Weekly Recap: ICE Bets $2B on Polymarket, S&P Bridges Crypto and Stocks

The Stablecoin Competition Is On. Who Will Be the Winners and Losers?

Everyone wants to issue a stablecoin. But which ones of them will win?

The stablecoin race is heating up. With the passage of the U.S. stablecoin law the floodgates have opened. Tether still dominates globally, but Circle, Stripe, and a wave of new “stablechains” are making their move.

In this episode, Dragonfly partner Rob Hadick and Helius CEO Mert Mumtaz join Laura Shin to map out how this battle could reshape crypto and payments.

Will ecosystem apps like Phantom and Jupiter keep their own stablecoins? Can Circle’s new Layer 1, Arc, compete with Tether’s network effect?

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Now, let’s get into this week’s news! In today’s edition:

• 🏛️ Senate DeFi Showdown: Crypto bill talks stall after Democrats propose tough DeFi restrictions.

• 📈 ICE Bets on Polymarket: NYSE parent invests $2B in prediction platform ahead of U.S. comeback.

• 💰 Coinbase vs. Mastercard: Both eye stablecoin firm BVNK in $2.5B acquisition race.

• 📊 S&P Goes Hybrid: New Digital Markets 50 Index blends top crypto assets with blockchain stocks.

• 🏦 BNY Mellon Modernizes: Bank explores tokenized deposits to speed up global payments.

• 🪙 Grayscale Unlocks Yield: First U.S. Ethereum spot ETFs to offer staking rewards.

• 🏦 Coinbase Goes Federal: Files for national trust charter to grow institutional custody business.

• 🟠 Trump Coin Treasury: Issuer seeks $200M to build digital asset war chest.

• 📉 Morgan Stanley’s Crypto Play: Bank recommends up to 4% portfolio allocation to digital assets.

• 🚨 DefiLlama Delists Aster: Wash trading concerns trigger token drop.

• 🔥 Polygon Tokenomics Push: Activist investor proposes ending inflation and adding buybacks.

​​Senate Crypto Talks Stall Over DeFi Restrictions in Democratic Proposal

Progress on the Senate’s bipartisan crypto market structure bill, known as the CLARITY Act, has stalled following the release of a Democratic proposal targeting decentralized finance. According to reports, Senate Banking Committee Democrats introduced language that would expand regulatory oversight of DeFi platforms, prompting backlash from industry groups and stalling negotiations with Republicans.

The proposal would require anyone profiting from a DeFi front-end to register as a broker, extending potential liability across a wide range of developers and operators. It also empowers the Treasury Department to maintain a “restricted list” of high-risk protocols and front-ends, criminalizing their use.

“This would effectively ban decentralized finance and wallet development in the United States,” said Summer Mersinger, CEO of the Blockchain Association. Legal experts including Jake Chervinsky called the framework “unworkable,” arguing it undermines bipartisan progress.

The proposal contrasts sharply with House legislation, which passed earlier this year and offered narrower definitions for intermediary regulation.

ICE Invests $2 Billion in Polymarket Amid U.S. Reentry Plans

Intercontinental Exchange, the parent company of the New York Stock Exchange, is investing up to $2 billion in Polymarket, valuing the crypto-based prediction platform at $9 billion post-money. The agreement, confirmed this week, makes ICE a global distributor of Polymarket’s event-driven data and includes plans for future tokenization initiatives.

Founded in 2020, Polymarket enables users to trade on binary outcomes tied to real-world events such as elections, sports, and cultural trends. The platform recorded over $2 billion in trading volume during the 2024 U.S. presidential election.

The investment comes as Polymarket prepares to return to the U.S. market, following a 2022 settlement with the Commodity Futures Trading Commission that restricted domestic access.

Polymarket also disclosed previously unannounced funding rounds totaling $205 million, including a $150 million raise in early 2025 led by Founders Fund. Its earlier investors include Coinbase, 1789 Capital, and Blockchain Capital.

