Fed Holds Rates Under Warsh as Senators Move to Block SBF Pardon, Illinois Adds Crypto Tax

Crypto News

The Federal Reserve held its benchmark federal funds rate steady at a range of 3.50% to 3.75% on Wednesday, a decision markets had priced in almost unanimously. The meeting was the first under new Chair Kevin Warsh, who succeeded Jerome Powell after Senate confirmation last month. Attention now turns to Warsh's debut press conference for signals on how the central bank will frame policy going forward. Traders have steadily pared back rate-cut expectations as inflation proved sticky and labor data stayed resilient, with some now weighing whether the next move could be a hike. Risk assets, including crypto, remain acutely sensitive to that shift and the threat of a prolonged bear market.

Prediction market operator Kalshi partnered with compliance software provider StarCompliance to launch a platform that lets financial firms monitor employee trading on event-contract venues. The system flags activity by transaction volume, trading patterns, market category and work-hour timing, centralizing investigations and audit records across onchain and offchain environments. The rollout follows a federal judge setting a December trial date for a US Army master sergeant accused of using non-public information about a military operation to earn more than $400,000 on a rival prediction platform. The launch lands amid intensifying scrutiny, with at least 11 states pursuing legal or regulatory action over whether event contracts fall under state gambling law or federal CFTC oversight.

A bipartisan pair of US senators, Republican Cynthia Lummis and Democrat Rubén Gallego, moved to introduce a resolution affirming that former FTX chief Sam Bankman-Fried should receive no executive clemency. The non-binding measure warns that a pardon would erase his conviction, weaken deterrence and signal that perpetrators of large-scale financial fraud can escape permanent accountability. Bankman-Fried, convicted in November 2023 on seven felony counts tied to misuse of FTX customer funds, was sentenced to 25 years in prison. A federal appeals court upheld that conviction last week, leaving a presidential pardon or a Supreme Court appeal as his only remaining legal paths after he formally applied to President Trump for clemency.

Illinois enacted a 0.2% tax on digital asset business activity after Governor J.B. Pritzker signed the state's roughly $56 billion budget on June 16. The provision applies to firms exchanging, transferring or storing crypto for state residents that report gross receipts of at least $100,000, and is projected to raise about $60 million. Industry participants reacted with alarm, noting the language was inserted last-minute and that the legislature has adjourned for the year, leaving little near-term path to amend it. Critics warn the broad wording could extend beyond crypto to electronic bank transfers, potentially capturing far more activity than lawmakers intended.

Singapore's Monetary Authority added crypto exchange Bybit to its Investor Alert List on Wednesday, a registry that warns consumers about entities which may be wrongly perceived as licensed or regulated by the watchdog. The regulator did not cite a specific reason for listing Bybit Fintech Limited. Bybit is not authorized by the MAS and does not operate in the city-state, which it lists among its service-restricted countries, even though founder Ben Zhou is Singaporean. The action fits a pattern of assertive oversight: in May the MAS revoked a liquidity provider's payment-institution license over risk-management failures and misleading disclosures, while police separately charged a former crypto-lending executive with fraud.

Grayscale Research named five decentralized finance tokens it argues offer genuine value as markets reward revenue over speculation. The list spans Hyperliquid, Aave, Uniswap, Sky and Maple, with the firm noting DeFi protocols have generated nearly $25 billion in cumulative fees since 2023. The report stresses that protocol revenue only matters when burns, buybacks and staking return earnings to holders; by that test Uniswap, which operates as an automated market maker, and Hyperliquid stand out, distributing almost all earnings. Hyperliquid routes trading fees into buying and burning its token, while Sky anchors its model on collateral-backed stablecoins. Aave was flagged as undervalued near $75.

Taken together, Wednesday's developments underscore a single arc: regulation and macro policy, not speculation, are now setting crypto's tone. From the Fed's steady hand under Warsh to state-level taxation, prediction-market enforcement and Singapore's investor warning, compliance risk is climbing even as Grayscale points investors toward fundamentally sound altcoin projects. COINOTAG's aggregate market data frames the caution: our Fear & Greed Index sits at 22, deep in Extreme Fear, while Bitcoin dominance stands at 69.8% and total crypto market capitalization has slipped to roughly $1.9 trillion. With sentiment far from any all-time high, capital is rotating toward assets offering verifiable revenue and regulatory clarity rather than narrative.