1. Galaxy Research: Democratic midterm victory may intensify regulatory pressure on crypto and AI, while sovereign funds continue increasing crypto holdings
Galaxy Research’s latest weekly report notes that Democrats’ victory in securing control of both chambers of Congress in the U.S. midterm elections could lead to greater regulatory scrutiny of the crypto industry and AI companies. Leadership of the Senate Banking Committee and House Financial Services Committee is expected to change. Galaxy believes that key crypto market structure legislation is unlikely to make substantial progress in the near term, while AI regulation may advance more quickly. In this election, 40 of 41 local ballot measures nationwide related to data centers produced outcomes unfavorable to data center development, heightening market concerns about the outlook for AI infrastructure investment. In addition, Kazakhstan announced that it would allocate $100 million to crypto investment funds and invest $90 million in Bitcoin ETFs. Galaxy believes this reflects a trend of sovereign and long-term investors continuing to increase their exposure to crypto assets. On the technology front, Anthropic released FlashProve, an open-source prototype for verifying zero-knowledge reasoning. It can verify whether an AI output came from a specified model without revealing the model’s weights. However, generating a proof currently requires about 70 to 95 times as much computation as standard inference, leaving it a considerable distance from practical large-scale deployment.
2. U.S. FinCEN accuses MEXC of facilitating at least $16 billion in illicit fund flows and orders it cut off from the U.S. financial system
The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an order prohibiting U.S. financial institutions from processing funds transfers to or from the cryptocurrency trading platform MEXC Global, effectively cutting off its access to the U.S. financial system. FinCEN said that between May 2021 and May 2026, MEXC Global facilitated at least $16 billion in fund flows linked to sanctions evasion, cybercrime, and other illicit activities. This included nearly $1.5 billion in transactions involving Russian sanctions evasion, approximately $1 billion in direct transactions with more than 40 Iranian cryptocurrency trading platforms, and around $22 million in transactions involving the Central Bank of Iran, the Islamic Revolutionary Guard Corps, and its Quds Force. FinCEN said MEXC Global’s anti-money laundering controls had serious deficiencies, making it a significant channel for illicit funds. The order will take effect 30 days after publication in the Federal Register.
MEXC said it is aware of the order issued by the U.S. Financial Crimes Enforcement Network (FinCEN) and is reviewing it closely with its legal and compliance teams. MEXC said the platform is operating normally, user assets are safe, and it plans to engage constructively with FinCEN and other relevant regulators and authorities worldwide. MEXC has launched an independent review of its anti-money laundering and sanctions controls and will share updates through official channels.
3. Bitcoin mining difficulty has stayed below its all-time high for 374 consecutive days, the longest stretch on record
Since reaching an all-time high of 155.97 T on October 29, 2025, Bitcoin mining difficulty has gone 374 consecutive days without setting a new record. This breaks the previous records of 364 days after the Mt. Gox collapse in 2011 and 253 days following China’s 2021 mining ban, marking the longest period in Bitcoin’s history without surpassing a previous peak. Although the network’s seven-day hashrate recently recovered to 1 ZH/s and difficulty briefly rose to 148.36 T—only about 4.9% below the peak—Mempool.space estimates that the next adjustment, in approximately six days, will reduce difficulty by around 3.7%, delaying a new high once again. Analysts say the main causes of continued pressure are weak Bitcoin prices (around $76,000) and rising operating costs, along with major publicly listed companies such as Riot and Hut 8 selling large portions of their reserves and mining firms shifting toward AI high-performance computing hosting.
4. Colombia is drafting a digital asset regulatory bill that would include rules for tokenized securities
Mariana Aya Guerrero, acting director of Colombia’s Financial Regulation Unit (URF), said at Blockchain Summit Latam 2026 that the URF is jointly drafting a digital asset regulatory bill with the Ministry of Finance, the central bank, and other agencies. The bill will include dedicated provisions for tokenized securities. The proposed rules would specify which digital asset activities require authorization, set operating conditions and regulatory responsibilities, and introduce penalties. The provisions on tokenized securities would adjust rules for ownership registration, order acceptance, clearing, and settlement, support the integration of related processes using distributed ledger technology, and explore round-the-clock trading and faster settlement. The bill is still being drafted and has yet to undergo legislative review.
5. Wu Says Weekly Roundup: U.S. midterm election results trigger market rout, Hong Kong passes crypto tax reporting framework, Binance reveals cause of $6.3 billion hack, and Top 10 news stories
Top 10 News Stories This Week
1. Democrats win both chambers of the U.S. Congress, fueling concerns over tighter AI regulation as stocks and crypto plunge link
Democrats won control of both chambers of the U.S. Congress in the midterm elections, prompting market concerns that they would tighten regulation of the AI industry. Democrats also plan to investigate the Trump family’s business dealings in areas including cryptocurrency. Amid uncertainty over the policies, U.S. stocks and cryptocurrency markets fell sharply. The Nasdaq Composite dropped 4.98% intraday, the S&P 500 fell 3.25%, and the Dow Jones Industrial Average declined 2.13%. According to OKX market data, BTC fell to a low of $75,558, down 5.32% over 24 hours, while ETH dropped to a low of $2,236, down 7.23%. CoinGlass data showed $870 million in liquidations across the crypto market over four hours that day, including $812 million in long positions and $58.34 million in short positions.
