Tag: Regulation & Policy

Supreme Court Expands Presidential Power, Overturning Century-Old Precedent on Agency Firings

The U.S. Supreme Court on Monday dismantled a nearly century-old precedent that had restricted presidents to removing federal agency commissioners only under extraordinary circumstances. The landmark 6-3 decision, authored by the court’s conservative majority, significantly bolsters presidential authority over key regulatory bodies, including those overseeing the cryptocurrency sector.

The ruling affirmed President Donald Trump’s right to dismiss Rebecca Slaughter, a Democratic commissioner at the Federal Trade Commission (FTC). This effectively grants the president the power to terminate other agency commissioners at will, with the sole exception of Federal Reserve governors.

The case held direct relevance to the cryptocurrency industry, as Commissioner Slaughter’s husband serves as Vice President of Policy at Paradigm, a prominent venture capital firm in the crypto space. This connection allowed the couple to fund Slaughter’s legal challenge all the way to the Supreme Court, as previously reported.

The Supreme Court’s decision in Trump v. Slaughter overturns a long-standing precedent established during the early years of the Franklin Delano Roosevelt administration. That precedent had stipulated that agency commissioners could only be removed for extreme cases of neglect of duty or malfeasance.

“Today’s historic Slaughter decision by the Supreme Court is the greatest increase in presidential power in the last 100 years,” President Trump stated in a social media post on Monday. “Such a monumental ruling at such an important time!”

The ruling means that President Trump, and future presidents, can now dismiss commissioners at influential regulators such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) at any time and for virtually any reason. This development grants the executive branch substantial new leverage over the direction of these agencies, which have historically been considered independent.

President Trump has already demonstrated his willingness to exert influence by withholding appointments of Democratic commissioners to the SEC and CFTC, both of which are mandated to have two minority-party commissioners. The SEC currently comprises three Republican commissioners and no Democrats, while the CFTC is led by a sole Republican chairman.

This issue became a critical point of contention in the year-long effort to pass the Clarity Act, a bill aimed at formally legalizing most cryptocurrency activities in the United States. Senate Democrats had previously indicated they would not support the legislation—which would grant significant regulatory authority over crypto markets to the SEC and CFTC—unless President Trump committed to appointing Democrats to both agencies.

In December, the president had toldDecryptthat he was “open” to the idea. However, in the six months since, no such appointments have been made.

Monday’s Supreme Court ruling further complicates the legislative landscape, as President Trump could now theoretically appoint Democrats to federal agencies and then remove them at his discretion.

The decision arrives as the Clarity Act faces a critical juncture after more than a year of stalled progress. Most stakeholders involved in the bill agree that it must be passed by early August to have a viable chance of becoming law, given the approaching November midterm elections.

Numerous obstacles beyond regulator independence still impede the legislation’s path. Chief among these is the president’s potential reluctance to approve ethics provisions that would restrict his numerous lucrative cryptocurrency ventures, a demand that Senate Democrats have identified as a non-negotiable “red line.” Earlier on Monday, Republican Senate leadership signaled an intention to bring the Clarity Act to a floor vote next month, regardless of Democratic readiness.

Galaxy Digital Lowers Odds on Crypto Bill Passage Amid Senate Calendar Crunch

Galaxy Digital has significantly reduced its forecast for the CLARITY Act becoming law in 2026, now deeming its chances a “coin toss.” The firm cited a rapidly closing window for the U.S. Senate to advance the cryptocurrency market structure legislation before its upcoming five-week August recess.

“We are reducing our odds of CLARITY Act passage in 2026 to 50-50,” Alex Thorn, Galaxy’s head of firmwide research, stated in a social media post on Friday.

This latest revision marks a steady decline in Galaxy’s predictions. The firm had initially pegged the odds at 75% in May, then lowered them to 60% on June 9, before arriving at the current even-money assessment. Prediction market Polymarket offers an even more somber outlook, pricing the bill’s passage in 2026 at approximately 49%, a notable drop from a high of 74% just a month prior.

Thorn emphasized that the primary obstacle is not the bill’s substance but its timing. A unified Senate text remains elusive, a firm floor schedule is absent, and the legislative calendar is shrinking as lawmakers approach their summer break. Competition for floor time has reportedly “intensified,” Thorn noted, particularly after President Trump’s recent refusal to sign a bipartisan housing bill until Congress passes the SAVE Act, an election measure focused on proof-of-citizenship. Surveillance and defense legislation are also vying for legislative attention.

