Stablecoins essential for US dollar’s future, says Paxos CEO  

Hong Kong police arrested 12 people involved in a cross-border money laundering scheme that relied on crypto and over 500 stooge bank accounts to launder HK$118 million ($15 million), local news outlets reported.The syndicate was dismantled on May 15, resulting in the arrest of nine men and three women in mainland China and Hong Kong. The suspects allegedly recruited others to open bank accounts to receive proceeds from fraud cases, which were then converted into crypto at crypto exchange shops to launder the illicit funds, Hong Kong Commercial Daily reported on May 17.The criminal organization rented a residential unit in the Hong Kong neighborhood of Mong Kok to plan and carry out its money laundering activities. Of the $15 million laundered, more than $1.2 million was linked to 58 reported fraud cases.Caught in actionThe bust followed police surveillance on May 15, when two recruits left the syndicate’s Mong Kok base — one visiting a bank, the other an ATM — before both went to convert the cash into crypto at a crypto exchange shop in the neighborhood of Tsim Sha Tsui.Police arrested both individuals on the spot, seizing around HK$770,000 ($98,540) in cash before the funds could be laundered. The other 10 individuals, aged between 20 and 41, were arrested soon after.Police seized approximately HK$1.05 million ($134,370) in cash, over 560 ATM cards, multiple mobile phones, bank documents and records related to crypto transactions.Senior Inspector Tse Ka-lun of Hong Kong’s Commercial Crime Bureau claimed that the individuals often used bank accounts from their friends and family to launder the stolen funds. Hong Kong reported a 12% year-on-year increase in fraud reports in 2024, with authorities making more than 10,000 fraud-related arrests. Of those arrests, around 73% involved individuals who held stooge bank accounts.Related: DOJ charges 12 more gamer-turned $263M Bitcoin robbersThe crackdown comes as Hong Kong continues to roll out its crypto regulatory framework to support local innovation, protect consumers and establish itself as a crypto hub.Hong Kong’s Securities and Futures Commission introduced new rules for crypto exchanges offering staking services in April. Two months earlier, the securities regulator rolled out a roadmap to improve market access, optimize compliance, expand product offerings, strengthen crypto infrastructure and foster relationships with industry players. Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight

Moody’s credit rating agency downgraded the credit rating of the United States government from Aaa to Aa1, citing the rising national debt as the primary driver behind the reduction in creditworthiness.According to the May 16 announcement from the rating agency, US lawmakers have failed to stem annual deficits or reduce spending over the years, leading to a growing national debt. The rating agency wrote:”We do not believe that material multi-year reductions in mandatory spending and deficits will result from the current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat.”The credit downgrade is only one degree out of the 21-notch rating scale used by the company to assess the credit health of an entity.An overview of the US national debt. Source: US National Debt ClockDespite the negative short to medium-term credit outlook, Moody’s maintained a positive outlook on the long-term health of the United States, citing its robust economy and the status of the US dollar as the global reserve currency as strengths, reflecting “balanced” lending risks.Related: Asia’s wealthy shifting from US dollar to crypto, gold, China: UBSInvestors react to Moody’s US credit revision Moody’s announcement drew mixed reactions from investors and market participants, leaving many unconvinced by the agency’s revised outlook.Gabor Gurbacs, CEO and founder of crypto loyalty rewards company Pointsville, cited the rating agency’s previous credit assessments during times of financial stress as unreliable, signaling that the outlook was too optimistic.”This is the same Moody’s that gave Aaa ratings to sub-prime mortgage-backed securities that led to the 2007-2008 financial crisis,” the executive wrote in a May 17 X post.However, macroeconomic investor Jim Bianco argued that the recent Moody’s credit outlook does not reflect a real downgrade in the perception of US government creditworthiness and characterized the announcement as a “nothing burger.”Interest rates on the 30-year US Treasury Bond spiked to nearly 5% in May 2025, signaling reduced long-term investor confidence in US debt. Source: TradingViewUS government debt surpassed $36 trillion in January 2025 and shows no signs of slowing, despite recent efforts by Elon Musk and others to reduce federal spending and curtail the national debt.As the debt climbs and investors lose faith in US government securities, bond yields will spike, causing the debt service payments to go up, further inflating the national debt.This creates a vicious cycle as the government will have to entice investors with ever-greater yields to incentivize them to purchase government debt.Magazine: Elon Musk’s plan to run government on blockchain faces uphill battle

