Bessent Unveiled 'Operation Economic Outcast' to Cut Iran Off From the Global Economy

Bitcoin and gold rallied as attention shifted to the Debasement Trade, with BTC briefly past $81K, its highest since mid-May, and gold above $4,600, while CNBC reported the Treasury could tap its near-$1T cash account to fund the expanded bond buybacks. Bessent separately unveiled 'Operation Economic Outcast', imposing secondary sanctions on any entity still doing business with Iran, and Brent settled above $90.

Crypto

Derivatives

Macro

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In Today's Note

Bessent unveiled 'Operation Economic Outcast', imposing secondary sanctions on any country or entity that continues doing business with Iran, with a cure period but no set timelines. Asked whether Chinese institutions were covered, he said no one is above the reach of US sanctions. Brent settled above $90.
Bitcoin and gold have rallied over the past week as attention shifted to the so-called Debasement Trade, after Bessent said the US will at least double its longer-dated bond buybacks. BTC briefly rose past $81K, its highest since mid-May, gold trades above $4,600, and CNBC reported the Treasury could tap its near-$1T cash account to fund the buybacks.

Market Snapshot: Overnight Moves

Macro & Markets

Crypto assets and precious metals charted a different path to Wall Street equities over the past 24 hours as markets digested Treasury Secretary Scott Bessent’s plan of economic isolation on Iran.
In Asian equity trading hours, BTC briefly rose past $81K, a level it last traded at in mid-May, three months ago.
ETH extended its rally and is now up 30% on the week, currently consolidating just below $2,500.
Crypto prices moved higher alongside a rally in gold which now trades above $4,600.

US equities on the other hand were dragged down by losses in Nvidia Corp. ahead of its earnings report (Nvidia shares fell for a seventh straight session) and news reports that some of the chipmaker’s largest customers have been notified about potential AI-related price hikes.
The S&P 500 declined 0.28%, while the Nasdaq-100 fell by a larger 0.97%. The Philadelphia Semiconductor Sector index ended the day down 2.70%.

Bitcoin and gold have rallied over the past week as market attention has shifted focus to the so-called Debasement Trade, after Treasury Secretary Scott Bessent announced last week that the US will at least double the size of off-the-run longer-dated government bond buybacks.
Yesterday, an article from CNBC reported that the US Treasury could use its near $1T Treasury General Account to help fund some of those buybacks.
Since making the initial announcement, the Treasury has yet to explain how it plans on funding the buybacks. Most market participants assumed the Treasury would do so by selling short-term bills.
The TGA is a cash account maintained by the Treasury at the Federal Reserve, funded by existing tax collections and bill issuance. Its current size is $935B.
Using existing funds from the TGA would provide an alternative method to funding buybacks instead of needing to immediately issue shorter-dated government bonds; however if the Treasury later wants to rebuild the TGA balance, it would likely need to do so by issuing short-dated bonds down the line, given the US runs a budget deficit.

Brent crude oil has settled above $90 a barrel after Scott Bessent announced ‘Operation Economic Outcast’ yesterday, “an unprecedented campaign against the Islamic Republic of Iran and its enablers” that aims to “sever every economic lifeline” available to the country.
This “economic D-Day” operation will see the US impose sanctions on all countries and entities that do business with Iran, as part of a new “economic asphyxiation” plan to end the Middle East war, absent renewed military escalations.
The Treasury Secretary said that every country will be given a defined timeline to shut down all of its Iran-related business activity and failure to do so will draw an imposition of secondary sanctions by the US, “The president is making phone calls to world leaders with specific requests to cease their interactions with the regime”.

During the Q&A that followed Bessent’s announcement, he was asked about whether the sanctions would extend to Chinese institutions, given China’s relationship to Iran as the largest buyer of its oil.
Bessent responded more broadly that, “No one is above the reach of US sanctions. If they facilitate transactions and are part of the ecosystem that turns Iranian oil into money into repression, they will be targeted."
When asked about timelines Bessent replied “I’m not going to set timelines, but we do not have infinite patience here” and that "We are giving everyone the opportunity to remedy bad behaviour. Why would I want to blow up the global financial system? We believe that it is important to level set and give people a cure period, but they should know that that will move very quickly and that we are serious."

DeFi / Web3 / Altcoins / Crypto

The Blockchain Association, a major U.S. crypto lobbying group representing more than 100 industry members, including Coinbase, Ripple, Kraken and Circle, is supporting proposed federal rules that would establish customer-identification requirements for stablecoin issuers under the GENIUS Act, which became law in 2025.
The group supports requiring issuers to identify customers when they deal directly with them to issue or redeem stablecoins, while keeping ordinary secondary-market transactions between users outside those requirements.
It also asked regulators for clearer definitions of which customers and activities are covered, more flexibility in how issuers verify identities, and rules that avoid overlapping compliance requirements.

