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CFTC tells court CME lacks standing to challenge perpetual futures policy

CFTC tells court CME lacks standing to challenge perpetual futures policy

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The CFTC’s latest court filing tests whether CME Group, operator of leading global derivatives venues, can block the agency’s opening of perpetual futures trading in the U.S. For BlockWest readers, the outcome decides whether a fast-growing crypto product stays under futures rules or is pushed into the swaps regime.

  • The CFTC argued in an October 16 brief that CME has not shown imminent financial injury.
  • CME says perps are swaps, not futures, because the contracts carry no expiration date.
  • TD Cowen’s Jaret Seiberg warns perps growth during litigation could complicate unwinding the market if CME wins.
  • Oct. 16 Date CFTC filed standing brief, after its September dismissal motion
  • 1st U.S. bitcoin perp approved in May, ahead of CME’s court challenge

The U.S. Commodity Futures Trading Commission has told a federal court that CME Group lacks legal standing to challenge its perpetual futures policy, CoinDesk reported. In a brief filed Friday (October 16), the agency argued that the exchange operator has not shown it is being harmed by the government’s push into perps. Without harm, the CFTC said, CME has no right to sue.

The agency opened the door to perps in May, approving the first bitcoin perp from Kalshi and signaling that it was open for business on a domestic surge in such contracts. CME objected in court. The CFTC has now answered that the company has no standing to get in the way.

CFTC says CME’s rising crypto futures volume undercuts its harm claim

In the brief, the agency said “Allegations of increased competition, without any plausible inference of an imminent financial injury,” don’t give CME the legal standing to challenge the CFTC’s actions. It noted that volume in crypto futures at CME has actually risen since the policy shift.

The CFTC first asked a federal judge to dismiss CME’s case in September, and the latest filing details its argument on standing. “CME must plausibly allege an actual or imminent increase in competition,” the CFTC argued. “CME has not even done that.”

The agency also turned CME’s investor communications against it, arguing that the company has been telling investors it hasn’t heard of demand for perps and that they aren’t substitutes for the futures it offers. “CME cannot have it one way with the court and another way with the investing public on earnings calls,” the CFTC contended in its brief.

CME’s swaps argument rests on perps having no expiration date

Perps let traders speculate on the future price of an asset, typically with a leveraged position, and the contracts don’t come with a built-in expiration. They had soared overseas, becoming a major form of transaction in crypto derivatives. The CFTC’s move sought to clarify how that market could get rolling in the U.S.

The agency, acting in response to President Donald Trump’s aggressive crypto agenda that included bringing perps into domestic trading, said it will regulate the products on a case-by-case basis as futures. CME has insisted the contracts are not futures, because they have no end date.

In CME’s reading, they are swaps, which would come with an entirely different regulatory approach. Spokespeople for CME didn’t immediately respond to a request for comment on the CFTC’s latest filing. The company’s answer to the standing argument is therefore not represented in the reporting beyond its stated legal position.

Pending dismissal motion will decide whether CME’s challenge proceeds

Jaret Seiberg, a policy analyst at TD Cowen, argued in a Monday client note that CME may still have the edge, both in its standing as a competitor and in its argument that perps may be appropriately treated as swaps. “What increasingly concerns us is the growth in perps while the litigation is playing out,” he wrote.

If this growth continues, it could create complications in trying to unwind this market if the CME prevails in the lawsuit.

Jaret Seiberg, policy analyst at TD Cowen

The clock is ticking on the new market, CoinDesk noted. The reporting gives no date for a ruling on the CFTC’s request to dismiss.

The BlockWest read. We read this fight as a dispute over product classification more than competition. If perps are futures, the venues and brokers building them work under one rulebook; if swaps, under another. Firms listing or trading U.S. perps now carry a classification risk that could outlast any ruling on standing, which is why Seiberg’s unwinding warning matters more than the standing argument.

The next step is the federal judge’s decision on the CFTC’s motion to dismiss, which turns on whether CME has plausibly alleged imminent harm. CME has yet to respond publicly to the standing brief. Seiberg’s open question is whether perps growth outruns the case before a ruling arrives.

Circle discloses 7 cents net profit per revenue dollar on USDC

Circle discloses 7 cents net profit per revenue dollar on USDC

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How USDC revenue is split between Circle and its distribution partners determines who earns the interest on the reserves backing the token. Circle’s disclosure of a roughly 7 cent profit per revenue dollar arrives as its biggest partner, Coinbase, backs a rival network.

  • Circle kept about 7 cents of net profit per revenue dollar in the first half of 2026.
  • Distribution and transaction costs took $819 million of about $1.4 billion in first-half revenue.
  • Watch whether Coinbase, Circle’s largest USDC partner, moves volume to Open USD, whose OUSD token is now live.
  • 7 cents net profit per revenue dollar, against roughly 58 cents spent on distribution
  • $819M distribution and transaction costs versus about $1.4 billion in first-half revenue
  • $473M left for compliance, liquidity and product development after distribution costs
  • $214M stock-based compensation and related costs, roughly 45% of that $473 million

Circle is defending its USDC revenue split as Coinbase, its largest distribution partner, backs a rival that aims to pass more reserve income to businesses, CoinDesk reported. Chief Commercial Officer Kash Razzaghi set out the figures in a blog post on Friday. Circle shares (CRCL) were at $82.25 when the market closed, down 5.43% on the day.

