Unchained - Bits + Bips: Crypto Investing Is About Managing Risk, Not Chasing Upside - Ep. 978

Episode Date: December 13, 2025

Subscribe to Bits + Bips: https://bitsandbips.beehiiv.com/subscribe On this bundled episode of Bits + Bips, Unchained executive editor Steve Ehrlich digs into the less obvious risks shaping crypto returns, from DeFi yield to tax reporting. First, Sebastien Derivaux, co-founder of Steakhouse Financial, explains why chasing high yield can be dangerous, how institutional risk curation works onchain, and why the future of stablecoins won’t be limited to the US dollar. Then, Shehan Chandrasekera, CPA and Head of Tax Strategy at CoinTracker, breaks down what crypto investors need to know heading into 2026, including tax loss harvesting, the wash sale gray zone, hidden tax obligations in crypto ETFs, and why the new 1099-DA form won’t tell the full story. Host: Steve Ehrlich, Executive Editor at Unchained Guests: Shehan Chandrasekera, CPA, Head of Tax Strategy at CoinTracker Sebastien Derivaux, Co-Founder & Partner at Steakhouse Financial Timestamps: 🎬 0:00 Intro 🧾 1:10 How crypto fits into existing tax law 📅 2:14 What investors should be thinking about before year-end—and how tax loss harvesting works 🔁 4:54 The wash sale rule: Is it safe to use in crypto? ⚖️ 9:27 How upcoming legislation could change crypto taxes 💵 11:22 Stablecoins and taxes: Are there any special rules? 📊 13:47 The hidden tax complexity of trading crypto ETPs and ETFs 📄 16:39 What the new 1099-DA form is—and what it will (and won’t) tell the IRS 👀 22:31 The key things Shehan says crypto investors should watch closely 22:32 Intro 22:59 Understanding Steakhouse Financial and its growth rate 24:59 What “risk curation” actually means and why Steakhouse focuses on institutions 27:52 How Steakhouse vaults generate stablecoin yields 30:39 What risk curators can—and can’t—control in a decentralized environment 35:28 What recent volatility revealed about DeFi vaults and the collapse of Stream Finance 39:33 Whether “safe” high yield is even possible 41:33 The liquidity problem with tokenized credit funds onchain 49:48 How Steakhouse is positioning for the stablecoin boom 51:24 How stablechains like Tempo and Plasma could change the game 52:47 Why Steakhouse plans to integrate tokenized deposits 54:55 Steakhouse’s 2026 bet on non-USD stablecoins Learn more about your ad choices. Visit megaphone.fm/adchoices

If you traded like ETPs, if you have ETFs, this is the second step that you need to do, in addition to relying on the 1099B that you are getting from the broker. Well, that does sound quite complicated. Hi, everyone. Welcome to Bits and Bips, the interview. I'm your host, Steve Ehrlich, executive editor at Unchained, and we've got a terrific lineup for you today. First, I'm going to be joined by Sheehan Chandrassakara, head of strategy at CoinTracker. and then we're going to follow up with Sebastian Daravow, a co-founder at the DFI Platform Stakehouse Financial. We have a lot to talk about today. Sheehan's going to join us to discuss a year-in-tax strategies,

things that everybody should be considering when wrapping up the year. We're going to cover tax loss harvesting, wash trading, and what's coming down the pike in 2026. So let's get started. Welcome, Sheehan. Yeah, thanks, Steve. Just one very quick disclaimer. Just one very quick disclaimer. Nothing that either I or my guests say here is tax or financial advice. For more information and disclosures, please check out Unchained.com backslash bits and bibs. So, Sheehan, let's get right into it. A lot of people listening have probably been paying taxes on their crypto for years, but for anyone that is kind of new, can you just briefly explain how crypto falls in line with current tax law?

Yeah, sure. So crypto currencies like Bitcoin or even NFTs, they're treated as property according to IRS rules. So that means whenever you cash out or go from one crypto to another or when you earn crypto through staking or any type of rewards, those are considered taxable event. I guess like one easy way for you to kind of think about crypto taxes is kind of thinking about how stocks are taxed. So crypto taxes are very similar to stock, how stocks are taxed with some exceptions. Okay. Yeah, and since this is kind of a year-end sort of tax wrap-up, I would imagine we might have you back in the spring to talk about when it comes to filing. But what are some of the things that people should be thinking about when it comes to sort of finishing out the year, especially in a year where, I mean, a few assets are up. but a lot are down. Right.

I would say like number one thing you should consider doing, especially in December is what we call taxless harvesting. So basically I would look at all the wallace and exchanges you have and go asset by asset and see which assets are below the cost basis. Cost basis means how much you paid for it. If the value is below the cost basis, you could consider selling them and realize the loss. And if you won't, you can buy it back,

in this year or next year, depending on, like, you know, how you want to maintain the question in the long term. And when you realize those losses, you can use those realized losses to offset your capital gains coming from crypto and also like stock transactions. As a result, you're just going to end up paying less taxes on April 15th. And tax loss harvesting, this is something that is not unique to crypto. I mean, anybody can do it for for any asset. and correct me if I'm wrong, but I think there's a limit that you can offset up to $3,000 a year.

And then if your loss is more than that, then it can just be extended outward until you reach the total. Is that correct? So this is how it works. So let's say like, you know, maybe I'll use an example. That's probably the easiest way to kind of understand this. So let's say you sold an asset at a loss and then you created let's say like $10,000 worth of capital losses. And for the same year, 2025 tax year, there's no capital gains coming from crypto or stocks. In that case, you can only claim $3,000 out of that $10,000 worth of total capital losses.

The remaining $7,000 goes to future years. So in the future years, if you have any capital gains, you can use those $7,000 to offset that capital gain. Now, the same scenario, let's say 10,000 capital losses, but let's say you have $8,000,000,000, worth of capital gains in 2025, you can fully offset that $8,000 worth of capital gain using that 10,000. The remaining 2,000 goes to next year. So that's how it works. So in other words, it's not necessarily limited at the 3,000. It's limited at 3,000 if you don't have any amount of capital gains. But if you have capital gains, actually there's no limit. Yeah, you can offset everything. You can do the full boat. Okay. All right. Now, thanks for that clarification. And this kind of

of leads into something I know we've spoken about a lot in the past, kind of crypto's sort of superpower in the sense that crypto is not banned from quote unquote wash trading as far as I can tell. Regular stocks are, regular securities are. Can you please explain that that difference? And I'm also just maybe kind of to add to the conversation talk about, I know there's been discussions about changing this rule, but it hasn't actually change as far as I can tell. And from what I can tell, it seems relatively safe now that Paul Atkins and whatever, yeah, it seems like given the, given the current SEC's like disposition with regards to most crypto assets, wash sale seems to be relatively safe.

