ENS Foundation Takes Control of $65M Endowment After Tokenholder Vote
Ethereum Name Service (ENS) tokenholders have approved and executed a major governance overhaul that gives the ENS Foundation administrative control of an endowment worth approximately $65 million. The “Next Era of ENS DAO” proposal passed with about 70% support and was executed onchain on Aug. 11. The restructuring establishes the ENS Foundation as a fully operational organization with a full-time executive director, dedicated staff and a five-member board. It also creates a clearer division of responsibilities between the Foundation, ENS Labs and the ENS DAO. Key Takeaways ENS Foundation takes control of $65 million endowment Under the new structure, the ENS Foundation will assume administrative control of the ENS Endowment, which holds approximately $65 million in ETH and stablecoins. The endowment is funded primarily through .eth domain registration and renewal fees. The assets will remain at their existing address rather than being moved to a new wallet. Transactions from the endowment will generally pass through a nine day timelock, allowing the ENS Security Council to cancel transactions that fall outside the Foundation’s mandate. The Foundation will also take responsibility for the stewardship of protocol revenue. However, the ENS DAO will retain control of its broader token holdings, representing approximately 54.6% of the total ENS supply. The proposal also authorizes a one time transfer of 1 million ENS tokens to the Foundation for employee compensation under a published framework. ENS Labs Will Focus On Protocol Development The restructuring separates ENS Labs’ technical responsibilities from the Foundation’s operational and institutional role. ENS Labs will continue to focus on engineering, integrations and core protocol development, including the upcoming ENSv2 upgrade. The Foundation, meanwhile, will handle off-chain responsibilities such as policy development, grants, legal matters, trademark protection and institutional relationships. The Foundation will represent ENS in organizations including the Internet Corporation for Assigned Names and Numbers (ICANN), the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C). It will also pursue recognition and stewardship of the .ens top level domain. The Foundation and ENS Labs will remain separate legal entities, with neither organization holding governance rights over the other. Five Member Board to Oversee the Foundation The new Foundation will be governed by a five member board consisting of Executive Director Alexander Urbelis, ENS founder Nick Johnson and three independent directors. The independent directors are Kartik Talwar, general partner at A.Capital Ventures and ETHGlobal co-founder; Brett Sun, co-founder of Prelude; and Anthony Leutenegger, CEO of Aragon. The independent directors will serve renewable two year terms, while ENS tokenholders will retain the ability to appoint or remove Foundation directors. The Foundation will operate through published budgets approved by its board and is expected to provide annual audited financial statements and quarterly grant updates. Security Council Safeguards Remain in Place The transfer of administrative control over the endowment has raised questions about how the new safeguards will work in practice. The nine day timelock gives the ENS Security Council an opportunity to cancel certain endowment transactions. However, ENS co-founder Alex Van de Sande raised concerns that some spending limits and protections described in the proposal are contained in its written terms rather than directly enforced by the smart contract code. Van de Sande also questioned aspects of the Security Council’s long-term oversight. Incoming Foundation Executive Director Alexander Urbelis acknowledged that some contract addresses should have been explicitly identified in the proposal rather than requiring voters to decode transaction data. Despite these concerns, tokenholders approved and executed the proposal. Governance Dispute Preceded the Vote The restructuring follows a major governance dispute within ENS in June. Nick Johnson self delegated approximately 3.26 million ENS tokens, representing roughly half of the active voting power at the time, and used the voting power to block the renewal of the existing Security Council. The move drew criticism from several delegates and community members, with some describing it as a governance attack. A new Security Council was subsequently established with a five-of-eight cancellation threshold. The dispute also intensified debate over whether operational and treasury responsibilities should remain directly under the ENS DAO or move toward a more formal Foundation structure. What the restructuring means for ENS The new arrangement does not give the Foundation complete control over ENS. Tokenholders continue to govern major protocol decisions and retain control over the DAO’s ENS holdings, while ENS Labs remains responsible for technical development. Instead, the restructuring gives the Foundation responsibility for the legal, financial and institutional functions that are difficult for a decentralized autonomous organization to manage directly. Conclusion The “Next Era of ENS DAO” marks a significant shift in how ENS is organized, giving the Foundation control over a roughly $65 million endowment while preserving tokenholder control over the broader protocol. The model could make ENS more effective when dealing with regulators, standards organizations and other institutions, but the Foundation’s new financial authority also makes transparency and Security Council oversight increasingly important. How the Foundation manages the endowment and maintains its relationship with tokenholders will determine whether the new structure strengthens ENS governance or creates another source of community conflict.