Circle says it kept 7 cents of profit per revenue dollar in the first half

Circle brought in about $1.4 billion in the first half of 2026, and distribution and transaction costs totaled $819 million. That is more than 58 cents of every revenue dollar, set against the roughly 7 cents Razzaghi said the company kept as net profit. The numbers sit at the center of a dispute over who gets the interest earned on assets backing stablecoins.

The remaining $473 million covered compliance, liquidity and product development, Circle said. About $214 million of that was stock-based compensation and related costs.

Razzaghi argued that reserve income must also fund redemption, compliance and liquidity, not only partner payouts.

The costs of redemption, compliance, and resilience don’t disappear just because the issuer declined to pay them.

Kash Razzaghi, Chief Commercial Officer, Circle

Coinbase backs Open USD, which passes reserve income to participants

Coinbase is Circle’s largest USDC partner, yet it also backs Open USD alongside Stripe and BlackRock. Unveiled in June, the network aims to let businesses mint and redeem stablecoins without fees. It passes reserve income, minus a management fee, to participants.

Circle’s post did not name Open USD, whose OUSD token is now live. Other competitors, including the Paxos-led Global Dollar Network (USDG), also share reserve income with participants.

Coinbase, Stripe, BlackRock and Paxos are not quoted in the CoinDesk report, so their view of Circle’s cost figures is not represented.

Binance’s $100 million stake and free redemptions anchor Circle’s reply

Circle has also been working to secure additional distribution partners. In September, Binance bought a $100 million stake in the firm under a five-year deal. The agreement includes a fee tied to USDC held through Circle’s wallet service.

Circle said standard USDC redemptions remain free and “typically settle in up to two business days.” Qualifying platform customers and payment flows through Circle Payments Network can now access near-real-time redemptions at no cost, it said.

The BlockWest read. We read the post as a retention pitch aimed at partner balance sheets. Coinbase sits on both sides, so its USDC balances become the leverage point in any renegotiation. Circle now has a public cost ledger to defend its split, but partners can weigh it against no-fee minting and redemption on OUSD. We expect the contest to turn on redemption access and wallet-held balances, where Circle just added the Binance fee.

The open question is whether Coinbase shifts USDC volume toward OUSD now that the token is live. None of the Open USD backers, nor Paxos, is quoted answering Circle’s cost argument, so the partner side of the dispute is still unresolved.

Ripple Prime offers institutions synthetic exposure to Hyperliquid perpetuals

Ripple Prime offers institutions synthetic exposure to Hyperliquid perpetuals

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Ripple has opened a channel for Wall Street institutions to trade perpetual contracts on Hyperliquid, a decentralized exchange, through synthetic derivatives that settle in stablecoins and accept XRP’s RLUSD token as collateral. The move tests whether prime brokerage infrastructure can bridge traditional finance and on-chain markets while regulators scrutinize the margin and liquidity risks that such arrangements create.

  • Ripple Prime now offers 24/7 total-return swaps referencing 110 perpetual markets listed on Trade.xyz, covering stocks, indices, ETFs, metals, energy and foreign exchange.
  • Trade.xyz handled $59.4 billion in perpetual volume during September, representing 23.9% of Hyperliquid’s total trading activity across all markets.
  • Ripple’s setup accepts RLUSD collateral with pooled margining across asset classes, while regulatory bodies including the CFTC and SEC are working on rules for 24/7 trading and margin harmonization.
  • $59.4B Trade.xyz perpetual volume in September versus Hyperliquid total
  • $2.6B RLUSD reserves reported as of October 8 against circulation
  • 70.7% Weekend Hyperliquid prices closer to reopening than Friday close
  • $13.2M Margin requirement before pooling in $100 million portfolio example

CryptoSlate reported on October 15 that Ripple Prime, the institutional arm of Ripple, launched swaps that allow institutions to gain synthetic exposure to perpetual contracts on Hyperliquid through Trade.xyz. The product operates as total-return swaps settling in USDC, with Ripple Prime acting as principal counterparty, and accepts RLUSD as eligible collateral subject to jurisdiction. The structure runs through Ripple Prime’s British Virgin Islands entity, with additional regional rollouts planned. It builds on earlier integrations announced in February and August that connected Ripple to Hyperliquid and expanded its derivatives offerings across equities, indices and digital assets.

Trade.xyz captures nearly a quarter of Hyperliquid’s perpetual volume

According to 0xArchive market data, Trade.xyz processed $59.4 billion of perpetual volume in September, accounting for 23.9 percent of Hyperliquid’s total activity. The venue lists 110 perpetual markets and averaged $541 million in daily volume on weekends. Trade.xyz’s oracle switches between external pricing during traditional market hours and its own internal order book when those sessions close, gradually shifting its reference price over a 30-minute window to reduce discontinuities at market reopenings.

An 0xArchive study of 614 market-weekends found that Hyperliquid’s weekend closing prices ended closer to the following Monday reopening price than to Friday’s close in 70.7 percent of observations. The median absolute error in price discovery fell from 113.3 basis points to 53.4 basis points, suggesting the oracle’s blended pricing method tracks cash market expectations during closure windows. The sample required at least $1 million of weekend volume per observation, and the Hyperliquid Policy Center funded the research.