Also this week, Polymarket added bitcoin deposits as a funding option, expanding beyond its existing support for Ethereum, Polygon, Base, Arbitrum and Solana to attract more users to its event-betting platform.

Coinbase and Mastercard Compete to Acquire Stablecoin Infrastructure Firm BVNK: Report

Coinbase and Mastercard are in advanced talks to acquire BVNK, a London-based fintech specializing in stablecoin infrastructure, with the deal potentially valued between $1.5 billion and $2.5 billion, according to sources cited by Fortune. While negotiations are ongoing, Coinbase is reportedly the frontrunner.

Founded in 2021, BVNK enables businesses to integrate stablecoins into payments, treasury management, and cross-border transfers. The company raised $50 million in late 2024 at a $750 million valuation, with investors including Coinbase Ventures, Visa, and Citi’s venture arms.

An acquisition of BVNK would mark one of the largest stablecoin infrastructure deals to date, surpassing Stripe’s $1.1 billion purchase of Bridge earlier this year. 

Interest from Coinbase and Mastercard reflects a broader shift toward stablecoins as core financial infrastructure.

S&P Unveils Hybrid Index Linking Crypto and Blockchain Stocks

S&P Global has launched the Digital Markets 50 Index, a new benchmark combining 15 major cryptocurrencies with 35 publicly traded companies tied to blockchain and digital asset infrastructure. Developed in partnership with blockchain firm Dinari, the index marks S&P’s first hybrid product bridging crypto assets and traditional equities.

The index is designed to provide diversified exposure across the crypto ecosystem. Eligible assets must meet minimum market capitalization thresholds — $300 million for cryptocurrencies and $100 million for equities — and no individual asset will account for more than 5% of the index. Constituents will be rebalanced quarterly under S&P’s established governance framework.

Dinari will also issue a token version of the index, enabling investors to access it through onchain instruments.

BNY Mellon Explores Tokenized Deposits for Blockchain-Based Payments

BNY Mellon is assessing the use of tokenized deposits to support blockchain payment infrastructure, as part of its broader push toward modernizing real-time, cross-border, and instant settlement systems. The move would allow clients to conduct transactions using digital representations of bank-held deposits, processed over decentralized ledgers.

Carl Slabicki, executive platform owner for Treasury Services at BNY Mellon, said tokenized deposits could help “overcome legacy technology constraints,” initially within internal systems and eventually across broader markets as standards evolve.

Tokenized deposits function as bank-issued digital coins backed by commercial bank money, offering near-instant settlement and 24/7 availability. BNY Mellon’s treasury services process approximately $2.5 trillion in payments daily and oversee $55.8 trillion in assets under custody or administration.

Grayscale Becomes First in U.S. to Offer Staking in Spot Ether ETFs

Grayscale Investments has introduced staking to its spot Ethereum ETFs, marking a first for U.S.-listed crypto exchange-traded products. The feature has been added to the Grayscale Ethereum Trust ETF (ETHE) and Ethereum Mini Trust ETF (ETH), both trading on NYSE Arca, and will allow investors to earn staking rewards without managing validators or crypto wallets.

Thanks to recent regulatory guidance, staking is now permissible within 1933 Act-compliant ETFs. “Thanks to new regulatory guidance, investors can now benefit from the value accrual of staking. No action needed, no change to exposure,” said Grayscale CEO Peter Mintzberg on X.

Staking has also been enabled for the firm’s Grayscale Solana Trust (GSOL), which is pending SEC approval for ETF conversion. For ETHE, rewards will be distributed directly. For ETH and GSOL, rewards will be reflected in fund price growth.

Grayscale will use institutional partners like Coinbase and a network of validator providers to manage the staking process.

Coinbase Seeks National Trust Charter

Coinbase has filed an application with the Office of the Comptroller of the Currency (OCC) to obtain a national trust bank charter, aiming to expand its institutional custody services. The license would allow the company to safeguard customer assets and manage payment-related activities, but unlike a full-service bank charter, it does not permit lending or deposit-taking.

