🔮 Capital Moves, Polygon Becomes Critical, Coinbase Walks, Govenment Holdings

Top Stories

Capital Rotates Out of Synthetic Yield

Ethena’s USDe supply has fallen nearly 60% from its peak to $6.3 billion, retreating to mid-2024 levels as capital rotated into Sky’s USDS, which just hit a new all-time high above $6.5 billion despite overall stablecoin supply remaining near records. The drawdown was catalyzed by the October 10 crash, when an exchange-specific de-peg on Binance and cascading liquidations undermined confidence, even as onchain markets held parity. With perpetual funding rates compressing and USDe’s yield declining, users increasingly favored the simpler, overcollateralized USDS model offering a more predictable 4% return, highlighting a broader shift from complex synthetic yield toward stability and transparency.

Spurce: DefiLlama, The Block

Polygon Builds the Open Money Stack

Polygon’s $250M+ acquisitions of Coinme and Sequence mark a strategic shift from being a scaling layer to becoming full-stack payments infrastructure. By combining U.S. money-transmitter licenses with embedded wallets and one-click onchain orchestration, Polygon can offer banks and fintechs a single, compliant entry point for issuing and settling money onchain. Backed by rapidly growing payments volumes in 2025, the Open Money Stack positions Polygon to compete at the settlement and orchestration layer, where stablecoins increasingly challenge legacy payment rails.

Source: Dune

Shorts Got Squeezed

Bitcoin’s surge toward $97,000 triggered a brutal unwind for bearish traders, with nearly $800 million in liquidations over 24 hours, the vast majority coming from short positions. Bitcoin alone accounted for roughly $380 million, followed by Ethereum and Solana, as broader crypto markets rallied on improving macro sentiment, strong Bitcoin ETF inflows, and optimism around U.S. crypto market structure legislation. The move underscores how quickly positioning can flip in a leverage-heavy market, with renewed momentum leaving bears decisively on the wrong side of the trade.

ETH Exposure, Now With Yield

Institutional adoption of Ethereum staking is accelerating, with Lido emerging as core infrastructure as products shift toward fully staked ETH exposure. WisdomTree’s late-2025 launch of a fully staked ether ETP in Europe using stETH set a new benchmark, while expectations are building for a U.S. staked ether ETF as early as mid-2026. Alongside ETFs, Lido’s expansion into customizable institutional staking vaults reflects a broader repricing of ETH as a yield-bearing asset, where staking depth, liquidity, and risk configuration are becoming central to how institutions access and hold Ethereum.

Source: Dune

Regulation

Another Crypto Custodian Rings the Bell

BitGo filed for its IPO this week, aiming to raise up to $200 million at a valuation approaching $2 billion as it prepares to list on the NYSE under the ticker BTGO on January 21. The custody and infrastructure provider, which secures more than $104 billion in digital assets, is offering roughly 11.8 million shares at $15–17 and reported sharp revenue growth in 2025 driven by digital asset sales, subscriptions, and services. The filing adds to what has become a banner year for crypto IPOs, reinforcing that regulated custody and stablecoin infrastructure are now viewed as core, investable pillars of the digital asset ecosystem.

Coinbase Walks Away at the Eleventh Hour

Coinbase abruptly withdrew its support for the Senate crypto market structure bill just hours before a critical Banking Committee markup, with CEO Brian Armstrong calling the draft “worse than the status quo.” The reversal centers on escalating pressure from the banking lobby to further restrict stablecoin rewards, a key business line for crypto platforms, beyond the limits already set in the latest draft. Coinbase’s move raises the risk of derailing the bill altogether and underscores how fragile the legislative coalition has become, as stablecoin yield has emerged as the defining fault line between crypto firms and traditional banks.

Banks Draw the Line on Stablecoin Yield

An updated U.S. crypto market structure bill draft would ban digital asset providers from paying interest simply for holding payment stablecoins, marking a win for banks that warned yield-bearing stablecoins could siphon deposits from the traditional system. While the provision closes perceived GENIUS Act loopholes, it preserves broad carve-outs for transaction-based and activity-driven rewards, including payments, liquidity provision, and ecosystem participation. The late release of the text has sparked procedural backlash from Democratic senators demanding a public hearing, raising the likelihood of delays as lawmakers debate how far stablecoins should be allowed to compete with bank deposits.

Seized, Not Sold

The White House confirmed that the roughly $6.4 million in Bitcoin seized from Samourai Wallet’s developers was not liquidated and will instead be added to the federal Bitcoin reserve, despite prior legal language suggesting an imminent sale by the DOJ. The clarification eases concerns that prosecutors were acting against the spirit of President Trump’s executive order establishing a national BTC reserve, even as the developers themselves remain imprisoned with no pardons issued. The episode underscores ongoing tension between federal crypto policy signaling and on-the-ground enforcement, particularly in cases touching privacy, forfeiture, and the government’s growing role as a long-term Bitcoin holder.

Other Domestic Regulation Updates

• Strategy Spends $1.2 Billion on Bitcoin, Its Biggest BTC Buy Since July
• Kraken-Linked SPAC Eyes $250 Million US Public Offering
• Visa Partners With BVNK to Enable Stablecoin Payouts on Visa Direct
• Senate unveils updated market structure bill limiting stablecoin rewards
• Kraken-linked SPAC targets Nasdaq IPO with $250 million offering
• Bitcoin Seized From Samourai Wallet Has Not Been Sold

Other International Regulation Updates

• Polygon Labs spends $250 million to acquire Coinme and Sequence, ‘foundational’ elements of its Open Money Stack
• Bank of America CEO: Interest-Bearing Stablecoins Could Take $6T Out of Bank Deposits
• Ripple secures preliminary EMI license approval as EU payments push advances
• Pakistan to Explore Stablecoin Remittances via Affiliate of Trump-Linked World Liberty Financial

Pain & Gain

Pain

• Tether freezes $182 million in USDT tied to five Tron addresses
• Jefferies strategist drops 10% bitcoin allocation over quantum computing fears
• Google Play to ban overseas crypto exchanges from South Korea store
• Iran's crypto ecosystem nears $8B as bitcoin withdrawals surge during protests: Chainalysis
• X ended the "InfoFi" ecosystem by revoking API access from applications that rewarded users for posting content, leading to divided reactions within the crypto community

Gain

• Standard Chartered's Global Head of Digital Assets Research, Geoffrey Kendrick, forecasts 2026 will be "the year of Ethereum," expecting ETH to outperform crypto peers
• Goldman Sachs CEO says firm is actively exploring tokenization and prediction markets
• Crypto VC Giant Andreessen Horowitz Raises $15 Billion to Help America ‘Win’ Tech Race
• Crypto hardware wallet provider Ledger launched a feature for users to access BTC Yield products