In a significant policy shift, the Federal Reserve announced the termination of its "novel activities" supervision program, which was established in 2023 to specifically monitor banks' involvement with cryptocurrency and financial technology . This program will now be integrated into the Fed's standard bank supervisory framework. The decision reflects the central bank’s enhanced understanding of the risks associated with these emerging technologies and how financial institutions manage them. This move signifies a transition from a specialized regulatory approach to a more integrated, routine oversight process within the Fed’s existing structures.
In a notable development within the cryptocurrency industry, Do Kwon, a South Korean entrepreneur known as "the cryptocurrency king," pleaded guilty to two counts of fraud related to the $40 billion collapse of Terraform Labs. The charges involved conspiring to commit commodities, securities, and wire fraud, as well as a separate count of wire fraud. Kwon co-founded Terraform Labs, which launched the stablecoin TerraUSD, claiming it was a safe investment. However, its collapse in May 2022, alongside its companion token Luna, led to massive investor losses worldwide. Under a plea deal with U.S. prosecutors, Kwon agreed to serve no more than 12 years in prison, though federal guidelines suggested a 25-year sentence. He will forfeit over $19 million in assets and relinquish his stake in Terraform Labs and its cryptocurrencies. Kwon, who was arrested in Montenegro in March 2023 for using a false passport and extradited to the U.S. in December 2023, accepted responsibility for misleading investors. U.S. Attorney Jay Clayton stated that Kwon exploited the hype around cryptocurrency to orchestrate one of the largest financial frauds in history. Sentencing is set for December 11.
In the United States, a cryptocurrency mining company named American Bitcoin, backed by Donald Trump Jr. and Eric Trump, is actively seeking acquisitions in Asia to build a strategic bitcoin reserve. The firm is exploring opportunities to acquire publicly listed companies in Japan and potentially Hong Kong, aiming to emulate Michael Saylor's strategy model—an approach where firms accumulate large bitcoin reserves and operate as “crypto treasury companies.” These companies provide investors an indirect way to speculate on crypto prices via the stock market. American Bitcoin, set to go public in the U.S. in September via a reverse merger with Gryphon Digital Mining, already mines new bitcoin and is positioning itself as a premier bitcoin accumulation platform. It evolved from American Data Centers , a subsidiary of Dominari Holdings, and rebranded in March 2025 through a joint venture with mining firm Hut 8. Hut 8 transferred its mining assets for a controlling stake in ADC, where the Trump sons were early investors. Donald and Eric Trump are also involved in other crypto ventures, including World Liberty Financial and Trump Media & Technology Group, which has plans to establish a $2.5 billion bitcoin treasury. The crypto-friendly U.S. regulatory climate and rising public interest are helping drive this strategic expansion into Asia.
In the realm of cryptocurrency market performance, Ethereum has recently experienced a surge, trading above $4,400, thanks to increased institutional investment and a more favorable stance from the SEC on ether ETFs. Digital asset treasury firms like Bitmine Immersion Technologies and Sharplink Gaming have significantly increased their ETH holdings, contributing to this rise. While Bitcoin has been appreciating steadily due to spot ETF developments and is nearing a 300% gain since early 2024, Ethereum has just recently begun to catch up, nearly doubling in that time. This trend indicates growing investor confidence in Ethereum's potential and its expanding role in the decentralized finance ecosystem.
Additionally, a proposal from the DeFi Education Fund and a16z Crypto has urged the SEC to create a "safe harbor" for certain blockchain applications. These applications support decentralized finance but operate without taking custody of user funds or offering investment advice. By meeting specific conditions—no custody, no discretion, no solicitation, and immutable code—the proposal suggests these tools should be exempt from broker regulations. This initiative aims to foster innovation in the DeFi space while ensuring user protection and regulatory compliance.