Delio CEO Sentenced to 15 Years in Prison on Crypto Fraud in South Korea
South Korea has sentenced Delio CEO Jeong Sang ho to 15 years in prison after the Seoul Southern District Court found him guilty of defrauding customers of about 70 billion Korean won, roughly $49 million, in cryptocurrency. The ruling marks a major development in the case surrounding the collapse of Delio, a crypto deposit platform that halted withdrawals in 2023 and was declared bankrupt in 2024. The sentence is five years shorter than the 20 year term prosecutors requested. The court also acquitted Jeong of the larger fraud allegation involving approximately 250 billion won and about 2,800 customers after ruling that key evidence obtained during a server seizure was illegally collected. Key Takeaways Court Finds Delio CEO Guilty Over $49 Million in Crypto The Seoul Southern District Court found Jeong guilty on several charges linked to Delio’s handling of customer assets. Prosecutors had accused the executive of misleading customers while the company’s financial position deteriorated and sought a 20 year prison sentence. The court ultimately imposed 15 years, describing the conduct covered by the conviction as extremely serious because of the number of victims and scale of the financial losses. The ruling also included convictions related to embezzlement and the use of falsified documents when Delio registered as a virtual asset service provider. Prosecutors alleged that a false accounting report overstated Delio’s cryptocurrency holdings by approximately 47.6 billion won. The court ordered Jeong to remain detained, citing concerns that he could flee. Why the Larger Fraud Charge Was Dismissed One of the most significant aspects of the ruling was the court’s decision to acquit Jeong on the larger allegation involving approximately 250 billion won and 2,800 customers. The dispute centered on evidence obtained during a search and seizure involving Gabia, the company hosting Delio’s servers. Jeong’s legal team argued that investigators had failed to protect his procedural rights during the search and had not properly provided an inventory of the materials seized. The court agreed that the evidence had been unlawfully obtained and therefore could not be used to support the primary fraud charge. This significantly narrowed the case against Jeong. Prosecutors had originally alleged that he took approximately 250 billion won in cryptocurrency from customers between August 2021 and June 2023. Earlier in the year, prosecutors had requested the 20 year sentence based on those allegations. The ruling therefore demonstrates how the handling of digital evidence can become decisive in major cryptocurrency criminal cases. Delio’s Collapse Began With a Withdrawal Freeze Delio operated a cryptocurrency deposit and lending business that promised customers returns on assets including Bitcoin and other cryptocurrencies. The company promoted itself as a digital asset banking platform and offered yields of up to around 10% on some products. The business came under severe pressure in June 2023. Delio abruptly suspended withdrawals on June 14 after problems involving Haru Invest, another South Korean crypto yield platform with which Delio had a business relationship. Customers were subsequently unable to access their deposited assets, triggering complaints and legal action. Delio later sought rehabilitation, but the Seoul Rehabilitation Court rejected the application after determining that liquidation was more appropriate given the company’s financial position. The court eventually declared Delio bankrupt in November 2024. What the Sentence Means for Crypto Platforms The 15 year sentence sends a strong warning to operators of centralized crypto platforms that hold customer assets. Unlike decentralized protocols, deposit and lending businesses take direct control of users’ cryptocurrency. That creates additional risks involving custody, asset management, liquidity and counterparty exposure. Delio’s collapse illustrates how quickly customers can lose access to their assets when a centralized platform encounters financial problems. For South Korean crypto businesses, the ruling also reinforces the potential criminal consequences of misleading customers, misusing assets or providing inaccurate information during regulatory registration. For investors, the case highlights the need to look beyond advertised yields when evaluating centralized crypto platforms. Asset segregation, proof of reserves, withdrawal conditions and the financial health of the company holding the assets can be just as important as the return being offered. Conclusion Jeong Sang ho’s 15 year prison sentence closes a major chapter in the criminal case surrounding Delio, but it does not resolve the broader question of how affected customers will recover their assets. The court’s decision to uphold convictions over approximately 70 billion won while rejecting the larger 250 billion won allegation also shows how procedural safeguards and digital evidence can significantly shape cryptocurrency fraud prosecutions. For South Korea’s crypto industry, the Delio case is likely to remain a reference point for how courts treat executives responsible for customer assets, particularly when platforms combine high yield products with centralized custody.
