💰 Kalshi Raises $1B at $22B Valuation in New Funding Round: WSJ. Prediction market platform Kalshi has secured over $1 billion in its latest funding round, led by Coatue Management.
‼️ Super Micro Executives Indicted for Smuggling AI Chips to China. U.S. Attorney Jay Clayton has filed criminal charges against SMCI associates for illegally diverting billions of dollars in servers to China.
🦋 Bluesky Decentralized Social Platform Discloses Past $100M Series B Raise. The raise was completed in April 2025, but is being disclosed now as the company gets a new CEO.
📸
Daily Market Snapshot: Markets got pummeled this week as Trump's Iran War got far less popular with Wall Street. Crypto prices, which have whiplashed all week, held steady Friday by comparison.
Last month I wrote about how the L2 landscape is tightening fast as Ethereum refocuses on the L1, meaning L2s will need to distinguish themselves by offering something Ethereum itself can't or won't.
Vitalik offered some ideas for these chains to consider, with privacy sitting at the top of his own list. Aztec has long been the name associated with that race, taking a diligent, lengthy path towards deploying a decentralized, privacy-first L2. It's a mission they've been driving towards since 2017 and they are finally nearing launch, though the exact timeline remains vague. Privacy has obviously become one of the most discussed use cases over the past year, with many teams throwing their hats in the ring along the way. There have been a few that have launched and deserve recognition, Payy Network, for example, but few stand on the same ground that Aztec's history gives it, except perhaps Starknet.
StarkWare, the team behind Starknet, has been building since 2018. Founded by one of the co-founders of Zcash, the company made privacy a central priority over the past year, amidst a push to differentiate their chain that started long before last month’s excitement around Vitalik's “electrifying” L1/L2 statements.
In recent weeks they've shared more details about initiatives to catalyze this focus, with the biggest coming from their release of the technical paper for STRK20: a framework for making any ERC-20 private by default. The framework turns on a single, official smart contract, the Privacy Pool, which will be deployed as core Starknet infrastructure.
Big news as of today: Starknet shared thattestnet goes live next week, with mainnet targeted for the end of April.
The flagship of this launch will be strkBTC, a similarly privacy-preserving version of BTC. STRK20 is the broader play: a standard for shielded tokens that still behave like normal crypto: composable with DeFi, usable at scale, and built with regulatory compliance from day one. Let me walk you through how it works.
One Pool, Any Token
As mentioned, the Privacy Pool is a single contract that holds any ERC-20: Bitcoin wrappers, stablecoins, ETH, STRK, what have you. You deposit public tokens, they lock inside the pool, and you receive encrypted "notes" representing your claim. A note is simply a private record that says "this address owns X amount of Y token." The underlying assets never leave the vault. Ownership now exists only as private notes you can decrypt.
Transfers of these notes follow a Bitcoin-style UTXO model. When you send, your current note is burned and marked as permanently spent. The system then mints new notes for the recipient, plus change if needed. Onchain this looks like a normal transaction. But who sent what, and how much, is completely opaque.
The first time you send a note to someone, the transaction establishes a one-time shared secret called a channel. This solves the inefficiency of the network needing to essentially scan all notes to identify which are yours every time you send or use a note. Instead, every subsequent transfer reuses that channel. The recipient's wallet checks their address, decrypts with their viewing key, and instantly locates every note you've sent them. No global scanning required.
Compliant Privacy, By Design
When you first interact with the Privacy Pool, your wallet completes a two-part setup:
It generates your viewing key pair: a private viewing key that only you control, used to decrypt all your notes and see your own transaction history, plus a public viewing key that anyone can use to encrypt messages to you.
It registers an encrypted copy of your private viewing key, tied to your Starknet address. That copy is locked using the public key of a designated auditor.
This is the deliberate architectural choice Starknet made for compliance. The encrypted version lives separately from your notes; it's just metadata associated with your address. But, if a valid legal request ever targets a specific Starknet address, say if a regulator suspects that an address is laundering funds, the designated auditor can decrypt that user's private viewing key and trace their full history: every channel, every note, every amount.
According to Starknet, only the targeted person's viewing key is decrypted in this process, not those of counterparties.
The auditor won't be a single person who can decrypt unilaterally. Instead, it will likely be a council of multiple independent parties using threshold encryption. A quorum has to agree before anything happens. No one actor can act alone. The decision is split and auditable by design.
DeFi Composability
As I mentioned, private notes can do more than just be sent back and forth. They can work in Starknet DeFi.
For example, an anonymous swap works like this: spend your private notes, the pool withdraws tokens to a helper contract, the swap executes on a public AMM, and the new tokens go straight back into a fresh note. All done in one transaction. Your identity stays hidden throughout.
