# I. Outlook

## 1. Macroeconomic Summary and Future Predictions

Last week, U.S. macroeconomic data intensified market concerns about "stagflation": consumer confidence unexpectedly declined, inflation expectations rose, with July CPI expected to increase by 0.2% month-on-month and approximately 2.8% year-on-year, while core CPI year-on-year approached 3%, indicating persistent price pressure. Meanwhile, employment and PMI indicators weakened, and economic growth momentum diminished. U.S. stocks slightly corrected from high levels, but the overall market still bets that if inflation remains mild, the Federal Reserve is likely to start cutting interest rates in September. Looking ahead, institutions generally expect a 10-15% adjustment in the stock market in the third quarter, but they also view it as an entry opportunity. In the medium to long term, inflation may gradually decline, and U.S. stocks are expected to regain momentum after a shift in monetary policy.

## 2. Market Changes and Warnings in the Crypto Industry

Last week, the cryptocurrency market as a whole entered a phase of high-level correction. Bitcoin briefly broke through its historical high but subsequently experienced price fluctuations and declines due to macroeconomic data (such as U.S. CPI and PPI releases) and profit-taking sentiment in the market. Ethereum showed a significant pullback after reaching around $4,700, dropping below $4,450 over the weekend, reflecting short-term cash-out pressure on mainstream assets.

Despite this, overall market sentiment remains optimistic: the advancement of the U.S. GENIUS Act for stablecoin regulation and continued inflows into institutional ETFs provide support for medium to long-term growth. However, in the short term, high-level fluctuations and concentrated corrections indicate that funds are becoming cautious in an environment where policy benefits and macro pressures coexist, and the market may continue to maintain a pattern of severe volatility.

## 3. Industry and Sector Hotspots

YZi Labs led a $3.7 million investment in Velvet Capital, a full-featured DeFi asset management platform integrating AI and multi-chain trading, which is an intention-driven DeFAI trading and portfolio management ecosystem. YZi Labs also led the investment in Sidekick Protocol, a one-stop digital asset platform that combines live interaction with instant trading. Quack AI serves as the AI governance layer for Web3, providing modular infrastructure to empower protocols, DAOs, and smart agents to achieve autonomous on-chain decision-making.

# II. Market Hotspot Sectors and Potential Projects of the Week

## 1. Overview of Potential Projects

1.1. Analysis of Velvet Capital, a Full-Featured DeFi Asset Management Platform Integrating AI and Multi-Chain Trading, Led by YZi Labs with $3.7 Million Investment

Introduction

Velvet Capital is an intention-driven DeFAI trading and portfolio management ecosystem that provides a vertically integrated tech stack, including native user applications, autonomous Telegram bots, easily integrated APIs, and a DeFAI operating system (OS) for smart agents.

Architecture Overview

1. Trading Terminal

Velvet's trading terminal allows users to trade any token or DeFi pool directly through their wallets without depositing assets into the platform. Supported chains include Base, Solana, Ethereum, BNB Chain, and Bitlayer, with plans to support more networks in the future.

Users can view various data indicators on the platform, including popular tokens, newly added trading pairs, gainers, and trading volumes. There are two ways to trade: one is to use "Quick Buy" for fast purchases by clicking the purple lightning icon next to the token; the other is to click the arrow button on the right to add the token to the trading module on the right, set the amount, and execute the trade.

Clicking on any token leads to a detailed page where users can view on-chain analysis, candlestick charts, historical trades, etc., and cross-asset trading is supported. By clicking the "Yield" tab, users can browse and participate in over 30 integrated DeFi yield pools, view various APY, TVL, and other information, and directly participate in or exit pools from the right-side operation bar.

The "My Positions" page allows users to view their current portfolios, adjust holdings, or sell unwanted assets at any time, with quick access to charts and buy/sell buttons for smooth and convenient operations.

2. Velvet Unicorn (VU)

Velvet Unicorn (VU) is the AI smart framework core of Velvet OS, empowering users with "AI superpowers" in on-chain research, trading, and DeFi management.

