svanevik reveals why he thinks “crypto is fundamentally inevitable” and predicts trillions are set to enter.

The critical reason you should never ask ChatGPT for legal advice

ChatGPT can be a source of inexpensive legal advice, but the chat logs can also be used against you in court.

If you want to be great, make enemies: Solana economist Max Resnick

Max Resnick can be controversial, but Ethereum did refocus on L1 scaling after his campaign, and hes making Solana better by reducing MEV.

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The biggest threat to the Bitcoin network is “ambitious opportunists” who want to push through protocol changes, according to Michael Saylor, the co-founder of Bitcoin (BTC) treasury company Strategy.

Saylor’s comments sparked a debate online. Bitcoin maximalist Justin Bechler said the comments were directed toward software developers pushing for non-monetary use cases on Bitcoin, such as non-fungible tokens (NFTs) and onchain images in blocks.

Source: Michael Saylor

“The greatest risk to Bitcoin is quantum,” investor Fred Krueger said, while others like Mert Mumtaz, the CEO of remote procedure call (RPC) node provider Helius, disagreed with Saylor. Mumtaz said:

“Absolute cancer of a mindset. ‘Ambitious people wanting to evolve this technology are our biggest risk.’ Nothing is infallible. certainly not Bitcoin, which has had tons of bugs until now, like all other software — perhaps let's let those bugs stay instead of patching them.”

Several users, including Mark of Bitcoin, cited the ongoing spam wars and Bitcoin Improvement Proposal 110 (BIP-110), a temporary soft fork aimed at filtering out non-monetary data from the Bitcoin ledger.

Saylor’s post inflamed the debate between Bitcoiners who want to ossify the protocol and software developers advocating for expanded features on Bitcoin, like quantum-resistant wallet addresses and onchain file storage. 

The Bitcoin community continues to debate the quantum threat

Quantum computing continues to be a subject of intense debate among the Bitcoin community. Nic Carter, the founding partner of venture firm Castle Island, has repeatedly warned that the protocol needs to move to post-quantum standards as soon as possible.

However, Adam Back, the CEO of digital asset infrastructure company Blockstream, rebuffed Carter’s claims, calling them “uninformed.”

“Bitcoiners and developers are not in denial about defensively doing the research and development to prepare for future quantum computers. But they are just quietly doing research while you make uninformed noise,” Back said.

Source: Adam Back

Bitcoin market analyst James Check said that quantum computing fears are not affecting Bitcoin’s market price, and he attributed the recent market downturn to long-term Bitcoin holders dumping their coins onto the market. 

Magazine: Quantum attacking Bitcoin would be a waste of time: Kevin O’Leary

Bitcoin (BTC) saw multiday lows into Sunday’s weekly close as bulls faced a week of macro uncertainty.

Key points:

Bitcoin heads lower as market nerves about upcoming macroeconomic volatility catalysts boil over.

Downside risks firmly outweigh the odds of upside, BTC price analysis says.

A potential bullish divergence against silver offers a glimmer of hope.

Bitcoin sags into big macro week

Data from TradingView tracked 1.6% losses for BTC/USD, which reached $87,471 on Bitstamp.

BTC/USD one-hour chart. Source: Cointelegraph/TradingView

Long positions made up the majority of 24-hour crypto liquidations, which passed $250 million, per data from CoinGlass.

Crypto liquidations (screenshot). Source: CoinGlass

Trading resource The Kobeissi Letter attributed market weakness to the prospect of another US government shutdown in the coming days.

BREAKING: Bitcoin falls below $88,000 as $60 million worth of levered longs are liquidated in 30 minutes.

A government shutdown is now expected and President Trump has threatened 100% tariffs on Canada.

US stock market futures will open in less than 7 hours. pic.twitter.com/40GxrMdRTI

— The Kobeissi Letter (@KobeissiLetter) January 25, 2026

“Buckle up for a huge week ahead,” it told X followers, further highlighting President Donald Trump’s tariff threats on Canada, macroeconomic data releases and the Federal Reserve’s decision on interest rates.

The latter, due Jan. 28, was seen as yielding no change to current rates despite pressure from Trump to cut them further.

The latest estimates from CME Group’s FedWatch Tool put the odds of a minimum 0.25% cut at just % at the time of writing.

“Earnings season has arrived and headwinds are mounting on multiple fronts,” Kobeissi added.

Fed target rate probabilities for Jan. 28 FOMC meeting (screenshot). Source: CME Group

BTC price pumps “potential short opportunity”

Among traders, the low time frame BTC price trading range was first on the list of issues to deal with.