Inside the fake crypto startup that fooled North Korean IT workers
Security researchers have uncovered a five week operation in which suspected North Korean IT workers were recruited into a completely fictional cryptocurrency startup and unknowingly monitored as they worked. The operation, known as Ballena Azul, gave researchers an unusual view into how North Korean operatives use false identities, remote access tools, VPN infrastructure and artificial intelligence while seeking legitimate employment in the crypto industry. Key Takeaways Researchers Turned a Fake Startup Into a Controlled Experiment The operation was conducted by cybersecurity researchers Mauro Eldritch of BCA LTD and Heiner García of NorthScan, with infrastructure provided by ANY.RUN. Rather than waiting for suspected North Korean workers to approach a real company, the researchers created Ballena Azul and advertised developer positions. A recruiter connected to the investigation supplied three candidates, who were given programming assignments and access to controlled virtual desktop environments. The researchers were able to monitor their activity throughout the engagement. The hiring process itself exposed several warning signs. One candidate claimed to be based in Texas but supplied a California driver’s license and a New York bank account. Another provided a Texas license, a valid Social Security number and a Kansas City bank account. A third supplied a New York driver’s license that reportedly belonged to another person. Researchers also found evidence that some identification documents had been processed using artificial intelligence tools. One image reportedly contained Google’s SynthID watermark, although the researchers did not establish exactly how the watermark was detected. The Workers Left Behind Valuable Intelligence Once inside the fake company, the suspected operatives behaved much like legitimate remote developers while simultaneously conducting reconnaissance of their working environments. All three reportedly ran commands including dxdiag, systeminfo and wmic to gather information about their machines. They also checked the apparent location of their internet connections. One worker installed Chrome Remote Desktop and connected a personal Google account to the controlled computer. This potentially exposed browsing history, saved passwords and browser extensions. The worker also logged into GitHub from the same environment. The researchers identified additional tools associated with the operation, including services used to relay two factor authentication codes, remote access software and VPN infrastructure. AstrillVPN exit nodes were repeatedly observed, a service that has also been associated with North Korean IT worker activity. The browsers contained several AI powered job application and interview tools, including AIApply, Final Round AI and Simplify Copilot. AI Became a Tool for the Suspected Operatives The investigation also revealed extensive use of generative AI. According to the researchers, the workers used ChatGPT to assist with coding, writing and technical assignments, including tasks they appeared to struggle with independently. Google Gemini was reportedly used for image manipulation and document alteration. The researchers said the suspected workers did not necessarily need to deploy malware themselves to create a security risk. Once an operative successfully obtains employment, legitimate credentials can provide access to source code, internal systems, communications and other sensitive company resources. That makes the hiring process itself a potential security boundary. García described one of the more surprising findings from the investigation: “Honestly, the biggest surprise was how much of it ran on improvisation.” The researchers said the suspected workers did not appear to follow a rigid corporate process, instead relying heavily on improvisation and available tools. The Infrastructure May Reveal More Than the Workers One of the most valuable discoveries was the external infrastructure used before the workers connected to Ballena Azul’s controlled environments. Researchers found servers associated with malware families including InvisibleFerret and BeaverTail/OtterCookie, which have previously been linked to campaigns targeting credentials, cryptocurrency wallets and other sensitive information. Some of the servers were already known to researchers, while others appeared to be previously