The US Commodity Futures Trading Commission has unveiled a new Innovation Advisory Committee aimed at shaping regulatory policy for emerging technologies, including cryptocurrency, blockchain infrastructure, and artificial intelligence. The initiative reflects a broader shift by US regulators toward more structured engagement with industry as digital assets become increasingly integrated into financial markets.

CFTC Chair Mike Selig said the committee will advise the agency on commercial, economic, and practical considerations surrounding new financial products and business models. The body replaces the agency’s Technology Advisory Committee and is designed to support what Selig described as clearer and more durable regulatory frameworks for modern markets.

Industry Voices Enter the Regulatory Process

The Innovation Advisory Committee is expected to include senior executives from both crypto-native firms and established financial institutions. Selig plans to nominate members of a newly formed CEO Innovation Council as charter participants, blending perspectives from digital asset platforms, derivatives markets, and exchange operators.

Proposed members include Gemini co-founder Tyler Winklevoss, Crypto.com CEO Kris Marszalek, Kraken co-CEO Arjun Sethi, Kalshi CEO Tarek Mansour, and Polymarket CEO Shayne Coplan. Executives from traditional market infrastructure providers such as Intercontinental Exchange, Nasdaq, and Cboe Global Markets are also slated to participate.

The CFTC said it will continue accepting nominations for additional members through the end of January, with representation expected from academia, public interest groups, and other regulatory bodies. The agency framed the committee as a forum for balancing innovation with market integrity, rather than a vehicle for industry lobbying.

Macro and Competitive Regulatory Context

The move comes as US regulators face growing pressure to clarify oversight of digital assets amid intensifying global competition. Jurisdictions including the European Union, the United Kingdom, and parts of Asia have advanced more prescriptive crypto frameworks, prompting concerns that regulatory uncertainty could push innovation offshore.

Within the US, the CFTC’s approach contrasts with a more enforcement-driven posture historically associated with other agencies. By emphasizing collaboration and technical expertise, the commission appears to be positioning itself as a pragmatic regulator for derivatives, tokenized products, and event-based contracts tied to real-world outcomes.

Artificial intelligence is also emerging as a core focus, with regulators increasingly attentive to its role in automated trading, market surveillance, and risk management. The CFTC said the committee will explore how AI and cloud-based systems are reshaping market structure, liquidity, and operational resilience.

Institutional Implications for Crypto Markets

For institutional investors and crypto firms, the committee signals a potential path toward more predictable regulatory engagement. Clearer guidance around product design, custody, and market conduct could lower compliance risk and support broader participation by banks, asset managers, and trading firms.

While the committee does not carry rulemaking authority, its recommendations may influence how the CFTC interprets existing statutes and prioritizes future policy initiatives. As crypto and AI increasingly intersect with traditional finance, the agency’s willingness to incorporate industry input may shape the competitiveness of US markets in the years ahead.

A federal judge in Tennessee has temporarily stopped state regulators from taking enforcement action against Kalshi, a US-regulated prediction markets platform, granting the company a preliminary reprieve as its legal challenge moves forward. Judge Aleta Trauger ruled that Kalshi would likely suffer irreparable harm if forced to halt operations and found that the firm has a reasonable chance of prevailing on the merits of its claims.

The order blocks the Tennessee Sports Wagering Council and the state attorney general from enforcing a cease-and-desist directive issued last week. That directive accused Kalshi of offering unlicensed sports wagering products and required the platform to void existing contracts and refund Tennessee users by the end of January, with potential fines of up to $25,000 per violation.

Federal versus State Authority

Kalshi’s lawsuit centers on a jurisdictional dispute between state gambling regulators and federal commodities oversight. The company argues that, as a federally designated derivatives exchange, it operates under the exclusive authority of the Commodity Futures Trading Commission. According to Kalshi, Tennessee’s attempt to regulate its event contracts intrudes on a regulatory framework established by Congress.

Judge Trauger’s order did not resolve the underlying legal question but signaled concern that state enforcement could undermine federal oversight before the court fully evaluates the case. The temporary restraint will remain in effect until a preliminary injunction hearing scheduled for later this month.