Yeah. So maybe it's worth kind of explaining what what a watch sale is for at least for tax purposes. A watch sale happens when you sell a stock at a loss and you, and you buy back the same stock within 30 days. If that happens, IRS does not allow you to take that loss because it's kind of considered like a paper loss, right? I mean, you just had it, but did you really lose it? Not really. So if you buy back the same stuff within 30 days,

you're not allowed to deduct that loss. IRS wants you to defer that loss to future years by making a basis adjustment. Now for crypto, if you read the, IRS tax code section 1091, the wash sale rule is applicable only for stocks and securities, but crypto is treated as a property according to IRS rule, as I explained earlier. So as a result, technically speaking, you crypto, wash sale rule is not applicable to crypto transaction. This means, you know, you could, you know, sell, let's say, Bitcoin at a loss, buy back the same unit,

you know, without having to pay that 30 days. But that's, you know, but that's, you know, That said, there are other rules in the IRS code that prohibits you from doing stuff like that. Like for example, you cannot sell a crypto asset at loss and buy back in the very next second because that type of transaction lacks the economic substance because you're just doing that to create like tax losses, which is bad. So the point that I'm trying to make here is that even though you don't have to wait that 30 days, I would at least wait like a reasonable period of time, maybe like a few days to buy back the same coin if you want to maintain that question. So that's the difference between like,

you know, wash sale as is applicable to stocks versus versus crypto. Yeah, it's not applicable, but it doesn't mean that you can have a civil leader. Yeah. And I was going to say, I think this is where the whole this is not financial, this is not tax, this is not investment, advice disclaimer becomes really important. I know we've spoken about this in the past. So maybe just to kind of drill down a little further, like, like it sounds like you need to have some sort of, if the IRS comes knocking, if you did this and sold Bitcoin at a loss, for instance and bought it back a week later, you'd have to have like some alibi might not be the right word, but a plausible explanation for why this is an economic move, like why this was not

just simply to maximize how much of a capital gain you can offset. Like there has to be some sort of plausible story. Is that kind of what you're saying? That's right. You know, I haven't seen like audits related to, you know, these wash sales rule yet because these several audits are very hard to conduct and hard to streamline because everything is kind of based on facts and circumstance of like each taxpayer and each situation. But you're right. So if I were to sell something at a, you know, lost today and buy it back on December 31st or like, I don't know, like tomorrow, I should I should be able to like, you know, justify why I did that. And in in some cases, it's just a, it's just a lot.

justifiable because unlike stocks, you know, crypto goes to like these huge swings, like, you know, every day, even every other. So is it justifiable? In some cases, yes. Yeah, I mean, you say someone could read a really great article Ununshamed about Bitcoin being about to go into a new cycle right after they sold. Exactly. And it would make perfect, perfect sense for somebody to buy back in. So I certainly get it. Just one more thing related to the wire. sale rule because I know it's been on the chopping block in the past, but it has never actually been kicked out. Do you have any sense of what the future of it looks like? And how is, to expand the conversation a little bit, how is this rule or just tax treatment of crypto being impacted by either the Genius Act, which went into law in July,

or the various market structure bills that are being passed along the halls of Congress? Yeah, wash sales has been a topic, you know, for a number of years right now. A bunch of, you know, draft bills, you know, have proposed to kind of eliminate wash sale rule. The, you know, crypto being, you know, not subject to it. The Genius Act doesn't talk about wash sale rule because it talks more about, you know, stablements and et cetera. But there's like, I would say, like at least like a handful of bills that are, you know, somewhere in D.C. I don't know which step they are in that says that, you know, crypto should be subject to the wash sale rule similar to stocks.

So I would say, I don't know when those bills are going to get momentum or it's going to get past. But I don't think this loophole that we spoke about is something that's going to exist forever. I think it's going to get closed down pretty quick. Yeah, it's, I mean, it's kind of interesting when you think about it. It's sort of like almost an accident that, I mean, maybe not an accident, but like the wash sale rule, I think of it more applying to things like cars or houses, like, like, very like esoteric like non fungible goods where it's like, I mean, how could you sell a house and then buy it right back?

Like it's just not practical. Whereas in crypto, treated as property, but these things are fungible and relatively liquid. It's just certainly a lot easier to do. So I can kind of understand why there's a bit of that mismatch. And everyone's trying to figure out the right way to handle this moving forward. So a couple more questions. And then we'll move on to a little bit of what people should expect in the spring. But I do want to ask you about just a few issues that I know come up a lot.

Stable coins. They're becoming much more popular. And while they're all kind of mentioned as they're all worth a dollar. They're all worth a dollar. But prices fluctuate. And there's times when they can significantly deviate from their pegs. people are using them in everyday transactions. Are there any special treatments, tax treatments for stable coins or anything that

anything that people should keep in mind when it comes to transacting in stable coins? So for tax purposes, every crypto asset is issued as property, including stable coins. So yes, you're right to know some of these stable coins could be not necessarily, you know, pecked, you know, one to one for the dollar. And if that happens, you still have to capture that, you know, tiny gain or loss. But generally speaking, like unless you do like, you know, hundreds of thousands of transactions, you know, these like,

minor fluctuation kind of round up to zero because in, in a tax return, you cannot put like, you know, multiple decimal phases. But that said, even if you don't have a gain or loss, you're still required to report your stable coin transactions on 89 49. Let's say, for example, you used, I don't know, maybe like five USDC to buy a cup of coffee. You still had to report that on Form 89-49, even though that may not result in a significant gain on loss. Because again, Stable Coins separated as property. So that's how stablecoin should be reported on taxes.