However, a declining probability of passage does not necessarily signal the bill’s demise, according to Tim Sun, a senior researcher at HashKey. “The drop in the probability of passage this time is merely a matter of time delay rather than the rejection of the proposal’s actual content,” Sun told Decrypt. He pointed out that prediction markets have shown odds below 50% since May, a view that is “somewhat more pessimistic than institutional forecasts.”

Sun reiterated that the core issue is the Senate’s packed schedule, with the housing bill, the SAVE Act, and other priorities continuing to dominate the agenda. Without a clear path to a vote before the recess, he warned, the CLARITY Act could be pushed into a “more complex mid-term election environment.” Nevertheless, Sun added, its prospects could improve rapidly if a final text is released in July and Senate leadership provides a definitive schedule.

The stakes for the cryptocurrency industry are considerable, Sun noted, especially in a trading environment “characterized by ETF outflows and weakening risk appetite.” The CLARITY Act, he suggested, “remains one of the few domestic U.S. policy catalysts that could potentially improve market sentiment.”

The proposed legislation aims to establish the first comprehensive U.S. regulatory framework for digital assets, dividing oversight responsibilities between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The bill passed the House of Representatives in July 2025 and cleared the Senate Banking Committee with a 15-9 vote in May. However, it garnered support from only two Democrats, falling short of the seven needed to overcome a 60-vote threshold on the Senate floor. Democrats, led by Senator Elizabeth Warren, have advocated for ethics provisions targeting cryptocurrency ventures associated with Donald Trump, while banking and law enforcement groups have raised concerns regarding stablecoin yields and potential gaps in illicit finance prevention.

For the time being, the bill’s fate appears intertwined with the crowded legislative calendar that is also impeding other measures, including the housing bill that President Trump is currently withholding over his election-related demands. Senator Cynthia Lummis indicated to Fox Business last Wednesday that a final version of the CLARITY Act text could emerge around July 4.

California’s Digital Financial Assets Law Looms, Impacting Ripple and XRP

California’s Digital Financial Assets Law (DFAL) is set to take effect on July 1, mandating that any firm conducting digital asset business with state residents must obtain a DFAL license or have a pending application with the Department of Financial Protection and Innovation (DFPI). Failure to comply will require cessation of such operations. Public records currently show no Ripple entities among the applicants, a development that coincides with XRP’s price falling below the $1.10 mark amid this regulatory uncertainty.

The DFAL encompasses a broad range of digital asset activities, including exchanges for fiat or other digital assets, transfers between individuals, custody services, and the issuance of reserve-backed instruments. These provisions directly align with Ripple’s existing operations in California, which include its payments infrastructure, custody services, and the issuance and redemption of RLUSD, its dollar-pegged stablecoin.

Regulatory Landscape and Ripple’s Position

Ripple’s existing portfolio of over 40 U.S. money transmitter licenses does not automatically satisfy the DFAL requirements. The new law establishes a distinct regulatory framework managed by the DFPI through the Nationwide Multistate Licensing System.

By the July 1 deadline, companies have three avenues for legal compliance: securing a DFAL license, submitting a complete application to the DFPI, or qualifying for a limited statutory exemption. This exemption is primarily available to banks, certain trust companies, and entities already registered with the SEC or CFTC that operate within their existing regulated activities.

Ripple has engaged with the DFPI, submitting a formal comment letter advocating for the elimination of redundant money transmitter license requirements for DFAL-licensed firms. However, this engagement does not equate to a filed license application. Law firms, including those recognized by Chambers, have characterized the DFAL as one of the most comprehensive state-level digital asset licensing regimes in the United States.

XRP Price Dynamics Amidst Regulatory Scrutiny

XRP is currently trading near $1.10, a significant drop from the $2.50 price point many had anticipated. Recent price action indicates weak momentum, with sellers consistently capping rallies in the $1.15 to $1.20 range. Despite ongoing attention on Ripple’s regulatory developments, the market has not yet factored in a decisively positive outcome.

Investors remain keenly focused on several legal and regulatory milestones involving Ripple. While a previous court finding that XRP itself is not inherently a security removed a major source of uncertainty, the outstanding penalty and injunction issues remain significant as they could influence Ripple’s future business operations and market sentiment.

