Meanwhile, the future of the CLARITY Act remains uncertain, and various parties are still debating issues related to stablecoin yields. The best performing assets in March were Hyperliquid (benefiting from increased commodity futures trading volume) and Bittensor (benefiting from a major technological breakthrough in decentralized AI). The Iranian conflict almost overshadowed all other market dynamics in March. For the global economy, the most significant impact was the substantial oil price shock: spot oil prices are currently up about $46 per barrel (a 63% increase), and forward futures prices have also risen in tandem as traders anticipate longer supply disruptions. The resulting inflation concerns have pushed up interest rate expectations in major economies. Broad-based equity indices, government bonds, and precious metals all declined. Despite market volatility, crypto assets managed to record a slight increase (see Figure 1). We believe the resilience shown by the crypto market stems in part from the significant release of market risks in recent months. Even with increased overall market volatility in March, crypto spot ETPs still saw a slight net inflow of funds, and perpetual contract open interest also increased slightly. Bitcoin was particularly boosted by Strategy, which purchased approximately 44,400 bitcoins (worth about $3.1 billion) thanks to strong demand for its STRC preferred stock product. Figure 1: Cryptocurrencies saw a slight increase in March. The crypto market may also benefit from increased regulatory clarity, including the latest interpretative guidance from the U.S. Securities and Exchange Commission (SEC) on how federal securities laws apply to crypto assets. This statement, developed in conjunction with the Commodity Futures Trading Commission (CFTC), addresses a series of long-standing issues that have plagued crypto entrepreneurs and their legal counsel. This guidance primarily includes three specific points: **Crypto Asset Classification Framework**. The SEC classifies crypto assets into five categories (see Figure 2). **Digital securities are securities (this is self-evident).** **Stablecoins may be classified as securities (if they do not meet the requirements of the GENIUS Act and possess securities-like characteristics).** **All other crypto assets are not securities.** **Token Definitions**. Most tokens are not securities, but even non-security tokens may constitute "investment contracts" and thus require registration with the SEC. The SEC here uses the classic Howey test standard: if investors can reasonably expect to profit based on the issuer's business practices, the issuance may be considered a securities offering. Regulatory Definition of Mining, Staking, Asset Packaging, and Airdrops. Generally speaking, these activities are not considered securities transactions. So what does this mean in practice? Blockchain provides new avenues for financing, but potential issuers want to ensure they fully comply with existing laws. This new joint guidance reduces uncertainty, which is expected to stimulate new investment activity. For crypto asset investors, the direct impact is: reduced regulatory tail risk; and an potential increase in new token issuances, potentially leading to more active on-chain activity. This increase in activity could ultimately provide value support for the underlying public blockchains and their native assets (such as ETH, SOL, SUI, BNB, and AVAX). Figure 2: SEC clarifies that most digital assets are not securities. Meanwhile, the prospects for the Clarity Act in the US Senate remain uncertain; Polymarket predicts a roughly 50% chance of its passage. Stablecoin rewards have become central to the debate—likely because this model threatens the revenue of some banks (see Figure 3). On March 20, senators announced an agreement in principle to push the bill through the Senate Banking Committee. On March 24, a new framework was released: prohibiting payouts for purely passively held stablecoins, but allowing limited activity-based rewards linked to payments or platform usage. This proposal aims to alleviate banks' concerns about deposit outflows while preserving room for innovation. In response, industry players have begun to jointly submit counterproposals, advocating for a more flexible regulatory approach to yield rewards. Negotiations are ongoing, with the goal of finalizing committee revisions in April and passing the bill as early as May. Figure 3: The CLARITY Act May Affect Competition in Payment Revenue. [Image of Hyperliquid and Bittensor] During March, the financial crypto sector performed best, with Hyperliquid leading the way. The platform's growth was primarily driven by HIP-3 (see Figure 4), which supports 24/7 trading of traditional assets such as stocks and commodities—an advantage particularly significant in volatile market environments where traditional exchanges remain closed. Furthermore, TradeXYZ (the HIP-3 deployer) partnered with S&P Dow Jones Indices to launch the first officially licensed S&P 500 perpetual contract on the Hyperliquid platform, further deepening its integration with traditional financial markets. Finally, with market interest in prediction-based markets continuing to rise, the highly anticipated HIP-4 upgrade has also found an opportunity to accelerate. Figure 4: Open interest in high-liquidity HIP-3 contracts continued to reach new historical highs in March. Meanwhile, the narrative surrounding artificial intelligence continued to heat up. Bittensor became a significant beneficiary of this trend, with its TAO token rising 71% in March, driven by increasing investor interest in the integration of blockchain and artificial intelligence technologies. On March 10th, a Bittensor subnet announced the successful training of a large language model (LLM) with 72 billion parameters using a permissionless network of nodes, demonstrating the potential of decentralized infrastructure to support large-scale AI research and development. That same month, Bittensor was mentioned in an interview with NVIDIA CEO Jensen Huang on the All-In podcast, generating widespread market attention. These developments collectively highlight Bittensor's unique position at the intersection of two core structural trends: artificial intelligence and decentralization. Figure 5: Cryptocurrency Sector Returns Show Significant Diversity. The ongoing military conflict in the Middle East continues to cast a shadow over the prospects of crypto assets. Before the conflict, the global economy was strong, even showing signs of accelerating growth, and central banks around the world were inclined to cut interest rates. If this round of conflict ends quickly and oil prices fall, the market may re-price the favorable macroeconomic environment. Conversely, a continued rise in oil prices could drag down economic growth and delay market recovery. Currently, we believe many investors will remain on the sidelines until geopolitical risks become clearer. Despite these uncertainties, we believe now presents a good opportunity for long-term crypto investors to build positions. The resilience of asset valuations since the outbreak of conflict suggests the market may have established a more solid bottom. Furthermore, the core trends driving blockchain adoption—especially the increasing popularity of stablecoins and tokenized assets—remain unchanged. A significant rebound in token prices may require further easing of macroeconomic uncertainties. However, in retrospect, such phases often prove to be highly attractive entry points.
Brian
Weiliang
Joy
Miyuki
Alex
Anais