2. House Democrats plan to advance a new crypto market structure bill in the next Congress, expanding SEC oversight authority link
Crypto journalist Eleanor Terrett reported, citing three industry sources, that House Democrats are discussing expanding amendments to the Crypto Investor and Consumer Rights Act, introduced by Maxine Waters in 2025, into a more comprehensive crypto market structure bill in the next Congress. The new proposal may include provisions from Waters’ CLARITY Act that were not adopted, as well as some provisions agreed upon by Senate Democrats and Republicans before a procedural vote in September. Items under discussion include expanding the SEC’s oversight authority over crypto markets, limiting the CFTC’s regulatory role, and potentially adding ethics provisions restricting Trump and other federal officials from participating in crypto activities. Republicans have described it as a bill intended primarily to make a political statement.
3. Binance reveals preliminary findings in $6.34 billion hack: fake job interview planted malware, internal AI tool was exploited link
Binance released a preliminary investigation report on the October 29 hack, revealing how attackers infiltrated its wallet infrastructure through fake job interviews, malware, and internal AI tools. In September, an engineer downloaded a project containing malicious code during a fake job interview, compromising the engineer’s work computer. On October 20, the attackers further exploited the compromised device and an internal AI tool to gain system access to other wallet engineers. On October 29, using stolen credentials, the attackers deployed malicious containers, gained unauthorized access to Binance’s internal wallet signing service, and used Ethereum’s EIP-7702 authorization mechanism to delegate certain execution permissions to a smart contract under their control. Binance said suspending withdrawals did not immediately stop the malicious onchain authorizations that had already been established. The team later revoked the permissions through a dedicated process. The incident involved approximately $6.34 billion in digital assets, of which about $2.85 billion has been frozen or intercepted. Binance’s latest report said that as of October 31, 98% of affected token assets had been replenished and that funds exceeding the total losses had been set aside. The investigation is ongoing, and the technical findings are subject to independent review.
Binance co-CEO He Yi wrote that since the start of 2026, Binance’s security team has identified and blocked 57 suspected cyber threat incidents linked to North Korea. Tactics included fake job interviews, malware disguised as developer tools, tampered software packages and browser extensions, and fake video conferencing apps. He Yi said that although the team had blocked a large number of attacks, it had failed to prevent one major security incident, which had serious consequences.
4. The $6.3 billion Binance hack prompts the Federal Reserve and OCC to urgently assess risks to traditional banking systems link
Reuters reported that after Binance suffered a hack involving $6.3 billion, U.S. regulators urgently contacted several commercial banks to investigate potential vulnerabilities in their systems and prevent cybersecurity risks in crypto markets from spreading to the traditional financial system. People familiar with the matter said regulators from the Federal Reserve and the Office of the Comptroller of the Currency (OCC) began making intensive inquiries of major banks on Monday morning about possible unusual activity or business disruptions. Meanwhile, Wall Street banks have launched comprehensive diagnostics of their own systems to guard against similar techniques. The cybersecurity team at one major U.S. bank contacted Binance’s team within hours of the attack and is now preparing an internal assessment report to support system reviews and security upgrades. Industry insiders say that targeted intrusions using rapidly evolving AI models have become a major challenge for the banking sector. Major banks are now dedicating substantial resources to reviewing and patching code vulnerabilities.
5. Hong Kong Legislative Council passes crypto asset reporting framework bill, with automatic tax information exchange to begin in 2028 link
Hong Kong Legislative Council member Johnny Ng disclosed on November 4 that the council passed the Inland Revenue (Amendment) (Crypto-Asset Reporting Framework and Amended Common Reporting Standard) Bill 2026 that day, implementing the OECD’s Crypto-Asset Reporting Framework (CARF). Under the arrangements, eligible crypto-asset service providers must conduct customer due diligence and report transaction information from 2027. Hong Kong plans to begin automatically exchanging tax information on crypto-asset transactions with partner tax jurisdictions from 2028. Reportable information includes users’ tax residency status and details of crypto-asset purchases, sales, and transfers.
