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Crypto Czar Lays Out Priorities |
The U.S. House of Representatives and Senate are forming a joint working group to advance crypto legislation, and David Sacks, the crypto czar appointed by President Donald Trump, said his aim is "ensuring American dominance in digital assets” in an appearance Tuesday at a joint press conference in Washington.
Alongside the chiefs of the congressional committees that will work on digital assets legislation, Sacks laid out a broad pro-crypto agenda. "I look forward to working with each of you in creating a golden age in digital assets," he said, calling crypto a "week-one priority for the administration."
A part of the plan was already revealed earlier on Tuesday, when details of a Senate stablecoin bill emerged. Senator Bill Hagerty, a Tennessee Republican, wrote a bill to set up U.S. oversight of stablecoin issuers, splitting regulation between state agencies and federal watchdogs — specifically the Federal Reserve and the Office of the Comptroller of the Currency. Tim Scott, the South Carolina Republican who now chairs the Senate Banking Committee, said the panel would take up stablecoins first.
The lawmakers, which included House Financial Services Committee Chair French Hill, House Agriculture Committee Chair Glenn "GT" Thompson and Senate Agriculture Committee Chair John Boozman, also said market structure legislation would come up, referring back to last year's House passage of the Financial Innovation and Technology for the 21st Century Act (FIT21).
Hill said that a bill similar to FIT21 would move forward alongside a stablecoin bill in the House. "We want to keep that innovation onshore in the U.S. Financial assets are destined to become digital, just like every analog industry has become digital, and we want that value creation to happen in the United States, rather than giving it away to other countries," Sacks said in the press conference, his first since taking the job of AI and crypto czar. |
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Bitcoin (BTC) continues to follow the trajectory of its 2017 cycle. Despite recent market turbulence, driven by escalating tariff tensions between the U.S and its neighbouring countries, as well as China.
Bitcoin remains up approximately 525% from its cycle low during the FTX collapse in November 2022. Comparatively, at the same stage in the 2017 cycle, bitcoin had risen 533%.
While, another method for evaluating bitcoin’s cyclical behavior is by measuring returns from previous all-time highs. The last cycle's market peak occurred in April 2021 at approximately $64,000, although in nominal terms, bitcoin’s all-time high was $69,000 in November 2021.
However, many on-chain indicators suggest that April 2021 marked the cycle’s true top. Despite ongoing geopolitical tensions, bitcoin has demonstrated remarkable consistency in tracking previous cycles. In addition, bitcoin (BTC) has remained range-bound within a $90,000 to $109,000 channel for the past 2.5 months, even amid heightened market volatility. Bitcoin continues to test both the upper and lower bounds of its current trading channel. Meanwhile, previous CoinDesk research identified $91,000 as a local bottom for bitcoin. |
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16 States Exploring Bitcoin Investments |
Almost half of the state governments in the U.S. are either on a path toward putting some of their money into crypto or already have, and much of a suddenly booming interest in tying their financial futures to the digital-assets markets has come after U.S. President Donald Trump showed support for a national stockpile of digit assets.
In the surge of crypto legislative or financial efforts at the state level, 21 states are investing or looking into investing — generally in the industry's leading token, bitcoin (BTC), and sometimes also in less volatile stablecoins that are designed to match the value of the U.S. dollar, according to a CoinDesk analysis. With states such as Arizona, Pennsylvania, Utah and Texas already digging into legislation to open public funds to buy cryptocurrencies, such initiatives may outpace the effort in Congress targeting a so-called Strategic Bitcoin Reserve. Sixteen state legislatures are looking at bills to either establish digital assets stockpiles or to allow their state retirement funds to be partially invested in crypto, most of them introduced in recent weeks. Officials in another three states are engaged in serious discussions about joining in, and the money managers for two states — Michigan and Wisconsin — have already dipped parts of their public employees' retirement portfolios into crypto exchange-traded funds (ETFs). If the states begin pouring portions of their public funds into bitcoin and other digital assets, it would potentially lock down billions of dollars of the tokens for extended periods, boosting the value of the assets still openly circulating. Another effect: The states are potentially setting up millions of people to have personal stakes in the health of the crypto sector — whether they want to or not. In several of the proposals, governments are looking to follow in the footsteps of Michigan and Wisconsin in pushing parts of their retirement funds and state pension investments into digital assets. Retired school teachers, law enforcement officers and other public employees will watch some of their financial security become dependent on the fluctuations of the crypto markets. Other pieces of legislation would instruct state treasurers to spend as much as 10% of their public funds on a strategic reserve, with some specifying that qualifying digital assets must have at least a $500 billion market cap, leaving only bitcoin currently meeting the mark. Arizona and Utah are building a lead after getting their efforts passed by legislative committees, but other states weighing some version of a crypto bill also include Illinois, Indiana, Kansas, Massachusetts, Missouri, Montana, New Hampshire, North Dakota, Ohio, Oklahoma, South Dakota and Wyoming. Others, such as Alabama, Florida and Kentucky are considering proposals from state officials or on the verge of pursuing legislation. The states interested in digital assets reserves are predominantly Republican-majority in their politics, and the reasons the lawmakers say they're backing the bills include investment diversity and embracing technological innovation. The amount put away by the states could eventually be overshadowed by the U.S. government's own reserve, if that effort comes to pass. President Trump, in his wider executive order on U.S. crypto policy, called for his administration to "evaluate the potential creation and maintenance of a national digital asset stockpile." The order suggested it may be