Core features include:

• Insight analysis based on on-chain and social data
• Execution of natural language commands
• Automated portfolio management

Highlights of Velvet Unicorn AI Architecture:

• It is a self-iterating multi-agent AI operating system designed specifically for DeFi.
• Each AI Agent performs specific roles (such as CEO, researcher, analyst, trader) and can dynamically expand new roles to enhance efficiency.
• The system combines large language models (LLMs) with small specialized AI modules for advanced decision-making and specific tasks (such as market forecasting), significantly reducing hallucination issues.

Agent Collaboration Mechanism:

• Continuously optimizes its prompts through a reward-feedback mechanism for self-improvement.
• The system can understand users' natural language questions (e.g., "Which Base chain token do you favor most?"),
  → classify intent
  → distribute to the appropriate sub-Agent (such as analyst or executor)
  → invoke market data, models, and sentiment analysis
  → if necessary, automatically execute trades or asset allocations.

1. Velvet Portfolio Management

Velvet allows users to create personal or public portfolios (Vaults) to showcase their strategies and performance, which can even serve as on-chain hedge funds to attract others to join.

Six Steps to Create a Public Portfolio:

• Basic Info:
  Set the portfolio name, code (displayed in the wallet), creator's name, and strategy description.

• Settings:
  Define portfolio visibility, transfer restrictions (whether to allow token transfers), and whitelist (to determine who can join).

• Fees:
  Management fees (based on TVL), performance fees (based on returns), and entry/exit fees (charged when depositing or withdrawing funds) can be set. If no fees are set, none will be charged.

• Token Set Up:
  Determine the initial token issuance and minimum deposit amount.

• Asset Configuration:
  Choose the initial assets for the portfolio (which can be spot assets or DeFi pools).
  It can start with just one token (like USDC or ETH).
  Enabling the asset whitelist will lock the strategy scope and prevent modifications.

• Review:
  Check all settings, click deploy and confirm the transaction, then complete the initial deposit.

1. Building Custom Applications

The simplest way to use Velvet.Capital is through the official Velvet application, where anyone can create a new portfolio (Vault) based on their preferred parameters in just a few minutes.

For crypto projects and institutional clients looking to leverage the Velvet DeFi operating system while retaining their brand and customer relationships, Velvet also offers white-label infrastructure services.

Commentary

Velvet.Capital is a DeFi operating system that integrates a trading terminal, AI investment engine, and multi-chain support, featuring advantages such as "zero custodial trading," "one-click asset portfolio creation," and "AI smart strategy execution," significantly lowering the barrier for users to participate in DeFi, suitable for both individuals and institutions. Its AI module features multi-agent collaboration and low hallucination rates, enabling more efficient asset management and investment research. However, its complex multi-functional structure still presents a learning curve for novice users, and it still relies on external protocol ecosystems for security and liquidity depth.

1.2. Interpretation of Sidekick Protocol, a One-Stop Digital Asset Platform Integrating Live Interaction and Instant Trading, Led by YZi Labs

Introduction

Quack AI is the AI governance layer for Web3, providing modular infrastructure to empower protocols, DAOs, and smart agents to achieve autonomous on-chain decision-making.

It transforms governance from static snapshots and voting panels into a real-time, native AI system capable of generating proposals, assessing risks, delegating authority, and executing operations across multiple chains—entirely without human intervention.

Architecture Overview

1. AI Models and Algorithms

Quack AI introduces an AI-driven advanced governance execution model that enhances governance efficiency, transparency, and intelligence through machine learning, sentiment analysis, and on-chain behavior tracking, replacing the traditional static governance model reliant on manual operations. Its core is a multi-layer AI architecture covering proposal evaluation, voting execution, and treasury optimization, and it interacts with on-chain smart contracts through AI Agents to achieve automated and compliant governance processes.