“Now, price is currently losing the mid-range which is a bearish sign for continuation to the downside, to the range lows,” trader CrypNuevo wrote in his latest X analysis.

Eyeing exchange order-book liquidity, CrypNuevo put bulls’ line in the sand at $86,300.

“Based on Bitcoin losing the mid-range; HTF liquidations to the downside; and the possible US Gov. shutdown, we still think that the most likely scenario is that Bitcoin drops back to low $80s in the coming weeks,” he concluded. 

“Any short-lived pump this week is a potential short opportunity.”

BTC liquidation heatmap. Soruce: CrypNuevo/X

Others drew attention to a marked increase in open interest into the weekly close.

That's a serious open interest increase... On a Sunday... Right before we have a lot of major macro events...

You guys are nuts.$BTC pic.twitter.com/G14wHhyBbb

— Byzantine General (@ByzGeneral) January 25, 2026

A note of optimism, meanwhile, came from crypto trader, analyst and entrepreneur Michaël van de Poppe.

After both gold and silver printed record highs, Van de Poppe eyed a potential bullish divergence on BTC/XAG.

“For the first time in the history, $BTC might print a bullish divergence against Silver on the 3-Day Timeframe,” he announced on the day.

“What does this say? This does say that the coming week is going to be extremely volatile and could indicate a bottom on this metric and therefore, Silver is likely to peak and money is likely rotating towards other assets.”

BTC/XAG three-day chart with RSI, volume data. Source: Michaël van de Poppe/X

Tezos, a layer-1 proof-of-stake blockchain network, implemented its latest protocol upgrade, Tallinn, on Saturday, which reduced block times on the base layer to 6 seconds.

The latest upgrade is the 20th update to the protocol, which reduces block times, slashes storage costs and reduces latency, resulting in faster network finality times, according to an announcement from Tezos.

Tallinn also allows all network validators, known as “bakers”, to attest to every single block, rather than a subset of validators attesting to blocks, which is how validators verified blocks in previous versions of the protocol, Spokespeople for Tezos explained:

“This is achieved through the use of BLS cryptographic signatures, which aggregate hundreds of signatures into just one per block. By lightening the load on nodes, it also opens the door to further block time reductions.”

The upgrade also introduced an address indexing mechanism that removes “redundant” address data, reducing storage needs for applications running on Tezos.

Spokespeople for Tezos said the address indexing mechanism improves storage efficiency by a factor of 100.

Tezos’ latest upgrade showcases the push for faster and higher-throughput blockchain networks that can handle more transactions per second and reduced settlement times to accommodate a growing number of use cases. 

Related: The 5 busiest blockchains of 2025 and what powered their growth

Block times have come a long way since the first generation of blockchains

The first generation of blockchain networks, like Bitcoin and Ethereum, had speeds of about seven transactions per second (TPS) and 15-30 TPS, respectively.

The Bitcoin protocol produces blocks about every 10 minutes, which presents a challenge for everyday payments and commercial transactions on the base layer.

The Bitcoin protocol produces blocks about every 10 minutes, on average. Source: Mempool

These slow network speeds have prompted both protocols to scale through layer-2 (L2) networks, which handle transaction execution. 

In the case of Bitcoin, this is done through the Lightning Network, payment channels opened between two or more parties that handle a series of transactions off-chain, posting only the net balance to the base layer once the payment channel is closed.

The Ethereum network relies on an ecosystem of layer-2 networks to scale, and takes a modular approach, separating the execution, consensus and data availability layers.

Monolithic blockchain networks, like Solana, combine all these functions into a single layer, instead of scaling through L2’s.

Magazine: Ethereum’s Fusaka fork explained for dummies: What the hell is PeerDAS?

Cathie Wood’s ARK Invest has increased its exposure to crypto-linked equities, adding shares of Coinbase, Circle and Bullish as prices slid across the sector.

According to ARK’s daily trade disclosures for Friday, the ARK Innovation ETF (ARKK) purchased 38,854 shares of Coinbase Global Inc., while the ARK Fintech Innovation ETF (ARKF) added another 3,325 shares, acquiring a total of  $9.4 million worth of the exchange shares. Coinbase shares closed down 2.77% on the day at $216.95.

ARK added a combined 129,446 shares of Circle Internet Group across ARKK and ARKF, a position worth roughly $9.2 million. The firm also added 88,533 shares of Bullish across the same ETFs, investing about $3.2 million. Circle shares were little changed on the day, slipping 0.03% while Bullish shares declined 2% during the session, closing at $35.75.