undocumented infrastructure. That distinction matters because infrastructure can be reused across multiple operations. Identifying a server used by an operative today may therefore provide intelligence about other campaigns or activities connected to the same network. North Korean It Workers Remain a Crypto Industry Risk The Ballena Azul investigation comes amid continued warnings about North Korean IT workers obtaining remote employment under false identities. In July, Consensys disclosed that it had unknowingly engaged a North Korea linked developer through a third party before identifying the threat and terminating access. US authorities have also prosecuted facilitators accused of helping North Korean workers obtain remote jobs using stolen identities. The US Treasury has estimated that North Korean IT worker schemes generated hundreds of millions of dollars for the regime, making employment fraud part of a broader financial strategy rather than simply a cybersecurity problem. For crypto companies, the danger is particularly significant because developers may have access to source code, wallets, infrastructure and financial systems. The Fake Company Eventually Disappeared After several weeks, the researchers ended the operation by introducing another fictional company executive who confronted the workers over inconsistencies in their identities and documentation. The confrontation caused the suspected operatives to leave the communication channels. Researchers then staged an internal dispute and presented Ballena Azul as a company collapsing because of a failed hiring decision. According to the researchers, at least one of the suspected workers later contacted García privately to apologize and ask whether he was safe. The suspected operatives, they said, still do not know that Ballena Azul was never a real crypto startup. Conclusion The Ballena Azul operation demonstrates why North Korean IT worker campaigns pose a different kind of threat to crypto companies. The initial compromise may not involve malware or a stolen password. Instead, the attacker can enter through a legitimate hiring process and receive authorized access from the company itself. For crypto firms, stronger identity verification, repeated checks after hiring, scrutiny of remote access patterns and careful monitoring of developer environments could become increasingly important as these operations become harder to distinguish from ordinary remote employment.
Crypto Group Backs Custodia in Supreme Court Battle Over Fed Access
The Blockchain Association has thrown its support behind Custodia Bank’s bid to have the U.S. Supreme Court review its long running dispute with the Federal Reserve over access to a master account. The crypto industry group argues that regional Federal Reserve Banks should not have unrestricted authority to deny payment system access to eligible state chartered banks. The case could have significant consequences for digital asset firms seeking direct connections to the U.S. banking system, particularly as more crypto companies pursue regulated banking operations. Key Takeaways Blockchain Association Challenges Fed Discretion The Blockchain Association filed its brief as Custodia asks the Supreme Court to examine whether the Federal Reserve has broad discretion to reject master account applications from otherwise eligible institutions. A master account provides a bank with direct access to the Federal Reserve’s payment infrastructure. For a financial institution, that can reduce dependence on correspondent banks and provide a more direct route into the U.S. payment system. Custodia argues that the Monetary Control Act requires Federal Reserve services to be available to eligible nonmember depository institutions. The Federal Reserve, however, maintains that regional Reserve Banks have discretion to determine whether an applicant should receive an account. The Blockchain Association says the lower court interpretation could have consequences beyond Custodia and the cryptocurrency industry. “No lawful industry should be excluded from essential banking services through regulatory pressure or unchecked administrative discretion.” The group argues that allowing federal regulators to exercise broad discretion over payment access could undermine the dual banking system, in which state and federal authorities both have roles in chartering and supervising banks. Custodia’s Long Fight for a Master Account Custodia, a Wyoming