The DeFi security risk continues to erode confidence in the sector as the impact of KelpDAO’s $292 million hack grows.
In addition to the DeFi woes, the Fed’s new chair choice has bolstered crypto’s position in the US financial system, while Britain pushes for stablecoin integration.
Here’s the full rundown of the top headlines shaping crypto in the past 48 hours.
Fed Chairman Kevin Warsh supports crypto
Kevin Warsh, President Donald Trump’s Chairman of the Fed, underlined the position of crypto in the current US financial system. During Tuesday’s hearing by the Senate Banking Committee, Warsh said:
Digital assets are already part of the fabric of our financial services industry in the United States.
He was responding to a question from Senator Cynthia Lummis, who sought to understand whether the Fed will support crypto integration and continued investment.
This was not surprising, given Warsh’s recent disclosure of investments in several crypto projects. Still, ranking Democratic member Senator Elizabeth Warren was cautious about Warsh’s nomination, noting that he will be a “sock puppet” for Trump’s crypto interests.
After the hearing, Bitcoin rose to $78,000 on Wednesday, its highest level since February.
Will DeFi contagion slow Wall Street adoption?
Investment bank Jefferies LLC has warned that the $292 million Kelp DAO hack and resulting DeFi taint could force traditional companies to pause their tokenization plans.
The exploit caused panic among investors, prompting a Outflow of 15 billion dollars from Aave, the leading DeFi lending platform.
Against this backdrop, Andrew Moss, research analyst at Jefferies LLC, told Bloomberg:
The potential loss of trust poses both short- and longer-term risks, regardless of who is to blame.
He noted that the rollout of tokenization expansion among banks, fintechs and others could “temporarily slow” as companies reassess risk.
Moss said tokenization has accelerated recently due to regulatory clarity, but he cautioned:
It’s easy to forget that the emerging digital asset industry still needs time to mature.
Britain is pushing for an integrated payment system
Finally, the UK Treasury has announced a single regulatory framework for traditional payments, stablecoins and tokenized deposits.
This is what Minister of Finance and Municipality Lucy Rigby says statement On Tuesday, the move will help “equip the UK payments sector for the future of rapid financial innovation.”
Rigby added that the ministry will soon invite the public and stakeholders for feedback on the plan. Interestingly, even payments made by agents are covered by the proposal.
The minister said the move would position Britain as a global leader in financial technology, something the US, Hong Kong and other jurisdictions are fighting for.
Final summary
- Warsh’s crypto support has drawn praise from the industry, but has also led to political backlash from Democrats.
- Jefferies warned that Aave’s $15 billion outflow caused by the DeFi contagion could prompt Wall Street to pause interest in the sector.