US Sticks to Budget-Neutral Bitcoin Reserve Plan

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Good Morning.

Markets are juggling mixed signals this week: big validator exits and billion-dollar liquidations on one side, and steady ETF inflows plus major exchange consolidation on the other.

In Today's Email:

• What Matters: US Sticks to Budget-Neutral Bitcoin Reserve Plan 🙅 

• Founders Highlight: Conor Moore & David Choi of USD.AI 👨 

• Deal Flows: Mesh Secures New Funding from PayPal, Coinbase 💰️ 

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WHAT MATTERS

US Sticks to Budget-Neutral Bitcoin Reserve Plan

State of play: US Treasury Secretary Scott Bessent said the government will not purchase additional Bitcoin for President Trump’s Strategic Bitcoin Reserve but will retain and grow holdings through seized assets, currently valued at $15–20B.

• The reserve, created in March from about 198,022 BTC obtained via forfeiture, will not involve taxpayer-funded purchases.

• Bessent reiterated that confiscated Bitcoin will not be sold and that budget-neutral acquisition strategies are being explored.

• He also dismissed the likelihood of revaluing the nation’s gold holdings.

The reserve was established by executive order to modernize US asset strategy, alongside a Digital Asset Stockpile for non-Bitcoin crypto obtained through forfeiture.

• Deadlines for reports on legal and acquisition frameworks passed without public updates.

• Following Bessent’s comments and hotter-than-expected July PPI data showing 3.3% annual inflation, Bitcoin, Ether, and the GMCI 30 index declined.

• Markets reacted to both policy clarity and rising inflation concerns.

Why it matters: Signals the US will rely on seized assets, not taxpayer funds, to grow its Bitcoin reserve, limiting near-term government demand.

Our take: The stance removes a bullish catalyst but preserves long-term supply pressure by keeping seized Bitcoin off the market.

For builders and investors: Watch for opportunities in custody, seizure management, and budget-neutral acquisition mechanisms that could influence future reserve growth.

BUILDER-INVESTOR HIGHLIGHT

Conor Moore & David Choi of USD.AI

Intro: Conor Moore & David Choi is the Co-Founders of USD.AI, a synthetic dollar ingeniously backed by yield-generating AI and DePIN hardware.

Previous background: Connor holds a BS in Finance and Economics from the University of Maryland and began his career with investment banking internships at Signal Hill Capital and Deutsche Bank.

• He worked as an Investment Banking Analyst at Eastdil Secured before joining Rockpoint Group in Boston as a Private Equity Associate from 2019 to 2021.

David started at ArtAssure in 2014, then worked in growth equity at Pontifax before joining Deutsche Bank in 2016 on major real estate and gaming deals. He holds dual magna cum laude degrees in Finance and Art History from USC.

• Since 2016, he has been at Taureon, focusing on MEV, on-chain projects, and seed investments.

The big idea: Conor’s and David’s big idea is to provide stablecoin-based loans to AI companies using GPUs as collateral, enabling fast, on-chain credit access without traditional financing hurdles, while giving investors yield exposure.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

Ethereum Validator Exits Top $3B

Ethereum’s validator exit queue has risen to 671,900 ETH (about $3.1B), with wait times stretching to 12 days as withdrawal requests accelerate since mid-July.

• Entry demand is far lower at roughly 105,620 ETH.

• Analysts cite factors like unwinding leveraged staking loops, liquid staking token depeg concerns, arbitrage opportunities, and large exits.

• Some stakers may also be repositioning ahead of potential US staking products, while others lock in gains as ETH nears record highs.

Exiting does not guarantee immediate selling, with some ETH likely to be restaked or redeployed, but the spike reflects heightened deleveraging and risk management in the staking ecosystem.

DEAL FLOWS

Mesh Secures New Funding from PayPal, Coinbase

Deal flows soared this week - we saw $4.1B in deals 💼 

Crypto payments infrastructure firm Mesh has raised additional capital from PayPal Ventures, Coinbase Ventures, and others, pushing its total funding past $130M.

• The round, worth at least $10M, follows a $82M Series B led by Paradigm in March.

• Mesh’s technology enables payments in over 100 crypto with instant settlement in stablecoins or fiat, and powers services like PayPal’s Pay with Crypto.

• The new funds will support product expansion, API scaling, and broader platform integrations.

Deal flows in the past week:

• Riva Money, $3M Pre-Seed Round

• Bitlayer, $5M Public Token Sale

• HackQuest, $4.1M Pre-Series A Round

• USD.AI, $13.4M Series A Round

• 1Kosmos, $57M Series B Round

• Silo Labs, $122K Strategic Round

• Zoth, $15M Strategic Round

• Transak, $15M Strategic Round

• PublicAI, $2M Public Token Sale

• Bullish, $1.1B IPO

• Deribit, $2.9B M&A

• ODX, $260K Unknown Round

• HoneyCoin, $4.9M Unknown Round

• Mesh, $9.5M Unknown Round

• Neon Machine (SHRAPNEL), $19.5M Unknown Round

QUICK BITES

• Ethereum validator exit queue climbs to over $3B in ETH.

• Google says it's not restricting non-custodial crypto wallets.

• Banking industry calls for fixes to GENIUS law signed by Trump.

• Coinbase completes $2.9B cash-and-stock acquisition of Deribit.

• Coinbase loses $300K to MEV bots following 0x swapper interaction.

• Bit Digital reports Q2 revenue drop amid pivot to ETH treasury strategy.

• Spot ETH ETFs log $639M in inflows, extending positive streak to 8 days.

• Ethereum treasury firm BTCS now holds 70,140 ETH worth over $321M.

• Crypto liquidations hit $1B after hotter-than-expected PPI inflation shock.

• US Treasury Secretary said the government will not purchase additional BTC.

NOTEWORTHY READS & MEME

• Winter Soldier’s read on Anoma Overview.

• Checkmate’s read on Cointime Economics.

• Pink Brains’s read on Stablecoins Competition.

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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.