chartered Special Purpose Depository Institution founded by Caitlin Long, applied for a master account with the Federal Reserve Bank of Kansas City in October 2020. The application remained unresolved for 19 months before Custodia took legal action in 2022. The Kansas City Fed eventually rejected the application in January 2023, citing concerns surrounding Custodia’s crypto focused business model and potential risks to the financial system. Custodia challenged the decision in federal court but lost at the district court level in 2024. The Tenth Circuit later upheld the ruling, finding that the Kansas City Fed had discretion to reject the master account request. The full Tenth Circuit subsequently rejected Custodia’s request for rehearing by a 7 to 3 vote in March 2026. Custodia has now turned to the Supreme Court. Its petition, docketed as Custodia Bank, Inc. v. Federal Reserve Board of Governors, asks the justices to review the interpretation of federal law governing access to Federal Reserve services. Kraken’s Fed Access Adds Pressure The dispute has gained additional relevance following the Kansas City Fed’s decision to grant Kraken Financial a limited purpose master account in March 2026. Kraken became the first crypto native institution to receive such access, although its account comes with restrictions. It provides access to core payment infrastructure but does not provide all the privileges associated with a conventional master account, including interest on reserve balances and discount window borrowing. The different outcomes for Custodia and Kraken have added another dimension to the debate over how crypto focused financial institutions should interact with the Federal Reserve. For the Blockchain Association, the issue is not simply whether Custodia should receive an account. The organization argues that the Supreme Court should clarify the legal limits on the Federal Reserve’s authority so that lawful digital asset businesses are not excluded from essential financial infrastructure. What Happens Next? The Supreme Court has not yet agreed to hear Custodia’s case. The Kansas City Fed is expected to submit its response to the petition by September 11, after which the justices will consider whether to grant review. If the court takes the case, its eventual ruling could establish clearer boundaries around Federal Reserve master account decisions and determine how much discretion regional Reserve Banks have when evaluating state chartered institutions. For the crypto industry, the stakes extend beyond one bank. A ruling favoring Custodia could make direct Federal Reserve access more predictable for regulated digital asset institutions, while a decision upholding broad Fed discretion would leave regional Reserve Banks with significant authority over who can connect directly to the central bank’s payment infrastructure. Conclusion The Blockchain Association’s intervention gives Custodia’s Supreme Court campaign broader industry backing at a critical stage. The dispute now sits at the intersection of crypto banking, state charter authority and Federal Reserve control over payment infrastructure. Whether the Supreme Court agrees to hear the case remains uncertain, but the outcome could help define how deeply regulated digital asset businesses can integrate with the U.S. financial system.
Ireland Plans Industry Standards for Illicit Crypto Use
Ireland has published its first National Anti Money Laundering, Countering Financing of Terrorism and Countering Proliferation Financing Strategy, setting out measures through 2030 to strengthen the country’s response to financial crime. The strategy places particular attention on cryptocurrency, including transfers involving private wallets and dealings between Irish crypto firms and overseas providers. Key Takeaways Ireland Puts Crypto Firms Under Closer Scrutiny The Irish Department of Finance said the new strategy responds to the growing sophistication of criminal organizations and their use of technology, crypto assets and international financial networks. Finance Minister Simon Harris said: “Criminal organisations are becoming increasingly sophisticated. They are exploiting new technologies, crypto-assets and complex international financial networks to conceal criminal profits.” The strategy introduces enhanced checks for transfers involving private cryptocurrency wallets. Crypto asset service providers will also be expected to carry out stronger due