And there's still no de minimis exemption. I know that's something I think even Senator Lomas had been speaking about. as recently as a few months ago so that I guess people can avoid having to put on tax forms if they bought a cup of coffee with with USCA. But there's still no de minimis exemption. Right. There's still no de minimis exemption. People are talking about $600 threshold, you know, in some case, thousands and et cetera. Yeah, there's still no de minimis. But, yeah, I mean, I'm a proponent of, you know, having something like that because that would you know, increase adoption and people will start using stable coins and even other coins

for like day-to-day purchases and et cetera. And one more question before we take a quick break, but I'm curious if there's any, we spoke a lot about different in your intro, you spoke about a lot of different ways that people can, I guess, incur tax generating events, for lack of a better term, air drops and staking and passive income, so on and so forth and how they're treated. But I'm curious, the world of crypto is always. evolving are there any sort of new or novel forms of like like tax generating events that people should really be aware of as they're getting ready to finish out the year

yeah i think uh a new one uh is there's like e tps exchange shared of products um so obviously you know if you're buying like an etp like in in other words etf or something like that you just buy it from a broker uh it works very similar to stock you know you have a cost base you have you're selling something and that results in a capital gain of loss. Now, there's a little hidden piece here. These grant or trust can only hold like, you know, digital assets inside this trust and periodically, they dispose of these digital assets to cover like fund expenses, you know, paying their employees and etc. Now, you have to go to the fund website, you know, download the statement and calculate your allocable share of Bitcoin or whatever the digital asset dispose at the fund level to figure

out your own gain or loss. So that's something very hidden because it's not captured by the broker. The broker is only capturing when you sell your ETP interest at a gain or loss, but the broker is not capturing your allocable share of gain or loss that the fund spend in terms of Bitcoin. So that's like a very nuanced thing. So something to keep in mind, basically the idea is that if you traded like ETPs, if you have ETFs, there's a second step that you need to do in addition to relying on the 1099B that you are getting from the broker. Wow, that does sound quite complicated. I guess that's why people need to.

Well, I would imagine, I guess that's why people really need to be careful when it comes to filing their taxes and seek out professional advice if necessary. Okay, a very quick break. and then we have a few more questions. Look, if you're deep into crypto, but try to find macro are a different language or vice versa, we get it. That's why we created bits and bips, a podcast and newsletter that bridges these two worlds. No jargon, no gatekeeping, just smart, clear breakdowns of how these systems actually connect so you stop feeling lost when one side starts speaking their language. If this sounds like something you need, check out bits and bips. You'll find the link right in the description and show notes, just scroll down.

So I want to turn a little bit to what to expect in the coming year. I know that there was some recent guidance that came out from the IRS. Actually, no, I think it was from the infrastructure bill back in 2021, where exchanges like Coinbase and Crackin and Rabbit Hood, etc. are going to have to start issuing a form called 1099 DA, I believe starting this coming cycle. Can you explain what that is? And I know you've spoken a lot in the past about some of the benefits,

but also some of the limitations of especially this year's form that is going to be received by investors. Right. So this whole 1099DRA ruling kind of came out of the infrastructure bill passed in 2021. The TLDR is that the government wants centralized exchanges to act very similar to stockbrokers. So if I'm a user at the end of the year, I get a tax statement showing my gains and losses so I can easily file my taxes. So that's in theory. I mean, in theory it sounds really good, but in practice it's going to create a lot of issues.

So starting 2025 this tax year, meaning like in January, you know, 2026 funding year, if you sold anything in a centralized exchange like, you know, Coinbase, Gemini, and Cracken and etc. you will be getting this brand new form called Form 1099DA showing only your proceeds. Like, for example, let's say you sold a Bitcoin for $100,000 and you paid $50,000. But in this tax form in the first year, it will only show $100,000. It will not show the cost basis. So I think a lot of people are going to get confused when they first receive this tax form

because it's a brand new form that they have never received. And then secondly, it will overstate your gains because it's not going to have the cost basis. So then you had to go to your own books and record, so you had to rely on a crypto tax software to figure out the cost basis. Now, yeah, go ahead, go ahead, Steve. I was going to just to follow up, just two quick things. I believe in 2026, though, they're going to include cost basis there. But going back to 2025, I mean, one question that will inevitably come up is say, I have two Bitcoin at Coinbase and how do I know and I bought one at $25,000, I bought one

to $50,000? How do I know which one I sold? Yeah. So in that case, it comes down to your books and records. Like let's say in your example, you're using something like CoinTracker and you have picked high full as your economy method, highest in first out. In that case, you can marry your highest cost basis with the proceed state when issued by Coinbase, and that will result in the gain or loss.

So in other words, exchanges are not reporting cost bases for the 2025 tax year. You get to input the cost basis based on your own books and records. I wonder how that's going to line up then with the next year when the, I mean, is the exchange actually going to be keeping track of which Bitcoin is sold? and I can imagine a where there's mismatches where like they don't the exchange doesn't know that you use the hypho method and whatever. I guess that might be a problem for next. So yeah, let me break down the 2026 year because that's where I feel like issue is going to get even more amplified. So for the 2026 year, exchanges will report proceeds and cost basis for transactions that happen only inside the exchange.

So going back to my example before, let's say you sold a Bitcoin in 2026, $400,000, and you bought that Bitcoin in, let's say, Coinbase in 2026, same year for $40,000, then you will get a complete 1099 DA. But if you transfer in that Bitcoin from, let's say, your self-custody wallet or crack into Coinbase and sell it on Coinbase, your DA will not show the cost basis. So you will still have those missing cost basis issues. So that's that's one issue. Issue number two is what you just said.

There will be mismatches between what you see on the DA versus your own books and record slash crypto tax software because think about this. I mean, maybe you have been using high full on your crypto tax software, but you have not, probably not set up that high full economy method on your Coinbase. So Coinbase is selling something else, but according to you, in your head, you are selling some other unit. That just starts in some different gain or loss. Now you had to reconcile. The third thing is, so there are like seven different types of transactions that exchanges are not reporting to you on the DAs, like stable coin transactions under 10,000.

They're not reporting to you. You got to rely on your own books and requests. NFT transactions on 600, you got to do. your own records, wrapping, lending, and most importantly, like, if you use a centralized but a non-US exchange, I'd say like Binance.com or something like that. They're not going to send you a DA because they're not a US base, but you still had to report those things. And then the last but not least, the DFI stuff, it's all your responsibility.

And then you had to keep your own books and records. So the point is that D.A. is going to show just a very partial truth of, like, you know, what you did in a given year, but these forms will have a lot of gaps, and now you had to marry that truth that's on the DA with your books and records, and hopefully everything ties when you file your taxes. Gotcha. And just to wrap up here, any other last-minute advice and anything that our viewers and listeners should be paying attention to as we get ready for the year to wrap up?

Yeah, so a couple of things. We spoke about tax or harvesting, so consider doing that to save tax bill because don't wait until the after 15th. By that time, you're already late. The second thing is that if you're using a centralized exchange, make sure your accounting method is set right now because if you don't set an accounting method like hypho-5-4-lifo, starting 1-12, they're going to default you to first in first up, which may not be ideal. So I encourage you to go to the tax centers of each exchange and make sure that economy that is set correctly. Okay, great. Well, Sheehan, we'll have to have you back.