From a technical standpoint, XRP must first reclaim the $1.15 to $1.20 zone before a stronger trend reversal can be discussed. Should buyers regain control and regulatory developments continue to be favorable, the next resistance level could emerge between $1.30 and $1.50. A sustained move above these levels would likely necessitate a substantial catalyst.

On the downside, support is currently clustered around $1.05 and $1.00. A weakening of regulatory expectations or a downturn in the broader cryptocurrency markets could place pressure on these levels. The $1.00 mark represents an important psychological threshold, as a decisive breach could trigger further selling.

For the time being, the market appears to be awaiting confirmation rather than trading on speculation. While regulatory progress could improve sentiment, XRP’s longer-term trajectory will likely be shaped by both legal clarity and a resurgence of stronger market demand.

White House Seeks to Limit OpenAI’s GPT-5.6 Release for Government Review

The Trump administration has requested that OpenAI restrict the initial rollout of its advanced AI model, GPT-5.6, to a select group of government-approved partners. This move, reported by The Information and Axios, comes as federal officials aim to evaluate the model’s capabilities.

This marks the second instance this month where the U.S. government has intervened to control the release of a cutting-edge AI system. Previously, the administration ordered Anthropic to halt public access to its Claude Fable 5 and Mythos 5 models, citing national security concerns.

According to the reports, the White House’s Office of the National Cyber Director and the Office of Science and Technology Policy are urging OpenAI to limit GPT-5.6’s deployment. The administration is currently developing a framework for assessing advanced AI models before they are made widely available. Sources close to the discussions indicated that the request was primarily driven by GPT-5.6’s “Mythos-like” capabilities, rather than a broader change in the government’s AI policy.

This request follows President Trump’s executive order earlier this month, which directed federal agencies to establish a voluntary testing framework for advanced AI systems prior to their release. This directive emerged after weeks of internal deliberations regarding the structure of such a program.

The administration’s intervention also signifies a shift in the dynamic between leading AI developers and Washington. For years, AI companies have advocated for government regulation within the industry.

In 2023, OpenAI CEO Sam Altman testified before the Senate, urging lawmakers to establish a dedicated regulatory agency for advanced AI systems, arguing that independent oversight would eventually be essential. More recently, Anthropic CEO Dario Amodei echoed similar sentiments, contending that the most powerful AI models should undergo rigorous, government-backed evaluations before deployment due to their potential to facilitate sophisticated cyberattacks, aid in biological weapons research, and pose other national security threats.

These concerns have become increasingly formalized, with Anthropic, OpenAI, and Google each publishing proposals outlining potential governance structures for frontier AI. While their approaches vary, all three companies advocate for structured evaluations of the most capable models, enhanced transparency in safety testing, independent reviews of high-risk systems, and a more significant governmental role in overseeing AI development.

The administration’s intervention may also serve as a test case for the feasibility of applying the governance frameworks championed by major AI companies uniformly across the industry. Critics have raised concerns that if the largest AI developers influence the creation of rules that are then enforced inconsistently, frontier AI regulation could devolve into a form of regulatory capture, benefiting a select few companies and hindering competition.

Hyperliquid Added to Singapore’s Investor Alert List, Platform Clarifies No Regulatory Breach

Hyperliquid, a perpetual futures platform, has been added to the Investor Alert List (IAL) maintained by the Monetary Authority of Singapore (MAS). The platform has clarified that this inclusion does not signify a regulatory violation, enforcement action, or ban.

In a statement released on X, Hyperliquid emphasized that its appearance on the IAL should not be construed as an indication of wrongdoing. The platform explained that the list is designed to identify entities that might be mistakenly perceived as being licensed, authorized, or regulated by the MAS.

Hyperliquid noted that several prominent cryptocurrency exchanges and decentralized finance protocols have previously been featured on the list. According to the MAS, the Investor Alert List comprises entities that, based on available information, may be wrongly assumed to be licensed or regulated by the central bank.

The regulator further stated that the list may also include entities offering investments or investment-related products that could be mistakenly viewed as authorized, recognized, registered, or accompanied by documentation lodged with the MAS.

Responding to the development, Hyperliquid asserted its status as permissionless infrastructure, stating that it has never claimed to be licensed or authorized by the MAS. The platform advised users not to consider it as holding such approvals. Hyperliquid also highlighted that users retain self-custody of their assets, and all network transactions remain transparent and are fully settled on-chain.

