CFTC, EU Banks Embrace Stablecoins as Crypto Markets Turn Fearful Following Weeklong Liquidation

This Week’s Top Stories: Stablecoins See Adoption Bolstered Across Borders

CFTC Backs Stablecoins as Collateral

• Institutions around the world embraced greater stablecoin integration this week. On Tuesday, the Commodity Futures Trading Commission (CFTC) formally moved to let U.S. derivatives venues accept dollar-backed stablecoins as collateral, which could help lower margin frictions and modernise settlement. Acting Chair Caroline Pham called the initiative the “killer app... to unleash economic growth by lowering costs.”
• Industry leaders echoed her enthusiasm. Circle’s Heath Tarbert pointed to unlocked liquidity and lower risk, and Coinbase VP Greg Tusar said the move keeps U.S. markets competitive. Jack McDonald at Ripple stressed clear rules on valuation, custody and settlement — a point Kris Marszalek at Crypto.com tied to broader non-cash collateral use. The proposal is out for public input until October 20, with coordination signalled across Treasury and the President’s Working Group.

U.S. & UK Deepen Crypto Cooperation

• The U.S. government also said it would establish a joint body with its counterpart in the UK to cut red tape for firms accessing capital markets on both sides of the Atlantic and to deepen cooperation on crypto assets. Approved by Chancellor Rachel Reeves and Treasury Secretary Scott Bessent during President Trump’s state visit, the task force—co-chaired by finance ministries with regulators participating—will deliver near-term fixes and longer-run options within 180 days. Aiming for smoother cross-border access, the UK continues to favour regulating crypto via existing rules, instead of opting for new ones, like the EU with its Markets in Crypto-Assets Regulation (MiCAR).

EU Banks Crafting MiCAR-Compliant Stablecoin

• Yet, financial institutions across the EU have banded together to issue a euro-stablecoin compliant under that regime. ING, Banca Sella, KBC, Danske Bank, DekaBank, UniCredit, SEB, CaixaBank, and Raiffeisen Bank International unveiled plans for a euro-denominated stablecoin built to MiCAR standards. The group has formed a Netherlands-based company seeking an e-money licence under De Nederlandsche Bank supervision, with first issuance targeted for H2 2026 and additional banks invited to join; a CEO appointment is pending regulatory approval. They hope to create a trusted payment rail, offering a credible European alternative to today’s USD-dominated stablecoin market and room for banks to layer wallets and custody.

A Quick Crypto Overview – Last Weekend’s Long Liquidation

After last week’s rally, volatility returned with a vengeance. Over the weekend more than $1.8 billion in crypto positions were liquidated, affecting 370’000 traders, and sinking market capitalization by more than $150 billion – the largest long liquidation event of the year so far. Bitcoin briefly fell below its 7-day simple moving average to $112’000 and Ether to around $4’200. Analysts blamed a mix of Trump’s controversial $100’000 H1B visa fee weakening tech stocks and traders overcrowded in leveraged altcoin positions. In the past 24 hours, another $170 billion dropped off the crypto market cap, with BTC falling to $109’000, before finding support, and ETH dipping below $4’000 for the first time since August 9.

Despite the larger selloff, Binance Coin (BNB) managed to shine through the storm. Binance Chain validators proposed halving transaction fees and speeding up block times to stay competitive with Layer2 networks. The proposal sparked a rally, as BNB jumped over 6 % week on week, briefly trading above $1’000. Even as most altcoins bled double digits, BNB closed the week near record highs, underlining how network fundamentals can trump wider market panic. 

Meanwhile, stablecoin giant Tether is in talks with institutional investors to raise up to $20 billion, valuing the company at around $500 billion. This would make it one of the world’s most valuable private companies, on par with the likes of OpenAI and SpaceX. Observers say the raise could help shore up reserves for USDT and fuel expansion into tokenisation, but it also highlights how just how significant stablecoins have become in the crypto ecosystem. 

Cross-border payment competitor Ripple once had similar ambitions, but in spite of new partnerships announced with Spanish banking giant BBVA and the first spot XRP ETF released last week, XRP has been performing poorly recently, which longtime XRP commentator Bill Morgan said it can no longer blame on its lawsuit with the SEC. 

Chart of the Week - September’s Big Options Roll 

Today marks one of the year’s larger crypto options expiries, with some $22.6 billion in Bitcoin options and $5.1 billion in Ethereum options reaching expiration. Deribit’s BTC options open interest by expiry shows a pronounced cluster into the late-September roll, with Cointelegraph noting ~$17.4 billion of OI at Deribit alone for Friday and ~$22 billion across venues.  

The lion’s share of these contracts are call options, signaling a broadly bullish sentiment — but the outcome hinges on Bitcoin’s ability to hold above key price levels. Currently trading around $109’000 — below the $110’000 threshold — bearish traders stand to gain, with up to $1 billion in advantage. If it rises back above $112’000, bulls take the lead, potentially securing $600 million or more in gains. 

The market’s recent dip — BTC down 1.3%, ETH down 4.1% — reflects caution ahead of the expiry. Traders are closely watching U.S. economic indicators, including GDP data and Treasury auctions, which could influence short-term volatility.

What’s Happening On-Chain? – Plasma Launch Boosts XPL, ETH Supply Tightens, Family Sentiment, Asian Adoption Up

Stablecoin-oriented L1 blockchain Plasma launched its mainnet yesterday, sending its native token XPL surging 52%. The launch saw support from industry players like stablecoin giant Tether, with Binance, the world’s largest cryptocurrency exchange, adding Plasma USDT to its Earn suite through Aave’s lending system. Plasma preceded the launch of its mainnet with the introduction of Plasma One, the first neobank built entirely around stablecoins, earlier this week.

