Ethereum Validator Exit Queue Hits Record $3.9B

Hi! In today’s edition:

• 📉 910,000 ETH — validators rush for the exits

• 🧾 Treasury crowdsources ideas to fight illicit finance

• ⚡ Circle’s Arc blockchain goes institutional with Fireblocks

• 📅 SEC punts on Solana, XRP, Litecoin & Truth Social ETFs

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Ethereum Validator Exit Queue Hits Record 910,000 ETH

A record 910,461 ETH was waiting to exit the Ethereum network as of Aug. 18, with wait times of about 15 days and 17 hours.

In dollar terms, the amount of ETH in the validator exit queue sits at around $3.9 billion and amounts to over 2.5% of ETH’s total supply.

The surge in exits comes as ETH retraced from a recent rally past $4,788 to just under $4,300 as of Tuesday morning. While validators in the exit queue are likely lining up to sell some amount of the ETH, onchain analysts suggest there could be other reasons at play.

One of them could potentially be the depegging of Lido’s liquid staked ETH (stETH) – something that started in July when a trader withdrew a significant amount from Aave, resulting in rates on ETH loans to surge past more than borrowers could afford.

As leveraged traders were forced to unwind positions, they pushed the price of stETH down slightly below the value of ETH.

“The queue is negative for LSTs/LRTs because it increases the duration risk of holding these instruments, but for ETH/USD it is largely neutral as stETH,” said Rob Schmitt, cofounder of Cork Protocol.

U.S. Treasury Seeks Public Input on Illicit Activity After GENIUS Act Signing

The U.S. Treasury Department has issued a public call for comments related to the detection and prevention of illicit activities involving digital assets, following the signing of the GENIUS Act into law.

The Treasury is seeking feedback on "innovative or novel methods, techniques, or strategies" that could be used to detect and mitigate illicit finance risks involving digital assets.

The request for input is part of the implementation process for the GENIUS Act, which establishes the first comprehensive federal regulatory framework for stablecoin issuers in the U.S.

“It’s a win-win-win for everyone involved: stablecoin users, stablecoin issuers, and the U.S. Treasury Department,” said Treasury Secretary Scott Bessent on X.

The comments, due by Oct. 17, will be reviewed by the Treasury to develop effective policies, which will then submit reports to the Senate Banking Committee and House Financial Services Committee.

Circle’s Arc Blockchain Integrates With Fireblocks

Circle’s new Arc blockchain, a layer 1 network purpose-built for stablecoin finance, will debut with institutional access via integration with Fireblocks.

Fireblocks is a digital asset custody and tokenization platform serving over 2,400 banks and fintech firms. The early integration positions Circle to offer immediate institutional-grade access to Arc, as it looks to broaden access to its stablecoin USDC and take on USDT-issuer Tether.

Arc’s rollout will see a public testnet launch in the fall of 2025, followed by a full production launch before year-end.  The blockchain is designed to deliver faster transaction speeds, lower fees, and flexible development features for enterprise adoption.

“Arc is an opinionated L1 that makes a few big bets and pushes them all the way down into the protocol,” said Sentora cofounder Jesus Rodriguez in a review of the new blockchain.

“If the internet needed a base layer where the unit of account for value and the unit of account for computation finally match — and where “confirmed” truly means “settled” — Arc is a concrete, engineering‑driven attempt to deliver exactly that.”

In related news, Circle acquired Malachite, a blockchain consensus engine from Informal Systems, to power its Arc network, bringing over staff and IP as it races to dominate the trillion-dollar stablecoin market.

SEC Delays Deciding on Multiple Crypto ETFs Until October

The U.S. Securities and Exchange Commission (SEC) has delayed decisions on multiple high-profile crypto exchange-traded funds (ETFs), pushing the review deadlines into October 2025.

Two Solana ETFs – one from 21Shares and the other from Bitwise – have a new decision date of Oct. 16. An XRP-based ETF from 21Shares also had its deadline decision pushed to Oct. 19.

Decisions on Litecoin ETF applications from Grayscale, Canary Capital, and CoinShares were also pushed to mid-October, as was a decision on the Truth Social Bitcoin and Ethereum ETF, linked to President Donald Trump’s Truth Social media platform.

The delay extensions are procedural to allow more time for assessment and to consider public feedback, but industry watchers have stayed optimistic about their eventual approvals.

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• 🐳 BitMine’s Ethereum stash surged past 1.5 million ETH worth $6.6 billion, making it the second-largest public corporate crypto holder after Strategy, though its stock slid as ETH retreated from record highs.

• ⚠️ Chaos Labs warned that Ethena’s USDe boom, heavily looped through Aave lending, could amplify risks to stablecoin markets if yields collapse and trigger rapid deleveraging.

• 📝 Illinois Governor JB Pritzker signed two bills creating the Midwest’s first crypto consumer protections—granting state oversight of exchanges and capping ATM fees at 18%—while criticizing Trump for letting “crypto bros” shape federal policy.

• 🐶 Pump.fun grabbed 90% of Solana’s memecoin launchpad market in just two weeks as top deployers abandoned rival LetsBonk, though most token launches remain driven by bots.

• 🇰🇷⛔ South Korea’s top financial regulator ordered local exchanges to suspend crypto lending after $1.1 billion was borrowed in a month and 13% of users were liquidated, citing risks in the absence of clear rules.

• 👮‍♂️ A Nebraska man known online as “CP3O” was sentenced to just over a year in prison after stealing $3.5 million in cloud computing power to mine nearly $1 million in crypto, forfeiting $500,000 and a Mercedes-Benz.

• 🏛️📚 Coinbase, DCG, Kraken, a16z, and others launched the tax-exempt American Innovation Project in Washington to “educate” policymakers on decentralized tech, though by law the nonprofit cannot directly lobby for legislation.

• 🏦 Gemini’s IPO filing revealed a $282.5 million half-year loss—seven times last year’s shortfall—while also disclosing a $75 million credit line from Ripple that could expand to $150 million and include loans in its RLUSD stablecoin.

• 📊 Lender Figure Technology filed to go public on Nasdaq after reporting $191 million in revenue and $29 million profit in H1 2025, planning to list under the ticker FIGR while highlighting $16 billion in loans and $50 billion in onchain deals since launch.

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