Alongside the crypto buys, ARK trimmed positions elsewhere in the portfolio, including Meta Platforms, selling 12,400 shares valued at roughly $8.03 million.

Coinbase shares dropped 2% on Friday. Source: Google Finance

Related: Cathie Wood says ARK’s $1.5M Bitcoin bull price hasn’t changed as markets eye rally

Crypto pullback weighs on ARK ETFs

As Cointelegraph reported, the downturn in crypto markets during the fourth quarter of 2025 weighed heavily on several of Cathie Wood’s ARK ETFs. In its quarterly report, ARK pointed to crypto-linked equities as a major source of weakness across its flagship products.

Coinbase emerged as the largest detractor during the quarter, dragging on performance at the ARK Next Generation Internet ETF (ARKW), ARKF and ARKK. ARK said Coinbase shares fell more sharply than Bitcoin (BTC) and Ether (ETH) as spot trading volumes on centralized exchanges declined 9% quarter-on-quarter following October’s liquidation event.

Roblox was the second-largest drag on ARK ETFs, despite posting strong third-quarter bookings growth. Shares fell after the company warned of declining operating margins in 2026 and faced additional pressure following Russia’s ban of the platform.

Related: Cathie Wood still bullish on $1.5M Bitcoin price target: Finance Redefined

ARK Invest sees crypto market reaching $28T by 2030

ARK’s continued interest in the crypto market comes as the firm expects the digital asset market could grow to $28 trillion by 2030, driven largely by rising Bitcoin adoption and price appreciation. In its Big Ideas 2026 report, ARK projected the crypto market would expand at a 61% compound annual growth rate, with Bitcoin accounting for roughly 70% of the total market value.

ARK said that if about 20.5 million Bitcoin have been mined by 2030, the forecast implies a Bitcoin price in the $950,000 to $1 million range. The firm cited growing institutional participation, noting that Bitcoin ETFs and corporate holders increased their share of total supply in 2025.

Magazine: Bitget’s Gracy Chen is looking for ‘entrepreneurs, not wantrepreneurs’

Colombia’s second-largest private pension and severance fund manager, AFP Protección, is preparing to launch an investment fund with exposure to Bitcoin.

Juan David Correa, president of Protección SA, confirmed the initiative during an interview with local outlet Valora Analitik. According to Correa, access to the product will be limited and granted only through a personalized advisory process designed to assess each investor’s risk profile. Only clients who meet specific criteria will be able to allocate a portion of their portfolios to Bitcoin (BTC).

Nifty Gateway, one of the earliest and most recognizable NFT marketplaces, is set to shut down operations next month, marking another high-profile exit amid the sector’s prolonged downturn.

“Today, we are announcing that the Nifty Gateway platform will be closing on February 23, 2026,” the Gemini-owned platform wrote in a Saturday post on X, adding that it has already entered withdrawal-only mode, giving users roughly one month to move any remaining NFTs or funds off the site.

A shutdown notice is now displayed on Nifty Gateway’s homepage, and users can withdraw assets either through a linked Gemini Exchange account or directly to their bank via Stripe.

Nifty Gateway said customers with NFTs, ETH or US dollar balances would receive email instructions on withdrawing their assets. The company urged users to complete the process ahead of the February deadline.

Nifty Gateway announces closure. Source: Nifty Gateway

Related: What the NFT Paris cancellation says about the current state of the NFT market

Nifty Gateway topped $300 million in sales at its peak

Launched in 2020, Nifty Gateway played a central role in bringing NFTs to a mainstream audience. Unlike many crypto-native platforms at the time, it allowed users to purchase digital collectibles using credit cards, lowering the barrier to entry. The marketplace became known for curated “drops” from high-profile artists and creators, including Beeple and Grimes.

At the height of the NFT frenzy in mid-2021, Nifty Gateway facilitated more than $300 million in sales. That momentum faded as the broader NFT market cooled. In April 2024, the company stepped away from operating a traditional marketplace and rebranded as Nifty Gateway Studio, shifting its focus toward onchain creative projects and brand partnerships.

Gemini, which acquired Nifty Gateway in 2019, said the closure would allow the crypto exchange to concentrate on its broader product strategy. “This decision will allow Gemini to sharpen its focus and execute on the vision of building a one-stop super app for customers,” the company said, adding that it will continue to support NFTs through the Gemini Wallet.

Related: US prosecutors drop OpenSea NFT fraud case after appeals court reversal

Animoca acquires Somo as NFT market shows signs of life

Earlier this month, Animoca Brands acquired gaming and digital collectibles firm Somo, bringing its playable and tradable collectibles into Animoca’s wider blockchain ecosystem. The company plans to integrate Somo using shared infrastructure and partnerships, positioning the deal as a strategic extension of its existing gaming and NFT portfolio.

