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- Bitcoin Proposal to Restrict Onchain Data Draws Censorship Concerns
Bitcoin Proposal to Restrict Onchain Data Draws Censorship Concerns
Plus: 💵 Fed reserves hit “danger zone,” 🧱 Solana vs Ethereum heats up, 🇰🇬 Kyrgyzstan rolls out a stablecoin, and more!
Juan Aranovich
October 27, 2025
Hi! In today’s edition:
🚨 Fed liquidity squeeze could fuel next BTC rally
🪓 Bitcoin community divided over “anti-spam” soft fork
🔥 Solana vs Ethereum: Yakovenko reignites decentralization war
💱 Kyrgyzstan launches new stablecoin with CZ at the table
🏛️ Crypto.com moves closer to becoming a U.S. trust bank
💫 Zelle takes stablecoins global for cross-border payments
🎬 Kraken’s Arjun Sethi reveals roadmap for tokenization & L2
By Tikta, Juan Aranovich and Ayesha Aziz
Fed Bank Reserves Near ‘Danger Zone,’ Analyst Implies BTC Upside
Bank reserves at the Federal Reserve dropped to approximately $2.93 trillion last week, according to The Kobeissi Letter. Author Adam Livingston interprets this decline as a signal that could trigger significant upside movement for bitcoin in the coming weeks.
Livingston argues that reserve levels are approaching a danger threshold. He claims the banking system is "within five weeks of the danger zone," suggesting liquidity conditions are tightening rapidly. Reserve balance represents the banking system's deposits at the central bank.
Livingston's analysis connects three simultaneous forces draining cash from the system. The U.S. Treasury has been replenishing its cash balance at the Fed by selling more bills. Meanwhile, the Federal Reserve continues shrinking its portfolio through quantitative tightening. Other Fed liabilities, like currency in circulation, also expand over time.
According to Livingston, when cash scarcity emerges and funding markets become volatile, officials typically slow balance sheet runoff. He argues these liquidity inflection points have historically coincided with stronger bitcoin performance.
📺️ Two must-watch livestreams on Unchained today! 👀
At 10am ET, Arthur Hayes and Adam Schlegel of Maelstrom join Laura to discuss crypto private equity and why the fund is taking outside capital for the first time.
At 4:30pm ET: Our newest Bits + Bips hosts, Austin Campbell and Chris Perkins, discuss tariffs, U.S.-China relations, and more. Joseph Chalom (co-CEO of SharpLink and former BlackRock exec) also joins as a guest.
Bitcoin Developers Debate Soft Fork Proposal to Curb ‘Spam’ Transactions
Bitcoin proposal BIP-444 seeks to implement a temporary soft fork to curb certain transactions on the Bitcoin network by limiting arbitrary data storage on the blockchain.
The proposal, authored by the pseudonymous “dathonohm,” sparked a heated debate among Bitcoin developers and the wider community. If implemented, it would impose strict caps on data embedded in non-monetary transactions, such as NFTs, JPEGs, and memecoins.
Supporters, such as Bitcoin Knots creator Luke Dashjr, see it as a pragmatic and necessary intervention to prevent overload and potential legal liabilities, describing it as an imperfect but useful step to "buy time" for a better fix.
Opponents warn that it risks undermining Bitcoin's core permissionless principles by introducing censorship, arguing that it sets a dangerous precedent akin to state-controlled censorship of monetary transactions.
The soft fork is designed to be temporary, with a sunset clause after one year, but critics fear it might become permanent and stifle future innovation.
Solana’s Yakovenko Challenges Security Claims of Ethereum L2s
Solana co-founder Anatoly Yakovenko challenged the security and decentralization claims of Ethereum's layer 2 scaling networks during a heated debate on X on Sunday. He argued that these networks face significant security vulnerabilities and centralization issues that contradict their stated benefits.
Yakovenko contended that layer 2s feature massive attack surfaces with code bases too large for proper software bug audits. He added that user funds can be moved from L2s without consent because these networks rely on multi-signature custody arrangements.
"The claim that layer 2s inherit Ethereum security is erroneous," Yakovenko stated. He added that "5 years into the L2 roadmap, wormhole eth on solana has the same worst case risks as eth on base and generates as much revenue for eth L1 stakers."
Kyrgyzstan Launches KGST Stablecoin and Advances Digital Som Pilot
Kyrgyzstan has introduced KGST, a national stablecoin pegged 1:1 to the som, and formally recognized its central bank digital currency, the digital som, as part of a national crypto strategy.