Key modules include:

• Governance Agents: Machine learning models trained on governance history that automatically evaluate proposals, determine priorities, and execute votes.
• Sentiment and Data Processing Layer: Utilizes NLP and sentiment analysis to understand community discussion trends, combined with on-chain data to extract real-time governance insights.
• AI Decision Algorithms: Employs reinforcement learning and predictive models to dynamically optimize governance parameters and proposal filtering.
• On-Chain Smart Contract Automation: Automatically completes voting, fund allocation, and reward distribution through smart contracts, with AI Agents making decisions based on governance strategies.

1. AI Decision-Making
   Quack AI's governance execution relies on AI models, covering proposal evaluation, community sentiment analysis, and decision validation, ensuring governance is efficient, fair, and automated.

Core functions include:

• Neural networks assess proposal quality and impact, filtering out duplicate or low-value proposals;
• Real-time sentiment analysis, scoring proposals based on community discussions, prioritizing community-supported topics;
• Data validation and anomaly detection, preventing governance manipulation by combining historical on-chain data;
• Autonomous execution mechanism, with AI automatically implementing voting results to avoid delays and human intervention.

1. Smart Contracts & Automation

Quack AI automates governance processes through on-chain smart contracts without human intervention, ensuring decisions are executed efficiently and securely.

Core functions include:

• Governance Proposal Contracts: Store and execute proposals evaluated by AI, automatically rejecting invalid or duplicate proposals;
• AI-Driven Governance Contracts: Self-learning capabilities that continuously optimize voting parameters and execution logic, enhancing governance fairness and security;
• Treasury Management Contracts: Automatically allocates on-chain revenue and funds based on governance-approved priorities;
• Compliance and Security Contracts: Prevent governance manipulation, generating AI compliance reports to ensure operations adhere to ecosystem rules.

1. Cross-Chain Infrastructure

Quack AI builds a governance model that operates across multiple blockchain ecosystems, enabling cross-chain participation and decision execution, ensuring governance is intelligent, decentralized, and efficiently scalable.

Key capabilities include:

• AI Governance Interoperability Layer: Tracks multi-chain governance trends, optimizing cross-chain voting logic to achieve governance coordination across chains;

• EVM Ecosystem Integration: Compatible with Ethereum and EVM protocols, providing governance tracking and data interfaces to facilitate user participation in DuckChain governance;

• TON Integration: Supports the TON network, with AI automatically handling proposal tracking to facilitate Telegram community governance participation;

• Core Components of Technical Architecture:

• AI Governance Agents: Automatically evaluate proposals and execute governance;

• Sentiment Analysis Models: Analyze governance discussions to optimize voting behavior;

• Smart Contract Automation: Execute governance decisions on-chain without human intervention;

• AI Compliance and Security: Identify fraudulent activities and enforce governance rules;

• Cross-Chain Governance Module: Track and optimize governance trends on chains like Ethereum and TON.

Overall, Quack AI constructs a scalable, intelligent, fully automated governance system through AI-optimized governance execution, smart contract automation, and cross-chain integration.

Commentary

Quack AI's strengths lie in its AI-centric fully automated governance architecture, featuring modular capabilities for proposal evaluation, sentiment analysis, contract execution, and cross-chain governance, significantly enhancing governance efficiency, transparency, and resistance to manipulation, adaptable to multi-chain ecosystems like Ethereum and TON, achieving true autonomy and intelligent governance.

Its weaknesses, however, stem from its heavy reliance on AI models and automated logic; if the model training data is limited or misjudged, governance decisions may deviate from community intentions. Additionally, the complex technical architecture poses higher demands on system stability and security.

## 2. Detailed Explanation of Key Projects of the Week

2.1. Detailed Explanation of KOR Protocol, Led by Camp, Aiming to Build Infrastructure for Full Lifecycle Management and Monetization of On-Chain Entertainment IP

Introduction

KOR Protocol is an entertainment IP infrastructure supported by Animoca Brands, dedicated to helping creators (such as "Black Mirror," electronic musician deadmau5, etc.) manage, distribute, and monetize their intellectual property on-chain through a complete set of AI tools and applications. KOR Protocol is reshaping the entertainment industry landscape, aiming to build the world's largest on-chain IP economy.