The dispute highlights growing tension as prediction markets expand beyond niche financial products into politically and socially sensitive areas, including sports and elections. State regulators increasingly view these contracts as de facto wagering, while platforms argue they are risk-management tools governed by federal commodities law.

Broader Market and Regulatory Context

Tennessee’s action follows similar moves by regulators in several other states, who have issued cease-and-desist letters to Kalshi and rival platforms such as Polymarket and Crypto.com. Courts have issued mixed responses. Judges in Nevada and New Jersey have granted temporary relief to Kalshi, while a Maryland court declined to block enforcement, underscoring the fragmented legal landscape.

For institutional investors and market operators, the case carries broader implications. Prediction markets have drawn interest from hedge funds, data-driven traders, and corporate users seeking to hedge real-world risks. Regulatory uncertainty at the state level complicates scaling these products nationally, particularly when compliance obligations differ sharply across jurisdictions.

The outcome of Kalshi’s Tennessee case may influence how aggressively states pursue oversight of federally regulated platforms and whether Congress or federal agencies move to clarify boundaries between derivatives markets and gambling laws. Until then, Kalshi remains free to operate in Tennessee, though the legal battle underscores the unresolved friction between innovation in financial markets and legacy regulatory regimes.

BitGo Holdings, a long-established cryptocurrency custody provider, has formally launched its initial public offering in the United States, according to a filing with the Securities and Exchange Commission. The company plans to offer approximately 11.8 million shares of Class A common stock, including shares sold by existing stockholders, with an expected price range of $15 to $17 per share.

At the top of the range, the offering could raise up to $201 million and imply a valuation of roughly $1.96 billion. BitGo intends to list on the New York Stock Exchange under the ticker BTGO, marking one of the most prominent public market tests for a crypto-native infrastructure firm since the launch of US spot Bitcoin ETFs.

Institutional Custody in Focus

Founded in 2013, BitGo reports more than $90 billion in assets under custody, positioning it as a key service provider to exchanges, asset managers, hedge funds, and corporate treasuries operating in digital assets. Its core offerings include regulated custody, wallet infrastructure, staking services, and settlement tools designed to meet institutional compliance standards.

The IPO comes as custody has emerged as a critical pillar of the crypto market’s institutionalization. Regulatory scrutiny following high-profile exchange failures has intensified demand for segregated, audited custody solutions, particularly among traditional financial institutions entering the space. BitGo’s business model is closely tied to these trends, with revenue exposure linked to transaction activity, asset balances, and enterprise service fees.

The company first confidentially filed for an IPO in September 2025, signaling its intent to access public markets as capital conditions stabilized and crypto market volatility moderated.

Market Context and Competitive Landscape

BitGo’s offering arrives amid renewed investor interest in crypto infrastructure rather than speculative token exposure. While public listings by crypto firms have been uneven since 2021, recent regulatory clarity around custody, stablecoins, and exchange-traded products has improved the outlook for service providers positioned as compliance-focused intermediaries.

Goldman Sachs is serving as lead book-running manager, with Citigroup and several other major US and international banks participating in the syndicate. The underwriting roster underscores continued Wall Street engagement with select crypto firms, even as broader risk appetite remains sensitive to interest rate expectations and macroeconomic data.

Competition in institutional custody remains intense, with traditional banks, prime brokers, and specialized crypto firms all vying for market share. Several large financial institutions have expanded digital asset custody offerings internally, while rivals such as Coinbase and Anchorage Digital continue to scale enterprise services.

BitGo stated that its registration statement has not yet become effective and that no shares may be sold until SEC approval is granted. The IPO’s reception will be closely watched as a barometer for public market appetite for crypto infrastructure companies operating at the intersection of digital assets and regulated finance.

X, the social media platform owned by Elon Musk, plans to introduce “Smart Cashtags,” a feature designed to reduce confusion around financial and cryptocurrency tickers while improving how users navigate asset-related discussions. The update will allow users to link ticker symbols to specific tokens or smart contracts, addressing long-standing issues around misidentified assets and spam-heavy conversations in crypto-focused feeds.

The feature, announced by X’s head of product Nikita Bier, will prompt users to select an exact asset or contract address when typing a dollar-sign ticker. Once selected, the cashtag will link to a dedicated asset page displaying real-time price charts and curated discussions tied to that specific token. The company is currently gathering feedback and has indicated a public release could take place as early as next month.

