Blockchain & Digital Assets Weekly Briefing - Week 20
- danae317
- May 16
- 8 min read
Updated: May 30
Week ending 16th May 2025
Coinbase grapples with a $400M cyberattack just as it enters the S&P 500 and eyes Deribit; stablecoin legislation hits a roadblock with the GENIUS Act; J.P. Morgan takes a major leap into public blockchain with Chainlink and Ondo; UBS’s Asian elite diversify into crypto; and South Korea inches closer to crypto ETFs under shifting political winds.
Coinbase faces $400M cyberattack fallout amid S&P 500 inclusion and Deribit acquisition.
GENIUS Act stalls as Democrats push back on stablecoin legislation amid political tensions.
J.P. Morgan embraces public blockchain for the first time in partnership with Chainlink and Ondo Finance.
UBS wealthy clients in Asia allocating up to 5% to crypto amid dollar diversification.
Crypto ETFs on the horizon as South Korea heads toward pro-crypto leadership.
Coinbase faces $400M cyberattack fallout amid S&P 500 inclusion and Deribit acquisition
Coinbase Global Inc. is set to join the S&P 500 index on May 19, 2025, replacing Discover Financial Services. This inclusion marks a significant milestone for the cryptocurrency industry, reflecting its growing legitimacy within traditional financial markets.
To qualify for inclusion, companies must meet stringent benchmarks, including a minimum market capitalization of $20.5 billion, along with consistent profitability, sufficient liquidity, and a broad base of publicly traded shares—as defined by the S&P methodology updated in March.
Complementing this achievement, Coinbase announced a $2.9 billion agreement to acquire Deribit, the world's leading crypto options exchange. This strategic acquisition significantly advances Coinbase’s derivatives business, establishing it as the premier global platform for crypto derivatives. The deal includes $700 million in cash and 11 million shares of Coinbase Class A common stock. Deribit, based in Dubai, is renowned for its substantial trading volume in Bitcoin and Ethereum options, which could significantly bolster Coinbase’s existing exchange operations.
However, the company is concurrently grappling with a major cybersecurity incident. Hackers bribed overseas customer support agents to access sensitive customer data, including names, contact details, partial Social Security numbers, and bank account identifiers. The attackers demanded a $20 million ransom, which Coinbase refused to pay. Instead, the company has offered a $20 million reward for information leading to the perpetrators' arrest. The breach affected less than 1% of users, and Coinbase estimates remediation costs could reach up to $400 million.
In a recent Bloomberg interview, CEO Brian Armstrong shared his vision for the future of finance, stating,
"Stablecoins will power the majority of all payments in global GDP, and crypto is going to become the majority of the financial system."
When asked about Coinbase's potential role as custodian for a strategic Bitcoin reserve, he responded, "We'll be the provider, I hope."
These developments underscore Coinbase's pivotal role in the evolving financial landscape, balancing rapid growth and innovation with the challenges of cybersecurity and regulatory scrutiny.
GENIUS Act stalls as Democrats push back on stablecoin legislation amid political tensions
A major bipartisan effort to regulate stablecoins—the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act—has stalled in the U.S. Senate. Despite revisions aimed at bolstering consumer protections and anti-money laundering provisions, the bill fell short of the 60 votes required to advance, with a final tally of 49-48. The failure highlights growing partisan tensions and unease over the role of political figures in the crypto industry.
Key Provisions of the GENIUS Act:
Tiered Oversight: Stablecoin issuers with over $10 billion in circulation would be federally regulated by the Federal Reserve and the Office of the Comptroller of the Currency (OCC), while smaller issuers could operate under state regulation with an option to apply for a waiver.
Certification Committee: A proposed Stablecoin Certification Review Committee would assess the adequacy of state regulatory frameworks, replacing earlier plans to centralize this authority within the Treasury.
Foreign Issuers: The bill outlines conditions for foreign stablecoin providers operating in the U.S., requiring legal compliance or reciprocity agreements, with limited Treasury-authorized safe harbors.
Democratic Concerns: The withdrawal of Democratic support was influenced by recent revelations regarding former President Donald Trump's involvement in the cryptocurrency sector. Reports indicate that Trump's family company, World Liberty Financial, launched a stablecoin and secured a $2 billion investment from a UAE fund. These developments raised alarms about potential conflicts of interest and the risk of political figures profiting from unregulated crypto ventures.
Senator Elizabeth Warren criticized the bill for potentially enabling political corruption and lacking sufficient protections against money laundering and foreign interference. In response to these concerns, Senate Democrats introduced the End Crypto Corruption Act, aiming to ban federal officials and their families from investing in or endorsing digital assets.
Legislative Outlook: While the GENIUS Act remains stalled, negotiations led by Senator Mark Warner are ongoing. Democratic senators are advocating for stronger measures on money laundering, foreign issuers, and accountability. The bill's future hinges on further bipartisan negotiation amid growing scrutiny of the cryptocurrency industry's influence and regulatory gaps.
In the broader context, Senate Majority Leader Chuck Schumer has expressed optimism about passing a crypto regulation bill within the year, emphasizing the importance of bipartisan collaboration to establish a sensible regulatory framework that supports innovation while ensuring financial stability.
J.P. Morgan embraces public blockchain for the first time in partnership with Chainlink and Ondo Finance
In a groundbreaking move, J.P. Morgan has utilized a public blockchain for the first time through its blockchain platform, Kinexys (formerly Onyx), marking a pivotal shift in the financial giant's approach to digital asset integration. This milestone was achieved in collaboration with Chainlink and Ondo Finance, aiming to connect traditional banking infrastructure with blockchain-based markets.
The initiative leverages Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to enable secure, real-time data sharing across different blockchains. This technology facilitated J.P. Morgan’s on-chain settlement of tokenized versions of USD and EUR—demonstrating that established financial institutions can now execute cross-border payments and settlements using decentralized public blockchain networks.