The acquisition came as the NFT market showed a short-term rebound at the start of 2026. Total NFT market capitalization rose about 20% in the first two weeks of the year, climbing from roughly $2.5 billion to over $3 billion, with a sharp $300 million jump occurring in a single 24-hour period alongside higher trading volumes.

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Polymarket betters are pricing in a 77% chance that the US government will shut down again before the end of January, marking a 67% increase over the past 24 hours.

It comes as the CLARITY Act, a significant crypto bill aimed at providing more clarity around regulations, is still making its way through Congress, with previous delays largely blamed on the record 43-day US government shutdown in October and November.

Political commentator Collin Rugg highlighted the surging Polymarket odds in an X post on Saturday, noting that it came shortly after US Senator Chuck Schumer announced that Senate Democrats would not “provide the votes to proceed” to the appropriations bill if funding for the Department of Homeland Security (DHS) is included.

The odds jumped 67% over the past 24 hours. Source: Polymarket

"What's happening in Minnesota is appalling —and unacceptable in any American city," Schumer said in a statement.

On Saturday morning, reports emerged that US federal agents shot and killed a 37-year-old man in Minneapolis. 

Trump didn’t rule out shutdown in the future

Schumer said that the DHS bill is “woefully inadequate to rein in the abuses of ICE. I will vote no."

US President Donald Trump didn’t rule out the chances of another government shutdown at some point, telling Fox Business on Thursday: “I think we have a problem, because I think we’re probably going to end up in another Democrat shutdown.”

It adds uncertainty around the CLARITY Act’s timeline, which has recently received a mixed response from the crypto industry after Coinbase CEO Brian Armstrong and other executives withdrew support.

“This version would be materially worse than the current status quo. We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft,” Armstrong said on Jan. 15.

CLARITY Act timeline remains unclear

Galaxy Digital head of research Alex Thorn echoed industry concerns in a report on Thursday that there is still uncertainty around stablecoin yields, which the US banking lobby argues would undermine the banking sector’s competitiveness. 

“There aren’t yet any significant indications that the two sides have identified a compromise that can rejuvenate the bill’s prospects,” he said, adding that “the additional 4-6 weeks until a second attempt at markup should give the parties more time to work on that.”

Thorn said one of the “big questions” is whether “the gridlocked negotiations over stablecoin rewards can advance in the interim to raise the odds that such a markup is a bipartisan success.”

Magazine: A ‘tsunami’ of wealth is headed for crypto: Nansen’s Alex Svanevik

US-based spot Bitcoin exchange-traded funds (ETFs) have extended their outflow streak to five days as crypto market sentiment continues to wane.

Spot Bitcoin (BTC) ETFs posted $103.5 million in net outflows on Friday, continuing an outflow streak that began the previous Friday.

Over the five days, including the four-day trading week in the US shortened by Martin Luther King Jr. Day on Monday, total outflows reached approximately $1.72 billion, according to Farside data.

The spot price of Bitcoin is $89,160 at the time of publication, having not been above the psychological $100,000 price level since Nov. 13, according to CoinMarketCap.

Bitcoin is up 2.40% over the past 30 days. Source: CoinMarketCap

Market participants often watch spot Bitcoin ETF flows to gauge retail investor sentiment and look for clues on where the trend might head for Bitcoin in the coming weeks.

The crypto market is in a “phase of uncertainty,” says Santiment

It comes as broader crypto market sentiment has been declining in recent times.

The Crypto Fear & Greed Index, which measures overall crypto market sentiment, posted an “Extreme Fear” score of 25 in its update on Sunday.

The Index has been in “Extreme Fear” territory since Wednesday. Source: alternative.me

Crypto sentiment platform Santiment said in a report on Saturday that the crypto market is in “a phase of uncertainty.”

“Retail traders are heading for the exits, while money and attention are flowing to more traditional assets,” Santiment said, arguing that a turnaround from the current downside may be a near-term possibility.

“At the same time, quieter signals like supply distribution and the lack of social chatter hint that a bottom may be taking shape,” Santiment said.

“The best move is probably patience.”

Meanwhile, global macro research company The Bitcoin Layer founder, Nik Bhatia, said in an X post on Saturday that the dwindling sentiment may be partly driven by recent surges in metal prices.

“With gold practically $5,000 and silver at $100, the sentiment in Bitcoin is so poor due to being left out of the metals rally that it almost feels like post-FTX $17,000 bear vibes,” Bhatia said.