Pooled margining and collateral haircuts create compounding liquidity pressure

Ripple Prime’s structure allows consolidated margining across asset classes, reducing collateral requirements when positions offset. Virtu Financial executive Scotte Moegling cited efficiency gains from 24/7 cross-margining. In a hypothetical $100 million portfolio comprising $60 million in equity swaps at 12 percent margin and $40 million in energy swaps at 15 percent margin, an assumed 25 percent offset would cut collateral needs from $13.2 million to $9.9 million. If an institution posts $15 million of RLUSD at a 5 percent haircut, it retains $4.3 million in headroom. However, a 6 percent decline in equities, 7 percent decline in energy, and RLUSD trading at $0.99 would create a $2.2 million shortfall.

A prime broker’s margin methodology determines when collateral calls arrive and how quickly institutions can adjust positions. The Bank for International Settlements’ March 2026 summary on margin liquidity identified leverage, concentration, interconnectedness and rapid collateral calls as sources of systemic vulnerability, drawing lessons from the Archegos Capital collapse in 2021 and the United Kingdom’s pension fund stress in September 2022. Regulators working on harmonized rules now face the added complexity of venues that operate without traditional market closures.

Regulatory framework for 24/7 derivatives still incomplete

The CFTC issued guidance on 24/7 trading in May 2026, and the SEC and CFTC jointly requested comment in June on portfolio-margin harmonization across securities, futures and swaps.

Ripple’s announcement describes the product structure but leaves material details undisclosed: position sizes, Virtu’s volumes, collateral haircuts, margin schedules and default protections remain unspecified. Each client position can be hedged on Hyperliquid, in another market, or internally, creating multiple pathways for volume to reach Ripple Prime’s books. Standard Custody and Trust Company, a New York-regulated trust company, issues RLUSD, and Ripple’s October 8 dashboard reports $2.6 billion in reserves against over $2.4 billion in circulation, representing 105.8 percent coverage on issuer-reported balances.

Ripple’s general risk disclosures cover collateral calls, basis risk, liquidity constraints, counterparty and insolvency exposure, operational failures and stablecoin depegging.

The BlockWest read. Ripple Prime’s structure succeeds only if weekend price discovery on Hyperliquid holds and margin haircuts remain stable. The bigger question is leverage migration: if institutions can now fund perpetual contracts through a regulated prime broker using RLUSD collateral, volume that would have stayed in traditional derivatives venues could shift to blockchain-settled markets. XRP’s role remains strategic but uncommitted; the token sits outside both collateral and settlement mechanics, leaving Ripple’s path to capture stablecoin collateral demand still unquantified.

The FSB’s December 2024 liquidity guidance calls for stress testing, diversified collateral, and active counterparty engagement, but leaves each firm to determine how far those principles extend into 24/7 venues operating under different margin rules. The SEC and CFTC’s June consultation on portfolio-margin harmonization will signal whether U.S. regulators plan to impose uniform haircuts and margin methodologies across swaps, futures and securities, or whether Ripple Prime’s BVI entity can operate under lighter scrutiny if it serves only non-U.S. clients.

SEC approves binary options tied to performance metrics at 23 companies

SEC approves binary options tied to performance metrics at 23 companies

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The SEC has approved binary options contracts tied to operating metrics at major crypto and fintech firms, clearing the way for retail traders to bet on whether companies like Coinbase, Robinhood and Marathon will hit specific performance targets. This marks a significant expansion of derivative products available to individual investors and signals renewed regulatory coordination between the SEC and CFTC.

  • SEC approved binary options on key performance indicators for 23 publicly traded companies on October 13.
  • Contracts will track Coinbase trading volume, Robinhood customer count and revenue, and Marathon bitcoin production.
  • Robinhood expects to be the first retail brokerage to offer these contracts once clearing house registration completes.
  • 23 Publicly traded companies with KPI-linked binary options approved by SEC
  • Oct. 13 Date SEC Chairman Paul Atkins approved the Cboe Global Markets rule change

CoinDesk reported that the U.S. Securities and Exchange Commission has approved the listing of binary options contracts tied to specific performance metrics of 23 U.S. publicly traded companies. Binary options are the simplest form of options contracts, allowing traders to bet on a simple yes-or-no outcome, such as whether Coinbase Global’s trading volume will exceed a predetermined level by a set expiration date. The contracts approved cover trading volume at crypto exchange Coinbase Global, customer count and revenue at Robinhood Markets, and bitcoin production at mining firm Marathon Holdings.

SEC approves cash-settled contracts after decades of regulatory turf disputes

SEC Chairman Paul Atkins approved the rule change filed by Cboe Global Markets on October 13, according to his statement on the approval. The binary options will be cash-settled and European-style, meaning traders can only exercise them at expiration rather than at any point before maturity. The contracts will settle based on figures reported in company SEC filings rather than numbers cited in earnings presentations, ensuring reliance on official regulatory disclosures.

Atkins framed the approval as breaking a pattern of regulatory conflict.

For decades, jurisdictional “turf wars” between the SEC and the CFTC have frustrated innovation and left a void of unrealized financial products in their wake. Today’s approval order, however, reflects a new spirit of harmonization, innovation, and investor choice, removing unnecessary obstacles to the lawful introduction of novel financial instruments within our markets.

SEC Chairman Paul Atkins, statement on October 13 The statement clarified that SEC approval applies only to these specific binary options structures traded on securities exchanges and does not address similar contracts structured differently or those that fall under Commodity Futures Trading Commission jurisdiction.

Robinhood set to launch contracts as clearing registration moves forward

Cboe plans to list the contracts this month, with Robinhood expected to be the first retail brokerage to offer them to individual investors.