diligence when dealing with crypto firms located outside the European Union. The measures are designed to give regulated firms greater visibility into where funds originate and where they are being sent, particularly when transactions involve wallets or counterparties outside the traditional regulated financial system. Ireland’s approach forms part of a broader European framework that already places crypto asset service providers under regulatory and anti money laundering requirements through the Markets in Crypto Assets Regulation (MiCA) and related legislation. Ireland’s Department of Finance said the remaining elements of its implementation are well advanced. Travel Rule Extends Transaction Information Requirements A significant part of the framework is the Financial Action Task Force Travel Rule, which requires information about the sender and recipient of a crypto transfer to accompany the transaction. The rule is intended to make it harder for criminals to move illicit funds anonymously through regulated crypto businesses. For Irish crypto asset service providers, the requirements become particularly relevant when transactions involve private wallets or overseas counterparties. Ireland has also opted for a shorter adaptation period for existing crypto firms than the maximum period available under the European framework. This means authorized providers have already had to adjust their systems to meet the applicable requirements. The strategy therefore represents more than a future regulatory proposal. Several of the measures affecting crypto businesses are already part of Ireland’s broader regulatory implementation. Crypto and Gambling Come Under the Spotlight Ireland’s AML strategy also identifies the use of crypto assets in gambling as an area requiring additional attention. The government plans to establish an industry standard covering the acceptance of cryptocurrency as a source of funds for gambling. The proposed standard is expected to include checks designed to establish whether the funds being used are legitimate. The measure is scheduled for development in 2027 and will add another layer of scrutiny to crypto transactions entering sectors considered vulnerable to money laundering. The strategy builds on Ireland’s national risk assessment published earlier in 2026, which identified crypto asset misuse among emerging financial crime risks. EU Rules Will Bring Further Restrictions in 2027 Ireland’s measures also sit alongside forthcoming EU wide restrictions on anonymous crypto accounts. From July 2027, crypto asset service providers will be prohibited from offering or maintaining anonymous accounts or accounts that allow transactions to be anonymized. The restrictions will also cover arrangements involving privacy enhancing crypto assets. However, the rules do not amount to a general ban on self hosted wallets. Where a wallet provider has no access to or control over a self hosted wallet, the wallet itself is outside the prohibition. This distinction is significant because it separates regulated services that facilitate anonymous transactions from individuals who maintain direct control over their own crypto assets. Ireland Prepares for Wider Financial Crime Review The new strategy covers more than cryptocurrency. Ireland also plans measures aimed at improving corporate ownership transparency, strengthening financial intelligence capabilities and increasing cooperation between regulators, government agencies and law enforcement. The country is preparing for its upcoming Financial Action Task Force evaluation, making the implementation of its AML framework particularly significant. For crypto businesses operating in Ireland, the direction is clear: regulators are placing greater emphasis on transaction monitoring, customer due diligence and transparency around funds moving between regulated platforms, private wallets and overseas firms. Conclusion Ireland’s first national AML strategy signals a tougher approach to the potential misuse of cryptocurrency for money laundering and other financial crimes. The immediate impact will be felt by crypto asset service providers dealing with private wallets and overseas businesses, while further restrictions on anonymous crypto services are expected across the EU in 2027. At the same time, the framework does not eliminate self custody. Instead, it focuses on the regulated businesses that connect users and their crypto assets to the wider financial system.
