Web3 Wavefronts - Digestible News on Crypto, DeFi and AI

Italian authorities opened a coordinated, in-depth review of cryptocurrency risks involving the Treasury, the Bank of Italy and the securities regulator to map exposures, identify oversight gaps, and propose policy responses. The review will cover exchanges, custodians, stablecoin arrangements, decentralized finance primitives where they intersect with regulated institutions, and interactions between crypto firms and banks and payment providers. Officials framed the objectives as assessing threats to financial stability, investor protection, anti-money-laundering and sanctions compliance, payment integrity, and alignment with EU measures such as Markets in Crypto-Assets implementation. The work will quantify exposures, examine operational links between crypto platforms and traditional finance, assess AML and sanctions risks, and consider consumer disclosure and suitability rules. Authorities stated they do not intend to ban crypto activity outright and will evaluate where existing rules are sufficient and where new national safeguards may be needed. The review will examine stablecoin issuance, backing, redemption mechanisms and reserve management and may recommend enhanced disclosure, reserve audits or restrictions on certain token types. Officials indicated likely recommendations to tighten transaction monitoring, strengthen cross-border information sharing, and increase penalties for non-compliance with AML and sanctions rules. The review could prompt banks to adopt more conservative exposure limits or enhanced due diligence and could affect access to fiat rails, custody and credit for crypto firms. Firms and founders will need to demonstrate governance, KYC/AML processes, operational resilience, custody segregation and incident response, perform due diligence on third-party providers, and run legal and stress-test assessments. Regulators will assess when DeFi protocols perform activities resembling financial intermediation and examine operator, node and governance structures for regulatory touchpoints. Italy will feed findings into EU implementation work and global policymaking, which may produce harmonized reporting, audit or capital requirements across jurisdictions. Authorities indicated the near-term impact will include higher compliance expectations, potential changes to banking relationships, and increased scrutiny of operational resilience.

Show description: Federal authorities seized the domain tickmilleas.com after identifying it as a front for a pig butchering crypto fraud that simulated deposits, staged trades, displayed fabricated balances, delayed withdrawals with invented fees or identity checks, and routed victim funds to operator-controlled wallets and off-platform channels. Investigators in San Diego reported more than 400 victims and about $90 million in losses in fiscal year 2024 and linked the domain to the Tai Chang compound in Kyaukhat, Myanmar, whose associated entities were designated as specially designated nationals by the U.S. Treasury. The seizure was coordinated with the Department of Justice Scam Center Strike Force, which combines U.S. Attorney’s Offices, the DOJ Criminal Division, the FBI, and the U.S. Secret Service and coordinates with State, Treasury/OFAC, and Commerce to sequence domain seizures, sanctions, and cross-border cooperation. Government agencies worked with industry to identify connected infrastructure and accounts; Meta removed roughly 2,000 accounts linked to the operation; DOJ and partner agencies reported more than $401 million in cryptocurrency seized and forfeited from related schemes to date, and in October 2025 the government announced the seizure of about 127,000 bitcoin connected to forced labor scam compounds. Guidance issued to founders, product teams, and exchange operators included expanding detection to off-platform signals, monitoring for shifts from public outreach to private chats, tracking referral traffic from messaging URLs, flagging spikes in new accounts tied to specific domains, mapping and monitoring SDN designations and seized domains, enhancing transaction monitoring to detect mismatches between user-facing activity and on-chain flows, implementing response playbooks for rapid transaction holds and outreach, surfacing warnings when users follow external links, offering pause and reporting mechanisms, and building direct reporting routes to law enforcement and internal trust teams. Victims were advised to file complaints with the FBI Internet Crime Complaint Center at ic3.gov and to include transaction details, screenshots, wallet addresses, and communication records; the U.S. Secret Service reported handling thousands of crypto fraud victims and offering assistance with exchange coordination. Authorities signaled an expectation of continued domain seizures, account takedowns, and expanded sanctions designations as the Strike Force scales. Source: https://theweb3.news/crypto/fbi-seizes-tickmilleas-scam-site/