Trading cannot begin until Cboe Clear U.S., the clearing house, receives provisional registration, with a separate application still pending.

Eleanor Terrett, host of Crypto America, noted on X that the approval creates novel trading opportunities for crypto investors. She wrote that for crypto, “this creates a new way to trade crypto-linked company performance beyond betting directly on BTC’s price,” while emphasizing that the SEC’s approval leaves room for differently structured contracts to potentially fall under CFTC oversight.

The BlockWest read. The approval reflects institutional confidence in derivative products beyond spot price movements, allowing allocators to express views on company execution rather than just asset volatility. For platforms like Robinhood, first-mover status in retail distribution could capture significant flow in contracts tied to their own business metrics, creating incentives to maintain competitive pricing and liquidity.

The next critical milestone is Cboe Clear U.S. obtaining provisional registration from the SEC, a separate application still under review that must complete before trading in the contracts can begin.

Judge rejects joint request to void Gemini’s $5 million settlement

Judge rejects joint request to void Gemini’s $5 million settlement

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A federal judge’s refusal to void Gemini’s settlement despite regulatory and company agreement signals that recent crypto-friendly policy shifts in Washington do not automatically erase past enforcement actions. The ruling constrains the Winklevoss-led exchange’s regulatory flexibility as it pivots toward the U.S. market.

  • Federal Judge Alvin Hellerstein rejected a joint motion from Gemini and the CFTC to overturn the exchange’s $5 million settlement from January 2025.
  • Gemini has already paid the $5 million and remains bound by a court order prohibiting it from misleading the CFTC or publicly denying the settlement’s findings.
  • The ruling demonstrates that regulatory reversals and company agreement cannot retroactively erase prior court judgments, even when both parties seek to undo them.
  • $5M Settlement amount Gemini already paid to resolve the CFTC enforcement case
  • 2023 Year the CFTC sued Gemini over alleged misleading statements during regulatory review
  • 2025 Month and year Gemini settled three weeks before trial without admitting wrongdoing
  • 3 years Duration Gemini litigated the case before electing to settle

CoinDesk reported that on Friday (October 16), Federal Judge Alvin Hellerstein in New York denied an unusual joint request by Gemini and the Commodity Futures Trading Commission to rescind the crypto exchange’s $5 million settlement. The CFTC had reversed its position on the case, arguing it should not have been brought, yet the judge ruled this regulatory shift was insufficient grounds to unwind the agreement that Gemini reached in January 2025.

Judge rejects CFTC reversal as basis to undo settlement

The CFTC’s decision to walk back its enforcement action represented a dramatic turn, but Judge Hellerstein found it did not justify vacating a settlement already paid and approved by the court. The regulator had alleged in 2023 that Gemini misled it during a 2017 review of a proposed bitcoin futures contract. Gemini settled roughly three weeks before trial without admitting or denying any wrongdoing.

The judge also rejected Gemini’s claim that regulators had coerced the exchange into settling.

In his ruling, Judge Hellerstein noted the timeline of Gemini’s decision: “Gemini litigated the case for approximately three years, and then, despite the preceding facts, made the calculated decision to settle the case shortly before trial.” The court’s order binding Gemini to the settlement’s terms remains in force, prohibiting the exchange from misleading the CFTC or publicly denying the settlement’s findings.

Regulatory pivot toward crypto does not erase past judgments

The decision carries broader implications for how courts treat enforcement actions when political winds shift. A more crypto-friendly regulatory environment under new leadership in Washington has prompted the CFTC to reverse course on Gemini, but the ruling shows that changed agency positions do not automatically nullify prior legal agreements, even when both parties now support undoing them. Past court judgments remain binding unless specific legal grounds for reversal are met.

Gemini, founded by Cameron and Tyler Winklevoss, has already paid the full $5 million settlement amount.

The company can continue operating in the U.S. and launching new products, but it must operate under the constraints imposed by the January 2025 settlement. This summer, Gemini announced it would exit the U.K., European Union, and Australia while cutting 25 percent of its workforce to focus on the American market and prediction markets, though it said it would maintain operations in Singapore.

Gemini has not publicly responded to Thursday’s ruling. The company’s strategic pivot toward the U.S. market now proceeds under regulatory conditions set before the recent shift toward crypto-friendly policy, raising questions about whether the Winklevoss brothers will seek to challenge the ruling further or whether they will accept the settlement terms as a cost of their domestic expansion.

The BlockWest read. What matters here is path dependency: a company cannot reset its regulatory scorecard simply because policymakers change their minds. Gemini’s decision to settle rather than litigate to conclusion three years ago now locks in obligations that friendlier regulators cannot unwind. This constrains the exchange’s operational flexibility and incentivizes future defendants to fight enforcement actions longer, knowing political reversals offer no rescue valve.

ASIC opens consultation on crypto exchange rules ahead of 2027 licensing deadline

ASIC opens consultation on crypto exchange rules ahead of 2027 licensing deadline

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Australia’s financial regulator has opened a consultation on strict new rules for crypto exchanges and digital asset platforms, marking the country’s shift toward treating cryptocurrency businesses like traditional financial firms. The rules take effect April 8, 2027, with a licensing deadline of October 7, 2027 for existing operators.