Product Changes amid Regulatory Scrutiny

The rollout comes as X faces growing regulatory pressure in Europe, where authorities are intensifying oversight of algorithmic transparency and content moderation. The European Commission recently extended an order requiring X to preserve internal data related to algorithmic systems through the end of 2026, while France has conducted investigations into potential bias and misuse of platform data.

Last month, the European Union fined X 120 million euros for breaches of transparency requirements under the Digital Services Act, citing shortcomings in ad disclosures, subscription verification, and researcher access to public data. Against this backdrop, Smart Cashtags represent a move toward clearer information architecture at a time when regulators are questioning how algorithms shape financial discourse online.

Elon Musk has pledged to open-source X’s ranking and advertising algorithms on a recurring basis, positioning the move as an effort to rebuild trust with users and regulators. The timing suggests Smart Cashtags may also serve as a practical response to criticism that X’s systems struggle to distinguish legitimate financial discussion from automated or misleading activity.

Crypto Discourse, Bots, and Market Implications

Crypto-focused users have long complained about ticker ambiguity and bot-driven spam, particularly when multiple tokens share similar symbols across blockchains. Analysts say Smart Cashtags could improve signal quality for traders, researchers, and institutions that rely on X as a real-time information channel, especially during periods of market volatility.

However, critics argue that structural issues remain. On-chain analyst Ki Young Ju has accused X of suppressing authentic crypto content while failing to curb bot activity, noting that paid verification has lowered barriers for spam rather than improving authenticity. Bier has countered that excessive posting and engagement farming dilute visibility, a view that has divided the crypto community.

Despite these tensions, X continues to invest in financial features, including messaging upgrades and ambitions around payments and digital wallets. Smart Cashtags fit into a broader strategy to keep financial markets and crypto discussions central to the platform, while attempting to balance user experience, institutional credibility, and regulatory compliance in an increasingly competitive social media landscape.

India’s Financial Intelligence Unit (FIU) has updated its guidelines for cryptocurrency exchanges, mandating stricter user verification to address money laundering and terrorism financing risks. Users must now submit a live selfie demonstrating liveliness, along with their geographical coordinates, date, time, and IP address. In addition to the mandatory Permanent Account Number (PAN), exchanges must collect official identification such as a passport, Aadhaar card, voter ID, or driver’s license, and verify mobile numbers and email addresses via one-time passwords (OTPs).

High-risk clients, including those connected to tax havens, FATF-linked jurisdictions, or politically exposed persons, are subject to enhanced due diligence, with checks conducted every six months. Bank account ownership is authenticated through a “penny-drop” mechanism, involving a nominal refundable charge to confirm account access.

Restrictions on Token Offerings and Transaction Privacy Tools

The FIU has explicitly barred cryptocurrency exchanges from supporting initial coin offerings (ICOs) and initial token offerings (ITOs), citing heightened money laundering and terrorist financing risks.

Platforms are also prohibited from using anonymization tools such as tumblers and mixers, which obscure transaction trails. All exchanges must register with the FIU, report suspicious activities, and maintain detailed user records for a minimum of five years.

This approach aligns with India’s cautious stance on virtual digital assets (VDAs), which are permitted for trading on registered platforms but are not recognized as legal tender. By tightening regulatory oversight, Indian authorities aim to integrate digital assets into a framework that prioritizes compliance, transparency, and risk mitigation, while continuing to allow legitimate market activity.

Institutional and Market Context

India’s move comes amid growing global scrutiny of cryptocurrency use in illicit finance. The new regulations place Indian exchanges in line with international best practices, including FATF guidance on virtual asset service providers.

The measures may also influence institutional participation, as regulated frameworks and enhanced compliance standards provide greater assurance for domestic and foreign investors. Analysts note that the restrictions on ICOs and transaction anonymization may limit high-risk speculative activity, while preserving market channels for approved crypto trading under government supervision.

Andreessen Horowitz, commonly known as a16z, has raised $15 billion to invest in crypto, blockchain infrastructure, decentralized finance (DeFi), and artificial intelligence (AI) projects in the United States. The fund aims to provide startups with capital to accelerate product development, expand into new markets, and attract top talent. According to the firm, the initiative reflects a broader goal of maintaining the US’s competitive position in global technology and finance while supporting the emergence of regulated, scalable digital ecosystems.

