Senate Confirms Jonathan McKernan to Treasury, Signals Potential Crypto Policy Shift

Executive Summary

The U.S. Senate confirmed Jonathan McKernan as Treasury Under Secretary for Domestic Finance by a 51-47 vote, signaling a potential shift toward deregulation and industry-friendly policies for digital assets, particularly concerning crypto debanking.

The Event in Detail

Jonathan McKernan was confirmed by the U.S. Senate to the role of Treasury Under Secretary for Domestic Finance on Tuesday, with a vote of 51-47. In this capacity, McKernan will oversee financial markets and advise senior officials on the financial system and broader economic matters. McKernan has previously expressed criticism of "crypto debanking" practices and has commended individuals actively working against what he perceives as overregulation within the crypto sector. During his July nomination hearing, McKernan affirmed his commitment to championing reforms that foster growth both within and outside the existing financial system. Treasury Secretary Scott Bessent stated that McKernan is an "ideal leader" who will play an instrumental role in "clawing back government overreach and excess," indicating a clear intent to reshape regulatory philosophy.

Financial System Implications

McKernan's appointment has implications for the U.S. financial system, particularly concerning the integration of digital assets. His expressed views on the "increasingly unattractive" nature of the U.S. banking system and its sliding performance in terms of innovation and crypto integration suggest a push for structural changes. McKernan, quoting economist Tyler Cowen, noted, "The U.S. banking system … is increasingly unattractive. It is also failing various market tests... How innovative is it? … Can it integrate with crypto? Relative performance is sliding, there is no other way to put it." This perspective indicates a potential shift in policy to facilitate greater interaction between traditional finance and digital asset markets, potentially easing banking access challenges faced by crypto-related businesses.

Business Strategy & Market Positioning

McKernan's role is strategically aligned with the broader initiatives of the Trump administration, which has emphasized positioning the United States as a global leader in digital assets. This administration's approach marks a notable departure from previous regulatory stances, prioritizing deregulation and industry input. For instance, Executive Order 14178, issued on January 23, 2025, repealed the Biden-era Executive Order 14067, which had focused on the risks of digital assets. EO 14178 explicitly states that the digital asset industry plays a "crucial role in innovation and economic development" and commits to supporting responsible growth. Furthermore, the SEC rescinded Staff Accounting Bulletin No. 121 (SAB 121) with SAB 122 on the same day, easing requirements for crypto custodians to record digital assets as liabilities. This collective strategy, in which McKernan's position is a key component, aims to foster a more permissive environment for digital asset companies, drawing parallels to how prior administrations might have strategically positioned other emerging industries.

Broader Market Implications

McKernan's confirmation suggests a potential easing of regulatory pressure on crypto-related businesses, particularly regarding access to banking services. His influence could lead to broader reforms in financial system oversight, making it more amenable to crypto integration. This could foster growth in the digital asset space and improve investor sentiment by reducing regulatory uncertainty. However, such shifts may also face pushback from traditional financial institutions or more conservative regulatory factions. The administration's establishment of a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile through Executive Order 14233 further underscores a proactive stance toward integrating digital assets into national financial infrastructure, signaling long-term support for the industry.

Expert Commentary

Treasury Secretary Scott Bessent has publicly stated that McKernan will play an instrumental role in strengthening the economy by "clawing back the government overreach and excess that defined the previous administration." McKernan himself has lauded the efforts of individuals like Worldwide Stablecoin Payment Network CEO Austin Campbell for their work against overregulation. He has also quoted libertarian economist Tyler Cowen on the perceived inadequacies of the U.S. banking system concerning innovation and crypto integration, signaling his alignment with perspectives advocating for significant regulatory and systemic adjustments.

