Crypto Market Update: Treasury Scraps Crypto Mixer and Self-Hosted Wallet Rules

Bitcoin price update

Bitcoin (BTC) was priced at US$85,394.47, trading 0.1 percent higher over the past 24 hours.

Recent price increases stem primarily from shifting expectations around US Federal Reserve policy. Following a softer-than-anticipated US employment report last week, market participants scaled back expectations for an October interest rate increase, providing support for risk-sensitive assets such as cryptocurrencies.

However, Lacie Zhang, research lead at Bitget Wallet, said lower rate expectations alone won’t be enough to push prices higher. “The Fed repricing has already provided a meaningful boost to Bitcoin,” she said in emailed commentary. “ETF demand remains supportive, but it is not yet strong enough on its own to force a breakout.”

Zhang pointed to Bitcoin's repeated failure to stay above a key price level as a sign that investors cashing in gains are still soaking up the buying from big institutions. She said a hotter-than-expected inflation report, rising oil prices or tougher talk from the Fed could bring rate hike bets back and push Bitcoin lower.

A real breakout would need steady exchange-traded fund inflows and stronger direct buying of Bitcoin.

Zhang named US$87,400 as a breakout confirmation level, with US$90,000 and US$93,000 as upside targets and US$84,000 and US$82,000 as support below.

Bitcoin price chart

Ether and altcoin price update

• Ethereum (ETH) was priced at US$2,704.84, trading 0.1 percent lower over the last 24 hours.

• XRP (XRP) was priced at US$1.50, down 0.9 percent over the past 24 hours.

• Solana (SOL) was trading at US$120.01, trading 1.6 percent lower over the past 24 hours.

Today's crypto news to know

Read on for a round-up of the biggest crypto market news:

• Treasury drops two proposed crypto rules
• Strategy posts US$21 billion Q3 Bitcoin gain, buys US$29 million more
• SEC clears 3x Bitcoin and Ether funds, but trading must wait
• CFTC takes first step toward leveraged crypto trading rules
• Kraken parent Payward launches 24/7 dollar settlement
• OKX, ICE launch 24/7 tokenized stock trading

Treasury drops two proposed crypto rules

FinCEN, the US Department of the Treasury’s anti-money laundering unit, said on Monday that it is withdrawing two cryptocurrency proposals that were never finalized.

The first, from 2023, would have required banks to file detailed reports on transactions believed to involve crypto mixers, which are services that pool coins from many users to make transfers harder to trace. The second, from 2020, would have required banks and money transmitters to record and report larger transfers to self-hosted wallets, which people control themselves instead of keeping their coins on an exchange, and to verify who owns those wallets.

In explanation, FinCEN said its broad definition of mixing “could have a chilling effect on legitimate activity” and would “place a large reporting burden” on financial institutions. The notice also says the Trump administration supports the ability of lawful crypto users to transact privately on public blockchains.

FinCEN said it will keep watching mixers for signs of money laundering and could take action in the future. Both withdrawals are set to be formally published on Tuesday (October 6).

Strategy posts US$21 billion Q3 Bitcoin gain, buys US$29 million more

Michael Saylor's Strategy (NASDAQ:MSTR) bought 334 BTC for US$28.7 million in early October, setting a fresh holding record of 848,000 BTC. The company announced it paid an average of US$85,838.80 per coin during purchases executed between October 1 and 4. The firm also reported a US$20.91 billion third quarter gain on its digital assets, saying it was driven by broad price appreciation across its massive treasury.

In addition, the company allocated a separate US$176.3 million to repurchase 1,773,802 Stretch (STRC) preferred shares during a time period spanning from the end of September to early October.

The preferred stock buybacks heavily outweighed the Bitcoin purchases, drawing US$154.1 million from the firm's US dollar cash balance and US$22.2 million from interest earnings. Strategy funded the Bitcoin purchases by selling 92,894 MSTR shares for US$15.7 million and drawing the remaining US$13 million from its US dollar cash balance.

The company's average cost basis across its entire Bitcoin position stands at US$75,440.70 per coin.

The preferred buyback program retains US$547.2 million in remaining capacity, while the firm holds US$833.4 million in its US dollar cash pool and US$4.88 billion in its US dollar reserve.

SEC clears 3x Bitcoin and Ether funds, but trading must wait

On October 2, the US Securities and Exchange Commission (SEC) approved a rule change that lets the Cboe BZX exchange list six funds from Volatility Shares that aim to deliver three times the daily move of the asset they track.

Two are tied to Bitcoin and Ether, and the other four track gold, silver, crude oil and natural gas.

The crypto funds won’t hold Bitcoin or Ether directly; instead, they will hold futures contracts, which are agreements to buy or sell an asset at a set price at a later date. Because these funds reset every day, they are built for short-term trading, and over longer periods their returns can be very different from three times the asset’s move.

The SEC’s order does not set a launch date, and Volatility Shares still needs the SEC to approve its registration before the funds can start trading. The company already offers 2x Bitcoin and Ether funds.

CFTC takes first step toward leveraged crypto trading rules

The US Commodity Futures Trading Commission (CFTC) is starting work on federal rules for leveraged and margin crypto trading by everyday investors. That means trading with borrowed money, which makes both gains and losses bigger.

On Monday, the agency asked the public for feedback on two planned regulations called Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets.

The plan would create a new type of federally registered crypto exchange as an alternative to today’s state-licensed platforms. No rules have been proposed yet. CFTC Chair Michael Selig said the agency can’t require crypto trading to move onto these exchanges without action from Congress, where the CLARITY Act, a broader bill on crypto markets, stalled in September. Comments are due 60 days after the notice is published in the Federal Register.

Kraken parent Payward launches 24/7 dollar settlement

Payward, the parent company of crypto exchange Kraken, has partnered with Singapore Gulf Bank (SGB) so that select institutional clients in Asia and the Gulf region can settle US dollar transactions at any hour. Crypto markets trade around the clock, but bank transfers are usually limited by business hours and cut-off times. Through the partnership, SGB clients can move funds to Payward over SGB Net, the bank’s real-time payment network, and use them right away.

SGB, a digital bank regulated by the Central Bank of Bahrain, will also use Kraken Prime, Payward’s service for large clients, to access crypto trading liquidity. The companies plan to add more clients and currencies over time.

OKX, ICE launch 24/7 tokenized stock trading

OKXICE, a joint venture between crypto exchange OKX and New York Stock Exchange owner Intercontinental Exchange (NYSE:ICE), notified the SEC that it plans to launch a 24/7 trading venue for tokenized US stocks.

The venture filed its notice under the SEC's innovation exemption, which allows qualifying venues to trade tokenized stocks without registering as traditional exchanges. Former New York Governor and OKXICE co-chair Andrew Cuomo praised the filing, calling it "a landmark step toward a truly global, 24/7 Wall Street."

Users will trade each tokenized stock in pairs against USDC, USDG or Tether's USDT stablecoins. Meanwhile, OKX's US entity will conduct identity, anti-money laundering and sanctions checks before issuing non-transferable soulbound tokens that authorize wallets to trade or supply liquidity.

An unaffiliated third party called "the Tokenizer" holds the underlying shares one-for-one through a registered broker-dealer to ensure token holders receive standard dividends and voting rights.