The same pattern applies to staking. From day one, STRK20 will support anonymous Ekubo (Starknet’s largest DEX) swaps and private staking. According to Starknet, private transactions will settle in under five seconds and cost less than $0.20. Pretty cool.
What Comes Next
Testnet launches next week. Mainnet end of April (fingers crossed).
Yet, as L2 differentiation becomes existential, expect more technically adept teams like Starknet and Aztec to go the distance, or at least attempt to, on privacy.
But this isn't an easy path. Enforcement against privacy developers continues to escalate, as evidenced by Jay Clayton’s push for Roman Storm to have a retrial. Anyone sitting on STRK20's compliance council will be stepping into a live enforcement environment, not a theoretical one. Likely this is a consideration being taken into account. Hopefully we can find a way to ensure participants, auditors in this case, can be protected enough to sign up and perform their duties, and thus enable this kind of compliant privacy.
Not financial or tax advice. Bankless content is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time to time, we may add links in this newsletter to products we use. We may receive a commission if you make a purchase through one of these links. Additionally, the Bankless team holds crypto assets.
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Rules for crypto. SEC has given an interpretation for builders.
Understanding STRC. The primary engine of current BTC price action.
Around the web. Katana launched the $KAT token, Aster launched its private chain, EF Mandate drama, and more.
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News
SEC has Finally Given the Rules
Crypto finally got the rules for our game.
What happened? The US SEC has given a clear interpretation of how rules apply to the crypto industry. It's co-signed by CFTC as well.
It means that builders can clearly address the legal risks. They can now know if their token is a security or not.
Here's what the taxonomy looks like:
Digital commodities are tokens that power a functional blockchain network. BTC, ETH, SOL, ADA, XRP, etc. are explicitly listed as commodities.
Digital collectibles are those you collect, display, or trade for their cultural, artistic, or entertainment value. Apart from NFTs like CryptoPunks, it also includes fan tokens and memecoins like WIF.
Digital tools are tokens that do a specific job. ENS names like "vitalik.eth" are the perfect example.
Stablecoins is defined as tokens that is designed to maintain a stable value relative to a reference asset like the U.S. dollar.
Digital securities are tokenized financial instruments. It's just TradFi instruments like stocks and bonds living onchain.
There's more. Solo mining, pool mining, solo staking, delegated staking, custodial staking, and liquid staking are all explicitly covered as non-securities activities. SEC views them as "administrative or ministerial."
That's all good. But there's a catch: It's not that simple for token sales.
Even a commodity token can become a security depending on how it's sold. The Howey test is what determines that. Three conditions:
Someone pays to acquire the token
That money goes into a shared enterprise with the issuer
The issuer promises to build something, and buyers expect to profit from that work
Hit all three? Congratulations, your commodity just became a security.
Some crypto lawyers have pointed out that this will have a negative impact. From now onwards, teams are incentivized to stay silent about the roadmap
On the positive side, the deal around a token can stop being a securities transaction once the issuer delivers on what it promised, after which the token trades freely as whatever it inherently is (commodity, collectible, tool).
SEC Chair Atkins also floated a safe harbor proposal. The idea is to let companies sell tokens and raise money without tripping over securities law, including an innovation exemption for new business models.
Why it matters: This is the clearest signal builders have gotten in years. But none of it is law yet.
The two chambers have to pass the law. The Clarity Act has to be signed by the president. But in the upcoming midterm elections, Democrats will probably win. And if they do, they'll probably block the bill, or at least remove the crypto-friendly aspects.
Ideally, the crypto should be looking to get the required legislation passed before the midterms in November.
AI Agents are taking over all tasks. There are even businesses run completely by AI.
What's an AI Agent's preferred store of value? According to a study, it's $BTC.
But Bitcoin L1 cannot support the demands of these AI agents. HFT Agents will make hundreds of transactions per second. Plus, L1 doesn't have programmability.
Enter Stacks. It's a Bitcoin L2 that brings programmability to BTC. Transactions settle to Bitcoin L1, confirmations under 5 seconds.
Agents have already started using Stacks.
Tiny Marten is an AI agent that runs a bounty board, sells data queries at 100 sats each, and operates a P2P marketplace. It already earns BTC autonomously.
143 agents have already registered through Stacks. Per day, ~10k AI calls for pay-per-request are sent to x402 Stacks
Stacks has become the rails for the Bitcoin AI Agent economy.
Since the war started, BTC has outperformed both Gold & Equities.
What's happening? Saylor is back. This week, he brought >22k BTC ($1.57b).
