GM, frens! ☕️

You don’t get very far in our space if you don’t believe in something. Doesn’t have to be blind conviction or some grand ideology - just enough belief to keep paying attention.

Everyone’s got their own version of it. A thesis, a project, a way the future could look if enough people keep pushing in the same direction. That’s usually what keeps this whole thing moving forward in the first place.

Here’s what we’re looking at this week:

• 🤖 AI is stealing all the attention in crypto - for better and for worse

• 👀 Ethereum: Clear Signing and Glamsterdam taking shape

• 👎️ Less than 1% - crypto’s reputation problem looks increasingly lazy

• 📑 CLARITY moves forward, with DeFi still fighting for breathing room

Below is how our $WALLET bag is doing at the moment:

And if you’ve got something you still believe in, our Discord is always open 🤗 

AI is stealing all the attention in crypto - for better and for worse

Our industry has always moved in what one might call “little manias”. Small bursts of hyped up topics around certain buzzwords. One month it could be rollups, then restaking, then RWAs, then ETFs, then some fresh round of infrastructure that half the space pretended to understand, etc.

Now a huge chunk of attention has drifted to AI shenanigans 🤖 

Not AI in the serious sense, like chips, models or enterprise software. Crypto rarely has the patience for that.

AI agents with wallets, AI bots moving (and losing) funds, AI wrappers around old products, AI pasted on token narratives, AI quote farming on X, AI safety failures and if you’ve noticed, every second founder is acting like the next phase of the internet will be something akin to a large digital AI anthill, with robots paying other robots for robot generated crap (and all of that onchain for some reason) while humans sit back and clap.

That is where the attention is going now, because it gives crypto something it always wants more than utility: a good theater.

One of the recent examples happened last week, with Grok and Bankrbot 👇️ 

Bankrbot is an AI powered bot tied to onchain actions.

Twitter’s Grok got dragged into this because it could interpret messages and pass instructions along. A user on X figured out that instead of talking to the system in plain text, they could hide the instruction in Morse code. Grok decoded it, treated it like a normal request, and Bankrbot followed through by sending out a huge amount of DRB tokens on Base 🤔 

Around $200,000 worth, just because the setup was trusting the chain of interpretation too much 💰️ 

• The “attacker” - if you can call him that - first gave Grok’s wallet a Bankr Club Membership NFT, which expanded what that wallet could do inside the Bankr setup. That part mattered because without those permissions the rest of the stunt would not have gone anywhere. After that, the attacker used Grok like a translator.

• Grok read the Morse code, turned it into a direct instruction, and Bankrbot processed it as if nothing was wrong. Then the tokens were dumped on the market 🪙 

That story spread everywhere because it captured the current AI crypto mood perfectly.

It was not just a loss event, but rather AI being manipulated in public, onchain, with money attached, in a way that felt both futuristic and embarrassingly primitive. That is exactly the kind of thing this space cannot stop staring at. It sounds like tomorrow, but it fails in a way that feels like a bad phishing email from 2009 🤦‍♂️ 

And this week, the theater flipped to the other side of the spectrum.

• Instead of a bot getting socially engineered into sending tokens out the door, the story making rounds was about Anthropic’s Claude helping a Bitcoiner recover 5 BTC from a wallet he had been locked out of for more than a decade.

• The guy, posting as Cprkrn, had spent weeks digging through old machines, hard drives, notes and backups, feeding Claude a pile of digital debris from his college years until the model helped connect the right clue to an old wallet file and finally get the thing open 🗡️ 

• By the end of it, more than 3.5 trillion password attempts had gone nowhere, and the answer turned out to be buried in his own forgotten mess the whole time 🤨 

That story ripped through X, pulling something like 16 million views, which tells you plenty on its own. Not because recovering old Bitcoin is a brand new theme, and not because “AI helps user search through ancient laptop junk” is some grand technological breakthrough.

It blew up because it landed in the same sweet spot with AI and unexpected money, a weirdly human setup, and a result that feels both futuristic and somehow relatable 🤖 

And that is exactly why AI shenanigans have started eating so much oxygen in crypto. They are not just “AI stories” they are stories with an actual plot with some tension, money, incompetence, luck, absurdity, public reactions and people instantly taking sides 🤐 

That is also why these incidents keep overpowering everything else. A wallet agent getting fooled into sending tokens and a chatbot helping recover lost Bitcoin are technically very different events, but attention wise they live in the same lane.

