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TLDR:

Bitcoin hit $116K before $3.45 billion in liquidations while stablecoins transferred a record $15.6 trillion with bots executing 70% of that volume. Host Tedd Huff, CEO of Voalyre, and BakerHostetler Partner Robert Musiala break down what happened in crypto this month and why it matters to your business now.

The SEC issued two major no action letters creating roadmaps for DePIN networks and state bank custody while Treasury opened a 58 question comment period closing October 20th on Genius Act implementation.

The Wolfsburg Group published global AML guidance requiring banks to know their customer’s customer when serving stablecoin issuers as nine European banks formed a consortium to launch a MICA compliant Euro stablecoin by 2026. Market fragmentation accelerates as purpose built stablecoins target specific communities while USDT and USDC slip to 84% combined share despite growing absolute volumes. Security threats remain the biggest adoption risk even as regulatory clarity emerges.

Learn the five moves compliance and product teams should make today: display fees before sends, segment use cases by ecosystem, publish clear redemption rules, run cross chain incident drills, and build a one page control map that speeds both sales cycles and audits.

If you manage risk, product, or finance in payments or crypto, this episode gives you the regulatory context and practical steps to act without waiting for Congress

September 2025 web3 with FTC Recap

“Web3 with FTC” returns with a September recap hosted by Tedd Huff, CEO of Voalyre, a fintech advisory firm, with co‑host and confidential informant Robert Musiala, Partner at BakerHostetler. This episode gives a clear, summary of what changed in the market, why it matters for operators, and where teams should focus next.

September set a fast pace, and the data backs it up. Bitcoin posted an eight percent gain for the month, a sign that risk appetite and on‑chain activity remained healthy. Network fees fell across key chains, with gas costs down by about ninety percent during the period. Lower fees encouraged more activity from retail users and builders, which showed up in active wallet counts and small ticket transfers. Large caps saw sharp swings, yet liquidity held up well, and price bands stayed tight for assets like XRP during long stretches. The key point is that use grew while costs fell, and that mix supports product adoption.

The bigger story sits with stable value. Stablecoin transfers reached a record fifteen point six trillion dollars in the third quarter of 2025. That level confirms how central stable value has become for payments, trading, and settlement. The mix behind that volume matters. About seventy percent of activity came from bots that handle arbitrage, liquidity balancing, and market making. That skew changes how leaders measure real demand. It also changes how you plan for spikes in volume, because automated flows react to price and fee changes much faster than people do. Teams should separate automated flow from human activity when they review growth and retention.

Banks moved closer to the core. The episode covers a set of institutions that formed a working group to test shared rails and standards. The idea is direct participation instead of sitting on the edges. Banks are acting as nodes themselves, not only as sponsors. That direction links to stablecoins and to tokenized cash. With stronger balance sheets and mature risk controls, these firms are positioned to connect card networks, account‑to‑account systems, and on‑chain settlement. Expect pilots that start narrow, such as marketplace settlement or cross‑platform treasury moves, then expand as controls harden and user feedback validates fit.

Policy did not slow down. The Securities and Exchange Commission published a rulemaking agenda that touches core parts of the market. Two no‑action letters also arrived. Those steps help define the edges for token projects, trading platforms, and custodians. Clear rules do not remove risk, yet they reduce guesswork. Builders get a better read on how to issue, list, and market a token. Risk teams get a cleaner view of controls that examiners will expect during reviews. The conversation calls out how these changes move in parallel with market growth rather than trailing it.

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Security stayed at the front of the news cycle. Intrusions and scams continued, with familiar patterns. Weak contract logic, compromised support tools, and hot wallet mistakes created loss events. Once funds started to move, they often crossed mixers and bridges to break audit trails. The public ledger still made tracing possible, which is why more teams treat on‑chain analytics as a core control. Prevention still beats response. The episode stresses tight key management, strict role‑based access, vendor security reviews, and incident drills that include cross‑chain scenarios.

Compliance tracked product more closely than before. Issuers and exchanges strengthened U.S. programs around customer checks, travel‑rule routing, sanctions screening, and suspicious activity reporting. The push is to shorten the time between a flagged event and a block or a report. Teams are blending rule engines with machine learning that scores risk by entity, asset, and behavior. The goal is not to replace analysts; the goal is to guide them with better signal at the speed of the chain. As stablecoin adoption grows, more firms will ship automated controls that make routing and reviews faster and more consistent.

Lower fees and better tooling changed the day‑to‑day user experience. Payments felt faster and less expensive. Builders shipped proofs that showed how small payments, streaming payouts for contractors, and cross‑exchange settlement can work at scale when cost per transaction drops. That shift attracts developers who watch unit economics. It helps users who care about predictability over thrills. It also opens the door for more direct wallet support inside mainstream apps. When transactions are cheap, app teams can design for convenience without forcing people to push large sums.