The fund is among the largest dedicated to combined crypto and AI investments, signaling strong institutional confidence in long-term digital innovation. Startups benefiting from the capital can focus on blockchain-based platforms, tokenized financial instruments, and AI-driven enterprise solutions. By targeting both sectors simultaneously, a16z positions itself to back projects that leverage AI to improve blockchain efficiency and security, while also using blockchain frameworks to provide transparency and governance for AI systems.

Implications for US Tech and Financial Markets

The fund is strategically timed amid intensifying global competition in technology. Countries such as China and members of the European Union are actively developing blockchain and AI infrastructure, prompting US venture firms to accelerate domestic innovation. By channeling capital into early-stage startups, a16z aims to retain critical talent, encourage innovation domestically, and create technologies that can scale under US regulatory standards. The initiative also underscores the growing convergence of crypto and AI as core components of financial and enterprise infrastructure.

Institutional and regulatory context is central to the fund’s approach. Andreessen Horowitz is targeting projects that meet compliance standards, mitigating operational and legal risks for investors while promoting the adoption of blockchain-based financial tools and AI applications. Analysts note that the move could influence other venture firms to increase investment in the US crypto and AI ecosystem, helping solidify domestic leadership in emerging technologies.

Startup Growth and Market Access

Startups supported by the fund will gain access not only to capital but also strategic guidance, technical expertise, and market channels that can accelerate product commercialization. By funding both crypto and AI projects, a16z is enabling solutions ranging from decentralized finance platforms to AI-enhanced blockchain analytics. These developments could reinforce the US’s position as a hub for innovative technologies while supporting enterprises in delivering more efficient, secure, and transparent products.

The $15 billion fund highlights the ongoing confidence of venture capital in digital innovation, even amid macroeconomic uncertainty. It also demonstrates a strategic alignment between private capital and national competitiveness, with US investors and policymakers increasingly viewing blockchain and AI as critical infrastructure for future economic growth.

Ripple has received Electronic Money Institution authorization from the UK Financial Conduct Authority for its UK subsidiary, marking a key regulatory milestone for the blockchain-based payments firm. The registration allows Ripple to offer regulated payment and e-money services under FCA oversight, placing it within the UK’s formal financial services perimeter. The approval was reflected on the regulator’s public register on January 9.

The move strengthens Ripple’s standing in one of the world’s most influential financial centers and provides a compliant foundation for expanding its payments infrastructure. With EMI status, Ripple can issue electronic money, facilitate domestic and cross-border payments, and partner more closely with banks and payment service providers. For institutional clients, the authorization signals regulatory clarity and operational continuity in a market where compliance standards remain high.

UK Regulatory Strategy and Institutional Alignment

Ripple’s approval comes as the UK accelerates efforts to integrate digital assets into its financial system. Policymakers and regulators have been consulting on comprehensive rules covering crypto trading platforms, custody, lending, and staking, aiming to balance innovation with consumer protection. The FCA has emphasized that firms seeking to operate at scale must meet the same governance, capital, and compliance expectations as traditional financial institutions.

Within this framework, Ripple’s regulated status positions it to benefit from increased institutional participation in digital payments. Banks and payment providers have shown growing interest in blockchain-based settlement solutions that reduce friction and improve transparency. EMI authorization enables Ripple to engage these institutions without relying on regulatory exemptions or interim permissions, a competitive advantage as compliance scrutiny intensifies.

Market Impact and Competitive Context

The approval also underscores the competitive dynamics among global payments and blockchain firms seeking regulated footholds in major jurisdictions. Traditional payment networks, fintech firms, and crypto-native companies are converging around regulated digital payment services, particularly for cross-border use cases. Ripple’s focus on institutional payments places it in direct competition with established payment rails and emerging blockchain-based alternatives.

XRP, the digital asset associated with Ripple’s payment and settlement mechanisms, moved modestly higher following the announcement. The token’s reaction reflected cautious optimism rather than speculative enthusiasm, consistent with broader market conditions shaped by macro uncertainty and tighter financial conditions. While token prices remain volatile, regulatory progress is increasingly viewed by institutional investors as a prerequisite for long-term adoption.