Core functions:

KOR Protocol is built by a decentralized community of creators, developers, and organizations, providing a series of key tools and frameworks aimed at empowering the entire entertainment industry. Its main features include:

• KOR DNA Framework: Allows tokenization of works, setting licensing agreements, and IP distribution, supporting AI/user-generated content and dynamic media experiences.
• KOR DNA Library: A content library of intellectual property composed of the most representative artists, IPs, and brands, open to fans, creators, and developers for mixed and collaborative creation, supporting built-in royalty sharing mechanisms, on-chain authorization, and attribution tagging.
• KOR Engine: A dynamic music and visual AI engine that allows easy integration of official IP's AI media content into various products with minimal code. Its first dynamic AI creation engine, LayerMosaic, has gone live, allowing developers to access the KOR DNA library and generate interactive AI audio/visual content in real-time through a web engine.
• KOR Mint Factory: Provides easy-to-use minting tools and access to interoperable assets within the KOR ecosystem.

Architecture Analysis

1. KOR SDK

Highlight Features:

Libraries and Tools

• Pre-built Libraries: The SDK provides a series of foundational libraries to simplify common operations, such as cryptographic functions, data processing, and blockchain interactions.
• Simplified Operations: Functionality is designed to efficiently handle complex tasks, such as decentralized storage, NFT minting, and intellectual property management.

Integration Tools

• SDK Integration Mechanism: Provides a mechanism for seamless management of tokens and IP assets by connecting to KOR infrastructure.

Development Environment

• Development Framework Support: The SDK supports various development frameworks and environments, helping developers efficiently build, test, and deploy applications.
• Framework Independence: KOR SDK is compatible with multiple JavaScript frameworks, allowing developers to flexibly develop and deploy in different environments.
• Testing Tools: Built-in testing environments and simulators allow developers to test applications in a controlled environment before deploying to the main chain.

Documentation and Support

• Comprehensive Documentation: The SDK comes with detailed documentation covering setup processes, API usage, and best practices for platform integration.
• Community and Technical Support: Developers can access community forums, technical support, and resource libraries to assist with troubleshooting and product optimization.

Security Features

• Encryption and Authentication: Built-in security mechanisms ensure transaction security, data integrity, and user identity verification.
• Compliance Tools: Provides tools and guidelines to help developers ensure their applications meet relevant standards and regulatory requirements.

2. KOR Protocol

The KOR SDK architecture consists of six independent modules:

• Asset Module
• NFT Module
• On-Chain IP Module
• On-Chain License Module
• Royalty Distribution Module
• Conflict Management Module

These modules are responsible for specific functions within the protocol and are designed to work seamlessly together to support the execution of complex operations.

Among them, four modules—on-chain intellectual property, on-chain licensing, royalty distribution, and conflict management—are coordinated by the Orchestrator Architecture. This design simplifies system processes, reduces overall complexity, and enhances code organization efficiency.

• Event Listener

The event listener service is a key component of the KOR protocol architecture, designed to monitor and process events emitted by KOR protocol smart contracts. Its main responsibilities are to ensure that all relevant on-chain events are captured, effectively processed, and stored in real-time for subsequent analysis and use.

• Connecting RPC Providers

The event listener service connects to two RPC providers, Ankr and Alchemy. These providers offer stable and reliable access to the Ethereum network, allowing the listener service to continuously monitor events in KOR protocol contracts.

• Event Detection

When KOR protocol smart contracts emit events, the listener service can detect these events in real-time, ensuring that no critical on-chain activities are missed.

• Message Queue Integration

Once detected, the event listener sends event data to AWS SQS (Simple Queue Service). This decoupled approach allows the detection and processing of events to run independently, enhancing the system's scalability and fault tolerance.

• Consumer Service

The Consumer Service receives event data from the AWS SQS queue, decodes it, and extracts key information for processing.