Texas purchased $5 million of BlackRock’s iShares Bitcoin Trust (IBIT) on November 20, 2025, as the first U.S. state-level bitcoin allocation. The purchase opens the Texas Strategic Bitcoin Reserve, a program established by the state legislature in June 2025 and seeded with a $10 million appropriation. The law names the Texas Treasury Safekeeping Trust Company as program manager and requires cold storage with a qualified third-party custodian, annual transparency reports, and independent audits. Officials described the $5 million ETF purchase as an interim placeholder while a competitive procurement to select a custody provider proceeds. The custody request for proposals emphasizes security architecture, SOC audit coverage, incident response, and public-sector reporting. The trade executed when market quotes were near $87,000 per bitcoin and the ETF exposure represents roughly half of the program’s initial appropriation. Officials intend to migrate the ETF exposure into direct cold storage once a custodian is selected and wallet controls and audit processes pass independent review. The statute establishes risk limits, reporting checkpoints, and review cycles, and near-term milestones include awarding a custody contract, publishing operating policies with documented key management and incident-response procedures, transitioning holdings from ETF to cold storage with documented audit procedures including on-chain verification where applicable, and deciding how to deploy the remaining $5 million and whether to seek expanded legislative authorization. Source: https://theweb3.news/policy/texas-first-state-buy-bitcoin/

Show description: Tether’s USDT has a market capitalization above $100 billion and functions as a primary settlement and trading rail across exchanges and chains. The issuer converts reserve yields from short-term U.S. Treasuries and similar instruments into profits. An ICIJ investigation traced at least $1.4 billion in USDT through a single wallet cluster tied to scams, hacks, and human trafficking. Chainalysis reported $2.17 billion was stolen from crypto services in 2025, with a share of proceeds laundered through USDT due to its liquidity and low slippage. Tether’s contract-level controls allow the company to blacklist addresses and freeze tokens when it receives validated legal requests or urgent notifications. In 2023 Tether worked with OKX to freeze 225 million USDT linked to a trafficking network, in 2025 freezes covered 326 wallets controlling about 435 million USDT tied to suspected fraud and laundering, and the Royal Canadian Mounted Police credited Tether’s response in the recovery of 460,000 USDT for a fraud victim. Many detections originate with third-party analytics vendors, exchanges, or law enforcement tips rather than Tether’s internal systems, and criminal actors move funds across chains, use nested wallets, or route through less-monitored venues. Market participants and policymakers are considering measures that include expanding on-chain screening of high-risk clusters, automating triage for urgent freezes, standardizing law enforcement intake via public APIs and service levels, publishing transparency reports on freeze volumes and response times while protecting investigative details, tightening KYC and enhanced due diligence for large counterparties and programmatic minters, and coordinating shared risk lists and faster incident response windows with major exchanges. Signals to watch include periodic disclosures of reserve composition and profit metrics, a public metric for average freeze response time, and extension of controls to Layer 2 networks and sidechains. Investors, exchanges, and DeFi protocols should model freeze risk, jurisdictional exposure, and counterparty hygiene, adjust liquidity assumptions for potential larger or faster freezes and narrower counterparty pools, and anticipate shifts in preferred settlement rails and demand for alternative stablecoins or collateralized solutions. Tether has executed freezes and law enforcement cooperation to remove illicit flows from markets, and market actors are planning deeper analytics integration, standardized law enforcement workflows, and clearer disclosures on freeze activity and referral sources to prevent further abuse. Source: https://theweb3.news/crypto/tether-profits-crime-controls/

Show description: Vanguard will permit client trading of select third-party, regulated crypto exchange-traded funds and mutual funds on its platform effective December 3, 2025. The eligible products cited include bitcoin, ether, and solana ETFs. The move reverses a prior Vanguard prohibition on crypto fund trading and affects roughly 50 million clients across retail, advisor, and institutional channels. Vanguard said it will not launch a proprietary crypto fund or offer direct token custody. The firm implemented system upgrades for fund eligibility checks, order routing, trade surveillance, prospectus delivery, tax reporting, and broker controls to integrate these products into existing brokerage workflows. Vanguard stated the change operates under existing securities and fund rules and that issuer transparency, fee disclosure, and operational readiness will govern offerings. Advisors and plan sponsors can allocate crypto exposure within existing models and custodial reporting, subject to plan rules and due diligence. Vanguard manages about $11 trillion in client assets and announced the change under CEO Salim Ramji. Source: https://theweb3.news/crypto/vanguard-crypto-etf-access/