Both make AI feel immediate. Both make crypto feel unstable in an interesting way. Both suggest that machine driven finance is no longer some clean future tense concept - it is already here, already touching real assets, and already producing stories that are easier to understand than most of the industry’s serious product pitches 🤷‍♂️ 

Ethereum: Clear Signing and Glamsterdam taking shape

The DeFi space has been plagued by horrific UI/UX since the beginning, especially with core infrastructure like wallets, where the UI was reduced to some walls of esoteric commands 🫠 

There’s a new standard now, backed by Ethereum contributors and a stack of major wallets and infra names like Ledger, Trezor, WalletConnect, Fireblocks and others. It’s meant to turn transaction signing into something people can actually read before approving it. Instead of an esoteric ritual where the user is expected to trust a blob of machine speak and hope not to get rekt 🤪 

This makes sense - if the signature is the final checkpoint, then the person signing should be able to understand what they are signing without needing any dev knowledge 🤓 

The system is built around a few parts 👇️ 

• One is human readable transaction descriptions. Another is a neutral, mirrorable descriptor registry, which gives wallets and apps a shared place to pull those readable descriptions from instead of every interface inventing its own version.

• It also includes an attestation framework so auditors can verify those descriptors.

So the idea is not just to make signing screens look good, but to create a standard way for wallets to show the same transaction clearly and verify that the explanation itself is trustworthy.

So with the standard in place, devs would be able to just turn that into a safe green button of some sort (or use any other intuitive user friendly ways) to notify the user that the txn is safe / or that it’s nothing out of the ordinary 🤔 

Btw, Ambire will be among the first wallets to fully support ERC-7730 as well 🤓 

And in the meantime, Ethereum is still moving on the protocol side too.

The Foundation says it has now hit several Glamsterdam milestones, including a credible post upgrade target of a 200 million gas floor, up from around 60 million today.

Glamsterdam is focused on scaling layer 1 by improving how the network processes transactions and handles its growing data load, while related work like ePBS and updated state pricing is supposed to make that extra capacity more practical and safer to manage 🧠 

The leadership reshuffle around the protocol team fits into that picture too. New leads coming in while Glamsterdam and the next steps on the roadmap take shape suggests the Foundation wants tighter coordination as Ethereum moves through a heavier phase of work 🧙 

Big roadmap targets mean a lot less if the execution around them gets loose.

Less than 1% - crypto’s reputation problem looks increasingly lazy

The industry has been carrying the same stupid accusation for years. You probably know the deal - mention crypto in a room full of outsiders and sooner or later someone will say that the the whole sector is basically one giant ponzi scheme rugpull of some sort 🙃 

New research is making that look even weaker now:

Binance Research says illicit crypto activity stayed below 1% of total onchain volume in 2025 📉 

So after another year of growth, more users, bigger institutions, more stablecoin traffic and more DeFi usage, the idea that crypto is mostly a criminal toy still does not survive contact with the numbers.

The crime hasn’t disappeared, of course. Criminal flows still pushed past $150 billion as the market got larger, and Chainalysis estimates illicit wallets received more than $154 billion during the year, while total illicit balances onchain climbed above $75 billion. North Korea’s Lazarus Group alone reportedly stole a record $2 billion, which is not exactly pocket lint 🫢 

But that is also the point.

• Crypto crime can still be massive in absolute terms while being a small slice of overall activity. Especially compared to cash crime which would be in endless trillions 🤡 

• Another point to consider is that the market is simply much bigger now. A tiny percentage inside a multi trillion dollar ecosystem still turns into a nasty pile of money. People hear "$150 billion" and their brain switches off 😶 

Critics always got away with talking about crypto like the criminal use case was the main event.

That was easier back when the whole industry looked more speculative. Now it’s clogged with normal economic activity - trading, stablecoins, payments, treasury movements, DeFi flows and institutional positions. The volume is so much wider that the old caricature looks increasingly lazy 😐️ 

And yes, there is still plenty of trash in the system. Scams are not gone. Laundering is not gone. State backed thieves are definitely not gone. But that is not the same as saying crypto is mainly criminal, just like cash is not mainly criminal because criminals also enjoy using it.

