In a week of noteworthy developments, a few stand out as particularly significant for the legal and financial professionals navigating the Web3 space.
Paxos' application for a national trust charter with the Office of the Comptroller of Currency (OCC) is a strategic move, demonstrating the growing trend of crypto-native firms seeking federal regulatory legitimacy. If approved, Paxos will join Circle and Ripple in holding a federal banking license, allowing it to operate across the United States and offer more rigorous and efficient solutions to its customers. This move is particularly timely, given the existing stablecoin legislation at the federal level. As Paxos navigates its recent compliance issues, this development signals a broader trend of crypto firms seeking to align with regulatory standards, thereby reducing jurisdictional risk and enhancing their market credibility.
Meanwhile, the growing trend of publicly traded companies creating crypto treasuries, as demonstrated by Safety Shot Inc.'s transition into a crypto treasury firm, highlights the increasing institutional adoption of digital assets. This strategic shift, which began with Bitcoin, has expanded to other areas of the industry, including meme coins. While the risks associated with such a strategy should not be underestimated, the potential for high returns and the ability to diversify traditional portfolios make this an intriguing development for institutional investors.
Finally, the resolution of the Ripple lawsuit by the SEC marks a significant milestone in the ongoing regulatory discourse around digital assets. The end of this lengthy legal battle frees up resources for the SEC to focus on the development of a clearer regulatory framework for the crypto market. This shift from litigation to proactive regulatory efforts could lead to a more predictable and stable regulatory environment, benefiting all stakeholders in the crypto ecosystem.
In summary, this week's developments underscore the maturation of the crypto industry, as firms seek regulatory legitimacy and traditional companies increasingly adopt digital assets. While risks abound, these trends suggest a promising future for the integration of crypto into mainstream finance.
The following article summaries have been sourced from Decrypt, CryptoSlate, NewsBTC, and Crypto Briefing. Each summary includes a direct link to the original source.
Stablecoin and tokenization firm Paxos has applied for a national trust charter with the Office of the Comptroller of Currency (OCC), following in the footsteps of Circle and Ripple. If approved, the application will upgrade Paxos's existing charter with the New York Department of Financial Services, enabling the firm to operate across the United States. A spokesperson for Paxos stated that the company believes a national designation will unlock new opportunities for growth and efficiency, while also holding them to the highest standards of oversight.
The application comes after the OCC announced in May that it would allow national banks to manage, buy, and sell crypto assets under their custody. The Paxos spokesperson said that federal approval would bring the company under federal oversight and allow it to offer more rigorous and efficient solutions to customers. This move comes at a crucial time when stablecoin legislation exists at the federal level. Last week, Paxos settled charges related to the launch of a Binance stablecoin (BUSD) which was illegally used by U.S. customers, paying $26.5 million to New York State to resolve the matter. Paxos, based in New York, issues stablecoins like PayPal’s PYUSD and PAXG and counts Mastercard, Interactive Brokers, and MercadoLibre among its clients.
Safety Shot Inc., a health beverage company, is transitioning into a crypto treasury firm, with an initial acquisition of $25 million in BONK, a Solana meme coin. The company aims to acquire up to 5% of the total supply of the meme coin, which could amount to $115 million. This move is part of a growing trend of publicly traded companies creating crypto treasuries, a strategy that began with Bitcoin and has since expanded to other areas of the industry. Safety Shot's stock, traded under the ticker SHOT on NASDAQ, has fallen 92% from its all-time high earlier this year. The company's market capitalization is currently $82.7 million, while BONK's market cap exceeds $2 billion.
The integration of BONK's founding contributors into Safety Shot will include core contributor Nom, who will join the company in a strategic role to assist with BONK accumulation and advise on on-chain operations. The BONK token was created as a community coin and distributed to Solana developers and community members after the collapse of FTX in November 2022. This move is believed to have saved the Solana blockchain. Safety Shot's pivot to a BONK treasury company was advised by Dominari Securities, LLC, which also assisted in the formation of a Tron treasury company. Nom stated that the BONK treasury company has been in development for months, and the recent $25 million acquisition is just the first step.