Related: Bitcoin nodes running BIP-110 crosses 2% as spam wars heat up

“I am bullish but the painful type where fear dominates and you have to push through it,” Bhatia added.

Crypto analyst Bob Loukas said that “sentiment is in the gutter and we could argue overdue some type of strong countertrend rally.”

Magazine: A ‘tsunami’ of wealth is headed for crypto: Nansen’s Alex Svanevik

The biggest obstacle to Bitcoin (BTC) being used as a payment method is tax policy, not scaling technology that reduces settlement times and transaction costs, according to Pierre Rochard, a board member for Bitcoin treasury company Strive. 

“Here’s a metaphor: the best athlete can win against the worst athlete 100% of the time, if the best athlete plays. It drops to 0% if he doesn’t play and lets the weak athlete win,” Rochard said about BTC’s current lack of use as a method of payment.

Source: Pierre Rochard

In December 2025, the Bitcoin Policy Institute, a non-profit policy advocacy organization, sounded the alarm on the lack of a de minimis tax exemption for small Bitcoin transactions.

The lack of a de minimis tax exemption means that every time BTC is transferred to another party for payment, it is subject to taxes, hindering its use as a medium of exchange.

US lawmakers are considering limiting the de minimis tax exemption to overcollateralized dollar-pegged stablecoins, which are tokenized US dollars, backed 1:1 by fiat cash deposits or short-term government securities, which sparked backlash from Bitcoiners.  

Related: Netherlands risks capital flight with unrealized gains tax on stocks, crypto

The Bitcoin community reacts to the lack of de minimis exemptions for BTC

In July 2025, Wyoming Senator Cynthia Lummis, an ally of the crypto industry, introduced a bill proposing a de minimis tax exemption on digital asset transactions of $300 or less.

The bill placed a $5,000 annual limit on exemptions and also included provisions to exempt cryptocurrencies used for charitable donations.

Senator Cynthia Lummis’ bill proposal for crypto tax exemptions. Source: Senator Cynthia Lummis

Lummis’ bill proposed deferring income from staking crypto to secure proof-of-stake blockchain networks or income earned from mining proof-of-work cryptocurrencies until those assets were sold.

Jack Dorsey, the founder of payments company Square, which integrated Bitcoin payments into its point-of-sale systems in October, called for a tax exemption on small BTC transactions.

“We want BTC to be everyday money ASAP,” Dorsey said. Meanwhile, others like Bitcoin advocate and co-founder of the Truth for the Commoner (TFTC) media outlet, Marty Bent, said the proposed tax exemption for stablecoins is “nonsensical.”

Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026

The Nietzschean Penguin (PENGUIN) token, a memecoin launched on the Solana layer-1 blockchain network, surged by about 564% following a social media post from the United States White House.

On Friday, the White House published a social media post on X of US President Donald Trump and a penguin holding hands and walking through the snow, which went viral.

PENGUIN traded at a market capitalization of about $387,000 before the post and recorded $244 million in trading volume in the 24 hours after the post, according to SolanaFloor.

Source: White House

The token’s market capitalization is about $136 million at the time of this writing, and it is trading at about $0.13, data from DEXScreener shows.

“The early success of PENGUIN is proof that onchain trading was never dead, just a sleeping giant waiting for the right moment,” Alon Cohen, the co-founder of memecoin launchpad Pump.fun — the platform PENGUIN launched on — said. 

The surge of the PENGUIN token came amid a broad downturn in the memecoin market, which was one of the best-performing crypto sectors in 2024, but crashed after several high-profile celebrity tokens declined by 80% or more from their peak prices. 

The PENGUIN memecoin’s price action. Source: DEXScreener

Memecoins show signs of life in 2026 after a disappointing year

11.6 million crypto tokens failed in 2025, largely driven by the flood of memecoins launched on platforms like Pump.fun and other similar launchpads.

The total market capitalization of memecoins briefly surged by 23% in January 2026, rising from about $38 billion in December 2025 to over $47 billion, according to CoinMarketCap.

The brief surge in memecoins was accompanied by a spike in social media mentions of memecoins, according to crypto market analysis company Santiment.

Social media interest in memecoins surged in January 2026. Source: Santiment

“Memecoins typically lead when risk appetite returns. The rebound in the Fear and Greed Index from extreme fear toward neutral reinforces this shift,” Vincent Liu, the chief investment officer at trading firm Kronos Research, told Cointelegraph.

However, the memecoin market fell back down to about $39 billion in total market capitalization at the time of publication, as crypto markets continue to move sideways, oscillating between temporary short-term rallies and pullbacks. 

