Washington stalls crypto, backs the yen

August 04, 2026

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CZ’s custody math reopens Bitcoin’s oldest argument

Key points:

  • River data placed self-custody losses slightly above exchange losses, but the comparison depends on how losses are identified and reported.

  • The Coldcard exploit and exchange compensation mechanisms highlight the different failure modes behind each custody model.

News - Changpeng Zhao (CZ) challenged crypto’s self-custody orthodoxy, arguing that centralized exchanges may be statistically safer than self-custody, based on Bitcoin loss figures shared by analyst Willy Woo.

River’s 2025 industry report estimated that 1.57 million BTC had been lost through self-custody, slightly above the 1.51 million BTC attributed to exchanges. CZ stressed that the conclusion depended on the accuracy of the figures.

The reporting gap - Exchange hacks are visible, documented events, while lost seed phrases, inaccessible wallets, forgotten passwords, and destroyed devices often go unreported. CZ argued that this imbalance may understate self-custody losses. Failures involving exchanges that no longer operate also remain included in the centralized tally.

The dataset predates recent custody incidents, including the Coldcard exploit. Galaxy Research estimated that attackers stole more than 1,367 BTC from 4,585 wallets after a firmware flaw weakened seed-generation randomness on affected Coldcard Mk3 devices.

Protection with limits - CZ pointed to exchange compensation mechanisms, including Binance’s SAFU reserve. Binance used the fund after its 2019 breach, covering roughly 7,000 BTC in losses without passing the damage to users.

Still, exchange custody concentrates risk. A platform failure can affect thousands of users at once, while most self-custody mistakes remain isolated.

No clean winner - CZ stopped short of endorsing exchanges outright. Woo maintained that self-custody preserves Bitcoin’s sovereign properties. Both framed custody as a trade-off among control, convenience, security, and user capability.

Washington stalls on Clarity as lawmakers seek Trump token probe, Bessent steps into yen

Key points:

  • $TRUMP scrutiny is deepening the Clarity Act ethics fight, while Crypto Watchdog runs an anonymously funded campaign in Washington.

  • Separately, Treasury joined Japan in supporting the yen, raising questions for yen-funded risk trades.

News - Two U.S. policy stories are moving at different speeds. The Senate’s crypto bill remains trapped in an ethics dispute involving U.S. President Donald Trump, while Treasury has acted with Japan in the currency market.

Senators Elizabeth Warren and Richard Blumenthal asked SEC Chair Paul Atkins to investigate estimated $TRUMP investor losses of $3.8 billion. Their letter cited Trump’s disclosure of $636 million in token-related earnings and questioned whether the disparity raised market integrity and enrichment concerns.

Crypto’s ethics wall - Clarity Act negotiators are awaiting the White House’s response to a tougher bipartisan proposal limiting senior officials’ direct involvement in crypto projects. Democrats rejected an earlier version as too weak, leaving the bill short of the support it may need to clear the Senate’s 60-vote threshold.

Crypto Watchdog has entered the debate with Washington-area ads linking digital assets to cartels, terrorism, and scams. The group promotes industry transparency, but its executive director declined to disclose its funders.

A faster market response - Treasury Secretary Scott Bessent confirmed that the U.S. bought yen alongside Japan after the currency fell to its weakest level since 1986. It was Washington’s first yen purchase since 1998.

Bitcoin’s indirect exposure - A stronger yen can make yen-funded risk positions, including some crypto trades, more expensive. Analysts remain divided over whether carry-trade unwinding would materially pressure Bitcoin, and Bessent said lasting stability depends on policy and economic fundamentals.

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Italy’s largest banking group cuts IBIT, but its Bitcoin exit is incomplete

Key points:

  • Intesa Sanpaolo reduced its IBIT stake by about 94%, nearly erased its call position, and added puts covering 500,000 shares.

  • The bank tripled its staked Ether ETF holding, while ARKB remained its largest crypto ETF position.

News - Intesa Sanpaolo reworked its crypto exposure in the second quarter, cutting IBIT while increasing its allocation to a staked Ether product.

The Italian banking group held 40,723 shares of BlackRock’s iShares Bitcoin Trust worth $1.36 million on June 30, down from 646,809 shares three months earlier. It also cut its IBIT call position by more than 99% and disclosed a new put position covering 500,000 shares.

Rotation, not retreat - The bank tripled its iShares Staked Ethereum Trust holding to 349,600 shares, valued at $7.1 million. The product is designed to earn Ethereum network rewards, an income feature unavailable to Bitcoin funds.

That shift occurred even as Ether fell 25% during the quarter and U.S. spot Ether ETFs recorded more than $715 million in net outflows.

Bitcoin still dominates - Intesa retained 3.47 million shares of the ARK 21Shares Bitcoin ETF worth $67.6 million, although the position declined about 4%. It remained the bank’s largest crypto ETF holding.

The filing also showed an unchanged $14.4 million Grayscale XRP Trust position, a nearly doubled BitGo stake, and reduced stakes in Coinbase, Circle, and Robinhood.

The missing net view - Form 13F disclosures capture long positions in U.S.-listed securities but not complete short exposure or options structures. The reshuffle therefore does not establish whether Intesa made a broader directional bet against Bitcoin.