Broader Context

The confirmation of McKernan occurs within a larger policy framework established by the Trump administration to reshape the digital asset industry in the United States. This includes a de-emphasis on regulation by enforcement, greater reliance on deregulation, and increased industry input. Key developments include Executive Order 14178, which explicitly supports the responsible growth of cryptocurrencies and blockchain technology. Additionally, legislative efforts like the STABLE Act and the GENIUS Act are moving through Congress, focusing on stablecoin regulation and integration into federal payment systems, requiring one-to-one reserve backing. These combined executive and legislative actions create a comprehensive strategy aimed at fostering innovation and growth in the digital asset sector.

source:

[1] Senate confirms Trump-backed pick Jonathan McKernan to Treasury role (https://www.theblock.co/post/373871/senate-co ...)[2] Senate confirms Trump-backed pick Jonathan McKernan to Treasury role | The Block (https://vertexaisearch.cloud.google.com/groun ...)[3] The Trump Administration's Reshaping of Digital Asset Policy | Federal Regulatory & Enforcement Insider (https://vertexaisearch.cloud.google.com/groun ...)

Related News

Oct 08 2025, 18:21

Reaper Actual Shooter with Optional Tezos NFTs Enters Alpha Playtesting

Executive Summary Distinct Possibility Studios, led by veteran game developer John Smedley, has initiated the "Foundation Alpha" playtesting phase for its open-world persistent shooter, Reaper Actual. This launch includes optional Web3 elements, featuring an NFT marketplace built on Tezos layer-2 Etherlink for in-game asset ownership and trading, a move that has generated discussion across the gaming and cryptocurrency communities regarding blockchain integration. The Event in Detail Reaper Actual, an open-world persistent shooter by Distinct Possibility Studios, has entered its "Foundation Alpha" playtesting phase. The game combines MMO-style progression with large-scale first-person shooter combat. Players can join the alpha by purchasing one of three Foundation Alpha Series 1 bundles through the Epic Games Store or the game's official website. These bundles provide access to the game's setting, the island of Marova, and include limited-edition Reapers (playable characters) and operational bases. Alpha and Beta testing are projected to continue through 2025, with an Early Access launch planned for 2026. A Web3-powered version of the Foundation Alpha is also available, built on Etherlink, a Tezos layer-2 solution. This version introduces blockchain functionality, enabling players to trade and own NFT versions of their bases, Reapers, and cosmetics. This Web3 release is limited to 10,000 Genesis bundles, divided into an initial drop of 2,000 and a second phase of 8,000. These blockchain features are entirely optional and operate independently of standard gameplay, designed to not affect game balance. Players opting for the Web3 version gain access to a dedicated marketplace and permanent digital asset ownership, while experiencing the same core gameplay as traditional players. Financial Mechanics Distinct Possibility Studios, founded in 2025 by John Smedley, secured $30.5 million in funding, led by Bitkraft Ventures and Brevan Howard Digital. Access to the Reaper Actual alpha is monetized through various bundle tiers. Players can acquire Foundation Alpha Series 1 bundles priced from $29.99 to $74.99. The "Stygian Oath Edition," priced at $74.99, is the highest tier, including four Reapers, a bunker base, a warehouse base, and game access. Lower-priced editions at $49.99 and $29.99 offer fewer in-game assets. The Web3-enabled versions, limited to 10,000 Genesis bundles, allow for on-chain trading of assets, signifying a distinct financial model for digital ownership within the game. Business Strategy and Market Positioning John Smedley, CEO of Distinct Possibility Studios, has positioned Reaper Actual as primarily a skills-based shooter, emphasizing that the game's core mechanics will not change due to Web3 integration. Smedley defends the optional use of crypto elements