Thanks for taking the time to speak with us. Thank you to everybody for watching and listening. And please stay tuned in a few minutes. I'm going to be back with Sebastian Darvow of Steakhouse Financial. It doesn't make any sense to make 1% more per year if you have 10% chance of losing all your money, which is what can happen. Hi, everyone. Once again, I'm Steve Ehrlich, executive editor at Unchained. And this will be the second part of our back-to-back bits and bips, the interview live screen for today.

I'm here with Sebastian Derevo, co-founder of Steakhouse Financial. So welcome, Sebastian. Nice for having me. Excited to be here. Yeah, yeah, as am I. So, I mean, look, the Steakhouse has been around for a little while, but for anyone watching or listening that is not familiar with your product, can you just please give us a brief overview?

Yeah, sure. Stakehouse has roots at Megadar where we started five years ago. The company was created in 2022, 2020, 23. And what we are doing those days is really creating product for the stable economy because we are feeling, as most people, obviously on this show that the stable economy is coming and is growing. So we have tools for on-chain, providing tools for on-chain asset management. To give you an example, we are the leading creator on Morpho, which is the learning protocol,

on FAM and other layer tools, and a leading creator on Camiro, which is the landing protocol on Solana. We are also operating growth, one of the stars of the Sky ecosystem, which is allocating $1.5 billion to institutional credit. Okay, great. So yeah, let's kind of get into it.

Give me some numbers to just kind of show your traction. I know that in particular, you've seen some impressive growth in your partnership with Morfo and Coinbase. Correct, yes. So just to give you rough ID, stack-offs is more or less 3 billion. On the 3 billion, there is 1.5 that are on growth, so the star that is managing some sky capital. And on the other part, which are tools for asset management, mainly landing protocols, Morpho and Camino, 1.3 billion for Morpho and 200 million for Camino. On those 1.2 billion, as you mentioned, Coinbase, we have a very much.

an exclusive partnership with Coinbase and the vaults, there where people can lend USDC on the Coinbase app as currently $400 million. Just crossed 400 million today. Okay. All right. Congratulations. So, I want to get into a big part of what you guys do.

Your secret sauce is like quote-unquote risk curation, the ways that you kind of construct your vaults in order to provide enticing yields, to your lenders, but also ensure proper risk compliance and safety. Can you talk a little bit about your overall approach to that and how you try to differentiate yourself from some competitors? Yeah, sure. So since the start, we try to differentiate on two axes, one which is we try to be more institution-institutional-focused,

meaning we have less risk in new vault. So vault creation is we provide, we package some risks, we provide some tools, backend tools to create the vault. And obviously, it all depends on the user appetite because we are providing those tools and people can decide which tools are,

which volts are better for them. So we are more institutional focused volt, meaning there is less risk. We don't have the long tail of assets that you can see on some vault to get some few basis points of additional We try to make sure that it works because it doesn't make any sense to make 1% more per year if you have 10% chance of losing all your money, which is what can happen.

So we try really to make a hard due diligence on all collateral we are onboarding, monitoring them. We have also a lot of tools. We rely a lot on automation to make sure that if something happened, we try to put a vote in a safe spot as fast as possible. When you say institutions, I want to be clear, are you talking about like hedge funds, prop shots, like those types of trading firms? Or are you talking now more about traditional institutions like Tradfi or even other businesses that perhaps are trying to manage their treasuries on chain? So I would say all of the above, what we are not doing is selling to retail for obvious reasons.

But we have a lot of what we call B2B2C. For instance, we can base. Coinbase proposed service to their users, but we face Coinbase directly. We are working with a lot of other FinTechs, wallet providers. We are, for instance, on the ledger, we are on Trust Wallet.

Lehman Cash is using us as an example of FinTech. But we are also discussing with a lot of more institutional partners, some key names that are well-known in the space, that are, let's say, 200 million in our volts. So those are key clients or key users with which we have weekly calls to update them on the activity of the market. So we B2B and B2B2C. Gotcha.

And what are some of the typical rates? I mean, looking, I guess, just first at the USDC vaults that you curate. I know the answer is it depends and it will fluctuate based on supply and demand. But generally, like, what are the types of supply or lend and borrow rates that people see on your platform. So it's very interesting because the rate on those, what we call prime vault, meaning there can be seen as somewhat safe, even if I don't make this classification,

they are usually quite close to the Tbil rate of the US government, the three months of Tbil rate or so far, if you prefer. And they are usually a bit above or below depending on the fluctuation of the super in demand. For instance, when there is a price jump of Bitcoin, people want to borrow against the BTC to get more leverage, and that makes the yield you are getting as a lender grow. If there is a price decrease in the price of BTC or Ease,

then it's the opposite. People don't want to speculate on the value increase of those assets, and then they are less willing to borrow at high rate, so the rate on those platforms decrease. That's for the prime vote. I would say so far plus or minus 50 beeps, maybe plus 100 beeps when the market are quite aggressive. On the high yield volt, you have 100 to 400 beeps more than the risk-free rate. I was going to ask you about the difference between the prime and the high yield.

I mean, prime, certainly USDC. Is that the only type of vault in prime or am I missing something? else. No, so each currency, what we call currency, so let's say USDC, USDT, if, has a prime vote in which the collateral against which we are lending are usually more blue chip, blue chip or more regulated. So for instance, in the USDC prime, you will have EIS, CBBTC, RAPS, more or less only those. If you go on high yield, you might have some Ethana-like collateral, some Infiniti-Fi, some reservoir collateral. So those are more complicated collaterals. Those are more on-chain.

And those can fluctuate a bit more. As we saw, for instance, over the last months, with a stream finance, some Volt had such collateral as in their Volt. And that was a key risk. And there was taking a loss on this front. So Prime Volt are really when you want to be a... exposed to blue chip. And high yield volt are more when you want to have a higher yield, meaning as well, a higher risk. Okay.

I want to also, I'm curious to like your level of actual like governance control involvement in platforms. I mean, maybe just talking about morpho. So all these vaults are non-custodial, meaning that the customer is, they're placed in smart contracts. And like you don't have direct you as in stakeouts. do not have direct control over funds. But you do have control over setting up the parameters. And when I was looking over some of your website materials, et cetera, I mean, there are, like you have ways to change,

necessarily to kind of sometimes change the rules, et cetera. So can you talk a little bit about precisely what type of control you have and how you kind of delineate that between you guys and Morpho and Morpho and sort of like what your plan is in case there ever is an adversarial event impacting one of your vaults. Sure. So let's start with a morpho level because that's the easiest. Morphoid is a piece of lending infrastructure, pure infrastructure. So everything that Morpho is deploying is imitable and there is almost no parameters. The only parameters they can influence by them, I mean the Morpho governance, is to take more fees.