Financial infrastructure firm ALT5 Sigma Corporation is planning to raise up to $1.5 billion to establish a World Liberty Financial (WLFI) treasury, according to a company statement. The company intends to sell 100 million of its common stock shares at $7.50 each in a private placement, with the sale expected to close on August 12. The funds raised will be used to purchase WLFI, settle litigation, pay debts, and fund existing operations. The move comes shortly after World Liberty Financial community members voted to make WLFI tradable.
Eric Trump, son of former U.S. President Donald Trump, is set to serve as ALT5’s Director of the Board once the stock sale is closed, while World Liberty Financial CEO Zach Witkoff, son of presidential advisor Steve Witkoff, has been appointed chairman of the board. WLFI is the native token of the World Liberty Financial DeFi platform, which was founded by Eric and Donald Jr. in 2024. The decision to make WLFI tradable, following its $590 million pre-sale in 2024, could potentially increase investor interest in the token and boost its value, benefiting ALT5 Sigma and other large token holders, including the Trump family, which holds a multi-billion-dollar stake in the project.
Heritage Distilling Holding Company, a Nasdaq-listed firm, has announced a $360 million digital asset treasury strategy focused on the Story (IP) token. The company raised $220 million through a private placement, which included $100 million in cash and $120 million in Story tokens. $82 million of the total proceeds will be used to buy additional IP tokens from the Story Foundation. The Foundation, in turn, plans to use the entire cash portion to repurchase IP tokens on the open market within 90 days of the transaction. This marks the first time a Nasdaq-listed company has adopted the IP token as its primary reserve asset, indicating a broader shift among traditional firms integrating alternative assets into their treasuries.
However, the announcement coincided with a sharp decline in Heritage's stock and the value of IP. Heritage's CASK shares dropped nearly 30% to around $0.49, while the IP token's value fell by 3.65% to approximately $6.35. Story's decision to list on Nasdaq was driven by a desire to extend the project's reach beyond the crypto community. Story operates at the intersection of crypto, artificial intelligence, and intellectual property, focusing on unlocking an $80 trillion asset class that includes AI datasets, entertainment franchises, and biomedical patents. The network has already secured significant adoption, with hundreds of thousands of IPs, including works from artists like Justin Bieber, Blackpink, and BTS, as well as global brands such as Crocs and Adidas.
Rumble, a live streaming platform and Bitcoin holder, has announced plans to acquire Northern Data, an AI and high-performance computing infrastructure provider. The proposed deal involves a stock exchange offer, with Rumble issuing new Class A shares in exchange for Northern Data's stock. If the transaction is approved, Northern Data shareholders would receive an approximate 33.3% ownership stake in Rumble. The acquisition is part of Rumble's strategy to strengthen its position as a global AI cloud leader, with plans to integrate Northern Data's core operations, including its data center business and GPU-as-a-service.
Tether, the issuer of the USDT stablecoin, is playing a significant role in the potential acquisition. Over the past year, Tether has invested heavily in both Rumble and Northern Data as part of its diversification strategy. It currently holds 54% of Northern Data's shares and plans to sell its entire stake to Rumble in exchange for newly issued Class A shares. This would make Tether the largest shareholder of Rumble's Class A common stock, although Rumble CEO Chris Pavlovski will maintain majority voting power. Tether also plans to enter a multi-year GPU purchase agreement with Rumble and adjust its existing loan to Northern Data, providing the combined business with enhanced financial flexibility.
S&P Global Ratings has issued its first credit rating for a decentralized finance (DeFi) protocol, Sky Protocol, setting a precedent for applying traditional credit evaluation frameworks to on-chain entities. The B-minus rating with a stable outlook applies to Sky Protocol's stablecoin liabilities, including USDS and DAI, and their interest-bearing versions, but does not extend to governance tokens. The rating was influenced by several factors, including depositor concentration, governance centralization, a low risk-adjusted capital ratio, and concerns over regulatory and cyber risks. S&P compared Sky Protocol's credit profile to the Republic of Congo's sovereign debt, placing it in speculative territory.