Magazine: Memecoins: Betrayal of crypto’s ideals… or its true purpose?

The number of Bitcoin (BTC) nodes signaling support for Bitcoin Improvement Proposal 110 (BIP-110), a temporary soft fork limiting the amount of data included in each transaction at the consensus level, rose to 2.38%. 

583 out of 24,481 nodes are running BIP-110, and the primary node software implementation for running the soft fork proposal is Bitcoin Knots, according to The Bitcoin Portal.

BIP-110 limits the size of transaction outputs to 34 bytes and caps the OP_RETURN data limit to 83 bytes. The temporary soft fork will be deployed for 1 year, with possible extension or alteration after the 1-year term, according to the proposal’s GitHub page.

A timeline for BIP-110 deployment. Source: BIP-110.org

OP_RETURN is a script code that allows users to embed arbitrary data and has been the subject of intense debate within the Bitcoin community following the release of Bitcoin Core version 30, the latest upgrade of the most widely used Bitcoin node software.

The OP_RETURN limit was capped at 83 bytes, which Bitcoin Core developers unilaterally removed in Bitcoin Core version 30, following a controversial pull request, first proposed in April 2025. The proposal was generally opposed by the Bitcoin community.

The pull request proposing the removal of arbitrary data limits on Bitcoin. Source: GitHub

Related: Bitcoiners reject quantum computing fears as cause of price slump

The arbitrary data issue creates a divide within the Bitcoin community

The Bitcoin Core update that removed the data limit went live in October 2025, sparking a torrent of negative feedback from critics, who say that removing the arbitrary data limit incentivizes spam on the Bitcoin ledger.

Arbitrary data increases the storage costs of running a Bitcoin node, and the prohibitive cost leads to increased centralization of the Bitcoin network. 

Bitcoin nodes can be run on consumer-grade computers, unlike high-throughput blockchains that generate large quantities of data and require specialized hardware.

Hardware requirements for running a Bitcoin node. Source: Cointelegraph

Increasing node hardware requirements undermines the Bitcoin protocol’s value proposition of being a decentralized monetary network, according to critics. Bitcoin advocate and educator Matthew Kratter said:

“It's like one of those parasitical plants, like ivy, completely covering a tree, eating up the tree, and then the inner scaffolding collapses, and the ivy collapses because it's basically destroyed the structure. This is what spam has the potential to do to Bitcoin.” 

Others like Jameson Lopp, a Bitcoin Core contributor, support the uncapped OP_Return Limit, arguing that filters do little to stop spam on the network.

Magazine: Big questions: Would Bitcoin survive a 10-year power outage?

The United States’ geopolitical brinkmanship over Greenland has thrown its economic ties to the EU into sharp relief. European powers are considering what instruments it has to combat US belligerence, including the “nuclear option” of offloading US debt.

The tone has shifted after a supposed “framework of a deal” at Davos, and US ambitions to take over Greenland have cooled, for now. But EU heads of state are still preparing possible responses to further escalation.

One option was cutting off access to US markets through the so-called “trade bazooka.” If triggered, it would cut off US companies from the EU market, costing them billions. Another option is offloading the trillions of dollars in US assets held in Europe.

But questions remain regarding its feasibility, as dumping could drastically change the global economic landscape. It could also have knock-on effects for the US financial system’s exposure to stablecoins.

Can the EU actually dump US debt?

Prior to Jan. 21, European leaders were considering possible responses. While Denmark deployed special forces to Greenland, other heads of state suggested the trade bazooka, which would deny the US access to EU markets.

Others, including former Dutch Defense Minister Dick Berlijn, suggested that Europe could use US debt as leverage. Berlijn said, “If Europe decides to offload those bonds, it creates a big problem in the US. [The dollar] crashes, high inflation. The US voter won’t like that.”

George Saravelos, Deutsche Bank’s chief FX strategist, wrote in a note last weekend, “For all its military and economic strength, the US has one key weakness: it relies on others to pay its bills via large external deficits.”

Source: Reddit/Bloomberg

Saravelos said that the US currently owns $8 trillion in US bonds and equities, which is “twice as much as the rest of the world combined.”

But can Europe actually offload this debt? There are both questions of how the EU could compel a sale and, in a world that is increasingly de-dollarizing, who potential buyers are. 

Yesha Yadav, a professor of law and associate dean at Vanderbilt University, told Cointelegraph, “Foreign government buyers tend to be sticky, meaning that they will not easily move their holdings unless there is a serious need for them to do so.”

