What has been happening this week in the world of blockchain and cryptocurrencies? Current events and background reports in our weekly review.
Selected articles of the week:
The Clarity Act has stalled in the US Senate for now. In September, the bill failed cloture 49 to 50, short of the required 60. SEC Chair Paul Atkins then announced that the agency would act within its statutory authority. Later that month, the SEC therefore issued a five-year exemptive order for venues trading tokenized US stocks. This week, the agency followed up with a proposal on crypto custody. Under the proposal, investment advisers and regulated funds could hold crypto assets with state-chartered trust companies. Adviser self-custody, by contrast, would remain the exception where no qualified custodian exists. This matters mainly for asset managers and hedge funds seeking to hold Bitcoin directly rather than through ETFs. However, the Commission still has to adopt the proposal. In addition, Atkins places it alongside guidance on tokenization and the proposed “Regulation Crypto Assets”. He has also announced further proposals.
The SEC plans to permit crypto custody by investment advisers and funds through state trust companies and, in narrow cases, on their own.
Blumenthal report places USDT at the center of Iran’s shadow banking
Meanwhile, the tone in the US Senate grew sharper this week. Democratic investigators see USDT, Tether’s stablecoin, at the center of Iran’s shadow banking. Senator Richard Blumenthal is behind a 28-page report from the Permanent Subcommittee on Investigations. However, it is a minority report, not a subcommittee decision. The investigators analyzed 846 sanctioned or blocked Iranian wallets. Of these addresses, 84% used USDT almost exclusively, while Circle’s rival USDC barely appeared. They also accuse Tether of repeatedly failing to freeze suspicious wallets despite having the technical means. Blumenthal therefore urges Attorney General Todd Blanche and Treasury Secretary Scott Bessent to investigate. Tether counters it supported freezes of nearly USD 550 million in Iran-linked USDT in 2026 alone. Worldwide, Tether says it has frozen more than USD 4.9 billion. However, the two sides measure different things. The report captures prevalence among already sanctioned wallets, whereas Tether counts frozen amounts.
According to a US Senate report, 84% of 846 Iran-linked wallets used almost only USDT, while Tether cites nearly USD 550 million in freezes.
Petra Tschudin worries about the uniformity of the franc
The Swiss National Bank (SNB) is also examining stablecoins, although from a monetary policy perspective. Governing Board member Petra Tschudin warns of large stablecoins emerging outside the banking system. Her concern is how interest rate decisions reach the economy. If households and firms shift deposits into stablecoins, banks lose refinancing funds. As a result, lending falls, which also affects interest rates. Moreover, she argues, a stablecoin franc is not automatically worth as much as a real franc. This would strain the uniformity of money. However, Tschudin describes a scenario, not a current disruption. According to the SNB, stablecoins in Switzerland remain a niche so far, posing no financial stability risk. At the same time, the federal government is drafting rules. Under the FinIA revision, only payment instrument institutions licensed by FINMA could issue Swiss stablecoins. Parliament will receive the dispatch in the second half of 2026 at the earliest.
Large stablecoins outside the banking system could weaken the effect of monetary policy, according to SNB Governing Board member Petra Tschudin.
Blockstream caught in a bind
Problems are mounting at Blockstream, the Bitcoin company of cryptographer Adam Back. It started with a hack of the Liquid Network, a federated Bitcoin sidechain. Attackers exploited a bug in the Elements software and created unbacked L-BTC. They then swapped these tokens via SideSwap for real Bitcoin from the federation wallet. Around 4,000 BTC, roughly USD 320 million, flowed out. Afterward, the attackers posed as white hats and returned around 3,400 BTC. However, they kept around 598 BTC, roughly USD 47 million, as a self-assigned bounty. Blockstream rejects the 10% bounty the attackers demand. Despite a patch, withdrawals from Liquid, known as peg-outs, remain suspended. In addition, the merger of Back’s firm BSTR with SPAC Cantor Equity Partners I has been off since August. According to Cantor, BSTR owes a USD 15 million termination fee. However, there is no evidence linking the hack to the deal’s termination.
About 600 BTC are still missing from Blockstream’s Liquid Network reserve after the hack, and a USD 4 billion deal from Adam Back’s circle collapsed.
Armada shareholders clear Evernorth’s path to Nasdaq
In addition, shareholders of shell company Armada Acquisition Corp. II approved the merger with Evernorth this week. Around 20.5 million votes went in favor, while around 1.4 million went against. The companies aim to close next week, subject to the remaining conditions. Afterward, the largest institutional XRP treasury plans to list on Nasdaq under ticker XRPN. As an actively managed treasury company, Evernorth aims to increase its XRP holdings per share. In doing so, it follows the model of Strategy, formerly MicroStrategy. It currently holds around 473 million XRP, worth about USD 714 million in late September. Its backers include Ripple, SBI Holdings and Pantera Capital. Moreover, Evernorth expects around USD 300 million in cash at closing. This includes USD 30 million from convertible notes the company secured in mid-September. Although the SEC declared the S-4 registration statement effective in August, this does not amount to substantive approval.
Armada shareholders vote on the Evernorth merger on September 30, and the XRP treasury would then list on the Nasdaq under the ticker XRPN.