More broadly, Ripple’s FCA authorization highlights how regulatory clarity is becoming a strategic differentiator in the digital asset sector. As jurisdictions formalize oversight, firms with early compliance credentials may find it easier to scale services, attract institutional clients, and navigate cross-border expansion. For the UK, the decision aligns with its ambition to position London as a regulated hub for digital finance while maintaining robust supervisory standards.

Stablecoin payment flows could expand to $56.6 trillion by 2030, according to a new analysis from Bloomberg Intelligence, positioning stablecoins as a core component of global payments infrastructure. Bloomberg estimates stablecoin flows totaled about $2.9 trillion in 2025, implying an annualized growth rate of roughly 80% over the next five years. Such expansion would place stablecoins alongside major card networks and wholesale payment systems in terms of economic relevance.

The projected growth reflects increasing adoption by financial institutions and broader use in countries facing inflation, currency volatility, and capital controls. In these markets, dollar-pegged stablecoins are increasingly used for savings, remittances, and business transactions, often outside traditional banking rails. These use cases have accelerated as geopolitical and macroeconomic uncertainty persists.

Market Structure and Competitive Dynamics

Bloomberg’s analysis highlights a divergence in stablecoin usage across centralized and decentralized platforms. Tether’s USDT remains dominant in centralized finance, particularly for payments and treasury management, while Circle’s USDC continues to lead activity within decentralized finance. Despite this split, USDC recorded higher total transaction volume in 2025, underscoring its role in onchain trading and settlement.

Together, USDT and USDC accounted for more than 95% of global stablecoin transaction volume last year, which reached approximately $33 trillion. From a valuation perspective, USDT maintains a substantial lead, with a market capitalization more than double that of USDC. This concentration underscores how scale, liquidity, and regulatory positioning shape competition in the stablecoin sector.

Institutional and Regulatory Context

At the institutional level, stablecoins are increasingly viewed as tools for faster cross-border settlement and improved capital efficiency. Several global payments and remittance firms are developing stablecoin-based settlement systems, reflecting growing confidence in regulated digital dollar infrastructure. These initiatives align with broader efforts by banks and payment companies to modernize legacy rails.

Regulatory developments also play a central role in Bloomberg’s outlook. The passage of stablecoin-focused legislation in the United States has prompted renewed policy discussions in other major economies, including the UK and Canada. As frameworks become clearer, Bloomberg expects stablecoins to gain wider acceptance in both public and private sector payment flows, reinforcing their role in global finance.

BlackRock increased its Bitcoin exposure by nearly $900 million during the first week of January, rebuilding positions after trimming holdings toward the end of 2025. Onchain data indicates the asset manager added close to 9,000 BTC over several days, bringing its total holdings to roughly 780,400 BTC, valued at about $70 billion. The move comes after BlackRock’s Bitcoin exposure peaked in late November before declining during the fourth-quarter market correction.

The renewed accumulation coincides with a marked slowdown in long-term Bitcoin selling. Exchange inflow Coin Days Destroyed (CDD) data shows long-held coins moving onto exchanges at their lowest rate since 2017, even as Bitcoin continues to trade near historically elevated levels. This suggests that older wallet cohorts are choosing to hold rather than distribute, reducing structural sell pressure following the recent drawdown.

Institutional Positioning and Onchain Signals

From a market structure perspective, long-term holder supply stabilized after declining sharply through mid-2025. While supply fell from over 15 million BTC in July to around 13.6 million BTC by November, it has since flattened, indicating that the wave of long-term distribution may have largely passed. This stabilization aligns with broader institutional behavior that favors gradual re-entry after periods of volatility rather than aggressive dip-buying.

Additional onchain indicators support this interpretation. The Spent Output Profit Ratio shows recent buyers selling at losses, while long-term holders remain largely inactive and profitable. Historically, this pattern has accompanied market reset phases in which speculative excess is cleared, and ownership consolidates among higher-conviction holders.

Macro Context and Competitive Dynamics

The developments unfold against a macro backdrop of easing financial conditions expectations, and sustained institutional interest in regulated Bitcoin exposure. Asset managers continue to compete for market share in spot Bitcoin products, making incremental accumulation by large players such as BlackRock closely watched by both institutional and retail participants.