  • ASIC opened consultation on Thursday on proposed standards requiring crypto exchanges to safeguard customer funds, ensure trading transparency and meet financial requirements.
  • Existing crypto firms have until October 7, 2027 to apply for a license and can continue operating while regulators review their applications.
  • The consultation closes November 27, with final guidance expected in March 2027, as Australia aligns with EU, Singapore and Hong Kong regulatory approaches.
  • April 8, 2027 Effective date when new digital asset framework laws take effect in Australia
  • 140+ Digital asset business applications ASIC has recorded seeking authorization to provide services
  • Nov 27 Deadline for stakeholder submissions on proposed standards and guidance
  • Oct 7, 2027 Final licensing application deadline for existing crypto operators

The Australian Securities and Investments Commission (ASIC) on Thursday commenced consultation on guidance and standards to implement the country’s new digital asset framework, setting mandatory requirements for how cryptocurrency exchanges and tokenised custody platforms must operate. CoinDesk reported the regulator’s proposals cover asset safeguarding, trading procedures and financial resource requirements ahead of the April 8, 2027 effective date. Parliament passed the underlying legislation in April 2026, joining the European Union, Singapore and Hong Kong in establishing dedicated crypto regulatory frameworks.

ASIC proposes standards covering asset separation, trading transparency and financial resources

Consultation Paper 392 outlines how digital asset platforms must apply for or update their regulatory license, provide customer disclosure documents and comply with asset-holding standards. The proposals require platforms to segregate and safeguard customer assets, implement transparent settlement procedures and maintain adequate financial resources. Trading rules address market manipulation, conflicts of interest and how exchanges handle customer orders.

ASIC Commissioner Alan Kirkland said the regulator’s approach recognizes the rapid evolution of global markets. “Our approach is based on the principle of ‘same activity, same risk, same regulatory outcome’ to align Australia with the approach of comparable overseas jurisdictions,” Kirkland stated in the consultation announcement.

Bringing digital asset platforms and tokenised custody platforms into the financial services regulatory framework means consumers can have greater confidence when trading digital assets.

Alan Kirkland, ASIC Commissioner

Over 140 firms seek authorization as ASIC extends transition period

ASIC has recorded more than 140 applications from businesses seeking to provide digital asset-related financial services, including over 110 applications received during the sector-wide no-action period that ran from October 2025 to September 30, 2026. The regulator extended that transition deadline in June 2026 as a pragmatic response to industry transition challenges. Existing crypto operators can now continue business while ASIC reviews their license applications, provided they submit by October 7, 2027.

Stablecoins used for payments are being addressed separately through Australia’s payment services reforms, according to the regulator’s announcement.

Consultation closes in six weeks; final rules come in March 2027

The consultation period closes November 27, 2026, at 5pm AEDT.

ASIC engaged early with industry through its Digital Asset Advisory Group and fintech liaison meetings in developing the proposals and will continue direct stakeholder engagement through consultation events and roundtables. The regulator published a consultation user guide to help stakeholders navigate the full package and provide feedback, with submissions sent to fintech@asic.gov.au. Final guidance and standards are expected in March 2027, giving platforms three weeks to prepare before the April 8 effective date.

The rules follow the 2022 FTX collapse, which left approximately 30,000 Australian customers unable to access their funds, and underscore the regulatory response to industry failures affecting domestic investors.

The BlockWest read. These rules reshape how Australian crypto operators manage capital and conduct business, but the six-month window between final guidance and the April 2027 effective date compresses significantly for the 140-plus firms waiting on approval. Exchanges must now embed compliance costs before rules take effect, while ASIC’s capacity to process 140-plus applications by October 2027 remains untested.

Stakeholders have until November 27, 2026 to submit feedback on the consultation paper. The critical test comes in March 2027 when ASIC publishes final guidance; any material changes to the proposed standards could force platforms to redesign systems with less than six weeks’ notice before the April 8 effective date.

Hyperliquid founder proposes regulating firms on his blockchain, not the network itself

Hyperliquid founder proposes regulating firms on his blockchain, not the network itself

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Hyperliquid’s founder is proposing a regulatory model that would place oversight on financial firms using his blockchain rather than the blockchain itself, potentially allowing Wall Street to build regulated trading businesses on the network without it becoming a registered exchange. The proposal could reshape how crypto infrastructure navigates U.S. regulation and sets a precedent for similar blockchain platforms seeking mainstream institutional adoption.

  • Hyperliquid founder Jeff Yan proposed that U.S. regulators oversee financial firms on his blockchain rather than the network itself.
  • Payward, Kraken’s parent company, plans to offer U.S. derivatives using Hyperliquid’s technology through a regulated exchange.
  • Yan’s model would allow Wall Street firms to build regulated trading businesses on Hyperliquid without requiring the blockchain to register as an exchange.
  • August Month when President Donald Trump said CFTC was working to bring Hyperliquid into the U.S.
  • 2026 Year Yan outlined his regulatory proposal to Bloomberg, setting framework for institutional adoption.

Hyperliquid founder Jeff Yan on Thursday (October 15) proposed a regulatory framework in which U.S. authorities would oversee financial firms operating on his blockchain rather than regulating the blockchain network itself, according to reporting by CoinDesk. The approach would allow Wall Street institutions to build regulated trading markets on Hyperliquid’s infrastructure without requiring the network to become a registered exchange with the Commodity Futures Trading Commission.

The regulation sits at the layer where there are controls, and indeed the deployers are the ones that exercise these controls.

Jeff Yan, Hyperliquid founder, in an interview with Bloomberg

Yan drew a parallel to how financial firms use internet infrastructure: companies operating trading markets on Hyperliquid should bear responsibility for meeting regulatory requirements rather than pushing that burden onto the protocol layer. Hyperliquid’s perpetual futures trading platform remains closed to U.S. customers, a restriction that has limited its access to American retail and institutional traders.