by highlighting "true digital ownership" and transparency, drawing a parallel to the Steam Community Market. He explicitly rejects "play-to-earn" and "slot machine" token mechanics, stating that for Reaper Actual, it is an "ecosystem play." This strategy aims to bridge traditional gamers into Web3 tools by offering a seamless experience where blockchain ownership is a choice, not a requirement. Initial estimates suggest only 8% of the player base might utilize the NFT marketplace, though Smedley believes this could grow to 30% within two years. The game is being released across multiple platforms, including Steam, Epic Games Store, and its own website, with only the website version featuring the Web3-enabled marketplace. This multi-platform approach, with distinct feature sets, demonstrates a nuanced strategy to cater to both traditional and Web3-savvy gaming audiences while managing potential backlash. Market Implications Reaper Actual's launch, with its optional blockchain features, presents a significant case study for the broader Web3 gaming ecosystem. The hybrid model—offering both traditional and blockchain-integrated versions—could influence future game development, particularly for projects aiming to incorporate digital ownership without alienating mainstream players. The debate surrounding its crypto integration highlights uncertain market sentiment, attracting both Web3 enthusiasts and criticism from traditional gamers. Success in this model could encourage further exploration of non-play-to-earn Web3 applications in gaming, focusing on asset ownership rather than speculative tokenomics. Conversely, if the optional Web3 elements fail to gain traction or contribute to negative perceptions, it could reinforce skepticism about blockchain's utility in gaming beyond niche applications. The game's reception may also impact investor sentiment towards the viability of non-speculative, utility-driven blockchain implementations in large-scale online games. Expert Commentary John Smedley, CEO of Distinct Possibility Studios, has consistently defended the optional Web3 integration. "Reaper Actual is first and foremost a skills-based shooter, and that will never change," Smedley stated. He further elaborated, "building on Etherlink with the help of Sequence lets us give players something unprecedented: true ownership of their in-game assets." Smedley compared the in-game asset ownership and trading to real-world property, noting, "just like you can buy and sell a home in the real world, you'll be able to do the same with your bases in Reaper Actual." He also addressed concerns about speculative mechanics: "I'm not a fan of 'play-to-earn' or mechanics like that. I also don't like seeing tokens being viewed as a slot machine." Smedley characterized Reaper Actual's approach as an "ecosystem play," transparently akin to the Steam Community Market. Efe Kucuk, Head of Gaming at Trilitech, commented on the underlying technology, asserting that "Infrastructure in games should feel invisible until it matters. That's what Etherlink allows – no friction, no gimmicks, just permanence when it counts." Broader Context The debut of Reaper Actual into alpha playtesting occurs amidst a broader industry discussion about the role of blockchain and NFTs in gaming. While the concept of "true digital ownership" is gaining traction among some developers, a segment of the traditional gaming community remains skeptical or outright hostile towards crypto integrations, often associating them with speculative "play-to-earn" models or perceived "Ponzi games" like Addicted on Solana or Bigcoin. Smedley's proactive efforts to differentiate Reaper Actual from these narratives, by emphasizing optionality and functional asset ownership over earning, reflects an industry attempt to find sustainable and player-centric applications for Web3 technology. The game's development on Etherlink, a Tezos layer-2 solution, also highlights the ongoing innovation in blockchain infrastructure designed for high-performance gaming applications, aiming to provide a frictionless experience that integrates permanence when relevant without disrupting gameplay.