Furthermore, according to the Financial Times, much US debt in Europe is not held by governments themselves, but by private entities like pension funds, banks and other institutional investors. Yadav noted that hedge funds in the UK, Luxembourg and Belgium have emerged as major buyers of US Treasurys.

Therefore, even if European powers wanted to dump US debt, they’d need to compel these private buyers to sell. Yadav said that it “does not seem likely in the near term that European governments may impose restrictions on hedge funds buying US Treasurys.”

SocGen’s chief FX strategist, Kit Juckes, wrote, “The situation probably needs to escalate a fair bit further before they damage their investment performance for political purposes.”

However, “they may potentially think about opening up the kinds of government debt that are considered most secure as collateral,” said Yadav.

The main problem is that there aren’t a lot of alternatives to US debt as a risk-off investment. Treasurys still boast a “risk-free” status and generally are highly liquid.

“Even as other highly stable and safe countries, such as Germany, begin to issue debt, their debt markets remain relatively small, such that it is very difficult to envision them ever taking the place of the US Treasury market,” said Yadav.

There’s also a paucity of potential buyers. China has been scaling back the tempo of its US debt purchases, Yadav noted.

Asian buyers do not have the capacity to absorb that many US assets. The market capitalization of the MSCI All-Country Asian index, which tracks large and mid-cap stocks across developing and emerging markets in Asia, is roughly $13.5 trillion. Per the Financial Times, the FTSE World Government Bond Index is about $7.3 trillion.

Rabobank’s analysts wrote, “While the US’s large current account deficit suggests that in theory there is the potential for the USD to drop should international savers stage a mass retreat from US assets, the sheer size of US capital markets suggests that such an exit may not be feasible given the limitations of alternative markets.”

Stablecoins become major buyers of US debt

One emerging major buyer of US debt is stablecoin issuers.

According to the GENIUS Act, the US’ landmark legislation creating a framework for stablecoins, issuers of those assets operating in the country must have dollars and US Treasurys in reserve to back their coins.

“That [stablecoin issuers] are growing as fast as they are means that their need for Treasurys is correspondingly high. To the extent that this trend continues, it offers a great advantage for US policymakers, but it also deepens the link between the continuity of stablecoin issuers and that of the ability of US Treasury markets to continue remaining liquid and popular,” said Yadav.

The proliferation of stablecoin issuers as a buyer for US debt doesn’t come without its risks. This, combined with fewer buyers of US debt, particularly in the event of the EU dumping or even significantly decreasing its exposure, could spell trouble for US Treasury markets.

Yadav and Brendan Malone, who formerly worked in payments and clearing at the Federal Reserve Board, have previously noted liquidity shocks in US debt markets, both in March 2020 and April 2025.

In the event of a run on stablecoin issuers, this lack of liquidity and growing lack of counterparties to sell to could prevent the issuer from selling off its securities. It would become insolvent and also significantly impact the credibility of US Treasury markets.

Economic and military escalation in an increasingly multi-polar world has created rifts between former allies. While there is hope for a dialogue between the EU and US, Latvian President Edgars Rinkēvičs said, “We are not yet out of the woods [..] Are we in an irreversible rift? No. But there is a clear and present danger.” The danger appears not only to Europe and Greenland’s sovereignty, but to US debt markets as well.

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The proposed restrictions on stablecoin yields under the US CLARITY Act risk driving capital out of regulated markets and into offshore, opaque financial structures.

Colin Butler, head of markets at Mega Matrix, said banning compliant stablecoins from offering yield would not protect the US financial system, but instead sideline regulated institutions while accelerating capital migration beyond US oversight.

“There’s always going to be demand for yield,” Butler told Cointelegraph, adding that if compliant stablecoins can’t offer it, capital will simply move “offshore or into synthetic structures that sit outside the regulatory perimeter.”

Under the recently enacted GENIUS Act, payment stablecoins such as USDC (USDC) must be fully backed by cash or short-term Treasuries and are prohibited from paying interest directly to holders. The framework treats stablecoins as digital cash, rather than financial products capable of generating yield. Butler argued that this creates a structural imbalance, particularly at a time when three-month US Treasuries yield around 3.6% while traditional savings accounts pay far less.

Butler said the “competitive dynamic for banks isn’t stablecoins versus bank deposits,” but banks paying depositors very low rates while keeping the yield spread for themselves. He added that if investors can earn 4% to 5% on stablecoin deposits through exchanges, compared with near-zero yields at banks, capital reallocation is a rational outcome.

