Stay informed with the latest crypto developments impacting Bitcoin, blockchain, DeFi, NFTs, Web3, and crypto regulation.
In recent crypto news, leading US banking groups have called for closing a loophole in the GENIUS Act that could allow stablecoin issuers to indirectly pay yields. Terraform Labs co-founder Do Kwon has pleaded guilty to wire fraud and conspiracy charges. Meanwhile, Circle has announced its upcoming layer-1 blockchain, Arc, alongside a significant revenue increase in the second quarter.
US Banking Groups Push to Close GENIUS Act Yield Loophole
The Bank Policy Institute (BPI) and other US banking groups have urged Congress to address what they see as a loophole in the GENIUS Act. This law prohibits stablecoin issuers from offering yields directly to tokenholders but does not explicitly restrict affiliated entities or crypto exchanges from providing such yields.
The groups warn that this gap could enable stablecoin issuers to sidestep regulations by channeling payments through affiliates, potentially destabilizing credit flow to American businesses and families. They estimate that ignoring this loophole could lead to $6.6 trillion in deposit outflows from traditional banks.
This concern relates to stablecoins like USDC, issued by Circle, which offers yield to holders on platforms such as Kraken and Coinbase – a major incentive for users in the rapidly evolving crypto market.
Do Kwon Pleads Guilty to Wire Fraud and Conspiracy
Terraform Labs’ co-founder, Do Kwon, has changed his plea from not guilty to guilty on two charges: wire fraud and conspiracy to defraud. The US District Court for the Southern District of New York reports Kwon waived his right to a trial for these counts and agreed to a plea deal with prosecutors.
The agreement includes financial penalties amounting to $19 million. The charges could carry up to 25 years in prison if sentences are served consecutively; however, prosecutors reportedly will recommend no more than 12 years. Kwon’s sentencing hearing is scheduled for December 11.
These charges stem from allegations related to securities fraud, market manipulation, money laundering, and wire fraud, connected to Kwon’s role at Terraform Labs. He was extradited from Montenegro and appeared in a New York court in January.
Circle to Launch Arc: A New Layer-1 Blockchain
Circle, the publicly traded issuer of USDC stablecoin, announced plans to launch Arc, a new layer-1 blockchain compatible with the Ethereum Virtual Machine (EVM), expected later this year.
The company disclosed its Q2 results, revealing a 53% year-over-year increase in revenue to $658 million. Arc is designed as an enterprise-grade platform focusing on stablecoin payments, foreign exchange, and capital markets.
Arc will feature USDC as its native gas token, allowing users to pay transaction fees with the stablecoin. It will also include an integrated stablecoin foreign exchange engine, near-instant settlement, and optional privacy features.
Circle emphasizes that Arc will integrate fully with its platform and maintain interoperability with numerous other partner blockchains.
Currently, USDC holds a market capitalisation of $65.6 billion across 24 networks.