Ether continues to leave centralized exchanges for staking, self‑custody and ETF custody channels. By reducing the pool of coins available to sell at short notice this helps ETH absorb drawdowns when broader risk softens. The near‑term caveat is rising bitcoin dominance. New capital is concentrating in BTC first, which can keep ETH’s outperformance on hold until dominance pauses. Medium term, a smaller exchange float remains a supportive signal for ETH once market leadership broadens. 

Citi Wealth’s 2025 Global Family Office study—surveying 346 family offices across 45 countries—shows sentiment toward digital assets improving by 10 percentage points, from -11% in 2024 to -1% this year. Citi links the shift to a warmer policy tone from the new U.S. administration and a clearer regulatory path, which together lower the perceived career and operational risk of holding crypto. 

Positioning is moving as well. Historically, many family offices capped crypto at 1-5% of portfolios. In 2025, a BNY Mellon review finds those ranges widening: larger family offices (AUM > US $1B) now average ~8% in digital assets, while smaller peers (< US $1B) sit closer to ~5%. Expectations are firmer, too: nearly four in ten respondents anticipate 10%+ portfolio returns over the next year. Notably, respondents indicated they are more likely to hold or add than to liquidate in response to tariff headlines—suggesting a higher conviction, longer-horizon approach to the asset class.  

While American family offices become more favorable toward crypto adoption, the latest Chainalysis data shows that Asia has been leading the way. According to its annual 2025 Global Adoption Index, Chainalysis said that India, Pakistan, and Vietnam lead global crypto activity. From last year until June this year, transaction volume in the APAC region has jumped from $1.4 trillion to $2.36 trillion.  

Digital Asset Fund Flows – Late Inflows as Rate Cut Digested

Last week, digital-asset funds logged a second straight week of inflows, $1.9 billion. After months of debate, the Fed’s rate cut arrived with a cautious tone, causing flows to pause early in the week and then re-accelerate on Thursday and Friday ($746 million) as investors digested the implications for crypto. Total AuM rose to a year-to-date high of $40.4 billion, keeping the pace on track to match or slightly exceed last year’s $48.6 billion in net inflows. 

Regionally, the U.S. led with $1.8 billion, followed by Germany ($51.6 million), Switzerland ($47.3 million) and Brazil ($9.3 million). Sentiment was broadly constructive; Hong Kong saw a small $3.1 million outflow. 

By asset, Bitcoin drew $977 million, while short-bitcoin products continued to bleed ($3.5 million out), pushing their AuM to a multi-year low ($83 million). Ethereum attracted $772 million, taking year-to-date inflows to a record $12.6 billion and lifting ETH product AuM to an all-time high of $40.3 billion. Among altcoins, Solana added $127.3 million and XRP US $69.4 million. 

Market Sentiment – Crypto Markets Fall Into Fear

Equities remain relatively subdued as the CNN Fear & Greed Index sits neutrally around 51, suggesting investors are still inclined to buy dips rather than reach for heavy hedges. That contrasts with crypto, where sentiment has swiftly swung down.  

The fear reading of the Crypto Fear & Greed Index dropped sharply to 28, from 43 just yesterday, while CoinMarketCap’s broader gauge followed suit, with a fearful 32, down from a neutral 41 yesterday. Cointelegraph frames this as the most fearful reading since mid-April, noting the index dropped below 30 even though Bitcoin’s price is far above where it traded back then—an indication that positioning is weighing more than spot levels. In past cycles, these sub-30 prints often preceded rebounds once the near-term overhang cleared.  

Retail stock investors are mixed rather than euphoric: the latest AAII survey shows bullish 41.7% and bearish 39.2%, a relatively even split that fits a range-bound tone while markets wait on catalysts. Put together, the four gauges tell a consistent story: risk appetite is selective, with stocks still comfortable and crypto more defensive. For portfolios, that argues for staying with liquid core exposures (BTC/ETH), staggering entries around the expiry and funding headlines, and keeping a modest cash/hedge buffer in case macro news pushes yields and the dollar higher. 

Other Relevant News

• LINE NEXT, the Web3 arm of messaging giant LINE, to launch a stablecoin superapp for cross-border payments.
• EU’s 19th package of sanctions to Russia to include crypto platforms for the first time.
• Metaplanet reaches 85% of its Bitcoin yearly target with its total holdings valued at $2.91 billion.
• Trump-backed WLFI confirms debit card and retail app launch amid Bithumb partnership.
• SEC and layer-2 (L2) sequencers disagree on regulation, increasing regulatory uncertainty surrounding centralized L2s.
• Digital asset service provider Bakkt’s stock rises 40% after announcing a crypto veteran on its board.
• Deutsche Bank highlights Bitcoin’s position alongside gold in central bank reserves by 2030.
• Ohio approves vendor to process crypto payments for state fees.
• GSR files 5 crypto ETFs tracking digital asset treasury (DAT) companies.

Looking Ahead

Tuesday, 30 September 2025 

Japan - Retail Sales YoY AUG 

Wednesday, 1 October 2025 

Switzerland - Retail Sales YoY AUG 

Eurozone – Inflation Rate YoY Flash 

Thursday, 2 October 2025 

Switzerland - Inflation Rate YoY  

Eurozone – Unemployment Rate 

US - Initial Jobless Claims  

Friday, 3 October 2025 

Japan – Unemployment Rate