• Data Storage

The processed event data is ultimately transmitted to a database and stored in an indexed format, supporting efficient querying and data retrieval for various application scenarios.

• Workflow

• Listening for Events: The event listener service continuously listens for events from KOR protocol smart contracts through connected RPC providers (Ankr and Alchemy).

• Event Triggering: Once a contract emits an event, the listener service immediately detects it.

• Event Queueing: Detected event data is packaged and sent to AWS SQS (Simple Queue Service), ensuring it enters the queue for subsequent processing.

• Event Consumption: The Consumer Service reads events from the AWS SQS queue, decodes, and processes the data.

• Event Storage: Processed data is stored in a database and appropriately indexed to support efficient data management and retrieval.

1. Module Analysis

• Asset Module

The Asset Module consists of multiple components for the following operations:

• Uploading a single asset or asset collection to IPFS/S3

• Creating metadata for a single asset or collection

• Uploading metadata to IPFS/S3

This module uses Pinata, Filebase, or custom storage solutions (like S3) to upload metadata to IPFS or S3.

Uploading Assets to IPFS/S3

When users upload an asset, the SDK uploads it to IPFS and returns the asset's IPFS CID (Content Identifier).

Uploading Collections

When users upload a collection folder, the SDK uploads all assets within it to IPFS or S3 and returns the IPFS/S3 CID of these assets.

Uploading Metadata

Metadata is automatically generated through the URI returned by the uploaded asset and other metadata fields. The generated metadata is then uploaded to IPFS or S3, and users receive the corresponding metadata IPFS/S3 CID.

• NFT Module

The NFT Module consists of a set of smart contracts that allow users to perform the following operations:

• Create NFT collections
• Mint NFTs from collections or single assets and register them as intellectual property (IP)
• Mint intellectual property (IP) directly from IP collections or assets
• Mint NFTs from the protocol's NFT contracts

Minting IP from Collections or Assets

When minting IP from a user's IP collection or asset, the system directly mints an IP asset for the user without needing to register the NFT separately or add authorization clauses. The SDK mints the NFT from the user's collection, automatically registering it as IP and setting additional authorization clauses according to the IP accounts in the collection, completing the minting of the IP asset in one step.

1. On-Chain IP Module

The On-Chain IP Module is responsible for handling functions related to intellectual property assets, allowing users to perform the following operations:

• Register NFTs as IP assets
• Create KOR ERC-6551 standard bound accounts (Token Bound Accounts) for NFTs
• Manage IP's permission roles
• Register derivative works
• Query IP asset information
• Register a collection as IP

1. On-Chain License Module

The On-Chain License Module is responsible for managing IP licensing, providing the following functions:

• Create different types of licensing agreements
• Attach licensing terms to IP
• Update the licensors' information for IP
• Update the content of IP licensing terms
• Upload licensing terms PDFs to IPFS

1. Royalty Distribution Module

Core Functions and Mechanisms:

1. Activate Royalty

• Purpose: Activate the revenue-sharing mechanism for a collection or single IP asset.
• Mechanism:
• Check if the IP allows revenue sharing and is in an active state.
• Create a "Royalty Vault" for the collection or asset and issue royalty tokens.
• Ensure the revenue-sharing status of parent assets (if any) is also activated.

1. Pay Royalty

• Purpose: Ensure royalty payments for IP are completed according to the licensing agreement.
• Mechanism:
• Ensure the IP revenue-sharing feature is activated.
• If it's a collection, payments go directly into the collection vault and generate a snapshot.
• If it's a single asset, for derivative assets, payments are distributed between the original IP and derivative IP according to preset ratios, generating separate snapshots.

1. Collect Revenue

• Purpose: Allow IP owners or licensors to collect revenue generated from the IP.
• Mechanism:
• Verify the IP status and vault readiness.
• Users holding the corresponding snapshot ID can claim their share of the revenue.
• Each revenue collection triggers an event record.

Module Support Functions

• Create and deploy Royalty Vaults and Royalty Tokens.
• Support complex royalty ratio splits, snapshot mechanisms, and event tracking.

