Fed Officials Said Debt Management Will Not Affect Their Rate Decisions

BTC rose to around $77K, having passed $70K only yesterday, pulling XRP up close to 20% and ETH, SOL and BNB higher with it, while the 30-year Treasury yield gave back its gains. Two Fed officials said monetary policy is set independently of debt management, and Bessent said the Treasury will set out a fiscal consolidation push within days.

Crypto

Derivatives

Macro

DeFi

In Today's Note

BTC rose to around $77K, having passed $70K only yesterday, pulling the rest of the market with it: XRP gained close to 20%, BNB 7%, and ETH and SOL 5% each. The 30-year Treasury yield gave back its gains and now trades near where it stood before Monday's buyback announcement.
St. Louis Fed President Musalem said policy is set independently of debt management or fiscal policy, and San Francisco's Mary Daly called the current stance a good place with no urgent case for cuts or hikes. Bessent separately said the Treasury will set out a fiscal consolidation push within days.

Market Snapshot: Overnight Moves

Macro & Markets

After rallying past $70K yesterday, BTC continues to ascend higher, now trading around $77K.
That’s dragged the rest of the crypto market up with it too, in the past 24 hours, both ETH and SOL are up 5%, XRP is up close to 20% while BNB has rallied 7%.

Treasury Secretary Scott Bessent’s move to double the size of Treasury’s scheduled buyback of longer-dated government bonds failed to meaningfully hold long-end yields lower and the US 30-year is trading almost at the same levels prior to the announcement.
Bessent even said in an interview with CNBC yesterday that the accelerated buyback program could be even higher than the announced $4B per operation, while claiming any market moves “within a 24-hour period is noise.”

“We’re going to increase the size of the buyback. I would note that it could be more than the 4 billion per issue.”
Bessent was reluctant to attach a figure on how large buybacks could be, insteading claiming, “We’ll see what the conditions are, and you know we will analyse them. All we’re trying to do is get people to focus on the fundamentals and not trade the headlines during a quiet period in a thin market”.
He also used the interview as an opportunity to forward his view that current levels of the yield curve don’t reflect current economic conditions, “We have a big toolkit, so we’ll see. Part of it is signaling here and to show that we believe that the yields don’t reflect the underlying fundamentals.”
As such, the Treasury is “announcing probably at the end of this week, beginning of next week, an increased focus on fiscal consolidation”.

While crypto assets traded higher on the back of increasing signs of fiscal dominance, the rally in US equities fizzled out in trading yesterday alongside the reversal in treasuries.
The S&P 500 fell 0.87%, with the Nasdaq-100 declining 0.72%. A gauge of semiconductors and chipmakers rallied yesterday however, up 0.53%, though down more than 5% on the week.

Two Fed officials speaking yesterday were more dismissive of the recent moves in US bond markets and the impact they will have on monetary policy decisions.
St. Louis Fed president Alberto Musalem said "We focus very simply on the labour market and on inflation, independently set monetary policy, independent of debt management or fiscal policy".

Meanwhile, speaking on Bloomberg, San Francisco Fed President Mary Daly thinks the Fed’s current policy is in a "good place".
She said “I also hear a lot about, should we be making preemptive cuts, or hikes, rather? And I don’t see a lot of evidence that that’s an urgent problem to solve”, nor does she think the central bank’s credibility is at risk, despite there being “a lot of discussion about our credibility”.
When asked whether a shift in Treasury debt issuance to more short-term debt could create issues for the Fed’s own conduct of monetary policy, she responded, "These are early days, and I wouldn't want to be preemptive in sort of discussing those types of things until we've had a chance to think through those issues."

On the geopolitical front, Bessent said the US will unveil its plan of economic isolation on Iran and its trading partners potentially by Monday next week.
Bessent said he will hold a press conference to “talk about exactly what we’re going to do”. His comments come only a day after President Trump threatened Iran and its allies with “an ECONOMIC D-DAY”.
The measure has drawn criticism from both Iran and China so far. Iran’s Foreign Minister wrote on X that “Doubling down on failed policies will only bring further defeat, and enmity of Iranians”, while a spokesman for the Chinese Foreign Ministry said “Sanctions and pressure will not help resolve the issue. China calls on relevant parties to take responsible measures and sought to solve the issue through diplomatic and political means.”

DeFi / Web3 / Altcoins / Crypto

President Donald Trump met privately with crypto and traditional-finance executives in the Oval Office to discuss the Clarity Act, with a source familiar with the meeting claiming that Trump appeared “bullish” on getting the legislation passed.
Chainlink co-founder Sergey Nazarov, who attended the meeting said that Trump sought feedback on the bill’s remaining obstacles, including which senators still need to support it and the strategy after Congress returns from recess, ahead of a Senate procedural vote scheduled for Sept. 15.
The legislation has been delayed by disagreements over stablecoin rewards, illicit-finance provisions and ethics restrictions related to public officials’ crypto activities, although Nazarov said the ethics dispute itself was not discussed in the Oval Office.
Nazarov also said a U.S. strategic bitcoin reserve was raised without any new implementation details, while Blockchain Association CEO Summer Mersinger and Crypto Council for Innovation CEO Ji Kim separately described increased industry optimism around the bill following the White House discussions.

MANTRA Chain, a Layer 1 blockchain focused on tokenizing real-world assets, halted its entire network after detecting an unspecified incident, freezing all transactions and network endpoints.
The shutdown also stops deposits and withdrawals, while MANTRA’s engineering and security teams investigate with external partners; no cause or timetable for restarting the network has been identified.
MANTRA’s token fell about 9.9% over 24 hours to $0.004406, while the disruption comes ahead of the planned acquisition of MANTRA by strategic backer Inveniam Capital Partners.

CME CEO Terrence Duffy raised concerns at a CFTC meeting that some prediction markets could be vulnerable to manipulation, particularly as platforms rapidly expand the number of contracts they offer.
CFTC Chair Michael Selig disputed one of Duffy’s examples because the contracts were traded offshore, while saying the agency plans further rule changes and consumer protections for U.S. prediction markets.
Duffy also clashed with Kalshi COO Luana Lopes Lara over regulatory standards, against a broader dispute in which the CFTC claims federal authority over prediction markets while several states argue some products fall under gambling laws.

Payward, the parent company of Kraken, is considering obtaining a full banking license outside the U.S., although it has not identified which countries it is targeting.
The move could expand Kraken beyond crypto trading into conventional financial services such as payments, lending, custody and potentially mortgages, alongside its asset-management business.
In the U.S., Payward already operates Wyoming-chartered Kraken Financial, but it cannot lend customer fiat or provide FDIC-insured deposits, despite gaining limited access to the Federal Reserve’s payment system in 2026.

Shinhan Asset Management, has partnered with the Solana Foundation, Etherfuse and Orca to test issuing and distributing a Korean won-denominated tokenized investment fund.
The proposed structure would let overseas institutional investors buy a Shinhan-managed fund holding ultra-short-term KRW bonds, with their fund holdings then represented as tokens on Solana.

Evernorth, a company focused on building a treasury around XRP, intends to generate additional uses for its holdings within the XRP Ledger while it works toward becoming publicly listed.
The company is particularly interested in XLS-66, a proposed upgrade that would add lending directly to the XRP Ledger and could limit reliance on separate smart contracts, which can introduce additional security risks.
Evernorth is also examining confidential transfers and smart escrows as potential ways to support more tokenized real-world assets on the network.

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.

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