Market structure continues to evolve. Stablecoin issuers are competing on reserves, audit cadence, and chain coverage. The leaders are working with banks for custody and for access to real‑time payment systems. Exchanges still chase share with listings, fee tiers, and reward pools. The gap is narrowing between pure crypto venues and large finance brands that are entering with strong compliance programs and durable balance sheets. When banks plug in at the node level, the user experience starts to feel familiar for people who expect statements, dispute paths, and simple tax forms. That will bring in a new wave of users who want clarity first.

The month also brought movement from global standards bodies. The Wolfsberg Group issued material that touches stablecoins and financial crime expectations. The practical message is that the same core controls still apply. Know your customer. Watch the flow of funds. Detect and report suspicious activity. Record keeping and audit trails matter. On‑chain data helps when a team knows how to use it. Those who pair chain‑level analytics with traditional controls will be the ones that earn bank accounts, pass reviews, and scale with fewer surprises.

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So what should teams do with all of this. Product leaders should start with their own data. Measure how much of your volume settles in stable value. Track average ticket size, refund rates, and failure codes. Separate bot‑driven activity from real users where possible, then design features for the people who need them. A wallet, a simple payout tool, or a stable value option at checkout can remove friction without confusing users. Engineers should default to lower fee environments and build graceful fallbacks when fees rise. Finance and treasury should model cross‑chain exposure and set limits that reflect real risk, not just price swings.

For banks, focus is a strength. If you plan to act as a node, pick one use case first and make it work end to end. Settlement for a closed‑loop marketplace is a clean start. Keep the asset list short. Pair each feature with one crisp control. Allow mint and burn only after account verification clears. Limit redemptions by age of funds. Require multi‑party approval for large moves. Publish clear terms and a simple risk summary for users. Hold a reserve standard that passes audit without long debates. Small wins that are safe build trust, and trust pulls in more volume.

Founders should treat compliance as a growth lever. You close enterprise deals when banks, payment companies, and large brands can say yes to you. That yes depends on clean onboarding, fast fraud response, and proof that funds remain safe during stress. Build relationships with tracing firms. Invest in device intelligence and anomaly detection. Keep runbooks fresh and tested. Hire a leader who has filed real reports and sat with auditors. This is how you remove doubt during sales cycles and how you pass due diligence without stalling.

Why this month stands out is simple. We saw price action, yet the more important changes sit under the surface. Use rose as fees fell. Stable value hit records, and bots drove much of that flow. Banks stepped closer to the core. Regulators moved to write down the rules. Security teams kept learning in public. Each piece supports the others, and the net effect is a market that rewards teams who build with care. The episode ties these threads together with plain talk and specific examples that operators can put to work.

If you care about payments, trading, custody, or compliance, this recap gives you the context you need to plan your next steps. Watch the full episode to get the exact cases, the nuances behind the numbers, and the decision points that did not fit in this summary. Then bring the discussion to your team and decide what you will ship next.

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Key Highlights:

Bots Control Seventy Percent

On chain stablecoin transfers hit a record $15.6 trillion in Q3 2025, but the most surprising fact is that automated bots executed 70% of that massive volume. This means the largest segment of stablecoin activity right now is not humans at all, but agentic bots programmatically facilitating these transfers while humans remain behind the scenes directing the behavior.

Banks Become Blockchain Nodes

Financial institutions are no longer just observers of blockchain networks; they are becoming the nodes themselves in new stablecoin infrastructure models. This represents a fundamental shift where traditional banks operate as validation nodes within blockchain settlement systems, bridging the gap between centralized banking and decentralized technology in ways that seemed impossible just years ago.

Rules For Humans Or Transactions

As bots dominate crypto activity, regulators face a critical question about who or what their compliance frameworks should target. The challenge is whether to create rules for human behavior or for the automated transactions themselves, especially when artificial intelligence makes decisions outside of direct human instruction and other AI systems validate those transactions as trusted.

Know Your Customers Customer

The Wolfsburg Group issued global anti money laundering guidance requiring banks to look beyond their direct clients when servicing stablecoin issuers. Banks must now evaluate not just the stablecoin issuer they are banking, but also analyze who those issuers are sending stable coins to, creating a new standard called knowing your customer's customer that adds layers of due diligence responsibility.

Reserves Just Sit There

Unlike traditional bank deposits that get traded and moved through the financial system, stablecoin reserves remain stationary while being managed by a bank. The stablecoin itself circulates in the marketplace while the backing assets stay put, creating unique custody requirements and compliance challenges that do not exist in conventional banking models and demand purpose built regulatory frameworks.

Segmentation Accelerates Across Market

The stablecoin market is growing and fragmenting simultaneously as different issuers target specific user communities with purpose built products. Major European banks are forming consortiums while crypto companies launch their own stable offerings and large financial institutions go solo, creating a battleground where ecosystem targeting matters more than market share dominance and raising questions about whether fragmented markets will eventually reconnect.

