Bitcoin Soars Past $87K Amidst Fed’s Stablecoin Guidelines and Bitget’s $351M Breach

In this week’s recap, Bitcoin soared to an eight-month peak exceeding $87,000 before experiencing a downturn. The Federal Reserve introduced proposed regulations for U.S. stablecoin issuers, while Bitget halted withdrawals following a major wallet breach that compromised $351.6 million. This week also saw a significant agreement involving USDC, fresh applications for bank-issued stablecoins, and legal actions against Polymarket in New York.

Bitcoin Hits $87,000 Amidst ETF Surge

• Bitcoin surged past $87,000 after overcoming resistance around $82,000, with HashKey Group analyst Tim Sun attributing this rise to a decrease in oil prices, Treasury yields, short interest correction, and heightened demand for U.S. spot ETFs. He noted that ETF inflows came after the initial price break, not as a trigger for it.
• U.S. spot Bitcoin ETFs attracted nearly $999 million on September 21 and $714.7 million on September 22. Despite these inflows, Bitcoin later dipped back toward $84,000. According to crypto.news, futures traders added over $2 billion in positions during this upward trend, increasing the leverage behind the rally.

Fed Introduces New Stablecoin Regulations

• On September 24, the Federal Reserve unveiled two proposed regulations under the GENIUS Act. The first rule mandates that payment stablecoins issued by regulated entities must be fully backed by allowable assets, such as short-term U.S. Treasury bills and other highly liquid assets. Additionally, it outlines capital and risk management standards.
• The second regulation details the process for an insured state member bank to obtain Fed approval for a subsidiary that issues stablecoins. Both proposals remain subject to revision, with a public comment period lasting 60 days to begin once published in the Federal Register.

Bitget Halts Withdrawals After $351.6 Million Hack

• Bitget reported unauthorized wallet transfers on September 24 that affected around $351.6 million. While the exchange has suspended withdrawals, it continues to allow deposits and trading during the ongoing investigation and system restoration.
• Preliminary findings suggested that a backend system breach was responsible, rather than a private key compromise. Blockchain tracker Lookonchain indicated that the largest share of the stolen assets involved 102.93 million XRP, valued at approximately $157.48 million. The exchange has not yet identified the attackers.

Binance Invests $100 Million in Circle’s USDC

• Binance acquired approximately $100 million in Circle shares through a private placement finalized on September 17, as disclosed this week. This acquisition encompasses about 1.24 million shares.
• As part of a new five-year deal, Binance will support the promotion of USDC across its platform. Circle, in return, will offer monthly incentives tied to USDC balances that qualify. This agreement replaces previous ones between the two companies, and Binance is restricted from selling, transferring, or hedging its shares for two years, while still retaining voting rights.

SoFi Integrates SoFiUSD in Mastercard Settlement

• SoFi and Mastercard announced on September 22 that transactions associated with SoFi Bank’s card program, valued at $25 billion, will now be settled using SoFiUSD. This bank-issued stablecoin facilitates operations within Mastercard’s network, allowing merchants to receive payments without requiring the token themselves.
• The partnership is also exploring the use of SoFiUSD for merchant settlements, cross-border transactions, and remittances. This announcement signifies a practical implementation of a U.S. bank-issued stablecoin within card infrastructure, rather than just a proposed pilot.

New York State Files Lawsuit Against Polymarket

• New York Attorney General Letitia James filed a lawsuit against Polymarket on September 24, accusing the platform of offering event contracts to state residents without a valid gambling license and allowing individuals under the age of 21 to access the service. The state is seeking to halt these alleged unlicensed activities and is pursuing restitution, fines, and the forfeiture of profits claimed to have been earned unlawfully.
• This lawsuit is part of a series of actions taken by New York against Kalshi, Coinbase Financial Markets, and Gemini Titan. It came a day after all 11 Democrats on the Senate Banking Committee demanded a public hearing on prediction markets.

Strategy Resumes Bitcoin Acquisitions with 950 BTC Purchase

• Strategy acquired 950 BTC for $75.7 million between September 14 and September 20, marking the end of a two-week pause in its acquisitions. According to a filing with the SEC on September 21, the total holdings of the company stand at 846,000 BTC, with an investment of approximately $63.8 billion.
• During this time frame, the organization also spent around $174 million repurchasing STRC preferred shares. No sales were reported under its at-the-market share programs for that week, and its cash reserves available for deployment fell to about $1.05 billion.

ARK Invest Launches Tokenized Venture Fund Interests

• ARK Invest along with Securitize has introduced tokenized interests in the ARK Venture Fund, initiating on the Ethereum blockchain. Eligible investors can acquire a blockchain-based stake in the fund, which encompasses notable companies like OpenAI, Anthropic, Stripe, and Databricks.
• The tokens represent interests in the fund rather than direct claims on the portfolio companies themselves. A September 21 SEC order allows ARK to offer this tokenized share class under specific regulations, making the compliance terms part of their U.S. launch.

Canada’s Major Banks Pilot Tokenized Deposits

• Canada’s six largest banks have collaborated on a project to investigate the transfer of tokenized Canadian dollar deposits. Participants include the Bank of Montreal, CIBC, National Bank of Canada, RBC, Scotiabank, and TD.
• The initial phase will focus on transactions between regulated institutions. The proposed tokens will remain liabilities of the issuing banks, distinguishing them from other stablecoins backed by reserve assets. The banks have indicated that broader payment use cases could be explored in the future, but a live service is not yet available.

ECB Requests Changes to MiCA Stablecoin Reserves

• The European Central Bank and EU national central banks proposed amendments to the MiCA stablecoin reserve regulations. The existing rules necessitate that issuers maintain at least 30% of reserves in commercial bank deposits, which increases to 60% for significant stablecoins.
• The central banks suggested introducing liquidity requirements grounded in asset maturity instead. They highlighted the risks that significant redemptions from a large stablecoin could pose to banks holding its deposits. This request is a recommendation and does not alter the current requirements established by MiCA.

KelpDAO and LayerZero in Dispute Over $292 Million Exploit

• KelpDAO filed a lawsuit against LayerZero and co-founder Bryan Pellegrino in British Columbia following an April incident that drained approximately 116,500 rsETH, valued at $292 million. KelpDAO claims that LayerZero did not disclose risks and failed to secure the infrastructure involved in the transfer.
• LayerZero has contested the claims, asserting that KelpDAO’s verifier setup caused the point of failure that allowed forged cross-chain messages to occur. Pellegrino described the lawsuit as baseless and indicated he would mount a defense.

Cosmos Hub Safeguards 1.23 Million ATOM After Neutron Attack

• Validators on the Cosmos Hub secured 1,227,121 ATOM related to a governance attack from Neutron, after pausing the network for approximately 24.5 hours. Roughly 1.73 million stolen ATOM had come from Neutron and ended up at Cosmos Hub.
• The recovery wallet necessitates approval from four out of six signatories to authorize transfers. Prior to returning the secured tokens, a governance vote from the Cosmos Hub is required. An additional 168,990.9 ATOM was transferred to the attacker after the network’s restart and subsequently sold on Osmosis.