It's a fee switch like Uniswap. In that sense, it's quite similar. At the stakehouse level, obviously a vault needs sometimes to add new collateral, remove collateral that are becoming too risky, or change the O'RACL because the Oracle is not good enough. Because I don't know, we are migrating from one Oracle provider to another that might be better. So we can add new markets. That's the main impact that we can have. Adding new markets, how we design at the Volt is we can create.

propose to add a new market and then on the prime vault, depositors into the vault have seven days to veto this change. Meaning that's why we are not in custody of the funds or even controlling the vault, because whatever we want to do, or most operations, the users themselves, we are using Argon Dow for that, can make a vote and vote against us, and it's not possible for us to go against this vote. So in that case, we are always trying to find ways to be as non-custodial as possible. Has that ever happened where there were sort of changes to collateral parameters and

and there was some sort of delay or this pause? So we made the test at the beginning to make sure that everything is working smoothly and helping people to understand how it works. But since then, we never tried, to add a bad market or try to steal collateral or whatnot. So we don't know if it's because people are not watching or if it's just that we didn't try to make something that was bad for users, so users had nothing to do. The good part as well is that we have on some vaults,

some key institutional players that are watching closely, some protocols, for instance, or for some key institution. So that's also one of the benefit is that even, if you are just invested in a vault, if anyone invested in this vault can make the veto, you are kind of protected. So that's quite key in our system. If you know that in the vault there are a lot of smart players that are following closely what is going on, you can be sure that those players will be notified and take action to

veto whatever decision we are making. And it's not so much about just us making a bad decision. say for instance that your curation, multisig is compromised. It can propose some bad decision. And thanks to the guardian mechanism, we can veto those decisions and put the vault in a safe place. Yeah. And that's a pretty common tactic, security tactic. And across, I know a lot of crypto protocols having a waiting period or cooling off period. So I can certainly appreciate that.

Very quick break. And we're going to come back with Sebastian. If you're deep into crypto, the TradFi and Macro is a different language, or if you're in Tradfi and Crypto feels like chaos, we get it. That's why we've created Bits and Bips, a podcast and newsletter that bridges these two worlds. No jargon, no gatekeeping, just smart, clear breakdowns of how these systems actually connect. So you stop feeling lost when one side starts speaking their language. If this sounds like something you need, check out Bits and Bips.

You'll find a link right in the description. Just scroll down. So let's, I want to talk about usage of your platform during like the current market chaos. There's been a lot of volatility, especially in the last two months or so. What have you seen? How are people using your vaults? And yeah, let's just go from there. Yeah, sure.

So there was two main events. I would say there was a lot of big volatility event. on the 10 of October, price going down. I think that was when USD was blowing up on Binance, those kind of stuff. On those events, not much happened on Morpho, for instance, or even coming. Because it's quite unrelated. The price of Bitcoin and this was crashing, but because there is open liquidation, so anyone can liquidate a position that is starting to get a loss,

or getting to get to a, getting to a point that it's a bit risky and nothing happens. There was liquidation. Borrowers were liquidated, for sure, but for lenders they didn't have any impact. Then fast forward just the months after, there was one incident where some creator were lending against the stream finance or Elixir, which are two protocols from Defi. Stream finance, which is kind of an unregulated hedge fund, used, gave money to someone that was using this capital to make leverage looping, so quite risky strategies. In exchange of a very high yield, I think the yield was from 10 to 30%, so quite high yield. And people were lending against

it at a high rate as well to get a higher yield for sure. And Elixir, which is a defy stable coin, being on-chain, was exposed to stream finance because they were investing part of the balance sheet into stream finance. So in the stream finance lost 80 million. I'm not sure there is any post-mortem on how and on why. And so everyone was rushing out and obviously there was a lot of issues. Now there is a bankruptcy process in my understanding. But the main issue is that the price of XUSD, which was a stable coin or the token went from one dollar to almost nothing. So to protect against those behaviors on lending protocol, it is quite custom to use a softener on the price, to say that's because there was no actual price or no deep price like USDC. So they were putting a price of one

because it was over-quest one. Or at least they were using, no, sorry, they were using the nav provided by the platform. So it was 1.1 and it was increasing all the world. But the price was still reporting an inflated value. And so there was no. liquidation possible, which is not per se an issue, but if the protocol was getting solvent again. It never got solvent and then that means that some people needed to take a loss. Some market were cut and the money was lost. So obviously when you have an impact like that, some people would think about it and say, well, maybe I shouldn't be in a very risky vault in the first place. And there was a lot of exodus of Volts that were impacted or not impacted.

The prime vault, we had some users leaving them. And they were saying, well, we know there is no risk, but our management thing that might be a risk. So we remove and we will come back. And on our high yield vote, we did go from 250 million, I think to 60 million in a few days. And now it's going back. We are at 150 million. Because people need some time to reassess the situation

and make sure that there was no risk. Which is quite usual because we are a repo protocol. Lemoth is a repo. So you should be able to remove your money anytime. Anything else, I mean, just related to how people are trading or trying to, especially in a bearish market, stretch out additional yields, passive income. Anything else aside from those couple of very, I guess, discrete events that kind of stand out to how your protocol is being used.

Now, really for now, and that's actually what we are planning to expand into in 2026, is if you look at how to generate a yield in DFI today, you have the lending protocols, the AVE, the Morphos, the Camino, the compound of the world. But then the rate is just a repo market. There is maybe less risk than what you want to absorb. And so the rate is, let's call it from 4 to 8%. And we have plenty of people that are asking, well, I want something more than 10%. at least. But those are different kind of product. And usually those products are kind of black boxes like Stream Finance, which was quite a black box, completely black box, because the money was taking off-chain. You have some basis trade product and you have new product coming in, but obviously it takes time for the market to understand what are good products, what are bad

product, what is the product that match the risk appetite of everyone. So going in 2026, we will deploy new product to enable a new risk appetite for people that want, for instance, I'm willing to put my money for six months and I'm willing to take a bit more risk, let's say just a duration risk, so the fact that my money might be liquid. And so that should drive a higher yield as a reward for those users. We also see actually the increase of a yield asset. I'm sorry. I'm sorry, the increase of what? Of a hill world assets, RWA, where people can start to invest in themselves.

