US debt tops $40T as the White House pushes the CLARITY Act and the EU reviews MiCA for DeFi lending; today’s BTC trades at $77K - $78K in Greed sentiment. The crypto market has staged a strong rebound in recent days. BTC is up more than 23% this week and is currently trading in the $77K to $78K range. It briefly moved above $79,000 and reclaimed its 200-day moving average, showing a clear improvement in the broader market structure. The rally has been supported by several factors. These include U.S. federal debt surpassing USD 40 trillion, the Treasury expanding certain debt buyback operations, renewed inflows into spot ETFs, and short liquidations after BTC broke through key technical levels. On the funding side, U.S. spot Bitcoin ETFs recorded USD 1.918 billion in net inflows last week, with BlackRock’s IBIT accounting for USD 1.331 billion. Spot Ether ETFs also attracted USD 697 million in net inflows during the same period. BlackRock’s ETHA led with USD 537 million, showing that institutional capital is increasing exposure to major digital assets through regulated products. ETH rose 31.1% over the same period to around $2,456, while the Crypto Fear and Greed Index climbed to 73 in the “Greed” zone. This reflects a rapid recovery in market risk appetite. However, leverage has also increased alongside prices. Total crypto liquidations reached USD 394 million over the past 24 hours, including USD 222 million in long liquidations and USD 172 million in short liquidations. This suggests that short-term volatility and liquidation pressure remain elevated. Looking ahead, the market will be watching whether BTC can maintain its current technical structure. U.S. inflation data, the Federal Reserve’s policy stance, Treasury yields, the U.S. dollar, and continued spot ETF flows for BTC and ETH will also be important factors shaping the next phase of the market.

Source: Alternative

Key News Highlights:

U.S. Debt Surpasses USD 40 Trillion as Crypto and Precious Metals Draw Market Attention

U.S. federal debt surpassed USD 40 trillion this week, bringing fiscal deficits, interest costs, and Treasury debt management back into focus across financial markets. BTC gained more than 23% over the week and briefly moved above $79K, marking one of its strongest weekly percentage gains since March 2023. Major crypto assets such as ETH, SOL, and XRP also posted significant gains, while the total crypto market capitalization moved higher. Another development attracting attention came from the U.S. Treasury, which said it would at least double the size of certain debt buyback operations to USD 4 billion. Some market research firms have linked growing interest in gold and crypto assets to persistent fiscal deficits, inflation concerns, and changes in Treasury policy. At the same time, annual U.S. government interest payments have surpassed Medicare spending and are now one of the largest federal expenditures after Social Security. Bridgewater Associates founder Ray Dalio also renewed his warning over U.S. debt. He said the country could face greater debt pressure in the coming years if the current policy path remains unchanged. These developments have brought the relationship between U.S. fiscal policy, government debt, and digital assets back into focus across the crypto market.

White House Pushes CLARITY Act as U.S. Regulators Advance New Crypto Rules

U.S. President Donald Trump again called on Congress to pass the CLARITY Act after meeting with several crypto industry executives. He said the U.S. needs a clearer regulatory framework for digital asset markets. The bill passed the House of Representatives in July 2025 and is now awaiting further action in the Senate. A procedural vote is expected on September 15 and will require 60 votes to advance. One of the bill’s main goals is to further define the regulatory responsibilities of the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission across different digital assets and market activities. Although the proposal has received some bipartisan support, several senators are still seeking stronger provisions on issues such as ethics rules for government officials. This leaves room for further negotiations over the final text. Meanwhile, the SEC has proposed a new framework for crypto asset offerings that includes specific exemptions for certain token issuances. Under the current proposal, eligible projects could issue up to USD 5 million in tokens over four years. Another structure would allow issuances of up to USD 75 million over 12 months under stricter disclosure and structural requirements. The proposal is now open for a 60-day public comment period, while regulators are also considering a safe harbor framework for certain crypto assets. The CFTC has also said it may move forward with its own rules for leveraged and margin crypto trading if Congress fails to complete the CLARITY Act.

EU Reassesses MiCA Scope as DeFi Lending Vaults Become a Regulatory Focus

The European Union is reassessing the scope of the Markets in Crypto-Assets Regulation, or MiCA. DeFi, crypto lending, and borrowing are among the areas receiving renewed attention because they were not fully covered by the original framework. The European Commission launched a consultation on May 20 to examine potential regulatory gaps in decentralized finance and on-chain lending markets. DeFi lending vaults have become a particular focus because they can direct large amounts of on-chain capital into different lending markets without operating like traditional financial institutions. Some vault structures divide asset ownership, strategy design, capital allocation, and risk management among several different participants. This makes it difficult for regulators to determine which party should carry the legal responsibilities of a service provider. MiCA currently excludes certain crypto asset services that are provided in a fully decentralized manner. However, the regulatory treatment becomes more complex when a protocol still has identifiable managers or parties with meaningful control. Legal and industry experts have therefore argued that regulators should assess these products based on their actual functions, control structures, and user rights rather than placing all DeFi lending products into a single category. Some have also suggested that the EU should create a clearly defined regulated service category if crypto lending is formally brought within the regulatory perimeter. This would avoid simply expanding the existing definition of a crypto asset service provider. The consultation will remain open until September 30 and could influence how DeFi lending, on-chain vaults, and related participants are treated under future EU rules.

Term Finance Suffers Governance Exploit With Meta Vault Losses Estimated at USD 8.5 Million

Decentralized lending protocol Term Finance recently suffered a governance exploit involving its strategy vaults. Blockchain security firms estimate that the incident resulted in approximately USD 8.5 million in losses. Public on-chain data shows that the attacker removed about 2,843 ETH worth roughly USD 6.87 million at the time. The attacker also obtained around 1.68 million USDC, which was later exchanged for approximately 1.68 million DAI. The reported loss represented about 68% of the USD 12.45 million held in Term’s vault product before the incident and included most of its ETH deposits. Onchain monitoring services said the attacker may have cheaply acquired majority voting control over a thinly held governance token and then used governance proposals to take control of the vaults. However, Term Labs has not yet fully confirmed the exact governance path used in the exploit. Term Labs later announced that all Meta Vaults had been permanently shut down and their DAO governance roles revoked to prevent further deposits. The shutdown is irreversible, while withdrawals remain open for users. Term Labs said its investigation so far indicates that the affected area was limited to the vault governance mechanism. The underlying Term protocol and its direct borrowing and lending markets were not affected, although the team is still verifying the full scope of the incident. The protocol is now working with external security teams on asset recovery, remediation, and restoration. If a funding shortfall remains after the investigation, Term Labs said it will explore possible measures to address it.

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