Happy Wednesday! Today we look at Arc's public mainnet and why renting distribution from multi-chain apps is not the same as owning the funnel that made Robinhood Chain work. Elsewhere, the CLARITY Act failed to clear cloture in a 49–50 vote and took crypto with it. BTC fell 3.2% to near $75.9k, with the tail off as much as 9.2%.

Crypto sold off on the Senate’s failed cloture vote on the Digital Asset Market Clarity (CLARITY) Act. The motion received 49 votes in favor and 50 against, short of the 60 needed to advance. Every index we track fell on the session except Meme, which gained 1.0%. BTC lost 3.2% to near $75.9k against the S&P 500 at -0.4% and the NASDAQ 100 at -0.6%, and the tail took the worst of it: Low Revenue, High FDV (-9.2%), Modular (-8.5%), DePIN (-7.9%), and Bittensor Ecosystem (-7.2%).

The weekly tape concentrates the damage in crypto. The S&P 500 fell 0.2%, the NASDAQ 100 fell 0.9%, gold fell 1.9%, and BTC fell 3.6%, while most crypto indices fell 5% to 20%. Republicans Josh Hawley, Susan Collins, and Jerry Moran joined Democrats in voting against cloture; Thom Tillis switched from yes to no for procedural reasons so he could move to reconsider the vote. Democratic negotiators said the remaining dispute centered on stronger ethics restrictions on officials’ crypto holdings. Polymarket odds on enactment this year fell from 34% on Monday to 5%.

Near-term federal crypto policy now shifts back toward agency rulemaking. The SEC and CFTC continue to advance crypto policy under existing authority, the OCC says it expects to finalize GENIUS Act stablecoin rules by November, and FASB’s proposal on when certain digital assets can qualify as cash equivalents is open for comment through November 19. Agency action is generally less durable than statute because future commissions can revise or rescind rules through new rulemaking, subject to administrative-law constraints. The Senate is scheduled to recess in October ahead of the midterms, leaving limited floor time for another attempt this Congress.

The Fed decides this afternoon, with futures pricing in roughly a 92% chance of a 25 bp hike, the first since US spot BTC ETFs launched. August core CPI rose 0.3% MoM, slightly above consensus before rounding, while headline inflation held at 3.4% YoY. Overnight, WTI trades near $105 and Brent near $108. Markets are pricing a cumulative two hikes by year-end, so Warsh’s guidance and the updated projections matter at least as much as today’s decision.

— Jake Koch-Gallup

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Circle Built a Chain, Not a Funnel

Circle opens Arc’s public mainnet today after operating a private mainnet with more than 100 institutional and ecosystem builders. Retail interest has arrived before public access, as over 30 launchpads have advertised Arc launches, and getting onchain early has been expensive enough that some bridges are still charging up to 50%.

Arc had an average of less than 2,000 transactions an hour through early September. Late last night, activity jumped to over 90,000 transactions an hour from roughly 21,000 active wallets, even as access remained restricted.

Arc gets even more distribution today. Binance Wallet, Phantom, and OKX Wallet have day-one Arc support, while Circle lists MetaMask and Ledger among compatible wallets, which is how anyone lands on Arc without paying 50% to a bridge. Trading apps add another layer. Pump.fun supports Arc in its app from day one. Fomo is also integrating on day one after its team publicly said it learned from missing Robinhood Chain’s launch. 

Those apps can bring genuinely new people onchain. Fomo cracked the top five US finance apps in August, ahead of Cash App. The difference is who owns the account. Robinhood’s millions of customers are not going anywhere, while Fomo’s are wherever Fomo points them next. Circle is not a broker and has no consumer trading app, so Arc opens with wide third-party access and no funnel of its own.

That is what made Robinhood Chain work. On July 8, a week after launch, Robinhood integrated its chain into Robinhood Wallet, its own consumer app, and began covering gas on swaps above $5. Volume rose 32x within three days, with traders up 6x, so each trader did 5x the volume once the chain was inside Robinhood's app with gas covered. Behind that wallet sits the brokerage of 28.6 million funded customers holding $384 billion. Robinhood has used that distribution to promote a token on its own chain exactly once. On August 6, it listed CASHCAT, a five-week-old memecoin deployed by anonymous developers, inside the main app, and the token ran from $40 million to a $220 million peak in three days.

Robinhood also supplied something to trade against. Launchpads priced memecoins in freely transferable stock tokens, and 55% of that float now sits in DEX pools rather than wallets. When those pools squeezed, Robinhood minted more, and the gap closed, because it held the real shares. Arc’s main RWA is BUIDL, which reverts any transfer to a wallet Securitize has not whitelisted, so no launchpad can quote against it. A seventh of Arc’s volume trades against bridged CRCL IOUs instead. Bridge operators can manage their own wrapped supply, but they don't have the same issuance relationship to the underlying securities.

Today will not be quiet. Multiple wallets and two of the largest memecoin trading apps are opening Arc support at once for a crowd that has been paying up to 50% at the bridge to get in early. The runners have already started; a launchpad has 10x’d; all we need is a mascot coin to 100x.

Then look at where the flow came from. Robinhood Chain worked because the issuer owned a wallet, paid the gas, and minted the asset on the other side of every trade, with 28.6 million funded brokerage accounts as potential users. Arc rents its funnel instead, and the apps arriving today are multi-chain by design. Rented attention rotates, and when it does, Arc has no claim on the users. Give it a few weeks before the same wallets leave to find the next one.

— Jake Koch-Gallup

USD.AI: The Loan Book Catches Up

Nick Carpinito from Blockworks Research moves CHIP from Underweight to Neutral as USD.AI's loan book scales. Deployed principal has gone from $8M pre-TGE to $272.4M across 17 loans at a blended 11.6%, now 46% of the protocol's $586M TVL. Loans supply 6.1 percentage points of the 8.2% gross APY, and a third of the principal is sitting in escrow at 7%, stepping up to 12% to 13.5% on hardware delivery, so yield rises without a new loan closing.

CHIP trades at ~17x fees versus ENA’s ~7.5x, with no fee-switch proposal scheduled and the April 2027 cliff releasing ~1.74B tokens, 87% of float. Fee routing to sCHIP would move CHIP toward Overweight; its continued absence into the cliff would move CHIP back to Underweight. 

The Copycat Trap: Crypto’s Lessons for AI

Blockchain Capital’s Jonah argues the AI trade is rerunning crypto's alt-L1 cycle: once Bitcoin cleared a trillion dollars and Ethereum and Solana proved multiple winners existed, VCs bought L1s as lottery tickets on whitepapers. Neo-labs now raise billions on a research thesis and a founding team poached from one of three incumbent labs.

The sharper warning is commoditization. Blockspace went from scarce to abundant, and value accrued to apps, not protocols; if open-weight models follow, margin accrue to energy, hardware, and applications, squeezing the model layer where most capital went. Carlota Perez’s four phases frame both.