Related: Goldman Sachs CEO says CLARITY Act 'has a long way to go'

Yield ban could drive demand for “synthetic dollars”

Andrei Grachev, founding partner at Falcon Finance, warned that limiting onshore yield could create a vacuum filled by so-called synthetic dollars, which are dollar-pegged instruments that maintain parity through structured trading strategies rather than one-to-one fiat reserves.

“The real risk isn't synthetics themselves - it's unregulated synthetics operating without disclosure requirements,” Grachev said.

Butler pointed to Ethena’s USDe (USDe) as a prominent example, noting that it generates yield through delta-neutral strategies involving crypto collateral and perpetual futures. Because such products fall outside the GENIUS Act’s definition of payment stablecoins, they occupy a regulatory gray area.

“If Congress is trying to protect the banking system, they have inadvertently accelerated capital migration into structures that are largely offshore, less transparent, and completely outside US regulatory jurisdiction,” Butler said.

Banks have argued that yield-bearing stablecoins could trigger deposit outflows and weaken their lending capacity. Grachev acknowledged that deposits are central to bank funding, but said framing the issue as unfair competition misses the point.

“Consumers already have access to money markets, T-bills, and high-yield savings accounts,” he said, adding that stablecoins simply extend that access into crypto-native environments where traditional rails are inefficient.

Related: The CLARITY Act stalling is positive for the crypto industry: Analyst

Stablecoin yield bans could hurt US competitiveness

Beyond domestic concerns, Butler warned of global competitive implications. China’s digital yuan became interest-bearing earlier this year, while jurisdictions such as Singapore, Switzerland and the UAE are actively developing frameworks for yield-bearing digital instruments.

Source: Senator Cynthia Lummis

“If the US bans yield on compliant dollar stablecoins, we're essentially telling global capital: choose between zero-yield American stablecoins or interest-bearing Chinese digital currency. That's a gift to Beijing,” he said.

Grachev argued the US still has an opportunity to lead by setting clear standards for compliant, auditable yield products. The current CLARITY Act draft, however, risks doing the opposite by treating all yield as equivalent and failing to distinguish between transparent, regulated structures and opaque alternatives.

Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026

The Netherlands plans to tax unrealized capital gains on a range of investments, including stocks, bonds and cryptocurrencies, sparking warnings of capital flight.

A majority of lawmakers in the Dutch parliament appear ready to back changes to the country’s Box 3 asset tax regime, which would require investors to pay annual tax on both realized and unrealized gains, even if assets have not been sold, NL Times reported on Tuesday.

The plan follows court rulings that struck down the existing system for relying on assumed, rather than actual, returns. The Tweede Kamer (House of Representatives) debated the proposal again this week, with more than 130 questions put to caretaker State Secretary for Taxation Eugène Heijnen.

While many lawmakers acknowledged flaws in the plan, most signaled they would support it, citing an estimated 2.3 billion euros ($2.7 billion) per year in lost revenue if implementation is delayed further.

Related: Blockrise wins Dutch MiCA license, brings Bitcoin-backed loans to EU businesses

Dutch parties back tax on unrealized gains

Under the proposal, investors in equities, bonds and cryptocurrencies would face annual taxation on paper gains. Heijnen reportedly told parliament that taxing only realized returns would be preferable but is not considered workable by the government before 2028. With public finances under pressure, further delays were ruled out.

Several parties, including People’s Party for Freedom and Democracy (VVD), Christian Democratic Appeal (CDA), JA21 (Right Answer 2021) and Farmer–Citizen Movement (BBB) Party for Freedom (PVV), are expected to back the bill.

Left-leaning parties such as Democrats 66 (D66), GreenLeft–Labour Party (GroenLinks–PvdA) also support the changes, arguing that taxing unrealized gains is simpler to administer and avoids major budget shortfalls, per the report.

Notably, the revised Box 3 system would be more favorable for real estate investors, allowing deductions for costs and taxation only upon realizing profits, though second homes would face an additional levy for personal use.

Related: Stablecoin panic could upend ECB policy, Dutch central bank governor warns

Dutch unrealized gains tax sparks crypto backlash

The tax plan has triggered sharp criticism from investors and crypto figures, who warn the move could accelerate capital flight.

Prominent Dutch crypto analyst Michaël van de Poppe called the plan “insane,” arguing it would sharply raise annual tax burdens and push residents to leave the country. “No wonder people are leaving the country, and to be fair, it's completely right to do so,” he wrote.

Source: Michaël van de Poppe

“Taxes on unrealized gains and wealth may be this century’s Boston Tea Party, Reign of Terror, or Bolshevik moment,” another user wrote.

Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026