The rating agency's stable outlook reflects an expectation that the current risk factors will persist over the next 12 months, with potential upgrades contingent on improvements in governance decentralization, capital adequacy, and depositor diversity. Despite the risks, S&P also recognized Sky Protocol's operational strengths, such as minimal credit losses since 2020, diversified liquidity reserves, and external smart contract audits. The rating could influence how DeFi yields are priced, enabling the repricing of lending and liquidity provisions in line with traditional credit markets. It also creates a pathway for DeFi exposure to meet mandates from regulated entities that require minimum rating thresholds.
The price of Bitcoin has been on the rise, heading towards the $120,000 mark, following a brief pullback earlier this week. However, a recent technical analysis has indicated a potential risk of a price crash due to an unfilled Chicago Mercantile Exchange (CME) gap near $116,500. This could act as a barrier as Bitcoin makes its way towards a new all-time high. Crypto market expert Ted Pillows has suggested that Bitcoin may face a significant hurdle on its path to a record high due to conditions in the current market structure that could trigger a temporary correction.
Pillows pointed out that Bitcoin has recently surpassed the $118,000 level after a volatile week, which saw the asset drop $2,000 to fill a CME gap from the previous week. This gap in Bitcoin's price action on the CME futures market around $116,500 is of interest to traders, as such gaps tend to be "filled" when the price retraces to trade within the missing range. Pillows believes that the unfilled CME gap near $116,500 will likely be revisited soon, which could disrupt Bitcoin's ascent and potentially trigger a price crash. However, he reassures that any pullback is likely to be temporary and could set the stage for a fresh upward trend.
In addition, market analyst 'Daan Crypto Trades' has discussed the Bitcoin CME gap, noting a recently formed gap that opened this week between $116,500 and $118,400. He explained that this gap, which is close to Bitcoin's previous all-time high, could create ideal conditions for price discovery. According to Daan Crypto Trades, the gap is unlikely to close until Bitcoin's price comes within 1% or 2% of it, placing that level just under $120,000. At present, Bitcoin is trading at $121,313.
Ethereum, the world's second-largest cryptocurrency by market cap, has surpassed MasterCard in global asset rankings, now holding the 22nd spot with a market capitalization of $507 billion. The cryptocurrency is currently trading at $4,220, with a 24-hour trading volume of $53.50 billion, and traders are generally optimistic about its prospects. Analyst Crypto Patel has identified a breakout from a multi-year ascending triangle pattern on Ethereum's chart, a formation often associated with strong upward price movements. Patel suggests that if the buying pressure continues, Ethereum could potentially reach $16,000.
Institutional buying has also contributed to Ethereum's rise. According to data from August, Ethereum exchange-traded funds (ETFs) saw approximately $174.57 million in net inflows, while Bitcoin ETFs experienced $565 million in net outflows during the same period. This trend has given Ethereum momentum against Bitcoin, with Ethereum briefly crossing the $4,300 mark on August 9 for the first time since 2021. However, opinions on the future of Ethereum's rally are divided. While some bullish analysts believe that Ethereum will continue to perform well based on chart indications and robust fundamentals, skeptics warn that false breakouts are common and that maintaining a price above $4,000 with heavy volume will be the true test in the coming weeks.
Ethereum has reached multi-year highs, breaking above the $4,300 level due to strong bullish momentum. This surge, the highest since late 2021, is driven by growing institutional demand, ETF inflows, and expanding on-chain activity. However, fresh data from CryptoQuant suggests that caution may be necessary in the short term. The all-exchange Estimated Leverage Ratio (ELR) has climbed to 0.68, nearing historical highs and indicating excessive market-wide leverage. Ethereum's price is currently testing a critical resistance zone between $4,020 and $4,060, a historically significant area that often determines whether a rally accelerates or faces a sharp pullback.
Despite short-term caution signals, Ethereum's mid-term fundamentals remain strongly bullish. Institutional demand is surging, with US Spot Ethereum ETFs recording a record $726.6 million in daily net inflows, driven by giants like BlackRock and Fidelity. This has pushed total ETF holdings above 5 million ETH (valued at approximately $20.3 billion), highlighting Ethereum's growing role in institutional portfolios. Major players are increasing direct exposure, with Ark Invest purchasing 30,755 ETH worth $108.57 million, and Fundamental Global allocating $200 million to ETH as part of its treasury strategy. This accumulation reflects increasing confidence in Ethereum's long-term utility and value proposition.
