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Good Morning,
Two weeks after the Clarity Act collapsed, the SEC is filling the legislative vacuum one rule at a time, and its custody proposal concedes an awkward truth: institutional demand for crypto has outrun the custodial infrastructure regulators once insisted on.
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In Today’s Email:
**What Matters:SEC Proposes Crypto Self-Custody for Investment Advisers 👀Founders Highlight:Jez of Papertrade 👨Deal Flows:**Jeeves Raises $110M Series C1 💰️
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WHAT MATTERS
**State of play: **The SEC is turning to rulemaking to set crypto policy, proposing a custody framework that would let investment advisers and regulated funds hold digital assets directly instead of relying on ETFs or other intermediaries.
The proposal addresses a gap where qualified custodians for some crypto assets do not yet exist, under rules that largely predate the internet.
State trust companies would be allowed to serve as custodians for client and regulated fund crypto assets.
Advisers could self-custody client assets when no permitted custodian is available, which Commissioner Hester Peirce clarified differs from investors holding their own keys.
The move adds to the SEC’s innovation exemption and the CFTC’s crypto asset rulemaking as part of a broader regulatory push.
Public comments are open for 60 days, and Chair Paul Atkins signaled that more crypto proposals are coming.
**Why it matters: **Advisers and funds get a compliant route to hold crypto directly, which could pull institutional flows away from ETF wrappers.
Our take: A custody regime built on agency rulemaking instead of statute can be reversed by the next SEC chair, so institutions are getting access without durability.
For builders and investors: State-chartered trust companies and custody infrastructure providers stand to gain most, and the 60-day comment window is the moment to shape the final rule.
BUILDER-INVESTOR HIGHLIGHT
**Intro: **Jez is the Founder of Papertrade, a fair-launched, fully-onchain perpetuals exchange built on hyperliquid.
**Previous background: **Prior to papertrade.xyz, Jez built an extensive career spanning automated market making at Morgan Stanley, quantitative research at Millennium Management, and web3 investing as a partner at Standard Crypto
**The big idea: **Jez wants to create a “loss-backed,” 100% user-owned derivatives exchange where the protocol operates literally like a casino house.
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INSIGHTS
One of the most-debated proposals in Ethereum forum history has been pulled from the Hegota upgrade after critics argued that a hard fork’s scoping process is the wrong place to rewrite ETH’s monetary policy.
EIP-8363 would have burned a rising share of validator rewards as staking grows, reaching 100% at about 60.25M ETH, roughly half of supply.
At the 34% staking ratio seen in mid-August, annual consensus yield would have fallen from about 2.6% to 1.2%.
SharpLink CEO Joseph Chalom and Aave founder Stani Kulechov opposed the plan, with Kulechov later praising its withdrawal.
A dedicated issuance process, with Lido helping steer it, will run forums and workshops from Devcon in November through EthCC in April.
The authors still maintain that an excessively high staking ratio threatens Ethereum’s security, neutrality, and ETH’s role as money.
DEAL FLOWS
*Deal flows soared this week - we saw $250M+ in deals 💼 *
CoinFund 𝕏led a $110M C1 round into Jeeves, betting that enterprises will adopt stablecoins only when they never have to see them, with settlement running onchain beneath familiar corporate cards, payables, and local accounts.
AllianceBernstein, Vista Equity Partners, Coinbase Ventures, a16z, Y Combinator, GIC, and ParaFi also joined the round.
Revenue tripled in 12 months, while annualized payment volume across cards and payments now exceeds $5B.
Stablecoin volume grew nearly 30x year to date, and 80% of customers use more than one Jeeves product.
Thousands of enterprises run on the platform, including BMW, Lululemon, H&M, Burger King, and Nubank.
After proving its model in Latin America, Jeeves is going global, with Europe at 15% of volume and a new Madrid office.
Deal flows in the past week:
Walapay, $4.6M Seed Round
PERPTools, $5M Seed Round
Jeeves, $110M Series C Round
Raven, $90M Strategic Round
Rip Cars, $475K OTC Round
World, $49M OTC Round
Grass, Undisclosed $ Unknown Round
QUICK BITES
NEAR Intentshalts servicesafter $3.8M exploit.Citigroupraises12-month bitcoin target to $113,000.Evernorth shareholdersapprove$1B XRP treasury deal.Bitcoin ETFs’ 9-day, $3B inflow streakcomes to an end.HPC, CirclepressEU on perps and stablecoin reserves in MiCA review.Ethereum staking reward burn proposalpulledfrom Hegota upgrade.Cryptolost$1.26B in hacks while bitcoin bulls enjoyed a monster quarter.Crypto industrygave$8M to Clarity Act lobbyists who didn’t close the deal.MetaMask security incidentforcesEthereum staking exits, no funds at risk.SECproposesframework allowing investment advisers, funds to self-custody.
NOTEWORTHY READS & MEME
Simon’s𝕏readon Fintech is Dead.Delphi’s𝕏readon The Emerging Onchain Market.a16z’s𝕏readon What financial markets need from blockchains.
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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.