Payward’s regulated derivatives offering validates the layered approach

Kraken’s parent company Payward is already moving forward with a model aligned to Yan’s framework. The firm plans to launch derivatives products using Hyperliquid’s technology through a regulated exchange available to U.S. investors, even though Hyperliquid’s native perpetual futures market itself remains unavailable domestically. This arrangement would effectively let a Commodity Futures Trading Commission regulated operator build on Hyperliquid’s infrastructure without the network having to navigate federal exchange registration.

Yan stressed that the proposal is not intended to disrupt existing market infrastructure. “We’re not trying to displace anything,” he told Bloomberg. “In fact, I think the technology can benefit everyone who currently operates markets in a more traditional setting.”

Trump administration pressure precedes Yan’s formal proposal

Yan’s regulatory framework comes months after President Donald Trump said in August (2026) that the CFTC was working to bring Hyperliquid into the U.S. under federal regulations. Trump’s statement signaled regulatory momentum that could have forced Hyperliquid to seek exchange status, a path that would have subjected the blockchain itself to stringent oversight. Yan’s proposal now offers an alternative: regulators could supervise individual market operators on the chain without classifying Hyperliquid as an exchange.

Whether the CFTC will adopt Yan’s layered regulatory model or pursue exchange registration for Hyperliquid remains unresolved, with the agency having made no public statement on the framework since Trump’s August comments.

The BlockWest read. Yan’s proposal shifts the regulatory burden away from the protocol layer to individual market operators, a structure that benefits both Hyperliquid and established financial firms seeking blockchain access without triggering full exchange classification. The test case is whether Payward’s CFTC-regulated derivatives platform can scale on Hyperliquid without prompting regulators to demand the blockchain itself register as an exchange.

Strive’s $280 million Bitcoin buy diluted common shareholders as equity issuance outpaced accumulation

Strive’s $280 million Bitcoin buy diluted common shareholders as equity issuance outpaced accumulation

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Strive’s $280 million Bitcoin purchase expanded its holdings by 11.24% in just one week, yet common shareholders saw per-share Bitcoin gains of only 1.72%, illustrating how aggressive equity issuance can offset treasury growth. The disconnect matters for investors evaluating whether Bitcoin treasury companies are actually concentrating or diluting shareholder ownership.

  • Strive purchased 3,311 Bitcoin at an average price of $84,500 per coin from October 5 to October 9, totaling approximately $280 million.
  • Effective common shares outstanding expanded 9.36% to 110.4 million, outpacing the 11.24% growth in Bitcoin holdings to 32,773 coins.
  • The resulting 1.72% increase in Bitcoin per effective common share fell far short of the headline purchase size, demonstrating dilution from preferred-share issuance.
  • 3,311 BTC Coins purchased by Strive during the October 5-9 reporting period
  • $280M Total spending on Bitcoin acquisition at average price including fees
  • 1.72% Growth in Bitcoin per effective common share after dilution effects
  • 9.36% Increase in effective common shares outstanding versus period start

Bitcoin treasury company Strive announced on October 13 (Tuesday) that it had accumulated over $280 million in Bitcoin during the trading week ended October 9, according to an SEC filing. The purchase of 3,311 coins at an average price of approximately $84,500 per Bitcoin, inclusive of fees and expenses, marked one of the company’s larger weekly acquisitions. Yet CryptoSlate reported that the headline acquisition size masked a far smaller net benefit to common shareholders when accounting for simultaneous equity dilution.

Share issuance outpaced Bitcoin accumulation

Strive’s Bitcoin holdings grew from 29,462 coins on October 2 to 32,773 coins on October 9, a gain of 11.24%. Over the same six-business-day period, effective common shares outstanding—defined as Class A and Class B common shares combined—rose from 100.9 million to 110.4 million, an expansion of 9.36%. The divergence revealed competing capital allocation pressures at the company.

Class A common shares increased by 9.46 million while Class B shares fell by 12,885, producing a net common-share increase of 9.45 million. The company also issued 532,094 shares of Series A Preferred Stock (SATA), expanding that class by 3.94% to 14.03 million shares. Strive’s SEC filing maintained a 13% annual dividend rate on SATA shares at a stated amount of $100 per share, meaning the incremental preferred issuance would carry approximately $6.9 million of annualized dividend obligations if the shares and rate persisted.

Preferred claims rank ahead of common equity

The 1.72% per-share gain in gross Bitcoin holdings did not account for senior claims on the treasury. Under SATA’s disclosed terms, preferred shareholders rank ahead of common shareholders for both dividends and liquidation distributions, meaning the reported per-share improvement overstates the true benefit to common holders. The $6.9 million in annual preferred dividends on the new shares would require cash reserves or Bitcoin sales to service.

Cash and cash equivalents also rose by $25.6 million to support operations and preferred obligations. Strive retained 505,000 shares of Strategy Inc. preferred stock (STRC), whose fair value moved from $50.2 million to $50.3 million, sitting separately from cash and Bitcoin. A separate Strategy Inc. update covering October 5-11 revealed that its parallel Bitcoin purchases totaled only 250 coins for $21.5 million, while it deployed $192.4 million to repurchase STRC preferred shares, signaling a different capital priority than Strive’s approach.

