Crypto Bill in Peril After Democrats Push DeFi Crackdown

Hi! In today’s edition:

• 🔥 Senate Dems float what looks like a full-on DeFi ban

• 🪙 BNB meme traders learn not to bet on CZ’s tweets

• 💰 “Bitcoin Jesus” Roger Ver cuts $48M DOJ deal

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Crypto Market Structure Bill Stalls After Democrats Propose ‘Effective Ban’ on DeFi

Bipartisan negotiations on the broader crypto market structure bill, the CLARITY Act, appear to have stalled after Senate Banking Committee Democrats sent a proposal to Republicans on Thursday, according to a report from Punchbowl News.

The Senate Democrats' new DeFi regulations contrast with Republican drafts, which sought to protect software developers and clarified intermediary liability more narrowly.

Blockchain Association CEO Summer Mersinger called the proposal a “non-starter” and one that would “effectively ban” decentralized finance and wallet development in the U.S.

“It authorizes Treasury to ban anything in DeFi,” said Jake Chervinsky, chief legal officer at Variant Fund.

“It creates a ‘restricted list’ for protocols and front-ends that Treasury thinks are too risky, and then makes it a crime for anyone to use them.”

Crypto lawyer Gabriel Shapiro noted that the proposal would not exempt DeFi protocols from intermediary-style regulation, even if they are sufficiently decentralized.

“This isn’t a starting offer, this absurd proposal is a poison pill by a group of Democrats who have no interest in engaging in a bipartisan crypto policymaking process,” wrote The Sentinel Action Fund, a Super PAC focused on crypto advocacy. 

BNB Memecoins Plummet After CZ Denies Endorsement

BNB-based memecoins experienced a sharp plunge in value, with some dropping between 60% and 95% over a few hours, after Binance founder Changpeng "CZ" Zhao clarified that his tweets should not be interpreted as endorsements or trading signals.

Zhao’s clarification came amid a frenzy where over 100,000 traders had speculated heavily on memecoins linked to CZ’s social media activity.

“For a brief time, I tried avoiding meme related content in my tweets. Impossible. Too many memes exist, and it made my writing unnatural,” said Zhao.

“Now I just tweet normally, any overlap to memes is coincidental, not endorsement.”

That tweet triggered panic selling and a sharp liquidity drain, especially on decentralized exchanges like PancakeSwap, which had seen record trading volumes during the memecoin surge. 

Zhao acknowledged the massive memecoin selloff in another X post, attributing it, in part, to “false news” about Binance Alpha declining to list certain coins in the future.

“People often give me too much credit, in good times and bad. I didn't do anything. Was busy all day,” said Zhao.

Roger Ver to Pay $48 Million in Tentative Settlement Deal With DOJ: Report

Roger Ver, known to some as "Bitcoin Jesus" for his early Bitcoin advocacy, has reached a tentative deferred-prosecution agreement with the U.S. Department of Justice (DOJ) to resolve a criminal tax fraud case.

The New York Times reported that Ver agreed to pay around $48 million in restitution for alleged tax evasion linked to his digital currency holdings.

Under the terms of the deal, which still requires court approval, the DOJ would drop charges against him if he complies with the agreement. 

Ver was accused of failing to pay taxes on roughly $240 million in Bitcoin gains from 2014 to 2017, including allegedly undervaluing his Bitcoin portfolio and companies before renouncing his U.S. citizenship in 2014.

“I was born an American. I am an American. And I will die as an American,” said Ver in a video posted to X in January, appealing to President Donald Trump to “end the lawfare” against him so he can help “make America great again.”

• 🏦 Coinbase and Mastercard reportedly entered advanced talks to acquire stablecoin startup BVNK for between $1.5 billion and $2.5 billion, signaling a race among major financial players to secure a foothold in the fast-growing stablecoin sector.

• 🎈 Monad confirmed it will launch its long-awaited token airdrop next week, on Oct. 14, though it kept details on who qualifies and how much they’ll receive secret, as early trading hinted at a $12 billion valuation for its upcoming token.

• 🏛️ Jack Dorsey urged U.S. lawmakers to revive a failed proposal granting tax exemptions for small bitcoin transactions, aligning the push with Block’s launch of new crypto payment tools for small businesses and gaining public support from Senator Cynthia Lummis.

• ⛏️ Crypto hardware maker Bitdeer decided to mine bitcoin with its own machines to offset weak demand from buyers, rapidly expanding its capacity to target a top-five global mining spot with roughly $750 million in expected annual revenue.

• 🤖 Yuma, a subsidiary of Digital Currency Group focused on the decentralized AI network Bittensor, launched an asset management arm backed by a $10 million DCG investment to run two funds targeting Bittensor subnet tokens.

• 🪂 Meteora detailed the tokenomics of its new MET token launching Oct. 23, with nearly half of the supply immediately circulating and a fifth reserved for former token holders.

• 🇱🇺 Luxembourg’s $900 million sovereign wealth fund invested about $9 million, or 1% of its portfolio, into Bitcoin ETFs, marking one of Europe’s first state-backed moves into crypto as part of a broader investment diversification strategy.

• 🌎 Argentine crypto fintech Lemon secured $20 million in Series B funding to expand its platform across Latin America after proving its model in Peru and Argentina, aiming to reach 10 million users within a year as adoption surges regionally.

• 🦉 CipherOwl, a crypto compliance startup founded by former Coinbase and Cruise engineers, raised $15 million to offer AI-powered tools that help financial institutions and law enforcement monitor blockchain transactions, competing with established players like Chainalysis and TRM Labs.

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