What happened in crypto today: New Fed chair pick, DeFi cracks, and more

DeFi security risk continues to dent confidence in the sector as the impact of KelpDAO’s $292 million hack deepens. 

Beyond DeFi woes, the new Fed chair pick has backed crypto’s position in the U.S. financial system as the U.K. pushes for stablecoin integration.

Here’s the full breakdown of top headlines that shaped crypto in the past 48 hours. 

Fed chair pick Kevin Warsh backs crypto

President Donald Trump’s Fed chair pick, Kevin Warsh, underscored crypto’s position in the current U.S. financial system. During the Tuesday hearing by the Senate Banking Committee, Warsh said, 

He was responding to a question by Senator Cynthia Lummis, who sought to understand whether the Fed will support crypto integration and ongoing investment. 

This wasn’t surprising, given Warsh’s recent investment disclosure across several crypto projects. Even so, ranking Democrat member Sen. Elizabeth Warren was cautious of Warsh’s nomination, noting that he will be a ‘sock puppet’ for Trump’s crypto interests. 

After the hearing, Bitcoin rallied to $78K on Wednesday, the highest level since February.

Will DeFi contagion slow Wall Street adoption?

Investment bank Jefferies LLC has warned that the $292 million Kelp DAO hack and ensuing DeFi contagion could force traditional firms to pause tokenization plans. 

The exploit triggered investor panic, prompting a $15 billion outflow from Aave, the leading lending DeFi platform. 

On this backdrop, Andrew Moss, research analyst at Jefferies LLC, told Bloomberg that, 

He noted that the rollout of tokenization expansion across banks, fintechs, and others may ‘decelerate temporarily’ as firms reassess the risk. 

Moss said that tokenization has recently accelerated due to regulatory clarity, but he cautioned, 

U.K. pushes for an integrated payment system

Finally, the U.K. Treasury announced a single regulatory framework covering traditional payments, stablecoins, and tokenized deposits. 

According to Treasury and City Minister Lucy Rigby’s statement on Tuesday, the move will help ‘equip the U.K. payments sector for the future of rapid financial innovation.’

Rigby added that the ministry will soon invite the public and stakeholders for feedback on the plan. Interestingly, even agentic payments will be covered in the proposal. 

According to the minister, the move would position the U.K. as a global leader in financial technology, a spot both the U.S., Hong Kong, and other jurisdictions are fighting for. 

Final Summary

• Warsh’s crypto backing has elicited industry praise but triggered political backlash from Democrats. 
• Jefferies warned that Aave’s $15B outflows triggered by DeFi contagion could tip Wall Street to pause interest in the sector.