Oct 08 2025, 17:23

Calamos Launches Bitcoin Protection ETFs with Defined Downside and Upside Caps

Executive Summary Calamos Investments LLC introduced three new Bitcoin Protection Exchange-Traded Funds (ETFs) on October 8, 2025: Calamos Bitcoin Structured Alt Protection ETF® – October (CBOO), Calamos Bitcoin 90 Series Structured Alt Protection ETF® – October (CBXO), and Calamos Bitcoin 80 Series Structured Alt Protection ETF® – October (CBTO). These funds are designed to offer investors exposure to Bitcoin's price movements with pre-defined downside protection and capped upside potential over a one-year outcome period, aiming to integrate digital asset investment with traditional risk management frameworks. The Event in Detail The newly launched Calamos ETFs provide varying levels of downside protection. CBOO offers 100% downside protection with an initial cap rate of 8.47%. CBXO provides 90% downside protection and an initial cap rate of 23.43%. CBTO is structured with 80% downside protection and an initial cap rate of 41.62%. These cap rates represent the maximum percentage return an investor can achieve from an investment if held over the outcome period, before fees and expenses. The expense ratio for CBOO is 0.69% as of its prospectus date. The ETFs are managed by Co-CIO Eli Pars and the Alternatives Team. Unlike spot Bitcoin ETFs that directly hold Bitcoin, these Calamos products do not invest directly in the cryptocurrency. Instead, they utilize options referencing the CME CF Bitcoin Reference Rate – New York Variant (BRRNY) or other underlying Exchange-Traded Products (ETPs) and Bitcoin Indexes to achieve their target outcomes. The structured protection ETFs are designed to reset annually, offering a new upside cap with refreshed protection against negative returns of the benchmark over the subsequent 12-month period. Business Strategy & Market Positioning Calamos's strategy with these new ETFs is to bridge the gap between traditional finance and digital assets by offering products that mitigate the inherent volatility of Bitcoin. By providing defined downside protection levels, Calamos targets a segment of investors who seek exposure to Bitcoin's growth potential but are risk-averse or operate under mandates that preclude direct, unprotected cryptocurrency investments. This approach contrasts with typical spot Bitcoin ETFs, which directly hold Bitcoin and are subject to its full price fluctuations, and futures-based ETFs, which invest in futures contracts. While spot ETFs often have lower expense ratios (e.g., 0.20-0.25% for many leading funds like iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC)), futures ETFs like ProShares Bitcoin Strategy ETF (BITO) can have higher fees (around 0.95%) due to rollover costs. The Calamos offerings, with their explicit protection levels and capped returns, represent a distinct alternative, prioritizing risk management over maximizing uncapped upside, thereby appealing to a different investor demographic. Market Implications The introduction of Calamos's Bitcoin Protection ETFs signifies an evolving landscape in the integration of digital assets into mainstream financial products. Short-term, these products have the potential to attract a new cohort of institutional and traditional retail investors who prioritize risk mitigation, thereby increasing capital flow into the Bitcoin ecosystem through regulated and structured vehicles. Long-term, this could pave the way for more sophisticated and protected crypto investment products, further integrating digital assets into traditional finance. This trend is part of a broader movement towards institutional adoption of Bitcoin, evidenced by the over $143 billion in assets under management by US spot Bitcoin ETFs within 18 months of their approval. The increased availability of such regulated products is observed to contribute to Bitcoin's reduced volatility, with 30-day rolling volatility decreasing significantly, making it comparable to traditional assets like the S&P 500 and gold. This development reinforces the narrative of Bitcoin transitioning from a volatile speculative asset to a more stable store of value within professional investment portfolios. Broader Context The launch of these structured protection ETFs by Calamos aligns with the increasing regulatory clarity and institutional acceptance within the digital asset space. With the EU's Markets in Crypto-Assets Regulation (MiCAR) fully operational and the Basel Committee's standards for crypto assets implementation set for January 2026, the global regulatory environment is becoming more defined. This clarity encourages traditional financial firms to innovate and offer more diverse crypto-linked products. The ability to invest in Bitcoin through a product with defined risk parameters allows for broader participation without the technical complexities or direct exposure to extreme market swings. This evolution facilitates the allocation of capital from investment advisers, pension funds, and other professional asset managers, contributing to Bitcoin's growing legitimacy and entrenchment within the global financial infrastructure. The trend suggests that the crypto industry is moving from an era of regulatory uncertainty to one of structured innovation and strategic growth, driven by products that balance investor protection with opportunities for digital asset exposure.