Ondo Finance, a specialist in tokenized real-world assets, brought its experience in issuing tokenized U.S. Treasuries to the project, creating a clear path for traditional financial products to exist and be traded on blockchain rails.
This collaboration signals a major evolution in institutional adoption of blockchain, as it’s the first time a global bank has used public blockchain infrastructure to facilitate real-world financial transactions—potentially accelerating the mainstream integration of tokenized finance.
UBS wealthy clients in Asia allocating up to 5% to crypto amid dollar diversification
Amy Lo, Chairman of UBS Global Wealth Management Asia, revealed that family offices and ultra-high-net-worth clients in the region are allocating up to 5% of their portfolios to cryptocurrencies as part of a strategy to diversify away from the U.S. dollar. Speaking at Bloomberg’s New Voices Hong Kong 2025 event, Lo explained that ongoing geopolitical tensions and currency risks are prompting these investors to explore alternative assets such as gold and digital assets.
While Lo’s remarks focus on Asia, the trend is global. Family offices—recognized as institutional investors—are leading this shift, often acting as early adopters of alternative investment strategies. This growing appetite for crypto suggests that digital assets are becoming a mainstream component of institutional portfolios.
This movement aligns with ARK Invest’s Bitcoin valuation framework, which models various levels of institutional adoption through 2030. In that model, the bear case assumes a 1% allocation of institutional portfolios to Bitcoin, while the bull case projects up to 6.5%. UBS clients already allocating 5% fall near the upper range of this spectrum (with a Bull Case putting Bitcoin price at $1.5 million by 2030), indicating that real-world adoption by sophisticated investors may be outpacing conservative projections.
Beyond institutional flows, ARK identifies several broader drivers of Bitcoin’s potential growth, including:
Bitcoin as digital gold and a long-term store of value
Safe haven demand in emerging markets with currency instability
Adoption by nation-states as part of treasury diversification
Corporate treasury allocations, where firms add Bitcoin to their balance sheets
Bitcoin-native financial services, including lending, settlement, and decentralized finance platforms
These growth areas are all showing early momentum. As adoption expands across these verticals, the case strengthens for Bitcoin reaching the higher end of its modeled valuation range.
At the sovereign and corporate level, adoption is also accelerating. On March 6, 2025, President Donald Trump signed Executive Order 14233, establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile. This initiative repurposes forfeited bitcoins from criminal and civil cases, currently valued at over $17 billion, to build a federal reserve of digital currency. The reserve is managed by the Treasury, employing strategies such as dollar-cost averaging, and is prohibited from selling the bitcoin, preserving it strictly as a long-term asset.
Complementing this executive action, Senator Cynthia Lummis introduced the Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act, aiming to codify the strategic Bitcoin reserve into federal law. The bill proposes that all Bitcoins acquired under this legislation must be held for at least 20 years unless used to retire outstanding federal debt.
At the state level, New Hampshire became the first U.S. state to sign a Strategic Bitcoin Reserve bill into law, allowing the state treasurer to allocate some public funds to Bitcoin. Shortly after, Arizona followed suit by establishing a reserve fund for Bitcoin and other digital assets, making it the second U.S. state to create such a framework. This legislation allows Arizona to retain unclaimed digital assets—such as cryptocurrencies, staking rewards, and airdrops—in their original form, rather than converting them to cash.
These developments collectively highlight the accelerating mainstream integration of Bitcoin, both as a macro hedge and a strategic asset class across diverse investor profiles—from sovereign entities to family offices.
Crypto ETFs on the horizon as South Korea heads toward pro-crypto leadership
South Korea is poised to usher in a new era of cryptocurrency regulation as both leading presidential candidates pledge support for legalizing spot crypto exchange-traded funds (ETFs). With the June 2025 election approaching, the country is set to see a pro-crypto government regardless of the outcome—a significant shift for one of Asia’s most tech-forward economies.
Democratic Party candidate Lee Jae-myung, currently leading in the polls, has vowed to approve spot crypto ETFs and implement investor protections, including reduced transaction fees and tighter safeguards. His campaign highlights crypto as a legitimate asset class, aiming to support the country’s growing number of retail investors—especially younger generations turning to digital assets for wealth building.
His opponent, conservative candidate Kim Moon-soo of the People Power Party, is also backing ETF legalization as part of a broader deregulatory agenda. His focus includes bolstering innovation in sectors like AI and crypto through private-public investment, and cutting taxes to spur middle-class growth.
While South Korea’s Financial Services Commission has been hesitant about greenlighting crypto ETFs in the past, political momentum and growing public demand are now shifting the conversation. Industry voices, such as the Korea Financial Investment Association, have openly supported ETF approval, citing increased investor interest and the need for safer, regulated exposure to digital assets.
With bipartisan backing, the legalization of crypto ETFs in South Korea is no longer a question of "if"—but "when." The next administration is expected to unlock significant changes that could cement the country’s status as a regional leader in digital finance.
WHAT WE ARE READING (OR WATCHING)
Stablecoins Go Mainstream as Mastercard and MoonPay Partner Across 150M Merchants
Goldman Sachs invests $1.4 billion in BlackRock's Bitcoin ETF
Ex-SEC Chair Gary Gensler privately supported crypto — McHenry
OCC Clarifies Bank Authority to Engage in Crypto-Asset Custody and Execution Services
Dubai government to accept crypto payments through Crypto.com partnership
Tether’s $150 Billion CIO Proved Himself Getting Cantor Backing
NYC Mayor Eric Adams to Make New York the 'Crypto Capital' of the World
DeFi Hyperliquid Grows Into a Major Player in Crypto Derivatives