Exactly, yeah. But it's still quite early. Yeah, I was going to ask about that because I know there was, I don't know controversy is the right word, but there was, but there was some discussion about one particular, I think tokenized credit fund on your platform that had to be, I guess, devalued. evaluate a slight amount because the underlying asset itself, which was being tokenized, gotten marked down. Maybe money just talking about that now. I mean, what does all that mean? Stoke a lot of confusion, but it also comes, I think, with the territory of trying to tokenize what is inherently an illiquid asset, or I guess largely illiquid asset that you're trying to

make liquid, but maybe just kind of walk us through what happened there. And I know that there are some other tokenized credit funds. Apollo has one with Securitized in Hamilton Lane. And these products have had a bit of trouble getting a lot of traction because of their inherent liquidity. So maybe talk about that. Yeah, sure. So the product in question is Midas MF1. That is a tokenized version of a FASA F1, which is one of the fund of FASA, which is an asset manager in London, managing $5 billion specialized in private credit. What is a bit specific with this product is that compared to other tokenized private credit, you can go in atomically.

You can deposit, I don't know, 10 million, and you will get 10 million token of MF1 directly. To get out, there is a 10% liquidity sleeve. So you can get out sometimes. If there is a liquidity, you have a 1% haircut, but you can get out immediately. Obviously, when there is no liquidity, then it's private credit and it takes 30 to 90 days to replenish the liquidity. So what was the event in question, as you mentioned, is that the underlying fund, like many private credit, had exposure to first brand, which was one of the blowup and fraud this year.

And so they marked down the fund by 2% recently. And the main issue is that people were looking at the chart of MF1. It was just going up. Almost the same amount every day, plus of minus. And then there was a drop. Now, the issue is that in private credit, because of the underlying kind of assets they have, it's a credit. So you are just marking every day you are accruing interest.

And when you have default, then you take the loss because you need to amorting a lot. or put a provision for the amount that you might lost because obviously there is a bankruptcy process and that will take quite some time. So it's a bit different because if you look at, I don't know, for instance, high yield ETF or J. Triple A or Accred of Apollo, which is one of the private credit on chain, the price fluctuate every day because there is some liquidity in Trotify and they are using the price of this liquidity. But for the real illiquid private credit, it's different.

It's just you have an investment, you accrue money every day. And at some point, when the fund administrator, which is a regulatory, he says, well, you should depreciate by X percent, then you deprecate by X percent. And it was 2 percent. So it's also quite important to know that if you are an investor in this product, you are losing 2%. And but for instance, we are investor as well.

And so even after the 2% loss, we made 4% for the last six months. So it's still quite a good ROI. And if you are a lender, you are not losing any money if there is a loss of 2%. Because there is a haircut or over collateralization, meaning that even if the price decreased by 2, 4%, you are still good for your money, and the borrower is still paying the interest. Yeah, there's a bit of a buffer zone. But yeah, it just speaks to the complexity of these products. I mean, Acred is, I think, what's called an interval fund where it doesn't have like daily liquidity like an ETF.

I forget all the, actually wrote a story about this a few months ago, where I think they can only redeem something like five or 10 percent of the total AUM on a quarterly basis. And if more people went out, then it has to be sort of prorated. And that's sort of the puzzle that people like you were trying to solve. taking illiquid assets and put them on chain. But private credit is such a big market and it's only growing that I would imagine there's going to be many more bites of the Apple coming. What are some of your key lessons learned from this particular instance?

Either just like technically from a business point of view or even publicly from a messaging aspect because a 2% drop in Bitcoin, that's nothing. But it certainly created a lot of panic among, your users because of this. And it seemed like there was a lot of misunderstanding. So what are your takeaways from this episode? So on the technical front, maybe on the valuation policy, there should be some stuff that can be improved.

Maybe, you know, the bankruptcy was two months ago. But obviously, Tritfi is not working on a 12-second interval. There are one-month process. You need the phone admin. They need to analyze what's going. on. We live in crypto. We don't have time to analyze. I mean, you know, that's well better than me. You need to react fast. You don't have two days or two weeks to make an informed decision. So maybe we can improve on that front. Obviously, there is a lot of a contractual obligation

and regulatory obligation. So we cannot just say, well, let's change it. What was interesting and to relate those two events, MF1 losing 2%, and stream finance, losing more or less everything, I mean, blowing up. What is interesting? is that stream finance was completely unregulated. It was someone on the other side, and they just misandals the money. On the MF1 side, which is private credit, and as you mentioned, it's more complicated for people to understand. At least you have someone that is regulated. Fassanara is regulated, the federal administrator is regulated, so it's not like coming from nowhere and managed by random people on the internet. Yet there is a lot of complexity because maybe we're

We are using the word private credit. We didn't convey enough that there was a risk. I mean, it was written in a document, but maybe the document was too big. And I think it's just the learning. You know, in 2020 at MakerDAO, some people wanted to use USDC as collateral for Dye the stable firm. And that was an outcry because how can we know that Circul is a sales company and that the money is there?

And it's not decentralized. Now, fast forward five years. Does anyone still care that USDC is in a risk? I mean, in crypto at least. No one cares. Everyone is using USDC more or less. So it's just the social evolution of the ecosystem. Sorry?

Yeah, I was just making a joke. I mean, notwithstanding March 2023, but I think we're, with regards to the USC, but I understand the point you're trying to make. And yeah. So let's look ahead a little bit more. I am curious, I mean, given your intense focus on stable coins, JuniSact has been put into law, but it hasn't been fully enacted yet.

What are you seeing in terms of growth and kind of how are you positioning to really take advantage of what could be an explosion in the stable coin field, not just in the total value, which could move into the trillions in a few years if you believe are the U.S. Treasury Secretary, but also lots of new types of issuers from Wall Street banks to maybe even Fintax and tech companies. Correct, yes. We are speaking with most of them. And as you know, they all have one particular problem is that they are not allowed to give a yield. If they are genius compliant or Mika in Europe. And so who view as a DFI tool provider is that those users will want to have a yield.

And so if they cannot get the yield of the underlying investment in T-bills, which is what genius stablecoin are doing, they will want to be able to lend their money and get yield or compensation this way. So we think it's an enormous opportunity for us to provide those kind of services and those tools towards stablecoin issuer. We are speaking with most. I see a few issues is that currently we still have a lot of stable coin coming on the market. which are not all compatible or fungible between each other.

Some stable coin issuer like I think Agora M0 or Stripe are providing white label stable coins. So you can have your own stable coin, but it's fungible with the rest of their own ecosystem. So that's one solution. But I think we need to crack how to make sure that we don't end up with 1,000 stable coins that are not one to one all the time. So I think that's that we're will be changing. Yes. And then we will provide and support as much stable coin as we can to provide the user of the stable coin to get a yield. I know that blockchain is like ARC and tempo are kind of still being built out. And I would imagine that like Aves and morphos and compounds in the world will migrate over or those products will build their own defy lending protocols. I mean, I would imagine that you are looking to get onto. those or even I'm blanking on the name. Was it stable, the one that Tether has also sponsored?