Oct 08 2025, 17:04

Crypto Markets See Key Technical Upgrades, Regulatory Shifts, and New Funding

Executive Summary The cryptocurrency market is experiencing a confluence of significant technical upgrades, strategic funding rounds, and evolving regulatory frameworks. Ethereum's Fusaka upgrade successfully completed its Holesky testnet run, signaling a move towards reduced costs for institutions and Layer-2 networks. Simultaneously, DoubleZero's mainnet-beta went live, integrating a private fiber network to accelerate Solana transactions, now connected to 22% of staked SOL. In the decentralized physical infrastructure (DePIN) sector, Bee Maps secured $32 million in funding, underscoring investor confidence. Regulatory bodies are also adapting, with the Bank of England planning exemptions for stablecoin holding limits and the SEC working to formalize an "innovation exemption" for digital asset companies. Despite these advancements, a GoMining survey revealed that 77% of Bitcoin holders have not engaged with BTCFi, indicating a significant user adoption challenge. The Event in Detail Ethereum's Fusaka Upgrade Advances Towards Mainnet The Ethereum Fusaka upgrade, slated for activation on December 3, 2025, successfully passed its Holesky testnet. This upgrade aims to reduce validator costs by 90% and enhance Layer-2 (L2) efficiency by 20-40%. Key features include PeerDAS (EIP-7594) for data availability sampling, which reduces bandwidth and storage requirements for validators by up to 90%, and blob scalability, increasing blob capacity to 14/21 per block by December 2026. This is projected to enable Ethereum to process over 100,000 transactions per second (TPS) in a modular architecture. Post-upgrade, staking Annual Percentage Yields (APYs) are anticipated to rise from 4-5% to 6-8%, with EIP-7251 increasing the maximum effective balance per validator to 2,048 ETH, signaling a strategic pivot towards institutional adoption. Solana Ecosystem Sees Infrastructure Boost and DePIN Funding DoubleZero's mainnet-beta, launched in October 2025, has already captured 22% of staked SOL. This network layer 1 (N1) utilizes high-speed private fiber routes across 25 cities to provide low-latency communication for blockchain validators, contributing to Solana's evolution into a high-performance infrastructure. The project has seen a 57% increase in validator count to 3,248 by July 2025. Solana's Total Value Locked (TVL) reached $10 billion by Q3 2025, processing 65,000 TPS with staking yields up to 7.5% APY. In related developments on Solana, Bee Maps, previously Hivemapper, secured $32 million in a funding round led by Pantera Capital, LDA Capital, Borderless Capital, and Ajna Capital. This investment supports its decentralized mapping platform, which rewards contributors with the native HONEY token for capturing real-world imagery. A new Bee Membership Plan offers a $19 monthly subscription that includes a Bee Dashcam, LTE connectivity, and software access, replacing the former $589 upfront device cost to lower the barrier to entry for contributors and scale data collection. Bee Maps has partnered with entities such as Volkswagen, Lyft, and Mapbox. Evolving Regulatory Landscape for Digital Assets The Bank of England (BoE) is adjusting its regulatory stance on stablecoin holdings, planning to introduce exemptions for certain businesses, particularly crypto exchanges, from proposed limits of £20,000 for individuals and £10 million for businesses. This shift, reported by Bloomberg, allows for larger stablecoin holdings necessary for trading and operations. The BoE will also permit stablecoins as settlement assets in its Digital Securities Sandbox. Similarly, the Securities and Exchange Commission (SEC) is working to formalize an "innovation exemption" for digital asset companies, aiming to reduce regulatory uncertainty and foster growth in the sector. These developments reflect a global trend towards accommodating digital assets while maintaining financial stability. Challenges in BTCFi Adoption Highlighted by GoMining Survey A survey by GoMining, involving over 700 participants across North America and Europe, revealed that 77% of Bitcoin holders have never engaged with BTCFi platforms. Despite this, 73% expressed interest in earning yield through lending or staking, and 42% sought liquidity without selling their Bitcoin. Mark Zalan, CEO of GoMining, stated that the industry has predominantly developed products for "crypto natives" rather than "everyday Bitcoin holders." Key barriers to adoption include trust, complexity, and a lack of awareness, with 65% of respondents unable to identify a single BTCFi project. Projects like Core are addressing this by enabling non-custodial Bitcoin staking, dual staking, and providing regulated access via ETPs such as Valour's yield-bearing Bitcoin ETP. Market Implications The ongoing technical upgrades in Ethereum and Solana are positioned to significantly enhance the scalability and efficiency of core blockchain infrastructure. Fusaka's improvements in validator costs and L2 efficiency could drive increased institutional participation on Ethereum, expanding its utility for tokenized assets and cross-chain finance. DoubleZero's impact on Solana's network speed and validator diversity further solidifies its role as a