Warrant exercises reduced potential dilution but left a gap in the ledger

Strive CEO Matt Cole said on October 13 that $208 million in warrants had been exercised, with about 15.3 million remaining. Shares underlying traditional warrants fell from 23.2 million to 15.3 million during the period, but the SEC filing does not allocate the Bitcoin purchase across warrant proceeds, common-share sales, preferred issuance or other cash movements. That accounting gap leaves open how much of the $280 million purchase came from each source and whether warrant exercise proceeds funded the full Bitcoin buy or only a portion of it.

The BlockWest read. Strive’s capital structure now layered preferred dividends and share issuance atop its Bitcoin accumulation, making future per-share calculations increasingly dependent on cash flow management and preferred repurchase strategy. Common shareholders should monitor whether management can sustain Bitcoin growth while containing the dilution embedded in its preferred-stock expansion.

Subsequent disclosures will show whether Strive can replenish cash while adding Bitcoin and limiting dilution, and whether Strategy allocates more capital to new coin purchases or preferred repurchases in the weeks ahead. The next material test will arrive with Strive’s next weekly filing, revealing whether the 1.72% per-share gain accelerates, stalls or reverses.

France approves 31.4% tax on regulated stablecoin conversions from January 2027

France approves 31.4% tax on regulated stablecoin conversions from January 2027

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France’s lawmakers are advancing a tax framework that would treat conversions to regulated stablecoins as taxable events, potentially reshaping crypto trading behavior across the EU. The proposal highlights an emerging tension between regulatory compliance and tax avoidance, as policymakers attempt to widen their tax base while inadvertently creating incentives to use less transparent alternatives.

  • France’s finance committee approved an amendment on October 7 taxing swaps from cryptocurrencies into EU-regulated stablecoins at 31.4% beginning January 1, 2027.
  • A second amendment approved October 9 would require disclosure of self-hosted wallets holding €100,000 or more, with fines up to $11,600 for non-compliance.
  • The full National Assembly must resubmit and vote on these measures by October 20, as the finance committee rejected the revenue section of the 2027 budget 31 votes to 3.
  • 31.4% France’s capital gains tax rate on crypto transactions
  • €100,000 Minimum wallet size requiring disclosure to French tax authorities
  • 33 Physical attacks on crypto holders in France through July 2026
  • 10% Capital gains tax Greece is preparing to impose on crypto

France’s National Assembly is advancing a series of cryptocurrency tax measures as part of the country’s 2027 budget deliberations, according to reporting by CoinDesk. The most significant proposal would classify conversions from cryptocurrencies into stablecoins regulated under the European Union’s Markets in Crypto-Assets (MiCA) framework as taxable events, subjecting them to France’s standard 31.4% capital gains rate starting January 1, 2027. Currently, swapping one cryptocurrency for another does not trigger capital gains tax in France, and the measure would specifically target so-called electronic money tokens that fall under MiCA’s scope following the regulation’s full implementation on July 1.

Regulated stablecoins face targeted tax treatment starting 2027

The amendment, adopted by the National Assembly’s finance committee on October 7, creates a narrow but significant distinction in how France treats digital asset conversions. By taxing only swaps into EU-regulated stablecoins and not other cryptocurrency-to-cryptocurrency trades, the framework effectively penalizes the use of compliant financial instruments while leaving unregulated alternatives untaxed.

Francois Volpoet, Chainalysis’ CEO for France, cautioned that the approach risks undermining regulatory objectives. “Do we want more taxpayers to declare their assets, or a higher tax rate applied to a base that is increasingly evaded?” he said in comments to CoinDesk. Volpoet noted that authorities can more readily track regulated stablecoin transactions than trades conducted through decentralized finance platforms or self-hosted wallets, suggesting that the tax structure may inadvertently incentivize traders to migrate toward less transparent channels.

Disclosure requirements and physical security concerns

A second amendment approved on October 9 mandates that French taxpayers disclose self-hosted cryptocurrency wallets holding at least €100,000 in assets, with penalties of up to $11,600 for violations.

Volpoet raised security objections to the disclosure mandate, pointing to a sharp rise in physical attacks targeting cryptocurrency holders in France. Through July 2026, Europe experienced 39 of 52 recorded global incidents of this type, with France alone accounting for 33 attacks or 63.5% of the worldwide total. The concentration of attacks in France underscores potential risks associated with mandated asset disclosure, as public records of large holdings could make individuals targets for theft or coercion.

The legislative package also includes an amendment adopted October 7 that would allow investors to carry forward cryptocurrency losses for up to 10 years, aligning the tax treatment of digital assets more closely with equities. A separate measure would extend France’s exit tax, which applies to wealthy individuals relocating abroad, to cryptocurrency holdings worth approximately $900,000.

Budget deadlock forces resubmission to full assembly

The finance committee rejected the revenue section of the government’s 2027 budget by a vote of 31 to 3, requiring all crypto-related amendments to be resubmitted to the full National Assembly for debate.

Lawmakers are scheduled to vote on the revenue section on October 20 (Tuesday). None of the proposed measures have become law. The outcome remains uncertain, as the broad rejection of the budget’s revenue framework suggests deeper fiscal disagreements that could reshape or eliminate individual provisions during full assembly proceedings.

France’s push for expanded crypto taxation contrasts sharply with regulatory approaches elsewhere in the EU. Greece is preparing to impose a 10% capital gains tax on cryptocurrency, making it among the bloc’s lowest-taxed jurisdictions on digital assets. Germany, Italy, and France are all setting or planning capital gains rates exceeding 25%, fragmenting the EU’s tax treatment of crypto across member states.