Saylor's primary buying engine right now is "Stretch" ($STRC). 75% of this week's purchase came from it. Understanding how it works explains a lot about current BTC price action.
What is $STRC? It's a preferred share product from Strategy. They have many: $STRF, $STRC, $STRK, $STRE, $STRD.
Preferred shares are a hybrid between stocks and bonds. Here are its features.
STRC has no maturity date. It'll never come due.
If the strategy goes bankrupt, preferred shareholders are "preferred" over common stockholders.
It is designed to trade near $100 par value while paying a monthly 11.5% annualized variable dividend.
If STRC trades above $100, then Strategy can issue more $STRC. If below, they can increase the rate.
This instrument won't have any equity-like upside or voting rights.
Strategy has been buying $BTC for ~6 years. So, it has some trustworthiness. Plus, it currently has $2.25B in cash balance.
These features make $STRC very attractive to buyers. 11% annual return from a company with >2 years of runway? Most investors will want to buy it.
As long as $MSTR trades above its mNAV, Strategy can keep selling common stock to buy more BTC. This also lets them reduce their leverage ratio down to ~33%.
The bottom line: two conditions keep Saylor's buying machine running.
mNAV stays above 1
$STRC trades above $100
If both hold, there's no ceiling on how much BTC he can buy.
If you want a detailed version of this argument, read this. It's very well worth understanding.
Here's the recap:
Investors will buy STRC for yield.
The Strategy will use money from it to buy BTC.
With mNAV arbitrage, the strategy should be able to increase STRC to whatever level they want.
But everyone knows there's no free lunch.
What are the risks? The biggest risk is BTC performance.
If BTC enters a prolonged (2+ years) bear market, then things will start going wrong. Eventually, they will run out of cash to pay the dividends. And they'll be forced to sell BTC to make their payments.
It'll be a downward spiral. Losing confidence in BTC > STRC going down > MSTR mNAV going down > Fears of Strategy selling BTC > Losing confidence in BTC > repeat.
It's difficult to predict exactly what's going to happen in that scenario. But it won't be anything good.
That's the worst-case scenario. I don't think we'll see a 2+ year bear market.
In the short-to-medium term, STRC is a way for Saylor to buy as much BTC as he wants. Taiki Maeda has published a compelling case that BTC has bottomed. TLDR: All the sellers are out of the market, and it's just Saylor left as a multi-billion-dollar buyer.
That's compelling, but you do have to weigh it against the horrible macro conditions. The Iran war is wrecking the economy. Jerome Power won't cut rates when inflation keeps increasing. If BTC continues to behave as just another risk asset, instead of a non-sovereign asset, that's bad for the BTC price.
Overall, things are still uncertain. Depending on your conviction in the non-sovereign SoV thesis, DACing might be a good option.
🚀 DeFi Catalysts
Katana has launched the $KAT token, and it's chain-level veTokenomics. It'll route revenue back into the ecosystem to reward active users.
S&P Dow Jones Indices partnered with trade[XYZ] to launch the first official S&P 500 Perpetual on Hyperliquid.
Aster has launched the genesis phase of its privacy-focused Layer 1 blockchain designed specifically for derivatives trading.
Pendle has introduced the one-click button for PT-looping for leveraged yield farming. It'll make 20% yield accessible to everyone.
Jupiter has launched Pre-IPO with the limit order functionality. It was launched in partnership with Pre-Stocks.
PumpFun introduced Automated Buybacks for Tokenized Agents. Users can now launch tokens for agents on PumpFun.
OpenSea has decided to postpone the launch of $SEA. They've cited market conditions as the primary reason for postponing it.
Tally is a very established DAO governance platform, and they are shutting down. It's part of the trend of a larger decline in DAOs.
Polymarket has acquired Brahma. They'll wind down their existing products and will be focusing on developing Polymarket.
Lido Finance introduced two simplified vaults: EarnETH & EarnUSD. They'll be sunsetting previous vaults GGV, stRATEGY, and DVV as part of it.
Ethereum Foundation published a Mandate that went controversial. Some see it as sliding back into the ivory tower mentality.
📰 Industry News
Tempo mainnet has gone live. It's the new payments-focused L1 blockchain platform from Stripe and Paradigm.
Privy introduced a new feature that enables earning on balances. They're using Morpho vaults to allow devs to do that with a few API calls.
Stripe introduced Machine Payments Protocol. It's a specification for agents and services to coordinate payments, but it doesn't use x402.
Circle introduced Circle Skills, an open-source AI skills for building with USDC, EURC, ARC, and Circle's developer platform.
Mastercard has announced a definitive agreement to acquire BVNK for up to $1.8 billion. The goal is to connect onchain payments and fiat rails.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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