The US Securities and Exchange Commission (SEC) has held discussions with Everstake, one of the largest non-custodial staking providers globally, to explore clearer regulatory definitions around staking in blockchain networks.The meeting, which also involved the SEC’s Crypto Task Force, comes at a time when over $193 billion in digital assets are staked across major proof-of-stake (PoS) networks.However, despite the massive scale of participation, staking remains in a legal gray zone in the US as regulators wrestle with its classification under existing securities law.The previous SEC administration also took enforcement actions against major players such as Kraken, Coinbase, and Consensys due to their staking services. The agency, under pro-crypto President Donald Trump, has recently dismissed these enforcement actions.During the meeting, Everstake told the SEC that non-custodial staking should not be classified as a securities transaction. The company said that users maintain full control over their digital assets throughout the staking process and do not transfer ownership to a third party.They argued that this makes staking a technical function, not an investment product.“Our main assertion is that staking is not a financial instrument or security transaction, but rather a technical process, a base-layer protocol mechanism—akin to an oracle in a database—that maintains the integrity and functionality of decentralized networks,” Everstake founder Sergii Vasylchuk told Cointelegraph.Everstake team meeting with the SEC. Source: EverstakeRelated: SEC delays staking decision for Grayscale ETH ETFsEverstake calls for regulatory clarityIn a letter submitted to the SEC’s Crypto Task Force on April 8, 2025, Everstake asked the agency to extend regulatory clarity to non-custodial staking and custodial and liquid staking models.In the letter, which came in respond to Commissioner Hester Peirce’s call for input on regulatory treatment of blockchain services, Everstake argued that non-custodial staking should not be considered a securities offering.It claimed that non-custodial staking, where users retain control of their tokens, does not involve the pooling of assets or the expectation of profits from managerial efforts.In its model, Everstake said users delegate only validation rights while maintaining ownership of their digital assets. The staking rewards are algorithmically distributed by the blockchain network itself, and the firm merely provides technical infrastructure.Related: Ethereum ETF staking will have little impact without multimonth rally: AnalystNon-custodial staking fails the Howey testThe letter also details why non-custodial staking fails each prong of the Howey test. Users do not make an investment of money in a common enterprise, do not expect profits from Everstake’s efforts, and are not dependent on the company’s management for financial returns.Instead, any rewards come from network-level incentives and fluctuate with the market value of the underlying asset.Everstake proposes specific criteria that should exempt non-custodial staking from securities classification. These include user asset control, absence of pooled funds, permissionless unstaking, and the provision of purely technical services.It likens non-custodial staking to proof-of-work mining, which the SEC has previously ruled out as a securities transaction.Margaret Rosenfeld, Everstake’s chief legal officer, also told Cointelegraph that “with non-custodial staking, there’s no handover of assets, no investment contract, and no third-party risk.” She added:“Treating it as a securities offering undermines the decentralized model and risks chilling innovation in the blockchain sector.”Nevertheless, the SEC has so far withheld a definitive stance. Rosenfeld said that the agency did not make any “specific commitments” on staking guidance. However, it continues to listen to industry stakeholders.“The Task Force is actively engaging with a range of stakeholders—including those involved with non-custodial staking, ETFs, and broader blockchain infrastructure—to gather input.”In an April 30 letter to the SEC, nearly 30 crypto advocate groups led by the lobby group the Crypto Council for Innovation (CCI) asked the agency for clear regulatory guidance on crypto staking and staking services.Magazine: Binance Wallet ‘killing’ MetaMask and airdrops, Chinese RWA tokens: Asia Express