For years, crypto largely operated outside the core plumbing of U.S. finance. Dollars still had to enter and exit exchanges through traditional banks, and many expected that arrangement to hold until Washington produced a comprehensive regulatory framework. That premise is starting to crack. In March 2026, a regional Federal Reserve bank approved a limited account for Kraken—marking the first time a crypto exchange has been permitted to connect directly to the Federal Reserve's payments infrastructure. More approvals could follow. Separately, the GENIUS Act, passed last year, created a workable federal framework for digital dollars and opened the door for conventional banks to issue their own tokenized versions. The shift did not require a single sweeping "crypto law". It has arrived through a string of narrower, technical moves that collectively change how crypto can interface with the banking system. What "direct access" to the Fed really changes The U.S. financial system relies on Federal Reserve-operated payment networks that banks use to transfer funds, settle daily activity, and access dollar liquidity. The centerpiece is Fedwire, which moves trillions of dollars between banks every day. Historically, using these rails required an account at the Fed—access typically limited to licensed banks. Firms outside that perimeter had to reach the system indirectly via a partner bank. Kraken's banking unit no longer needs that intermediary. With its own direct link into the Fed's payment system, it can settle dollar transactions on the same backbone used by banks. The account is "limited": it does not include interest on reserves or access to the Fed's emergency lending facilities. Even so, the practical impact is significant—fewer layers, less dependency on a sponsor bank that can restrict or withdraw service. Policy drift gives way to operational change U.S. crypto policy has advanced slowly, shaped by overlapping agencies and unresolved jurisdictional disputes. Institutional demand, though, has remained steady. Large investors have sought more standardized, regulated ways to interact with digital assets, and the system has begun adjusting through implementable steps. The GENIUS Act supplied the first credible federal rulebook for digital dollars and effectively encouraged regulated banks to participate. Regulators also issued special charters enabling nonbank firms such as Circle to operate with bank-like privileges. The Fed launched a public comment process around a lighter-weight account structure tailored to payment-focused firms. Wyoming's crypto-friendly bank charter—once viewed as a niche experiment—became the legal pathway that enabled Kraken's entry. For consumers and markets, the practical takeaway is that traditional banks' exposure to digital assets is likely to rise—through partnerships, new products, and potentially their own tokens. Citi has said it is targeting a 2026 launch of crypto custody. A consortium of major global banks, including JPMorgan, Bank of America, and Goldman Sachs, has explored a jointly backed digital dollar. Even for customers who never buy crypto, digital-asset infrastructure may increasingly sit adjacent to the accounts they already use. A tighter linkage also changes the risk profile Wider, shorter pipes between crypto and traditional finance can accelerate flows in both directions—and potentially speed up the transmission of shocks. For crypto, direct access to the payment system signals legitimacy that would have been difficult to imagine a few years ago. It also reduces crypto's distance from the regulated financial perimeter and brings greater expectations around controls and resilience. As integration increases, crypto risks become less isolated. Stability vs. contagion: the core disagreement Supporters of integration argue that pulling crypto inside the regulatory perimeter can reduce risk. Entities with direct Fed access face higher standards, reserves can be monitored more directly, and users may encounter fewer opaque intermediaries between their dollars and an exchange. Critics, including the U.S. banking lobby, frame the Kraken approval as a meaningful expansion of operational and compliance risk. They warn that lightly regulated firms with access to payment rails could increase money-laundering and operational vulnerabilities. Another concern is deposit flight: in a period of stress, funds could rush into these new accounts, draining deposits from community banks and credit unions that support the real economy. The Bank Policy Institute, representing the largest U.S. banks, said the approval occurred before the Fed Board completed its own rulebook for these account types. Beneath the debate is a single question: does bringing crypto into the system make the system stronger—or more fragile? Many observers argue that crises tend to emerge from unmodeled connections, and a direct linkage between crypto markets and Fed payment rails could become exactly that kind of transmission channel. A structural shift happening without an announcement The most consequential part may be how quietly the change is unfolding. There is no definitive moment when "crypto joins the banking system" because the transition is being built through incremental steps: a regional Fed approval, a stablecoin framework, a charter for a firm most Americans do not recognize. Each step can appear technocratic and low-profile, allowing progress that broader crypto legislation has struggled to achieve. Once the Fed finalizes its lighter-weight account framework, more crypto firms are likely to pursue similar approvals, granted district by district with conditions buried in extensive legal language. Large banks are expected to continue rolling out custody and digital-dollar initiatives as standard product launches rather than ideological statements. At the same time, the Kraken cybersecurity incident this spring—an extortion attempt involving insider access—provides fresh ammunition for critics who argue that lightly regulated firms should not operate on the same rails as JPMorgan. A comprehensive crypto market-structure law may still pass. Yet by the time it arrives, much of the system it aims to govern may already be in place, shifting the real question from what the rules say to how much of the infrastructure has learned to operate without waiting for them. The post Crypto to enter the US banking system through a backdoor, not through regulation appeared first on CryptoSlate.

