Morning Minute: The Clarity Act Markup Comes May 14

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Morning Minute is a daily newsletter written by Tyler Warner. The analysis and opinions expressed are his own and do not necessarily reflect those of Decrypt. And check out our new daily news show covering all of the top stories in 5 minutes or less, downloadable on Apple Pod or Spotify. GM! Today’s top news: - Crypto majors are green despite Trump rejecting latest Iran deal; BTC at $81k - VVV posts massive +90% week leading all movers, now at $17.60 - Circle raises $222M at $3B valuation in Arc presale - Strategy CEO clarifies the 2 situations where they will sell BTC - Clarity Act goes to markup on May 14, odds reach 79% before falling 🗓️ The Clarity Act Will Markup On May 14 The Senate Banking Committee officially announced its markup hearing date for the Digital Asset Market Clarity Act on Thursday May 14. That marks the most concrete date this controversial bill has notched to date. The White House has been publicly targeting July 4 for full passage, and this official step puts that target one step closer. The stablecoin yield question, the central obstacle that has stalled the bill for months, is resolved. Senators Tillis and Alsobrooks locked in compromise language two weeks ago that bans passive yield on stablecoin balances but permits activity-based rewards tied to real platform participation. Both sides are unhappy with it, which is typically the signal a deal is real. Polymarket bettors pushed the odds of passage up to 79%, close to as high as the odds have ever been, before falling sharply this morning to 63%. The next five weeks determine everything. Congress breaks for Memorial Day recess May 21, leaving roughly one week of Senate floor time after the markup to pass this before summer. Four weeks in June get the job done if the Senate moves as quickly as the White House wants. Any slip past mid-June pushes the bill into an August recess window that few believe will produce action, and November midterms after that change the legislative math entirely. 💰 BlackRock Leans Deeper Into Tokenization with $7B Treasury Push BlackRock filed two separate SEC applications Friday that together represent its most aggressive push into tokenized finance since launching its BUIDL fund in 2024. The first filing proposes the BlackRock Daily Reinvestment Stablecoin Reserve Vehicle, a new fund that invests in cash, short-term US Treasury securities, and overnight repo agreements backed by Treasuries, designed specifically as an eligible reserve asset for stablecoin issuers under the GENIUS Act. The fund issues “OnChain Shares” through a permissioned system connected to multiple public blockchains. The explicit target audience is Tether, Circle, and the 20+ banks currently waiting to issue stablecoins under GENIUS Act rules, institutions which are parking $320 billion in stablecoin reserves that currently earn yield through back-channel Treasury holdings. BlackRock is building the regulated, onchain yield-generating alternative to that arrangement. The second filing brings BlackRock’s Select Treasury Based Liquidity Fund onchain, a traditional money-market fund with nearly $7 billion in assets under management. Alongside these two filings, BlackRock separately expanded its existing BUIDL fund to BNB Chain and Solana, and integrated it with DeFi platforms including Uniswap and Euler. Total BUIDL AUM now sits at $2.4 billion across eight blockchains. Meanwhile, the broader RWA market has grown 200% year-over-year to surpass $30 billion. The great TradFi tokenization push continues, and BlackRock wants its piece of the pie… 🚩 LayerZero Finally Admits Mistake in KelpDAO Exploit Three weeks after initially blaming Kelp DAO’s configuration choices for the $292 million rsETH exploit, LayerZero reversed course Friday. The company published a blog post acknowledging it should never have allowed its own decentralized verifier network to serve as the sole verifier for high-value cross-chain transactions, the exact vulnerability that Lazarus Group exploited on April 18. “We made a mistake by allowing our DVN to act as a 1/1 DVN for high-value transactions,” the company wrote. “We didn’t police what our DVN was securing, which created a risk we simply didn’t see. We own that.” The admission is a significant reversal. LayerZero’s original post-mortem placed responsibility squarely on Kelp DAO, describing the single-verifier setup as a configuration choice made against explicit guidance. Kelp’s response pointed to eight integration meetings over two and a half years in which LayerZero personnel never flagged the configuration as a security risk, and cited LayerZero’s own quickstart documentation and GitHub examples as showing the 1-of-1 DVN as the default setup. A Dune analysis found 47% of approximately 2,665 active LayerZero OApp contracts were running the same configuration at the time of the attack, with $4.5 billion in associated market value at equivalent risk. LayerZero also conceded it had done “a terrible job on comms over the past three weeks” and said it should have led with directness rather than waiting for a comprehensive post-mortem. The fallout is accelerating: Kelp already migrated rsETH to Chainlink’s CCIP. Solv Protocol announced this week it is moving more than $700 million in tokenized Bitcoin infrastructure off LayerZero following a fresh security review. Soon we will find out if the apology was too little, too late or if they’ve been able to stop the bleeding. 