Bitcoin’s Net Unrealized Profit and Loss metric currently sits near levels associated with early recovery phases rather than cycle peaks. While this does not imply an imminent breakout, it suggests a transition toward more balanced market conditions. Taken together, declining long-term selling and renewed institutional accumulation point to a market that may be stabilizing after the Q4 correction, though confirmation will depend on sustained demand and broader risk sentiment.

Binance has expanded its derivatives platform into precious metals, launching perpetual futures contracts linked to gold and silver and settled in Tether’s USDT stablecoin. The move allows traders to gain continuous exposure to metals prices without holding the underlying assets or managing contract expirations. The products mark a further step by crypto-native exchanges to replicate traditional market instruments within blockchain-based trading systems.

The new contracts, listed as XAUUSDT and XAGUSDT, trade around the clock and are designed to mirror spot price movements in gold and silver. Settlement in USDT enables traders to remain fully within a crypto-denominated workflow while accessing traditional safe-haven assets. Binance said additional contracts tied to conventional financial markets are planned as it broadens its product suite.

Regulatory Positioning and Market Context

The gold and silver perpetuals are offered through Next Exchange Limited, a Binance entity regulated by the Financial Services Regulatory Authority under the Abu Dhabi Global Market framework. The regulatory footing reflects a broader effort by global exchanges to anchor derivatives activity in jurisdictions viewed as supportive of digital asset innovation while maintaining formal oversight. Abu Dhabi has emerged as a hub for crypto-linked financial products, including stablecoin settlement.

Binance’s expansion comes as precious metals have drawn renewed interest from both institutional and retail investors. Gold and silver reached record highs late last year amid geopolitical uncertainty, persistent inflation concerns, and a weaker US dollar. In that environment, demand has risen for instruments that provide flexible exposure without the operational constraints of physical ownership or traditional futures markets.

Competitive Pressure and Convergence with TradFi

The launch places Binance in direct competition with other major exchanges that already offer metals-linked derivatives, including Coinbase, Bybit, and MEXC. While such products are common in traditional finance, their migration to crypto platforms reflects a growing convergence between the two ecosystems. For exchanges, metals contracts diversify revenue streams beyond digital assets, while for traders they offer portfolio hedging tools within a single venue.

Settlement in USDT also highlights the continued role of stablecoins as the backbone of crypto derivatives markets. Despite regulatory scrutiny in some regions, USDT remains widely used for margining and settlement, particularly in offshore and international markets. Abu Dhabi’s approval of USDT for regulated use has further strengthened its position in the Middle East.

The broader implication is a shift in how crypto exchanges position themselves. Rather than serving only speculative digital asset trading, leading platforms are increasingly framing themselves as multi-asset venues capable of supporting commodities, equities, and other traditional instruments. That strategy reflects both competitive necessity and evolving user demand, as traders seek diversified exposure through familiar crypto infrastructure.

As crypto and traditional markets continue to intersect, products such as gold and silver perpetual futures underscore how digital platforms are adapting established financial tools for a 24-hour, globally accessible trading environment.

India’s income tax authorities have reinforced long-standing concerns from the Reserve Bank of India (RBI) over cryptocurrencies, warning lawmakers that virtual digital assets pose growing enforcement challenges. In a presentation to Parliament’s standing committee on finance this week, officials highlighted difficulties in tracking taxable income and recovering dues as crypto activity expands beyond traditional banking rails. The intervention comes just weeks before Finance Minister Nirmala Sitharaman presents the Union Budget for the 2026-27 fiscal year.

According to officials, the core design of cryptocurrencies complicates oversight. Pseudonymous addresses, peer-to-peer transfers, and the use of offshore exchanges limit the government’s ability to monitor transactions and assert jurisdiction. Tax authorities also pointed to the fragmentation of global crypto markets, where activity may span multiple countries while enforcement powers remain largely domestic. These structural gaps, they argued, undermine the effectiveness of India’s existing tax framework for digital assets.