Crypto exchange trading volume doubled in five days last week, rebounding from its yearly low to around $37B.
Despite the sharp recovery, daily exchange volume remains well below the 12-month high of $105B.
Monthly spot CEX volume reached about $490B so far in August, compared with $670B in July.
BTC and ETH gained more than 23% and 30% respectively last week, helping drive the increase in trading activity.
The broader altcoin market, excluding BTC and ETH, rose around 13% over the same period.
Centralized exchanges are also facing more competition for trading activity from spot ETFs, digital asset treasuries and decentralized exchanges such as Hyperliquid and Lighter.

Bitmine Immersion, chaired by Tom Lee, bought another 32,447 ETH, bringing its holdings to 5.85M ETH worth about $14.7B, or roughly 4.8% of Ethereum’s circulating supply.
The purchase comes as ETH gained about 30% over the past week, with Lee saying, “We believe this upside move in ETH was overdue,” citing stronger crypto fundamentals, Wall Street tokenization and improving financial conditions.
Bitmine has now staked about 5.07M of its ETH, and Lee said those holdings are currently projected to generate roughly $330M in annualized staking revenue.

Strive, a publicly traded asset-management company pursuing a bitcoin treasury strategy, purchased 1,110 BTC for about $81.5M between Aug. 17 and Aug. 21 at an average price of $73,409 per bitcoin, according to an SEC filing.
The purchase increased Strive’s holdings by roughly 5.5% to 21,356 BTC, making it the seventh-largest publicly traded corporate bitcoin holder, according to Bitcoin Treasuries.
Strive CEO Matt Cole said he has “very strong” conviction that the bitcoin bear market is over, pointing to bitcoin’s recent gains against both the U.S. dollar and gold as the company continues building its treasury.

Franklin Templeton, a global asset manager with a growing tokenized-fund business, has partnered with Hong Kong-based digital asset platform HashKey Exchange to offer its Franklin OnChain U.S. Government Liquidity Fund to professional investors in Asia through HashKey’s Earn platform.
The tokenized fund gives investors blockchain-based access to a portfolio invested mainly in U.S. government money-market instruments and U.S. dollar cash assets.
Franklin Templeton said it plans to expand the HashKey partnership beyond money-market funds into other tokenized products, using HashKey’s presence across Hong Kong, Singapore, Tokyo, Dubai and Bermuda.

The Hyperliquid Policy Center is urging the SEC and CFTC to create consistent U.S. rules for perpetual contracts based on how the products are structured rather than what assets they track.
The group argues that clearer, coordinated rules would reduce disputes over whether the SEC or CFTC has authority over particular products and make it easier for regulated U.S. exchanges to offer them.
The proposal comes as Hyperliquid’s markets expand rapidly and face scrutiny from traditional exchanges, while President Trump recently said the CFTC is working to bring Hyperliquid into the U.S. under a compliant regulatory framework.

Gemini and Apex Fintech Solutions have signed a letter of intent to distribute crypto prediction market contracts to Apex’s brokerage clients.
Under the proposed partnership, brokerages offering crypto event contracts through Apex’s Futures Commission Merchant will use Gemini for execution and clearing.
Gemini Titan would become the exclusive regulated venue for crypto-related event contracts distributed through Apex.
The companies may also work together on other prediction market categories, including sports, economic and financial market contracts, on a non-exclusive basis.
The agreement has not yet been finalized, with both firms still working through the details.

Grayscale is expected to launch the first U.S. spot ZEC ETF on NYSE Arca today, August 25, under the ticker ZCSH, subject to final regulatory approvals.
The product converts Grayscale’s existing Zcash Trust into The Zcash ETF and carries an annual sponsor fee of 2.5%.

This Week's Calendar

Charts of the Day

Figure 1. Block Scholes BTC Risk-Appetite Index (white, left-hand axis) and BTC spot price (orange, right-hand axis).

Figure 2. Block Scholes ETH Risk-Appetite Index (white, left-hand axis) and ETH spot price (purple, right-hand axis).

Figure 3. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

Figure 4. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

Figure 5. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

Figure 6. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

Block Scholes is an FCA-regulated institutional crypto derivatives analytics platform. Live data, IV surfaces, and backtesting available via blockscholes.com.