Ethereum reached a new on-chain milestone in the first quarter of 2026, logging its highest-ever quarterly activity on the base layer. Artemis data shows the network processed more than 200 million transactions, up 43% from 145 million in the prior quarter ending late 2025. After bottoming around 90 million quarterly transactions in 2023, activity stabilized through most of 2024 before accelerating into 2026. Much of the growth has been attributed to Layer 2 scaling networks that execute transactions off-chain and settle to Ethereum. Rollups such as Base and Arbitrum aggregate activity, which can lift recorded base-layer transaction totals over time. Stablecoin expansion also contributed. Total stablecoin supply on Ethereum climbed to roughly $180 billion during the quarter, underpinning decentralized finance use cases as well as payments and remittance flows across the ecosystem. Protocol efficiency played a role as well. The Dencun upgrade lowered data costs for Layer 2s, easing fee pressure on Ethereum mainnet. Despite higher usage, gas fees did not rise proportionally, and ETH burns did not increase in step with transaction growth. Even with stronger network activity, Ether has hovered near $2,400, still more than 50% below its 2025 peak. Analysts point to a widening gap between on-chain usage and market valuation, with some interpreting the disconnect as a lagging market response to improving fundamentals. At the same time, researchers caution that part of the transaction increase may reflect automated stablecoin transfers rather than new user adoption, leaving open questions about how much activity represents incremental economic demand. Markets will be watching whether Ethereum can sustain more than 200 million transactions into Q2 2026 alongside continued growth in stablecoins and Layer 2 usage. The key issue is whether today's strong on-chain metrics translate into renewed long-term market strength as usage, scaling, and price trends continue to move in different directions.

Rhea Finance, a lending protocol in the NEAR ecosystem, has reported an estimated $18.4 million loss following an exploit tied to a flaw in its margin trading functionality. The attacker is believed to have abused the protocol's slippage protection mechanism by crafting fake liquidity pools and engineered swap routes. This setup enabled the opening of numerous margin positions and ultimately drained liquidity from the protocol's main pool. Rhea Finance said the latest figure is materially above earlier estimates of about $7.6 million. In a postmortem, the team said borrowed debt tokens were routed into attacker-controlled pools, while the protocol received only a negligible amount of position tokens in return. The resulting imbalance left many positions undercollateralized, triggering liquidations across the system. Rhea Finance said these forced liquidations depleted the reserve pool and produced "realized losses" affecting both the protocol and users. Rhea Finance said it is assessing available resources to pursue recovery for impacted users. The incident has renewed scrutiny of DeFi safeguards such as slippage protection, with security and audit teams reviewing similar mechanisms across other protocols. Liquidity providers in affected pools have taken losses, and the protocol's native token, RHEA, has declined following the exploit. The exploit follows other high-profile DeFi incidents, including a reported breach at Drift Protocol that was linked to $280 million in losses.

@zodl_co said a combined release of zcashd v6.12.1 and the Zcash Foundation's Zebra v4.3.1 has addressed four vulnerabilities. The issues included an Orchard action-encoding bug that could crash nodes and a related consensus-split risk between the two clients. The fixes have already been deployed, and there are no indications the bugs were exploited. The team added that user funds and privacy were not at risk and the flaws could not have enabled any ZEC supply inflation.

Blockchain investigator ZachXBT has flagged an exploit tied to KelpDAO involving more than $280 million, with spillover effects now being felt across Ethereum's DeFi lending markets.

Kelp DAO's rsETH bridge was reportedly exploited in an attack described as LayerZero-based, with losses estimated at roughly $292 million.

A transfer of 285,111,406 USDT, valued at USD 285,154,173, was recorded moving from Aave to Spark.

A transfer of 200,000,000 USDT, valued at roughly 200,030,999 USD, has been recorded moving from Aave to HTX.

On-chain data shows a transfer of 150,000,000 USDT, valued at about USD 150,042,000, from Aave to an unidentified wallet.