SEC Clears Franklin Templeton Funds to Use Onchain Benji System for Cash Management
SEC Clears Franklin Templeton Funds to Use Onchain Benji System for Cash Management Alt text: The U.S. Securities and Exchange Commission (SEC) has issued a no action letter to Franklin Templeton, allowing the asset manager’s registered mutual funds, exchange traded funds and other investment products to invest in its blockchain-based Franklin OnChain U.S. Government Money Fund, known as BENJI or FOBXX. The decision removes a significant custody obstacle that had made it difficult for traditional registered funds to hold shares in a blockchain-based fund under existing rules. It also represents another step toward integrating tokenized financial products into conventional investment markets. Key Takeaways SEC Provides Custody Relief for Franklin Funds The SEC’s Division of Investment Management based its decision on Section 17(f) and Rule 17f-2 of the Investment Company Act of 1940, which contain custody requirements for registered investment companies. Some of those provisions were designed around physical securities, certificates and traditional custody arrangements. BENJI, however, uses blockchain-based records to represent ownership. Under the no action letter, the SEC said it would not recommend enforcement action if Franklin Templeton’s registered funds hold BENJI shares under the proposed custody structure and comply with the specified safeguards. Bloomberg ETF analyst James Seyffart described the decision as opening the door for Franklin’s registered funds, including mutual funds and ETFs, to hold its onchain money market fund despite the differences between blockchain custody and traditional physical custody requirements. The SEC emphasized that the letter does not create a new rule or formally approve Franklin Templeton’s custody framework. Instead, it reflects the staff’s position that it will not recommend enforcement under the specific arrangement described by Franklin. Benji Combines Blockchain and Traditional Recordkeeping Franklin Templeton operates BENJI through a hybrid system that combines blockchain infrastructure with conventional transfer agent controls. The fund’s transaction and ownership activity is recorded on the Stellar blockchain, while Franklin Templeton Investor Services maintains the official shareholder records and administrative controls. The transfer agent also retains control of the private keys associated with the blockchain wallets. Under the approved arrangement, it will create and manage separate Stellar wallets for participating registered funds. This structure allows Franklin Templeton to benefit from blockchain based transaction processing while retaining traditional safeguards over shareholder records. The company can also correct unauthorized transactions, restore records, freeze wallets, migrate records and maintain the official history of ownership when necessary. The SEC considered these controls important because they preserve centralized oversight over the official shareholder register even though blockchain technology is being used to record transactions. Benji Expands Its Role in Cash Management The decision allows Franklin Templeton’s registered funds to use BENJI as a cash management vehicle and for securities lending collateral. BENJI is the blockchain-based version of Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX). The fund primarily invests in U.S. government securities, cash and fully collateralized repurchase agreements, while targeting a stable $1 net asset value. The blockchain infrastructure provides several operational features, including more frequent net asset value calculations, intraday transactions and potentially faster settlement. BENJI was initially launched on the Stellar blockchain in 2021 and has since expanded across other blockchain networks, including Ethereum and Solana. According to the figures provided in the source material, the fund manages approximately $726 million in assets, with the majority of its assets remaining on Stellar. A Broader Step Toward Tokenized Finance The SEC’s decision is significant beyond Franklin Templeton’s own funds because it demonstrates how blockchain-based financial products can potentially operate within existing investment regulations. Rather than treating blockchain as an alternative to traditional financial infrastructure, Franklin’s model combines the two. The underlying investments remain conventional U.S. government securities, while blockchain technology is used for transaction processing and recordkeeping. The SEC also referenced a 1992 no-action letter involving Franklin Templeton, showing how earlier regulatory interpretations surrounding electronic book entry systems can be applied to newer blockchain-based structures. If similar approaches are adopted for other tokenized financial products, blockchain could become increasingly integrated into traditional asset management without requiring investors to abandon established regulatory and custody frameworks. Conclusion The SEC’s no action letter gives Franklin Templeton’s registered funds a clearer path to use BENJI for cash management and securities lending collateral while operating under a blockchain-based recordkeeping system. The decision does not change existing securities law, but it removes an important custody barrier for Franklin’s tokenized money market fund. More importantly, it shows that blockchain infrastructure can be incorporated into traditional investment products while retaining conventional oversight and custody controls. As tokenized funds continue to develop, this type of regulatory accommodation could help bring blockchain-based financial products further into mainstream institutional finance.