Enforcement Risks and Institutional Alignment

The income tax department’s position aligns closely with that of the RBI, which has consistently expressed unease about privately issued digital assets. Officials noted that even exchanges registered with India’s Financial Intelligence Unit face scrutiny, citing reported irregularities such as misuse of customer funds, excessive leverage, and potential insider trading. The convergence between tax authorities, financial intelligence units, and law enforcement agencies reflects a broader institutional effort to tighten oversight rather than expand crypto adoption.

This stance persists despite India already imposing one of the world’s most stringent tax regimes on crypto trading. A flat 30 percent tax on gains and a 1 percent tax deducted at source on each transaction remain in place, even as regulators have yet to introduce a comprehensive market framework. Policymakers have instead emphasized the development of a central bank-backed digital rupee as a regulated alternative.

Technology, Data Sharing, and Policy Trade-Offs

To address enforcement gaps, tax authorities are increasingly turning to technology and international coordination. India has begun using artificial intelligence tools and global data-sharing arrangements under the Crypto-Asset Reporting Framework to cross-check transaction data with income tax filings. Notices are issued when discrepancies exceed prescribed thresholds, signaling a more systematic approach to compliance.

However, industry observers warn that enforcement-first policies carry trade-offs. While tighter scrutiny may improve tax collection, sustained institutional resistance without regulatory clarity risks pushing innovation and capital offshore. As other jurisdictions experiment with licensing regimes and clearer rules, India faces competitive pressure to balance fiscal control with the development of a domestic digital asset ecosystem.

With the Union Budget approaching, the tax department’s intervention underscores the government’s cautious posture. The debate now centers on whether India can move beyond enforcement toward a coherent regulatory structure that addresses risks while providing certainty for institutions, investors, and technology firms operating in the digital asset economy.

BitMEX has released its annual research report, State of Crypto Perpetual Swaps 2025, outlining how structural stress and shifting incentives reshaped the global crypto derivatives market over the past year. The study points to a decisive move away from easy, yield-driven strategies as volatility, liquidity shocks, and counterparty risk came into focus. For institutional traders, 2025 underscored that market structure now plays a central role in performance outcomes.

The report identifies the October 10 to 11 market selloff as the defining event of the year, triggering an estimated $20 billion in liquidations across exchanges. Auto-deleveraging mechanisms disrupted delta-neutral positioning, forcing professional market makers to pull back liquidity. Order books thinned to levels last seen in 2022, amplifying price dislocations during a period of already fragile risk appetite.

Market Structure Stress Redefines Risk

According to BitMEX, the October episode exposed vulnerabilities in exchange risk engines that many traders had previously discounted. Strategies designed to remain neutral to price direction failed when liquidity evaporated simultaneously across venues. In a macro environment marked by tighter financial conditions and reduced speculative leverage, these breakdowns prompted a reassessment of how derivatives are traded and where risk truly resides.

BitMEX CEO Stephan Lutz said the events highlighted the limits of sophistication when systems are stressed. Institutional participants increasingly evaluated exchanges based on transparency, rule clarity, and operational resilience, rather than headline fees or headline yields. This shift mirrors broader trends in traditional markets, where infrastructure reliability has become a competitive differentiator.

Funding Arbitrage Loses Its Edge

The report also documents the erosion of funding rate arbitrage as a dependable source of yield. Once a core strategy for hedge funds and proprietary desks, funding trades became crowded as exchanges introduced native delta-neutral products. By mid-2025, average funding yields compressed toward 4 percent and often fell below comparable US Treasury rates.

In a higher-rate macro backdrop, that compression reduced the appeal of perpetuals as a yield substitute. Capital rotated toward strategies emphasizing capital preservation and execution quality, reinforcing the idea that crypto derivatives are maturing into tools for risk transfer rather than yield extraction.

Trust, Decentralization, and New Products

Beyond mechanics, BitMEX highlights a widening trust gap between fair-matching venues and platforms operating internalized, or B-Book, models. The report cites incidents where profitable traders faced reversals or restrictions under broad “abnormal trading” clauses, sharpening focus on counterparty risk.

At the same time, perpetual decentralized exchanges expanded, bringing innovation alongside new vulnerabilities such as oracle manipulation and targeted liquidations. BitMEX notes emerging products, including equity perpetuals and funding rate derivatives, as evidence that competition and convergence with traditional finance are accelerating, even as the era of easy yield fades.