Greg Tusar, Coinbase’s vice president of institutional product, said the move is intended to support innovation between crypto and traditional finance. “An OCC charter will streamline oversight for new offerings and enable continued innovation to integrate digital assets into traditional finance,” Tusar stated.

He clarified that Coinbase has “no intention of becoming a bank,” emphasizing the company’s focus on regulatory clarity and customer trust.

Coinbase joins several other crypto firms—including Circle, Ripple, Paxos, and BitGo—in applying for similar charters amid a favorable policy environment shaped by recent federal stablecoin legislation signed in July.

Trump Memecoin Issuer Seeks $200M to Build Digital Asset Treasury

Fight Fight Fight LLC, the company behind the Trump memecoin, is working to raise at least $200 million to establish a digital asset treasury (DAT) focused on accumulating the token, according to sources cited by Bloomberg. The effort, which could expand to as much as $1 billion, is still in development and has not been officially announced.

Launched days before President Donald Trump’s second inauguration, the memecoin reached a high of $44 in January but currently trades near $8. Around 35% of its supply is unlocked, with the rest primarily held by Trump-linked entities. The token has a circulating market value of approximately $1.5 billion, according to Messari.

The DAT initiative is being led by Bill Zanker, a longtime Trump associate. It follows other promotional campaigns around the coin, including a May dinner with President Trump for top holders. The project joins a broader wave of digital treasury ventures emerging across the crypto sector.

Morgan Stanley Recommends Up to 4% Crypto Allocation for Growth Investors

Morgan Stanley’s Global Investment Committee has advised portfolio managers to allocate up to 4% to cryptocurrency in “Opportunistic Growth” portfolios, according to its October guidance note. The recommendation is aimed at investors seeking higher-risk, high-return strategies.

For portfolios with more moderate objectives, the bank suggested 2% for “Balanced Growth” and 3% for “Market Growth” strategies, while advising a 0% allocation for income-focused or capital preservation portfolios.

Describing crypto as “a speculative and increasingly popular asset class,” the GIC noted its primary focus remains on bitcoin, which it likened to “digital gold.” The report also highlighted the need for periodic rebalancing, given crypto’s potential for volatility under macroeconomic stress.

DefiLlama Delists Aster Volume Data Over Trading Pattern Concerns

Crypto analytics platform DefiLlama has removed Aster’s perpetual futures trading data from its platform, citing concerns over data reliability. According to 0xngmi, a pseudonymous co-founder of DefiLlama, Aster’s trading volume showed an almost perfect correlation with Binance’s perpetual markets, raising suspicions of potential wash trading.

“Aster doesn’t make it possible to get lower level data such as who is making and filling orders,” 0xngmi stated, adding that until verifiable transparency is available, the data will remain delisted.

The move comes as Aster’s daily perpetual volume had recently surged to $60 billion and briefly overtook competitors like Hyperliquid. The delisting triggered a 10% drop in Aster’s native token, which is currently trading below its previous highs.

Investor Pushes for Major Changes to Polygon’s Tokenomics

A proposal from pseudonymous investor “Venturefounder” is gaining traction in the Polygon governance forum, calling for a significant revision to the POL token’s supply model. The plan includes eliminating the current 2% annual inflation rate and introducing a buyback-and-burn strategy funded by the Polygon Treasury or ecosystem revenues.

The investor cited POL’s prolonged underperformance as a key motivation, noting a 46% decline over the past year and a drop of over 90% from its all-time high. “Despite significant ecosystem development and innovation, token price has dropped… underperforming virtually every comparable layer 2 or ecosystem token,” Venturefounder wrote.

The proposal suggests either immediately adopting a 0% inflation rate or gradually tapering inflation by 0.5% per quarter until it phases out. While the initiative has received support from community members and recognition from Polygon Labs CEO Marc Boiron, concerns remain over how validator rewards would be maintained without inflationary funding.

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