high-performance blockchain, fostering DeFi innovation and transaction volume. The substantial funding for DePIN projects like Bee Maps indicates a growing market demand for decentralized real-world utility, potentially onboarding new users to Web3 through practical applications. Regulatory clarifications from the Bank of England and the SEC are expected to reduce uncertainty for businesses operating with stablecoins and digital assets, potentially fostering greater corporate adoption. The expansion of tokenized funds, exemplified by KAIO bringing BlackRock and Brevan Howard funds to the Sei Network, demonstrates a growing bridge between traditional finance and the crypto ecosystem, attracting institutional capital into real-world asset (RWA) tokenization. However, the low adoption of BTCFi, despite high interest in yield generation, indicates persistent challenges in user experience and product accessibility. This highlights a need for more user-friendly products and educational initiatives to broaden mainstream engagement with decentralized finance built on Bitcoin. The market sentiment remains cautiously optimistic to bullish, driven by foundational technological advancements and efforts towards regulatory clarity, while simultaneously recognizing the ongoing hurdles in widespread user adoption for specific DeFi sectors. Expert Commentary Mark Zalan, CEO of GoMining, observed that the BTCFi industry has developed products for "crypto natives" rather than "everyday Bitcoin holders," indicating a disconnect between offerings and broader user needs. Chanel Chuang, a contributor to Core, predicted that "BTCFi in 2025 will focus on utility-driven innovations like tokenized yield products that bring liquidity to staked Bitcoin assets." This perspective was echoed by Rich Rines, another Core contributor, who suggested that the shift toward Bitcoin-native solutions could lead to "a significant portion of all active Bitcoin addresses becoming active on Bitcoin scaling solutions," potentially surpassing Bitcoin in DeFi on Ethereum-based chains. Regarding institutional adoption of blockchain technology, Olivier Dang, COO of KAIO, stated that the expansion of tokenized fund offerings to the Sei Network marks "another major milestone in institutional blockchain adoption," highlighting the increasing integration of traditional finance with decentralized platforms. Justin Barlow, Executive Director at the Sei Development Foundation, supported this view, commenting that the integration is an "important step toward the goal for Sei to become the institutional settlement layer for all digital assets." On the infrastructure front, Austin Federa described DoubleZero as “the missing hardware layer,” capable of pushing decentralized systems towards Nasdaq-level throughput. Broader Context The strategic moves within the crypto market reflect a broader push towards enterprise-grade infrastructure and bridging traditional finance with decentralized ecosystems. Ethereum's Fusaka upgrade and Solana's DoubleZero mainnet exemplify a focus on enhancing core blockchain capabilities, reminiscent of traditional financial infrastructure upgrades aimed at speed and cost efficiency. The financial mechanics of Fusaka, including the reduction in validator costs and increased staking APY, are designed to attract institutional capital by offering more predictable returns and lower operational overheads, positioning Ethereum as a backbone for tokenized assets. Bee Maps' funding round and its innovative subscription model address a critical supply-side constraint in the rapidly expanding Decentralized Physical Infrastructure Networks (DePIN) sector. This business strategy of lowering entry barriers for contributors is key to scaling data collection for real-world applications and stands in contrast to previous models that relied on high upfront hardware costs. This parallels the evolution of many tech industries where subscription models democratize access and accelerate adoption. The regulatory adjustments from the Bank of England and the SEC indicate a pragmatic shift towards accommodating digital assets within existing financial frameworks, aiming for clarity that can attract greater institutional participation. The tokenization of institutional funds by KAIO on Sei, including those from BlackRock and Brevan Howard, represents a significant advancement in the Real-World Asset (RWA) tokenization trend. This directly parallels the growth of securitization in traditional finance, but with the added benefits of blockchain's programmability and transparency, enabling new forms of liquidity and access for accredited investors. This move positions networks like Sei as critical infrastructure for the future of financial markets, blending the security and compliance of traditional finance with the efficiency of decentralized ledgers. This trend aims to overcome some of the "trust and complexity" barriers identified in the GoMining survey regarding BTCFi, by offering institutional-grade products that are both regulated and accessible on-chain, thereby expanding the overall digital asset market. Efforts by projects like Core to simplify BTCFi access are also crucial in this evolving landscape, demonstrating a dual approach of institutional integration and user-centric product development.