Blackrock Says Bitcoin Sentiment Is Turning as Decoupling From Stocks Takes Hold
BlackRock’s Head of Digital Assets Robert Mitchnick says investor sentiment toward Bitcoin is beginning to shift as the cryptocurrency increasingly moves independently of traditional equities. Bitcoin has traded between roughly $60,000 and $65,000 for more than two months, with the cryptocurrency remaining under pressure despite continued demand from institutional investors. Mitchnick said the change in Bitcoin’s relationship with equities has become more noticeable over the past month, particularly after the cryptocurrency outperformed technology stocks during July’s artificial intelligence driven market pullback. As of Monday afternoon, Bitcoin was trading around $63,853, down about 2% on the day. The asset remained nearly 30% lower year-to-date and roughly 50% below its price a year earlier. Key Takeaways Bitcoin Begins to Decouple From Equities Mitchnick said Bitcoin’s decoupling from equities began earlier this year. Initially, the separation worked against Bitcoin because stocks, particularly AI-related companies, were performing strongly while Bitcoin remained relatively flat or declined. That relationship changed in July when AI stocks experienced a significant pullback. Bitcoin held up comparatively well during the downturn, providing an example of how the cryptocurrency could behave differently from other risk assets. Mitchnick described this decoupling as a healthy development because it supports one of the key arguments for including Bitcoin in a diversified portfolio. “Bitcoin decouple[d] from equities starting earlier in the year,” Mitchnick said, adding that the July performance showed the potential benefit of Bitcoin acting as a diversifier and possible hedge against extreme downside risks elsewhere in a portfolio. The distinction is important for institutional investors. If Bitcoin continues to move independently of stocks during periods of market stress, its value as a diversification tool could become stronger. Bitcoin ETFs Continue to Attract Capital Recent flows into U.S. spot Bitcoin exchange traded funds also indicate that investors remain willing to allocate capital to Bitcoin despite its weak price performance. U.S. spot Bitcoin ETFs recorded approximately $853.5 million in inflows last week, marking their strongest weekly inflow performance since mid April. The inflows continued for five consecutive trading sessions. BlackRock’s IBIT accounted for the majority of the capital, attracting approximately $693.7 million, or more than 80% of total spot Bitcoin ETF inflows during the week. Fidelity’s FBTC recorded another $116.4 million, representing about 13% of the total. Mitchnick said the investor base for Bitcoin ETFs has generally demonstrated a long term, buy and hold approach. Rather than reacting to every short term price movement, many investors appear to be treating the products as strategic exposure to Bitcoin. He also acknowledged that Bitcoin remains highly volatile, noting that the cryptocurrency has experienced several major boom-and-bust cycles throughout its history. Coldcard Exploit Raises Self Custody Concerns Another development that could be influencing ETF demand is the reported Coldcard exploit, which resulted in more than $100 million worth of Bitcoin being stolen from cold storage. The incident has raised questions about the security of self-custody, particularly among investors who prefer holding Bitcoin directly rather than through regulated financial products. Bloomberg Intelligence Senior ETF Analyst Eric Balchunas noted that BlackRock’s, Fidelity’s and other spot Bitcoin ETFs recorded inflows every day following the Coldcard incident. He suggested that the timing made it difficult to completely dismiss a relationship between the security incident and increased ETF demand. However, the available information does not establish that the exploit directly caused investors to move Bitcoin into ETFs. What the Shift Means for Bitcoin The combination of improving sentiment, ETF inflows and Bitcoin’s recent performance against equities provides a more constructive backdrop for the cryptocurrency despite its current price weakness. The most important development is whether the decoupling from stocks continues. A sustained period in which equities decline while Bitcoin holds its value or rises would provide stronger evidence that Bitcoin is developing independent market drivers. For institutional investors, that could strengthen the argument for allocating a portion of portfolios to Bitcoin as a diversification asset rather than treating it solely as another risk-on investment. Conclusion BlackRock’s latest comments suggest that Bitcoin’s investment narrative may be evolving. The cryptocurrency remains volatile and significantly below its previous highs, but its growing separation from equities could strengthen its case as a portfolio diversifier. Continued demand through spot Bitcoin ETFs also shows that institutional investors remain interested despite the recent price weakness. The key question now is whether Bitcoin can maintain this independence during future equity market downturns. If it does, the decoupling could become an important part of Bitcoin’s long-term investment case.