On-chain metrics also paint a bullish picture, with transaction volumes hitting new highs and staking participation expanding, reducing circulating supply. Regulatory clarity, such as the SEC closing investigations into liquid staking, has further strengthened demand for ETH. Upcoming network upgrades are set to boost scalability and lower costs, enhancing Ethereum's appeal to developers and enterprises. Despite the risk of sharp volatility in the short term due to high leverage and key resistance levels, the mid-term outlook remains positive, supported by sustained institutional inflows, robust network growth, and technological advancements.
The resolution of the Ripple lawsuit by the Securities and Exchange Commission (SEC) has freed up resources, allowing the focus to shift towards the development of a clearer regulatory framework for the crypto market, according to SEC Commissioner Hester Peirce. Known as 'Crypto Mom' for her pro-innovation stance on digital assets, Peirce emphasized the importance of moving from litigation to proactive regulatory efforts. She described the conclusion of the Ripple case as a "welcome development" as it allows minds previously occupied with litigation to concentrate on creating a clear regulatory framework for crypto.
Last week, the SEC and Ripple decided to dismiss their appeals in the Second Circuit, marking the end of the lengthy legal battle between the top US financial regulator and the crypto firm. As a result of the appeals being dropped, each party will bear their own legal costs. The final legal decision, issued by US District Judge Analisa Torres in August 2023, ruled that XRP sales to retail investors on secondary markets did not constitute securities transactions. However, XRP sales to institutional investors were found to have violated securities laws, leading to a fine of $125 million for Ripple.
David Bailey, CEO of Bitcoin Magazine and Bitcoin advisor to former US President Donald Trump, has announced his intention to purchase $1 billion worth of Bitcoin. Bailey, who is also the founder of Bitcoin-native company Nakamoto Holdings, made the announcement following the company's successful raising of over $51 million through a private investment in public equity (PIPE) deal. This deal, which was announced in June, has significantly increased the company's total capital allocated for Bitcoin purchases, bringing it to a total of $763 million.
Bailey's ambitious Bitcoin purchase plan is part of a broader strategy to promote the interests of Bitcoin in the US. Earlier, he revealed plans to raise up to $200 million to establish a political action committee (PAC) dedicated to supporting pro-Bitcoin political candidates and initiatives. The PAC, which could potentially be anchored by Nakamoto Holdings, has set ambitious goals such as driving the Bitcoin price to $10 million and fostering long-term strategic positions for the digital asset. Bailey's upcoming Bitcoin purchase, therefore, represents not just a significant investment, but also a strategic move to further the interests of Bitcoin in the US.
Paxos Trust Company, a New York-based firm specializing in blockchain-based infrastructure for tokenized assets and stablecoins, has applied for a US national trust bank charter. This move mirrors similar actions by other crypto-native companies like Ripple and Circle, who are also seeking banking licenses to gain federal regulatory legitimacy and strengthen the regulatory foundation of their stablecoin operations. If the application is approved, Paxos would be able to hold customer assets and process payments more quickly, transitioning from its current New York state trust charter to a federal one.
Paxos' initial application for a national trust bank charter was submitted in December 2020 and received preliminary conditional approval from the Office of the Comptroller of the Currency (OCC) in April 2021. The charter would allow Paxos to offer services such as custody, fiduciary duties, and stablecoin reserve management. However, the application was criticized for not including traditional trust bank activities, leading to calls for more regulatory scrutiny. Paxos faced an investigation by the New York State Department of Financial Services (DFS) in early 2023, and the application expired by March 31, 2023. This left Anchorage Digital as the only digital asset firm with an active national trust bank charter. Paxos' recent settlement with the DFS over anti-money laundering compliance violations and due diligence errors related to their past work with Binance resulted in a $26.5 million civil fine and a commitment to invest $22 million in improving compliance systems over the next three years.