📈 Zcash Just Announced a Quantum-Proof Roadmap Zcash CEO Josh Swihart shared a major roadmap update at Consensus on Thursday, including: - quantum-recoverable wallets launching within a month - full post-quantum readiness by late 2027, and - a scaling target of Visa and Mastercard-level transaction throughput over the same 12-18 month window. ZEC has rallied more than 110% in the past 30 days, partly on its post-quantum narrative, partly on its privacy narrative and partly on a Multicoin Capital investment disclosure that sent sentiment sharply higher. The quantum-recoverable wallet, launching in June, is the first practical step. It isn’t a full quantum-proof system, but it is a transition mechanism that gives users a recovery path if current cryptographic methods are eventually broken. The broader 2027 target involves integrating NIST-standardized post-quantum signature schemes across the entire protocol stack through the Tachyon upgrade, addressing not just wallets but the underlying transaction validation architecture. Zcash’s advantage in this upgrade is its existing use of zero-knowledge proofs. Its shielded transaction layer already uses a different cryptographic stack than transparent transactions, giving developers a stronger base to build quantum resistance from than protocols relying entirely on classical ECDSA. The network is also showing meaningful adoption momentum independent of the quantum narrative. Zcash’s shielded pool now holds approximately 30% of all circulating ZEC, up from 11% at the start of 2025. Delphi Digital cited that growth as evidence of genuine user demand for private transactions rather than speculation. Between $600 and $700 million has moved into shielded ZEC via cross-chain swaps through Near Intents. A community proposal to cut block time from 75 seconds to 25 seconds is in active discussion, with Solana and Hyperliquid bridges already live. 🌎 Macro Crypto and Markets - Crypto majors are slightly green despite Trump rejecting the latest Iranian peace deal offer, leading to another oil spike; BTC even at $81k; ETH +1% at $2,330; SOL +2% at $95; HYPE -3% at $41.50 - VVV (+20%), SUI (+14%) and XDC (+9%) led top movers - Oil rebounded 3% at $96; Gold -1% at $4,670 - Stock futures are flat premarket - Strategy’s CEO Phong Le clarified that they will only sell BTC 1) to pay STRC dividends and 2) if its makes sense for tax optimization purposes - Coinbase suffered a service outage Thursday linked to an AWS cooling failure at a data center - Coinbase CEO Brian Armstrong sold $540 million in COIN stock across 88 trades between April 2025 and January 2026 - Sen. Elizabeth Warren sent a letter to Mark Zuckerberg demanding full disclosure of Meta’s stablecoin integration plans before the Senate votes on the Clarity Act - SEC Chair Paul Atkins called for new rulemaking Friday to clarify how exchange, clearing agency, and broker definitions apply to onchain systems and DeFi protocols - Kraken parent Payward filed an application with the OCC for a national trust company charter, for institutional digital asset custody; if approved, Payward would hold the full CFTC derivatives stack, OCC trust charter, stablecoin payment rails in Asia (Reap), and retail trading (NinjaTrader) simultaneously - Rain’s head of strategic partnerships John Timoney told Consensus Miami that stablecoin card spend grew 105% year-over-year and stablecoin cards could hit double-digit market share in some Latin American markets within years; Rain, a Mastercard Principal Member valued at $1.95 billion, uses existing card infrastructure so merchants receive fiat while users spend stablecoins - ECB President Christine Lagarde warned Friday that even euro-denominated stablecoins could threaten financial stability and monetary policy transmission - XRP network active addresses and active supply fell sharply in Q1 2026, with new wallet creation down roughly 40% quarter-over-quarter despite XRP ETF inflows of $1.24 billion since late 2025 Corporate Treasuries & ETFs - The Bitcoin ETFs saw $146M in net outflows on Friday, still with a new $632M in net inflows on the week; the ETH ETFs saw $3.6M in inflows on Friday and $70M on the week - Morgan Stanley’s MSBT ETF saw $194M in net inflows in its first month with no outflows - TeraWulf posted a $427 million Q1 net loss, up from $61.4 million a year ago as Bitcoin mining revenue fell 50% to $13 million; AI and HPC lease revenue jumped 117% sequentially to $21 million, now 60% of total revenue Meme Coin Tracker - Meme leaders were mixed; DOGE +2%, SHIB +2%, PEPE +2, PENGU -2%, TRUMP -1%, BONK +3%, SPX +5%, FARTCOIN +1 - TROLL (+30%), Goblin (+140%), and TripleT (+20%) led notable movers 📈 Myriad Market of the Day 💰 Token, Airdrop & Protocol Tracker - Circle raised $222M for its ARC token in a presale valued at $3B, led by a16z, BlackRock, Apollo and others - Digital Asset Holdings is looking to raise ~$300M at a $2B valuation as it builds out its blockchain used by big banks and trading firms 🚚 What is happening in NFTs? - NFT leaders were mostly green over the weekend; Punks -1.5% at 30.5 ETH, BAYC +6% at 10.6 ETH, Pudgy +6% at 5.56 ETH; Hypurr’s -2% at 310 HYPE - Chimpers (+18%), Normies (+30%) and Deadfellaz (+18%) led notable movers

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