1. Conflict Management Module

The Conflict Management Module is used to handle disputes related to IP (intellectual property) within the KOR protocol, ensuring that asset disputes in the ecosystem can be resolved in an orderly and fair manner.

Core Functions and Mechanisms:

1. Raise Conflict

• Users must submit the following:

• Conflict evidence link

• Conflict tier

• Stake the corresponding number of tokens based on the tier

• Effect: Once a conflict is submitted, the IP will be marked as "in conflict," and its derivative operations will be paused (no further derivatives can be created).

1. Resolve Conflict

• Operator: Only arbitrators can handle this.
• Mechanism:
• Arbitrators review evidence and determine whether the conflict is valid.
• If the conflict is valid:
  • Return the remaining staked tokens to the conflict initiator.
  • The IP is locked (i.e., cannot be used further).
• If the conflict is invalid:
  • The remaining staked tokens belong to the platform.
  • The IP's "conflict" status is removed, and it can continue to be used.

Summary

KOR Protocol is an on-chain entertainment IP infrastructure supported by Animoca Brands, featuring complete modules for IP registration, licensing, revenue distribution, and dispute resolution. Its advantages include a clear modular architecture that supports full-process automation from asset uploading, NFT minting, IP binding, licensing to royalty distribution, and ensures high availability and scalability through event listening and message queues. Additionally, it has conflict management and arbitration mechanisms that enhance the security and trustworthiness of IP usage.

However, its disadvantages lie in its reliance on several third-party services (such as Ankr, Alchemy, AWS, IPFS/S3), which may introduce certain centralization risks; furthermore, the system's complexity poses a higher barrier to entry for developers, and the ecosystem still requires time for cultivation and validation.

# III. Industry Data Analysis

1. Overall Market Performance

1.1. Spot BTC vs ETH Price Trends

BTC

Analysis

Key resistance this week: $118,200, $119,300, $122,400

Key support this week: $115,600, $114,400, $111,900

ETH

Analysis

Key resistance this week: $4,380, $4,570, $4,670

Key support this week: $4,260, $4,160

2. Public Chain Data

2.1. BTC Layer 2 Summary

1. Bitcoin Hyper presale fundraising surpasses

Bitcoin Hyper is the first SVM (Solana Virtual Machine) Bitcoin Layer-2 solution, aiming to provide near-instant and extremely low-cost BTC transfers.

• According to the latest reports, its ongoing crypto presale has surpassed $5.5 million, attracting significant industry attention and being referred to as "one of the most significant crypto presale projects of the year."

1. Layer-2 overall performance outperforms other assets

• According to SmartMoneyMindset's "Crypto Pulse" report, Bitcoin's performance has been relatively stable this week, while Layer-2 solutions and real-world asset (RWA) tokens have shown impressive performance, outperforming the overall market.

1. BTC reaches a historical high

• Binance's market commentary this week noted that Bitcoin reached a new historical high, accumulating $123,000. Although this is not a direct advancement of Layer-2 itself, Layer-2 activity benefits from Bitcoin's strong performance.

2.2. EVM & Non-EVM Layer 1 Summary

Circle announces the launch of EVM-compatible Layer-1 blockchain "Arc"

• Announcement date: August 12, 2025 (this week). Circle announced the launch of a Layer-1 blockchain named Arc, designed for stablecoin finance, using USDC as the native gas fee, compatible with EVM, and featuring enterprise-level characteristics, including sub-second settlement, stablecoin FX engines, and optional privacy controls.
• This move marks Circle's gradual transition from a stablecoin issuer to an infrastructure provider, integrating its services into its own blockchain network, strengthening its entry position in the stablecoin ecosystem.

Stripe and Paradigm are building EVM-compatible Layer-1 blockchain "Tempo"

• Related reports were also disclosed this week. Stripe is collaborating with Paradigm to develop a new EVM-compatible Layer-1 chain Tempo, aimed at building a super-fast and low-cost global payment system.