The bigger crypto gets, the harder it becomes to sell the public on the idea that illicit use defines the whole sector. Not when exchanges are getting better at tracing flows and freezing funds, not when stablecoins are becoming global settlement tools, and not when so much of the activity is clearly tied to normal financial behavior rather than crime 🥷 

CLARITY act moves forward, with DeFi still fighting for breathing room

• The CLARITY Act is the U.S. crypto market structure bill meant to split oversight between the SEC and CFTC, define when tokens are securities or commodities, create registration rules for digital commodity platforms and give DeFi some legal boundaries instead of forcing everything through the same dusty banker door.

• The latest Senate version also puts digital commodity exchanges, brokers and dealers under Bank Secrecy Act duties, meaning AML, customer checks and due diligence become part of the framework. Grimly normal stuff, but better than regulation by lawsuit roulette.

The latest update landed just yesterday, when the Senate Banking Committee advanced the bill 15-9. Every Republican backed it, joined by Democrats Ruben Gallego and Angela Alsobrooks. That is considered a serious win for the bill because the January attempt collapsed after the stablecoin rewards fight, mostly because Coinbase hated the earlier language and banks wanted the rewards lane sealed shut forever 😶 

The Coinbase angle is not subtle. Coinbase currently advertises 3.50% rewards for simply holding USDC in eligible regions, and its own help page says rewards accrue daily based on balance, then distribute weekly.

Higher USDC balance means higher rewards. Human civilization has apparently reached the stage where “loyalty program” and “bank deposit interest cosplay” are now a parlamentary level knife fight 🔪 

• Coinbase is not defending abstract consumer freedom from a mountain monastery, though. Its USDC economics are massive. Coinbase’s Circle agreement gives it revenue tied to USDC growth and reserve economics, with the company earning more when more USDC circulates generally and on its platform 🪙 

• External reporting based on Coinbase’s 2025 numbers puts stablecoin revenue around $1.35 billion for the year, up from $911 million in 2024, which explains why Coinbase suddenly became very spiritual about protecting rewards 💵 

• The Senate compromise now bans rewards on idle stablecoin balances when they look economically like bank deposit interest, but it still allows rewards tied to real activity such as payments, transfers, settlement, conversion, market making, collateral use, governance, validation, staking and product participation.

The key win for crypto is that some rewards may still be calculated by balance or duration, as long as the activity is considered legitimate and not just a fake savings account with better branding 👛 

• The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America and National Bankers Association said the bill is a step toward a needed digital asset framework, but they still want the stablecoin rewards language tightened 🤡 

• Their argument is that rewards from exchanges could drain deposits from banks and reduce lending to consumers, small businesses and farmers. Translation: competition is healthy until the old system has to compete 🤦‍♂️ 

The banking lobby did not fully win this round, though. It pushed senators to close what it calls a loophole around exchange paid stablecoin rewards, yet the committee still advanced the bill with the compromise intact.

The banks got the passive yield ban, then still complained that activity rewards leave too much room for crypto firms. They want parity, but the actual demand reads more like keeping stablecoins as payment tokens only, with as little user upside as possible.

The odds of the bill surviving without being carved into useless meat are better than they were in January, but not clean 📜 

• Positive signs: the House already passed CLARITY in July 2025 by 294-134, the Senate Banking vote was bipartisan and the banking lobby failed to stop committee passage. Galaxy noted that prediction markets had moved year-end passage odds to roughly 67-75% before markup, although that reflected momentum rather than settled policy.

The bill likely needs 60 votes, so Republicans need more Democrats than the two they got in committee. That means amendments are almost guaranteed. Total destruction looks less likely after the stablecoin compromise survived committee, but a cleaner DeFi friendly version is not guaranteed either.

Tldr, objectively how it looks: CLARITY is now alive again, but the fight has narrowed into a simple question 🥸 

Does the U.S. want crypto rules that protect users while leaving room for DeFi and onchain markets, or does it want bank approved crypto where every useful feature gets sanded down until JPMorgan can sleep peacefully?

The current text is imperfect, but it still keeps a path open for rewards, DeFi protections and CFTC led market oversight.

For a pro DeFi view, that is the part worth defending before the banks try to turn “clarity” into nothing ✍️ 

Other worthy reads

“The AI Supercycle is Now Reorganising Macro Policy. Here is What Happens Next.” by Raoul Pal:

“How CBB Cartel & Friends Made +$40m on $XPL” by CBB:

Is Circle x Coinbase friendship falling apart?

MEMES

That's all for now, frens.

We'll meet in a week! And remember, the market conditions are temporary, but our commitment to building a better Web3 is here to stay. Thanks for joining us, and we look forward to seeing you back next week. Cheers!

Yours, The 🔥 Team

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