The UK will require UK-registered crypto exchanges and platforms to collect verified identities and full transaction records for UK-resident users starting January 1, 2026, and to submit the first filings to HM Revenue & Customs covering the 2026 reporting period in 2027. The domestic rules implement the OECD Cryptoasset Reporting Framework (CARF) and extend reporting to cryptocurrencies, stablecoins, tokenised assets, non-fungible tokens, and DeFi tokens that meet CARF definitions. Platforms must capture verified legal name, address, date of birth, tax residency and, where available, National Insurance numbers or UK tax reference numbers, and must report transaction-level fields including asset type, quantity, fair value at time of transaction, relevant dates, and nature of activity (buys, sells, swaps, transfers, staking, and similar events). HM Treasury projects approximately £325 million in additional receipts over five years from improved compliance, and HMRC will use platform data for risk scoring, case selection, targeted compliance letters, cross-checks against Self Assessment returns, and identification of non-filers and historic reporting gaps. Individuals who underreport or fail to file may face penalties following data matches, and platforms that fail to comply can face penalties up to £300 per affected customer plus additional sanctions for persistent failures. HM Treasury and HMRC expect platforms to implement identity verification, data capture, cost-basis tracking, reconciliation, extraction pipelines, validation, and testing in 2025 to meet 2026 data capture and 2027 reporting requirements, and HMRC plans to publish staged technical guidance, schema clarifications, and operational timelines. Source: https://theweb3.news/policy/uk-crypto-reporting-rules-2026/

President Serdar Berdimuhamedov signed a statute on November 28, 2025, that legalizes and regulates cryptocurrency mining, exchanges, and digital asset activity; state media reported the move the same day. The law takes effect January 1, 2026, and establishes the Central Bank of Turkmenistan as the primary regulator charged with licensing exchanges, setting technical standards for distributed ledger technology, and exercising emergency powers over asset-backed instruments. Cryptocurrencies are recognized as objects of civil rights and are explicitly not legal tender, currency, or securities. The statute includes a national roadmap for virtual assets and mining through 2030. Miners must register with designated authorities and disclose power sources, equipment profiles, and site details, and covert or unauthorized mining is prohibited, including misuse of third-party computing resources. Exchanges must obtain licenses under Central Bank supervision, meet fit-and-proper checks and capital requirements, and implement custody controls such as cold storage, multi-factor access, segregation of client assets, and incident response procedures. AML/CFT and KYC controls are mandatory for all customers and transactions, anonymous wallets and anonymous transactions are banned, and firms must conduct ongoing monitoring, risk scoring, sanctions screening, and suspicious activity reporting. Advertising must include mandatory risk warnings, avoid use of national symbols and involvement of minors, and prohibit messaging that portrays crypto as easy wealth. Enforcement measures include fines, license suspension, asset freezes, site-level inspections, energy audits, and uptime reporting requirements for mining operations. Source: https://theweb3.news/crypto/turkmenistan-crypto-law-2026/

Upbit suspended deposits and withdrawals after 44.5 billion won was moved from a hot wallet to an unauthorized address, with initial conversion estimates ranging from about $30 million to $37 million as asset baskets and rates were reconciled. Upbit initiated internal forensics while Korean regulators and law enforcement launched on-site inspections and treated the incident as a hot wallet compromise rather than a cold storage failure. Investigators emphasized possible credential theft or administrator impersonation and reported no presented evidence of a direct server exploit. Local media and officials identified patterns consistent with past state-linked activity, and early assessments named the North Korea–linked Lazarus Group as the leading suspect. On-chain analytics firms and law enforcement traced the stolen funds and searched for rapid chain swaps, chain hopping, use of mixers, and transfers to sanctioned entities while working to flag addresses and disrupt cash-out paths at compliant venues. Regulators inspected wallet segregation practices, access controls, logging and monitoring, and incident reporting processes. Analysts and compliance teams recommended minimizing hot wallet exposure through strict withdrawal ceilings and staged approvals, protecting privileged accounts with phishing-resistant authentication and just-in-time access, expanding continuous monitoring with automated quarantine triggers for suspicious withdrawals, and rehearsing withdrawal-halt incident response playbooks. Authorities and industry participants identified next steps to include official attribution updates from Korean law enforcement and regulators, timelines and staged plans for restoring deposits and withdrawals, publication of technical indicators of compromise, and potential supervisory guidance or enforcement actions that could redefine security baselines for exchanges. Source: https://theweb3.news/crypto/upbit-hack-lazarus-probe/