2.3. EVM Layer 2 Summary

1. Taiko implements "Preconfirmations" feature based on Rollup

• Taiko becomes the first network to introduce a "Preconfirmations" mechanism in its based Rollup. This means users can experience 20-30 times faster transaction confirmation speeds while still maintaining compatibility and security with Ethereum's core values.

1. Fluent launches its blended virtual machine (Blended VM) testnet

• Fluent's innovation lies in supporting an environment where EVM, WASM, and SVM smart contracts coexist and execute. The testnet is now live, providing developers with a more flexible smart contract development infrastructure.

1. Facet becomes the first general Stage 2 Rollup on L2BEAT platform

• After launching, Facet features a complete exit window mechanism, allowing users to submit transactions or state roots directly to the Ethereum mainnet in case of sequencer or proposer failures, achieving a higher trust-minimized design.

1. ZK field research: Compressing hash-based SNARK proof size

• Blockchain researchers Giacomo Fenzi and Yuwen Zhang released new findings, compressing hash-based SNARK proofs to 40% of their original size using a post-quantum secure technique, helping to alleviate verification and bandwidth burdens.

# IV. Macroeconomic Data Review and Key Data Release Points for Next Week

In July, the U.S. CPI year-on-year remained at 2.7%, slightly below expectations, signaling a mild rise in inflation and alleviating some market concerns about continued interest rate hikes. However, the core CPI, excluding food and energy, rose to approximately 3.1% year-on-year, the highest level since February, indicating that supply-demand structure and tariff pressures are still quietly pushing prices upward. The July PPI rose by as much as 0.9% month-on-month, the largest single-month increase since June 2022, with a year-on-year growth of about 3.3%, indicating that upstream cost pressures remain significant and may be transmitted to the consumer end.

Important macro data release points for this week (August 18 - August 22) include:

August 20: U.S. EIA crude oil inventory for the week ending August 15

August 21: U.S. initial jobless claims for the week ending August 16

# V. Regulatory Policies

United States

• The Federal Reserve will abolish the "Novel Activities" regulatory program On Tuesday, the Federal Reserve announced it would abolish its "Novel Activities" regulatory program, which was initiated in 2023 specifically for banks engaging in crypto and fintech activities, incorporating these activities into the existing regular banking regulatory framework. This reflects its deepening understanding of the associated risks and the management capabilities of financial institutions.
• SEC launches "Project Crypto" plan SEC Chairman Paul Atkins announced this week the launch of "Project Crypto," a key measure to implement the recent 160-page policy report released by the White House, aiming to "on-chain" the U.S. financial market. The plan includes clear classification regulations for tokens (such as securities, commodities, stablecoins), simplifying capital-raising mechanisms, and allowing securities and non-securities tokens to trade on the same platform.
• DeFi safe harbor proposal emerges The DeFi Education Fund and a16z Crypto proposed a suggestion calling for the SEC to establish a "safe harbor" for certain decentralized finance (DeFi) applications, stating that as long as these protocols meet conditions such as "no custody, no manipulation, no solicitation, and immutable code," they should be exempt from broker-related regulations.

Indonesia

• Significant increase in crypto trading and mining tax rates Starting from August 1, 2025, Indonesia will make significant adjustments to its crypto asset tax policy: domestic trading tax will increase from 0.1% to 0.21%, and overseas trading tax will rise from 0.2% to 1%; the buyer's value-added tax (VAT) will be eliminated; the VAT for mining activities will double from 1.1% to 2.2%, and the previous 0.1% special income tax will no longer apply, with a standard tax rate to be adopted starting in 2026.

South Korea / International (Judicial)

• Do Kwon pleads guilty to crimes: South Korean entrepreneur Do Kwon pleaded guilty to two counts of fraud in Manhattan federal court, related to the collapse of the stablecoin plan held by Terraform Labs. He faces a maximum sentence of 12 years and must forfeit over $19 million in assets, with sentencing scheduled for December 11.