The announcement followed a meeting of the National Council for the Development of Virtual Assets and Blockchain Technologies, attended by President Sadyr Japarov and Binance founder Changpeng “CZ” Zhao, who serves as an adviser on digital assets.
According to government statements, KGST will operate on the BNB Chain and is registered in the State Register of Digital Assets, distinct from the previously proposed dollar-backed USDKG. The National Bank said the digital som will undergo a three-phase pilot, starting with bank transfers, then expanding to government and social payments, and finally testing offline functionality.
Officials also agreed to evaluate proposals for a national cryptocurrency reserve, which CZ said could include BNB tokens. Kyrgyzstan is also partnering with Binance Academy to expand blockchain education programs across its universities.
However, not everyone was happy with the announcement. Mert Mumtaz wrote on X: “we should not be helping nations develop CBDCs, it is incredible to brag about this (...) crypto without privacy is not crypto.”
Crypto.com Applies for OCC Charter to Expand Institutional Custody
Crypto.com has applied for a national trust bank charter from the U.S. Office of the Comptroller of the Currency (OCC), joining firms like Coinbase, Paxos, Ripple, and Circle in seeking federal recognition for digital asset custody operations.
The Singapore-based exchange said the move aims to enhance its institutional custody and staking services under direct OCC supervision, covering assets across multiple blockchains including its Cronos network.
If approved, the charter would allow Crypto.com to operate a limited-purpose national bank that provides custody and fiduciary services nationwide, though it would not take deposits or issue loans. The company emphasized that the filing will not affect its New Hampshire–chartered Crypto.com Custody Trust Company, which already serves institutional clients.
The OCC has previously granted conditional approvals for firms such as Anchorage Digital and Paxos, signaling an expanding pathway for federally regulated crypto trust institutions amid a broader industry shift toward formal oversight.
Zelle to Enable Cross-Border Payments Using Stablecoins
Zelle, the U.S. payments network owned by major banks including JPMorgan Chase and Wells Fargo, announced plans to enable international money transfers using stablecoin technology, marking its first expansion beyond domestic payments.
The initiative is led by Early Warning Services (EWS), which operates Zelle, and comes after the passage of the GENIUS Act, which established regulatory guardrails for stablecoins.
“Zelle transformed how Americans send money at home. Now we’re beginning the work to bring that same level of speed and reliability to international transfers,” said EWS CEO Cameron Fowler.
The move would allow Zelle’s partner banks to facilitate faster and cheaper cross-border payments by leveraging U.S. dollar–pegged stablecoins, which maintain stable value and are increasingly being adopted by traditional financial firms.
EWS said the initiative aims to bring Zelle’s “trust, speed, and convenience” to global remittances, though it did not disclose a launch date or supported regions.
How Kraken Plans to Dominate Tokenization and Perps in 2026 and Beyond
As crypto markets mature, Kraken is transforming from a trading venue into a multi-asset infrastructure platform.
Co-CEO Arjun Sethi breaks down the exchange’s expansive strategy: building a vertically integrated derivatives business, pioneering tokenized equities with xStocks, and launching a purpose-built layer 2 chain, Ink, to bridge regulated finance and open DeFi.
Sethi also explains how Kraken responded to the Black Friday crash, the firm’s ADL and margin policies, and what Kraken wants from U.S. policymakers in 2025. Plus: how Kraken’s acquisitions of NinjaTrader and Small Exchange could reshape U.S. derivatives, and why this time, tokenization may finally deliver.
Watch it on YouTube and subscribe to the new Bits + Bips channel! You’ll find unique content there we think you’ll love.
💰 Major crypto firms including Ripple Labs, Coinbase, Tether, and the Winklevoss twins joined big tech companies in donating to Trump’s $300 million White House ballroom project, which has faced political backlash over its cost and the demolition of part of the East Wing.
🪂 Polymarket confirmed plans to launch its own token and airdrop once it fully returns to the U.S. market, after being sidelined by regulators in 2022, emphasizing that the token will play a core role in its platform rather than being rushed out.
🚀 JPMorgan estimated Coinbase’s future Base token could reach a valuation between $12 billion and $34 billion, predicting it will drive major new revenue streams through its Layer 2 network and stablecoin strategy.
🕵️ North Korea stole $2.84 billion in crypto since early 2024 through hacks and illegal IT work abroad, but Chainalysis said Western governments and private companies are getting more effective at tracing and blocking its operations.