Stable and plasma, yeah. Yeah, you're looking to integrate with those as well? Correct, yes. So every time there is a new chain. I mean, the last one we integrated was Monad. If you go on Morpho Monad, you will see there is only Stakelsvold. We try to be as much everywhere as possible. Obviously, it's quite an investment, so we cannot do everything.

We will probably focus more on institutional chain, the like of tempo, arc, and so on, because we think we can provide the basic infrastructure. And as you mentioned, any stable coin chain will need to have lending. Because the landing component is the basis of the financial ecosystem as we live today. If we remove repo, the repo market is a few trillion dollars of volume every day. So we need this to have a functioning stable coin economy. that's at least who are all belief that stakeholders. I also want to ask about, I don't think you deal with these,

and I mean, they're just getting started, but tokenized deposits. JP Morgan is already, I guess, piloting, if that's the right term on base. And I've always, I understand the need for stable coins, but from a bank point of view, I guess I've always been sympathetic to the idea that tokenized deposits are a much more capital-efficient tool for banks than stable coins. They have to be fully collateralized,

whereas tokenized deposits are fractionalized. Is that something that you're looking to potentially integrate as well? Yeah, 100%. So I would agree with you. I mean, there are some nuance. If you look, for instance, the Euroconvertible issued by, a stable account issued by a social general in France. The whole backing is just a bank deposit as a society general.

So in that way, it doesn't break too much. I think with genius, it's more, it's less, compatible. The idea as well is when you have tokenized bank deposit is you know who are the users and that has a big impact on the liquidity profile that you can apply on the asset side of your balance sheet. There was a lot of people discussing this precious issue that if you are only providing stable coins or funding or being the bank of stable coin, you cannot invest for long term because the liquidity might be needed quite fast. So we will We love a tokenized bank deposit as well.

Currently, as you mentioned, it's super early. GPMorgan launched one in June on base. But it's obviously more difficult. One of the key aspects of the blockchain is the permissionless nature. That's why we have such a big capital pool on Ethereum, Solana and other blockchain. Because it's permissionless and anyone, wherever they are,

they can play with each other and build the financial ecosystem. If you need to permission everyone, obviously that way slower than if you let people to create every day. And just to wrap up here, I'm curious. I know you started to hint at some of your plans for 2026. I'd love for you either to expand on that a little bit more or just share any final thoughts that we didn't have a chance to speak about. Yeah, sure.

So we have two targets in 2026, one which is developing new. product that will be morphovolvvvvvv but I think Avia has something as well which you will have a yield curve currently. Everyone is landing for 12 seconds more or less and then the rate can go up or down. So it's a viable rate which is not very good if you want to plan for the next six months. So it will be able to land at six months. There was already a lot of protocols trying to do this but for some reasons they didn't find foreign product market fit maybe because there was too small to get the size sufficient enough to get something good. And the second part is the new stable coins, non-USD stablecoin.

We have launched Singapore dollar volt recently. We have a long list of new volts that we want to launch with a new stable coins that are not USD denominated. And that will be interesting because we will be able to make cross-cruency repo and that could be something quite helping at least for to have a better ecosystem on the blockchain. I live in France, so I need euros. So whatever I can do to create more free DT or liquidity for the euro, USD pair. That's good.

There is a lot of users of stablecoins that are in emerging markets. They are using only USD. I mean, maybe they want USD, but I'm quite sure for the everyday life, they would be fine with a local currency stablecoin. All right, well, Sebastian, thanks for coming on Bits and Bips the interview. Look forward to tracking your progress. And thank you to everybody for watching and listening. Welcome to this week's news recap. Let's begin. Duquan receives 15-year prison sentence over Terra collapse.

Terraform Labs co-founder Doquan was sentenced to 15 years in prison by a federal judge in New York for orchestrating a sweeping crypto fraud tied to the collapse of the TerraUSD stable coin in May, 2020. The sentence imposed by Judge Paul Engelmeyer of the Southern District of New York exceeded the 12-year term sought by prosecutors and far surpassed the five-year request from Kwan's defense team. Kwan pleaded guilty in August to conspiracy and wire fraud, admitting he knowingly misled investors about the stability of Terraform's products. Prosecutors said the scheme wiped out roughly $50 billion in market value over three days. Judge Engelmeier cited the scale of losses, the number of victims, and Kwan's attempts to evade arrest using false passports as key factors in the decision, calling aspects of his conduct despicable. Kwan must serve at least half of his sentence before seeking a transfer to South Korea,

where he may still face additional charges. OCC clears path for Stablecoin issuers with banking charters. U.S. banking regulators have taken a major step toward integrating stable coins into the traditional financial system. The Office of the Comptroller of the Currency has granted conditional approvals, for national banking charters to five digital asset firms, including Circle and Ripple. Circle's first National Digital Currency Bank and Ripple National Trust Bank were approved as new entrants, while BitGo, Fidelity Digital Assets, and Paxos Trust Company, received conditional approval to convert their existing state charters. New entrants into the federal banking sector are good for consumers, the banking industry and the economy, said Comptroller of the Currency,

Jonathan V. Gould, citing increased competition and innovation. The approvals come as the stable coin market has expanded rapidly, reaching $313 billion in 2025. Wall Street builds safety net into Ripple's $500 million raise. Bloomberg reported that Ripple's latest fundraising round drew some of the biggest names in finance, but only with unusually strong protections attached. In November, the company sold $500 million in shares

at a $40 billion valuation to investors, including Citadel Securities and Fortress Investment Group, marking the largest valuation ever for a privately held digital asset firm. According to people familiar with the terms, investors secured the right to sell their shares back to Ripple after three or four years with a guaranteed annualized return of 10%. If Ripple opts to repurchase the shares itself, that return rises to 25%. The group also negotiated a liquidation preference that, places them ahead of other shareholders in a sale or bankruptcy. The structure reflects how some funds view Ripple as heavily tied to XRP, which accounted for

roughly 90% of its net asset value in assessments by two participating firms. XRP has fallen more than 40% from its July peak, though Ripple continues to expand through acquisitions, including the $1.25 billion purchase of Prime Broker Hidden Road and a $1 billion deal for G Treasury. BlackRock advances bid for Staked Ethereum ETF. BlackRock has taken its first formal step toward launching a staked Ethereum Exchange Traded Fund, filing an S-1 registration statement with the SEC for the proposed I-Shares Ethereum Staking Trust, or ETHB.