FBI insider turns system access into $1M crypto theft

Key points:

  • A former FBI supervisor admitted obtaining crypto wallet credentials through internal systems and transferring assets into accounts he controlled.

  • Authorities recovered about $925,000, while searches uncovered seed phrases, crypto accounts, and ChatGPT queries about investing a $1 million windfall.

News - Former FBI supervisory agent Patrick Steven Yaroch pleaded guilty to stealing roughly $1 million in digital assets from wallets tied to individuals connected to an unnamed adversarial country.

According to the guilty-plea filing, Yaroch made 10 unauthorized transfers between late 2024 and early 2025 after obtaining wallet credentials through FBI systems. He moved the assets into wallets under his control and deposited some funds into Suilend to earn yield.

Access from inside - Yaroch worked in counterintelligence, held top-secret clearance, and served at FBI headquarters. The affected wallets were linked to foreign individuals investigated by the bureau, giving the case an insider-risk dimension beyond an external breach.

After reporting his conduct, Yaroch was placed on administrative leave, terminated, and arrested. Agents recovered devices, handwritten seed phrases, and a Trezor wallet from his Virginia home. With his cooperation, they accessed Kraken and Suilend accounts and transferred the recovered funds into government-controlled wallets.

The AI record - Court filings described ChatGPT conversations in which Yaroch asked how to invest or spend $1 million for maximum returns and how someone with that amount might relocate to Europe. Investigators also found Portugal travel plans and power-of-attorney documents.

An old federal pattern - Former DEA agent Carl Force and former Secret Service agent Shaun Bridges both pleaded guilty in 2015 after stealing Bitcoin during the Silk Road investigation.

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Interesting facts

  • The FBI became a crypto founder to catch market manipulators: U.S. law enforcement created a fake company called NexFundAI and an Ethereum-based token that traded on Uniswap as part of an undercover sting. Market maker CLS Global later pleaded guilty and was sentenced in April 2025 after agreeing to wash trade the government-created token.

  • DAI had a one-asset childhood and another name: The original Dai system launched in 2017 with ETH as its only accepted collateral, earning it the name Single-Collateral Dai. It later became known as Sai after Multi-Collateral Dai launched in November 2019.

  • CryptoPunks went from free claims to museum walls: All 10,000 CryptoPunks were initially offered free to anyone with an Ethereum wallet, apart from the network fee. The collection has since entered the permanent holdings of institutions including the Museum of Modern Art, Centre Pompidou, and LACMA.

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Top 3 coins of the day

LayerZero (ZRO)

Key points:

  • ZRO broke above $0.76 and triggered a provisional Supertrend buy signal after rebounding from its $0.71 to $0.72 base.

  • +DI overtook −DI, but ADX at 23.57 showed that the emerging trend still needed stronger follow-through.

What you should know:

ZRO’s latest advance shifted the short-term setup from consolidation toward a possible trend reversal. Price climbed to $0.77 and crossed the Supertrend barrier near $0.76, while +DI rose to 28.32 against −DI at 14.72. ADX remained at 23.57, however, suggesting that directional strength had improved without becoming firmly established. Buying volume also increased, though it stayed below the larger spikes seen during late July. The rebound coincided with LayerZero’s August 3 deprecation of its v1 relayers and its planned late-August support wind-down for Botanix, Canto, Moonriver, Moonbeam, and Nexera. ZRO must hold $0.76 to preserve the breakout, with $0.80 and $0.82 as the next resistance levels.

Cardano (ADA)

Key points:

  • ADA held near its rally highs after recovering the latest pullback, but $0.20 remained the ceiling to beat.

  • The Awesome Oscillator stayed positive at 0.0159, while Supertrend support near $0.18 kept the broader upswing intact.

What you should know:

ADA’s rally reached a pressure point beneath $0.20, where smaller candles showed buyers pausing after the sharp climb from $0.154. The bullish Supertrend remained intact near $0.18, while the Awesome Oscillator stayed positive at 0.0159 despite a red bar signaling slower upside momentum. Volume had expanded during the broader advance but eased as price consolidated near the highs. Sentiment also drew support from Cardano’s August 3 IBC testnet connection with Injective and reports that large holders accumulated 240 million ADA over five days. ADA now needs to hold $0.19 and break the $0.198 to $0.20 ceiling. A loss of $0.19 would reopen the $0.182 to $0.186 support zone.

Avalanche (AVAX)

Key points:

  • AVAX held its breakout territory near $6.82 after a volume-backed surge from roughly $6.58.

  • MACD continued strengthening above zero, but $6.85 to $6.90 remains the immediate barrier before $7.00.

What you should know:

AVAX had already delivered its breakout, and the latest candles shifted the focus to whether buyers could defend the new range. Price held near $6.82 after surging from roughly $6.58, while MACD strengthened above zero with the line at 0.092 versus the signal line at 0.050. The positive histogram expanded to 0.042, showing that momentum remained supportive even as price paused. Breakout volume was strong, but activity eased during consolidation. Beyond the chart, Progmat reportedly migrated more than $2.7 billion in securities to an Avalanche L1, while Hyundai launched a stablecoin payments pilot with Tether and Axiom Finance. AVAX must hold $6.78 to $6.80 and clear $6.85 to $6.90 before retesting $7.00.

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