The BlockWest read. The proposals reveal a fundamental mismatch in regulatory design: lawmakers want both compliance and revenue, but the tax structure punishes compliance. If traders migrate to unregulated stablecoins and DeFi to avoid the 31.4% rate, France’s tax base shrinks while regulatory visibility into the market declines. The real cost is not the rate itself but the incentive structure it creates.

The October 20 (Tuesday) full assembly vote on the revenue section will determine whether these amendments advance to law or face further revision. France’s National Assembly must pass the entire 2027 budget by December 10, leaving narrow time for negotiation if the current measures face rejection or substantial amendments during plenary debate.

HSBC CEO warns the AI boom won’t make every data center a good bet

DOJ charges OpenAI engineer with secretly recording conversations

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The Justice Department charged an OpenAI engineer with secretly recording conversations inside the company’s San Francisco headquarters, unsealing a criminal complaint against a Saudi national who allegedly hid a listening device inside a roll of toilet paper near an executive conference room television. The case, filed in the Northern District of California, is tied to National Security Presidential Memorandum 11, a directive aimed at protecting U.S. “super intelligence” technology.

  • Abdulrahman Alfozan, 35, arrested Oct. 9, made his initial federal court appearance today
  • Second recording device found in his unattended bag inside an OpenAI building on Oct. 5
  • Watch for a detention or bail hearing and the government’s first substantive evidentiary filing
  • 5 yrs maximum prison term if convicted on the single charged count
  • $250K maximum fine listed in the complaint alongside the prison term
  • 3 yrs supervised release following any custodial sentence
  • Jul ’25 month Alfozan began work as an OpenAI engineer, per the complaint

According to the Justice Department release, Alfozan has been charged with using or endeavoring to use an electronic device to intercept oral communications, a single count tied to a device OpenAI personnel discovered on Sept. 30 inside a USB port on the back of a television in an executive conference room. The complaint says OpenAI determined the device was installed around Sept. 28, had been concealed in toilet paper, and stored its contents in encrypted form. Closed-circuit footage reviewed by investigators allegedly placed Alfozan near the conference room on multiple occasions before the discovery, despite what the complaint describes as his lack of authority “to access or to participate in meetings occurring in the executive conference room.”

A chatbot trail tied to a spouse’s account

The complaint’s most granular allegations involve digital research the government says preceded the installation. It alleges Alfozan used a “productivity tool” to query OpenAI’s building addresses, meeting-room capacities and calendars, and “leadership and exec” locations.

A separate chatbot account the government links to Alfozan’s spouse, which it says shared multiple identifiers with his own account, allegedly submitted prompts between Sept. 24 and Sept. 30 covering how to “build a continuous audio recorder,” customize Wi-Fi connectivity, and “encrypt the SD card.” The same account, according to the complaint, later submitted prompts referencing the recovered device’s custom header and unique MAC address between Sept. 27 and Sept. 28, days before the hardware was found.

A second device surfaces in an unattended bag

The complaint alleges that on Oct. 5, Alfozan entered the executive conference room and appeared to look behind the same television where the first device had been inserted. That same day, he allegedly left a bag unattended in a different OpenAI room.

OpenAI security personnel opened the bag and found, alongside Alfozan’s wallet and identification, a second device similar to the first, the complaint says. The government has not disclosed what, if anything, either device recorded or transmitted before discovery, nor whether any captured audio has been reviewed as evidence.

“Protecting American SI innovation is essential to safeguarding our nation’s economic strength and national security, and the FBI views that mission as one of our highest counterintelligence priorities.”

Kash Patel, FBI Director

What the complaint leaves open

The department frames the case in explicitly geopolitical terms, invoking NSPM-11 and what DNI Jay Clayton called “the global super intelligence race,” but the complaint as described does not allege that Alfozan acted on behalf of any government or outside entity. Alfozan is a charged defendant, not a convicted one, and the allegations remain to be tested in court. The release does not say whether he has entered a plea, retained counsel, or been granted bail, and it does not specify what, if any, information the devices actually captured before OpenAI found them.

What changes for AI labs and their insurers

For OpenAI and peers racing on frontier model development, the case formalizes what until now has been an informal worry: physical insider threats inside buildings that already run extensive digital security. The complaint’s reliance on chatbot prompt logs as evidence, tied to an account allegedly linked to a spouse rather than the defendant directly, shows investigators treating AI query history as a forensic data source in the same way email or browser logs have been used.

That has practical implications for enterprise AI governance teams and corporate counsel at labs handling similarly sensitive model work. Expect tighter controls on executive-floor access, more aggressive conference-room sweeps, and renewed scrutiny from boards over insider-threat programs now that a federal prosecution has put a dollar-and-years figure on the risk, even if the maximum penalty here, five years and a $250,000 fine, is modest next to the value of the intellectual property the complaint says was at stake.

The BlockWest read. This case turns AI labs’ own chatbot logs into evidence against insiders, and it puts a counterintelligence label on ordinary corporate espionage risk inside frontier AI firms. Allocators backing OpenAI-adjacent companies should expect security diligence questions to now include physical access controls and NSPM-11 compliance posture, not just model safety reviews.

The next concrete step is Alfozan’s detention or bail hearing in the Northern District of California, where prosecutors Nicolas Parker and Kate Tagert will need to lay out what, if anything, the recording devices actually transmitted.

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