Traditional Rules Don't Fit

Regulators now recognize years later that the same rules designed for centralized traditional finance systems do not work for blockchain peer to peer payment networks. The SEC, Treasury, and global groups like Wolfsburg are proposing purpose built regulations acknowledging that blockchain technology with its global peer to peer structure and public transaction ledgers requires a completely different compliance approach than outdated frameworks.

Programmatic Transfers Escape Howey

The SEC issued a no action letter explaining that programmatic transfers within decentralized infrastructure networks do not satisfy the fourth prong of the Howey test for securities classification. Network providers and resource providers engaged in these automated transfers do not have reasonable expectation of profits from entrepreneurial efforts of a promoter, but instead rely on their own efforts, opening the door for more infrastructure projects.

Volatility Drops While Targets Rise

Bitcoin and major crypto assets showed 35 to 40% price swings in September compared to the hundred percent swings seen in previous years. The market continues to climb, self correct, and recover with reduced volatility as institutional adoption increases and major global banks publish bullish price targets reaching $165,000, signaling growing confidence and maturation across the entire sector.

Public Ledger Analysis Required

New York Department of Financial Services issued guidance mandating that banks serving the crypto industry must use blockchain analytics tools in their anti money laundering programs. This requirement leverages the unique advantage of public transaction ledgers that can be analyzed to derive interesting insights about transaction patterns, making blockchain analytics a table stakes compliance tool rather than an optional enhancement for financial crime prevention.

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Takeaways:

1️⃣ Display Fees Before Every Send

Show users the exact cost of each transaction before they execute it, especially for cross chain transfers where gas fees vary significantly. This builds trust and reduces customer service complaints while meeting transparency expectations that regulators now expect from both crypto firms and traditional banks entering the space.

2️⃣ Segment Use Cases By Ecosystem

Stop treating all stablecoin users the same way. Build different products or features for traditional finance customers versus native crypto users versus cross border payment businesses. The market is fragmenting fast, so your product strategy should target specific communities instead of chasing universal adoption that no longer exists.

3️⃣ Publish Clear Redemption Rules Upfront

Write a one page document explaining exactly how your stablecoin redemption process works, who can redeem, what verification steps apply, and how long settlements take. Make this public facing because Wolfsburg guidance now expects banks to evaluate these policies when deciding whether to service your company, and unclear redemption creates AML red flags.

4️⃣ Run Cross Chain Incident Drills

Schedule quarterly exercises where your team practices responding to bridge failures, smart contract exploits, or validator attacks that could lock user funds. Security threats remain the biggest adoption barrier, so organizations that demonstrate preparedness through documented incident response capabilities gain competitive advantage when pursuing partnerships or raising capital.

5️⃣ Build One Page Control Map

Create a single visual document showing your entire compliance stack including wallet custody, key management policies, vendor relationships, blockchain analytics tools, and AML procedures. Sales teams can use this to accelerate enterprise deals while audit teams can reference it during regulatory reviews, cutting weeks off both processes and proving your operations are production grade from day one.

Links:

Robert A. Musiala Jr.

BakerHostetler Profile: https://www.bakerlaw.com/professionals/robert-a-musiala-jr/

LinkedIn: https://www.linkedin.com/in/robert-a-musiala-jr-esq-cfcs-b6534bb/ 

BakerHostetler

Website: https://www.bakerlaw.com/ 

The Blockchain Monitor: https://www.theblockchainmonitor.com/ 

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Time Stamps:

About The Guest:

Robert Musiala - Partner - BakerHostetler

Robert Musiala has been working in the blockchain and digital assets market since 2012 and has led multiple digital asset investigations, including as the court appointed receiver over cryptocurrency investment funds used in a major fraud. Robert also advises on a variety of regulatory compliance issues involving digital assets and has drafted/negotiated agreements for a wide range of transactions in the fintech, digital assets, Web3 and NFT markets. The inventor of two blockchain patents, he works directly with tech teams to build solutions that are compliant by design. Robert is co-leader of the Web3 and Digital Assets team at BakerHostetler.

About the Host:

Tedd Huff: 

Tedd Huff is the Founder of Voalyre, and Diamond D3, professional services consulting firms focused on global payments and marketing. He is also a video podcast host and executive producer on the Fintech Confidential network.

Over the past 25+ years, he has contributed to FinTech startups as an Advisory Board Member, Co-Founder, and Chief Experience Officer, providing strategic and tactical direction for Global Payments OpenEdge, Heartland Payments, Nuvei, and TSYS, among others, focusing on growth while delivering innovation, process improvements and user experience-driven value to simplify the complexity of payments.

DD3, Media: 

DD3 Media is a media creation, management, and production company delivering engaging content globally

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