built from government seizures of crypto in criminal cases. The idea had initially been pitched by Senator Cynthia Lummis, the Wyoming Republican who devotes much of her political bandwidth to supporting crypto and was named as the first chair of the Senate Banking Committee's digital assets subcommittee. Her bill to set up a U.S. reserve calls for the country to obtain about $20 billion worth of the tokens in the first year and to get another 200,000 in each of the next four years, until the U.S. is eventually holding a million bitcoin. While Lummis' pitch has called it a "Strategic Bitcoin Reserve," it's not — like the petroleum reserve — designed for deployment when economic conditions warrant it. It's structured more as a long-term investment, requiring the U.S. to hold the assets for at least 20 years. That would be almost 5% of the eventual, finite supply of global bitcoin going untouched for at least two decades. Combined with whatever the states seek to stockpile, U.S. governments would secure a significant percentage of the asset, in addition to the towering reserves held by the U.S. ETF issuers such as BlackRock and Grayscale and corporate investors led by MicroStrategy. |
The U.S. Securities and Exchange Commission’s (SEC) Acting Chairman Mark Uyeda unveiled a list of the agency’s newly-appointed executive staff on Tuesday, including three members of the Crypto Task Force. Two of the task force’s appointees come from within the SEC’s ranks. Richard Gabbert, who formerly served as a counsel to crypto-friendly task force head Commissioner Hester Pierce will be its chief of staff, as well as a senior advisor to Uyeda. Taylor Asher, who was previously a senior policy advisor to Uyeda, will be the task force’s chief policy advisor. The other named appointee – Landon Zinda, who will be counsel to Uyeda and a senior advisor for the task force – previously served as policy director for crypto think tank Coin Center. Prior to his work for Coin Center, Zinda worked for two crypto-friendly congressmen, Sen. Pat Toomey (R-Pa.) and Rep. Tom Emmer (R-Minn.). The SEC announced the formation of the new Crypto Task Force last month, just one day after former Chairman Gary Gensler stepped down. The task force will be focused on “developing a comprehensive and clear regulatory framework for crypto assets,” and will work closely with both Congress and the crypto industry, as well as sister regulatory agency the Commodity Futures Trading Commission (CFTC), according to the press release announcing its formation The formation of the Crypto Task Force comes as the agency overhauls its approach to crypto regulation, moving away from the practice of so-called regulation by enforcement that became standard practice under former Chairman Gensler. “To date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way,” the SEC said in a press statement. “Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive. The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better.” |
The Takeaway: DeepSeek AI Better For Web3 |
By Jesus Rodriguez, IntoTheBlock Until now, Web3 has struggled to establish compelling use cases that clearly add value to the creation and utilization of foundation models. To some extent, the traditional workflow for pretraining foundation models appears to be the antithesis of Web3 architectures. However, despite being in its early stages, the release of DeepSeek-R1 has highlighted several opportunities that could naturally align with Web3-AI architectures.
1) Reinforcement Learning Fine-Tuning Networks R1-Zero demonstrated that it is possible to develop reasoning models using pure reinforcement learning. From a computational standpoint, reinforcement learning is highly parallelizable, making it well-suited for decentralized networks. Imagine a Web3 network where nodes are compensated for fine-tuning a model on reinforcement learning tasks, each applying different strategies. This approach is far more feasible than other pretraining paradigms that require complex GPU topologies and centralized infrastructure.
2) Synthetic Reasoning Dataset Generation
Another key contribution of DeepSeek-R1 was showcasing the importance of synthetically generated reasoning datasets for cognitive tasks. This process is also well-suited for a decentralized network, where nodes execute dataset generation jobs and are compensated as these datasets are used for pretraining or fine-tuning foundation models. Since this data is synthetically generated, the entire network can be fully automated without human intervention, making it an ideal fit for Web3 architectures.
3) Decentralized Inference for Small Distilled Reasoning Models DeepSeek-R1 is a massive model with 671 billion parameters. However, almost immediately after its release, a wave of distilled reasoning models emerged, ranging from 1.5 to 70 billion parameters. These smaller models are significantly more practical for inference in decentralized networks. For example, a 1.5B–2B distilled R1 model could be embedded in a DeFi protocol or deployed within nodes of a DePIN network. More simply, we are likely to see the rise of cost-effective reasoning inference endpoints powered by decentralized compute networks. Reasoning is one domain where the performance gap between small and large models is narrowing, creating a unique opportunity for Web3 to efficiently leverage these distilled models in decentralized inference settings.
4) Reasoning Data Provenance One of the defining features of reasoning models is their ability to generate reasoning traces for a given task. DeepSeek-R1 makes these traces available as part of its inference output, reinforcing the importance of provenance and traceability for reasoning tasks. The internet today primarily operates on outputs, with little visibility into the intermediate steps that lead to those results. Web3 presents an opportunity to track and verify each reasoning step, potentially creating a "new internet of reasoning" where transparency and verifiability become the norm. The release of DeepSeek-R1 has marked a turning point in the evolution of generative AI. By combining clever innovations with established pretraining paradigms, it has challenged traditional AI workflows and opened a new era in reasoning-focused AI. Unlike many previous foundation models, DeepSeek-R1 introduces elements that bring generative AI closer to Web3.
Key aspects of R1 – synthetic reasoning datasets, more parallelizable training and the growing need for traceability – align naturally with Web3 principles. While Web3-AI has struggled to gain meaningful traction, this new post-R1 reasoning era may present the best opportunity yet for Web3 to play a more significant role in the future of AI.
Read the full op-ed here. |
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