6. SEC updates crypto asset FAQ, clarifying how governance control is determined and how securities laws apply to token buybacks link
On November 2, the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance updated its FAQ on federal securities laws and crypto assets. It said that participants in broad governance mechanisms are generally not considered a single group if they are unaffiliated and have no arrangement to act together beyond participating in governance. Even if they constitute a group, they must control the system’s operations, economics, or voting to qualify as a “central control party.” The FAQ clarifies that “functional” and “decentralized” are distinct concepts, and that services to maintain or upgrade a system or foster network effects after it becomes functional do not constitute “essential managerial efforts” under the Howey test. If a system is functional and has no central control party, an issuer’s announcement of a plan to buy back non-security crypto assets does not constitute a commitment to perform such managerial efforts. If the system is not yet functional and the issuer claims that buybacks will generate returns for holders, however, that could constitute such a commitment. The FAQ represents only the views of SEC staff and has no legal force.
7. Vitalik: The crypto industry’s top priority over the next two years is survival, not winning the competition link
Ethereum co-founder Vitalik Buterin said in an interview that as major exchanges such as Binance continue to suffer hacks, the crypto industry’s priority over the next two years should be survival, not winning the competition. He believes that major security incidents over the past year and a half have been concentrated more in user interfaces and centralized components, while attacks involving smart contracts have declined significantly. Major exchanges, custodians, and financial institutions need to adopt stricter security measures and enter a state akin to “fortress mode.” Vitalik warned that if hacking continues, regulators may require companies to bear greater responsibility for security. He also said Ethereum will use zero-knowledge proofs, AI, and formal verification to advance its Lean Ethereum roadmap, while L2s should focus on exploring high-performance DeFi, privacy, and enterprise applications rather than simply replicating Ethereum’s scaling functionality.
8. Circle reports third-quarter 2026 results: revenue up 17% to $865 million, average USDC circulation reaches $73.3 billion link
Circle disclosed that revenue and reserve income in the third quarter of 2026 rose 17% year over year to $865 million, while net income from continuing operations increased 5% to $226 million. Other income included $182 million in proceeds from the ARC token presale. Average USDC in circulation during the quarter was $73.3 billion, up 8% year over year. Circle also said it had completed the genesis minting of all 10 billion ARC tokens and signed a definitive agreement to acquire cross-border payments platform Tazapay. The deal is expected to close in 2027, subject to regulatory approval. The company implemented a workforce reduction of approximately 5% in the third quarter to better align its organizational structure with its operating model and strategic priorities. The restructuring resulted in approximately $9.145 million in expenses, primarily related to severance, pay during notice periods, and employee benefits.
9. Tether CEO reveals holdings of 150,000 Bitcoin, with over 730 million users worldwide link
Tether CEO Paolo Ardoino revealed during a speech at the Plan ₿ Forum in Lugano that Tether holds approximately 150,000 Bitcoin and has more than 730 million users worldwide, with around 30 million new wallets added each quarter. According to Tether’s third-quarter reserve attestation report, it directly holds approximately $122.8 billion in U.S. Treasuries, or about $132.4 billion including repurchase agreements, and has excess reserves of $7.95 billion. Ardoino also outlined Tether’s Independence Stack strategy, which aims to build an infrastructure ecosystem spanning energy, Bitcoin mining, peer-to-peer communications, self-custody wallets, and local AI using open-source technology. He said that even if Tether no longer exists in the future, its open-source technology should still be able to operate.
10. ICE republishes partnership announcement with Trade xyz, emphasizing plans are subject to regulatory approval link
Intercontinental Exchange (ICE) republished its partnership announcement with Trade xyz after deleting an earlier post. In the new post, ICE revised the wording, emphasizing that the two parties “plan to bring Hyperliquid-based perpetual futures to U.S. regulated markets” and explicitly noting that the business is “subject to regulatory approval.” The platform is intended to operate independently of ICE’s existing institutional futures business and be designed specifically for retail trading. It aims to offer 24/7 trading in crypto, stocks, indices, commodities, foreign exchange, and other macro assets through regulated futures commission merchants (FCMs), including the joint venture between ICE and OKX. The two parties said they would formally move forward with license applications to establish a compliant market on Hyperliquid that meets KYC requirements and supports leveraged trading.
Key Funding Events
Digital asset insurer Soter Insure receives strategic investment from SC Ventures and SBI Group link
SBI Holdings announces $100 million investment in U.S. digital bank Erebor Bank link
Onchain stock trading platform StableStock completes new strategic funding round at a $75 million valuation link
Onchain die-cast car collectibles platform Rip Cars completes $1.5 million strategic funding round link
Settle and 3Jane sign forward loan agreement of up to $100 million, with the latter to fund it through stablecoin liquidity link
Uranium Digital raises $16.5 million in Series A funding led by Blockchain Capital link
Lombard raises $4 million to promote institutional adoption of the DvL standard link
Latin American stablecoin finance platform Takenos raises an additional $7 million in seed funding, plans to expand to more than 15 countries in the region link
For more industry fundraising news, visit crypto-fundraising.info.