“The Hyperliquid ecosystem remains committed to engaging collaboratively and constructively with regulators and institutions globally and to supporting clear, well-designed frameworks for onchain finance,” the platform stated.

Earlier this month, the MAS also placed Bybit Fintech Limited on its Investor Alert List. Bybit responded by stating its ongoing regular and constructive engagement with the MAS and detailing measures implemented to restrict access for users in Singapore. These measures include modifications to its terms of service and geo-blocking of Singaporean IP addresses.

Hyperliquid’s native token, HYPE, showed minimal reaction to the news. HYPE traded around $62 over the past 24 hours. The token had previously reached over $75 in mid-June before experiencing a decline amid broader market volatility.

Meanwhile, institutional demand for the token appears to remain robust. Data from SoSoValue indicated that U.S. spot HYPE ETFs recorded net inflows exceeding $108 million on June 25, marking the largest single-day inflow since their launch last month. These inflows followed five trading days in June that saw no net flows.

Anthropic is urging Congress to bolster protections against AI model distillation, citing what it describes as the largest known effort to extract capabilities from its Claude chatbot, allegedly carried out by operators affiliated with Alibaba.

In a letter dated June 10 to Senate Banking, Housing, and Urban Affairs Committee Chairman Tim Scott and Ranking Member Elizabeth Warren, Anthropic detailed allegations that Alibaba and its Qwen AI lab-linked operators engaged in over 28.8 million interactions with Claude between April 22 and June 5. These exchanges reportedly involved nearly 25,000 “fraudulent accounts,” meaning they did not represent genuine, organic users.

Anthropic characterized this activity as a “distillation attack,” stating that the operations specifically targeted Claude’s abilities in agentic reasoning, software engineering, and long-horizon planning. Such attacks, the company explained, allow competitors to replicate advanced model behaviors without incurring the substantial costs associated with training a frontier AI system from scratch.

“Beyond its scale, this campaign was striking for its brazen nature,” Anthropic wrote in the letter. “Alibaba is listed on the New York Stock Exchange, maintains business operations in the United States, and is accountable to U.S. investors and regulators.”

The AI firm asserted that the campaign extended beyond intellectual property concerns, framing large-scale model distillation as a national security issue. Anthropic warned that such practices could accelerate China’s military and cyber AI capabilities, thereby diminishing the United States’ technological advantage.

This appeal comes as Washington intensifies its focus on safeguarding U.S. leadership in artificial intelligence. Earlier this month, President Donald Trump signed an executive order aimed at expanding AI-powered cybersecurity initiatives, a measure he had previously delayed amid concerns it could compromise America’s competitive standing against China.

“When PRC labs distill these capabilities from U.S. models, they capture the returns on American investments without bearing the costs or risks associated with training frontier AI models,” Anthropic stated. “This inverts the economic logic that underwrites American AI leadership, turning billions of dollars’ worth of research and development, compute, and other U.S. investments into a subsidy for our competitors.”

Anthropic proposed several actions for lawmakers, including expanding intelligence sharing between frontier AI developers and the U.S. government, clarifying antitrust regulations to permit AI companies to share information about distillation attacks, strengthening export controls on advanced AI chips and computing power, closing loopholes that enable Chinese firms to access overseas data centers, and implementing penalties for companies involved in large-scale model extraction.

A spokesperson for Anthropic declined to comment on the specifics of the letter but told Decrypt, “We believe combating the threat of illicit distillation requires coordinated action between government and industry, and we will continue working with Congress and the administration to maintain American AI leadership.”

The letter builds upon previous claims made by Anthropic in February, where it alleged that Chinese AI developers DeepSeek, Moonshot AI, and MiniMax had generated over 16 million Claude exchanges using approximately 24,000 fraudulent accounts.

Those earlier allegations drew criticism from some observers who pointed out that AI companies themselves employ similar techniques during the training of their own systems. Anthropic has maintained that conventional distillation is a legitimate method for creating smaller, more cost-effective models. However, it argues that the unauthorized extraction of frontier model capabilities through fraudulent access constitutes a violation of its terms of service.

The broader discourse surrounding AI model distillation has grown increasingly complex in recent months. In April, Elon Musk testified in federal court that his company xAI had “partly” utilized OpenAI models in the training of its Grok chatbot. This testimony underscored that distillation is an established industry practice, even as companies continue to debate the boundaries between legitimate model training and unauthorized model extraction.