The application would allow the firm to introduce a product that stakes between 70% and 90% of its ether holdings and pays out yield on a quarterly basis. A separate 19B-4 filing from NASDAQ is still required. to trigger the SEC's review clock. The move reflects a shift in regulatory posture under new SEC Chair Paul Atkins, who has shown openness to staking features after earlier filings were forced to remove them

under previous leadership. BlackRock's existing Ethereum Fund, ETHA, holds roughly $11 billion in Ether and will operate independently from the staked version. The filing arrives as Ethereum's staked supply reaches record levels. About $108 billion worth of ETH is now ETH is now staked, representing 28% of total supply.

Adkins outlines new boundaries for ICO oversight. SEC Chair, Paul Atkins signaled a major shift in how initial coin offerings may be regulated in the U.S., stating that most token launches fall outside the agency's authority under his proposed token framework. Speaking at the Blockchain Association's annual policy summit, Atkins explained that his taxonomy breaks tokens into four categories, network tokens, Token, Digital Collectibles, Digital Tools, and Tokenized Securities. ICOs transcend all four topics. Three of those areas are on the CFTC side, so we'll let them worry about that, and we'll focus on tokenized securities, he said. Atkins emphasized that ICOs tied to network, collectible, or utility tokens should not

be treated as securities. His comments align with the SEC's ongoing Project Crypto effort, which envisions exemptions and safe harbors for compliant token launches, airdrops, and network rewards. The stance could pave the way for a resurgence in U.S. ICO activity. Industry momentum is already building, with Coinbase launching a new token offering platform in November after acquiring Echo for $375 million. Gemini secures CFTC Greenlight to launch U.S. prediction markets. Gemini has received approval from the Commodity Futures Trading Commission

to introduce regulated prediction markets in the United States. The authorization grants Gemini Titan, an affiliate of the exchange, a designated contract market license after a five-year review process. Today's approval marks the culmination of a five-year licensing process and the beginning of a new chapter for Gemini, CEO Tyler Winklevoss said, crediting the Trump administration for ending the Biden administration's war on crypto. The designation allows U.S. customers, to trade event contracts directly through Gemini's web platform, with mobile access expected later.

Sample markets could include questions such as whether Bitcoin will finish the year above $200,000. The approval puts Gemini in direct competition with Kalshi and Polly Market, both of which have seen rising activity as regulators adopt a more permissive stance toward event-based trading. CFTC launches pilot-letting crypto serve as derivatives collateral. The Commodity Futures Trading Commission has introduced a new pilot program permitting regulated derivatives firms to use Bitcoin, Ether, and Payment Stable Coins, such as USDC as margin collateral. Acting Chair.

Caroline Fam announced the initiative, saying it, establishes clear guardrails to protect customer assets, and provides enhanced CFTC monitoring and reporting. The program applies to approved Futures Commission merchants, which must meet strict oversight requirements. For the first three months, participating firms must deliver weekly disclosures on digital asset holdings and alert the agency to any issues. A separate no-action letter also gives firms limited permission to hold certain digital assets in segregated customer accounts. The CFTC simultaneously withdrew a 2020 advisory that had restricted crypto collateral, calling it outdated in light of the Genius Act.

Updated guidance now covers tokenized real-world assets. real-world assets, including treasuries, which must still satisfy enforceability, custody, and valuation standards. Circle unveils Privacy-enhanced USDCX for institutional use. Circle is developing a new privacy-preserving stable coin, USDCX, designed for banks and other institutional users that require confidentiality while maintaining regulatory transparency. The asset is fully backed one-to-one by standard USDC. and issued through Circle's X-reserve system, but transactions take place on the privacy-focused ALEO blockchain

using zero-knowledge cryptography. This setup conceals details such as sender, receiver, and transfer amounts from public view. Despite the added privacy, USDCX is not anonymous. Each transaction generates a compliance record accessible to Circle if requested by regulators or law enforcement. USDCX is live on ALEO's test net and is expected to move to Mainnet around late January.

Circle says the model could support use cases ranging from corporate payments to cross-border remittances, with interoperability across other USDC networks planned. Farcaster retreats from Social First Vision refocuses on wallet growth. Prominent decentralized social platform Farcaster is stepping back from its years-long push to build a Twitter-style network, with co-founder Dan Romero announcing that the team will shift future development toward its in-app wallet. Romero said, We tried social first for 4.5 years. It didn't work for us. Wallet has been growing, so we're doubling down on that direction. Romero said the wallet, launched earlier this year,

has accelerated faster than any prior product. We think it's the closest we've been to product market fit in five years, he added. The new strategy inverts Farkaster's original approach. Rather than adding a wallet to a stagnant social layer, the team will layer social features onto a tool users already find useful. The shift follows Farcasters acquisition of Clanker, an AI-driven token launchpad, signaling a deeper pivot toward on-chain utilities. Community reaction has been mixed, as the protocol posted $1.84 million in fourth-quarter earnings, down 85% year-over-year.

ETF proposal bets on Bitcoin's Night Owl Behavior. A boutique wealth manager is leaning into one of Bitcoin's quirkiest patterns with a newly proposed exchange-traded fund designed to hold BTC only while most of America is asleep. Nicholas Financial has filed with the SEC for the Nicholas Bitcoin and Treasuries after Dark, ETF, a product that would buy Bitcoin at 4 p.m. E.T. write as U.S. markets close

and sell it again before the opening bell at 9.30 a.m., rotating into short-term treasuries during the day. The strategy hinges on data showing Bitcoin tends to post stronger returns. turns outside regular U.S. trading hours. BTC has been more likely to trade in the green overnight over the past year, while daytime sessions skew negative. Bloomberg's Eric Beltunis said similar patterns appeared in 2024 and may reflect

ETF flows and derivatives positioning. If approved, the After Dark Fund would add a playful yet data-driven twist to Bitcoin investing by treating time of day as a core part of its strategy. Time for fun bits! The banana meme strikes back. Crypto never misses a plot twist, but this week's headline belonged to a fruit. After Binance admitted it had suspended an employee for allegedly using official accounts to hype a freshly minted token, the wonderfully named Year of the Yellow Fruit went up,

because of course it did. According to Binance, the employee posted promotional images less than a minute after the token appeared on-chain, which is either impressive reaction time or a dead giveaway. The exchange called it abuse of their position for personal gain, contacted authorities, and reminded everyone about its zero-tolerance policy. Traders, meanwhile, saw the words insider trading and apparently read, Buy Now, sending the tiny meme coin to a new high. In crypto, even the scandal pumps.