Issue 02: Cooked. BTC, NY roasts prediction markets, CFTC, data centers, COGE, JPM and BLK onchain

Welcome to babsNYC.news Issue 02 🗽

babsNYC is the only newsletter with cross-sector coverage of blockchain in NYC. Here’s what we've seen around town the last few weeks:

(click on topic word to jump to section)

FINANCE: Making sense of blockchain use cases in finance, using BlackRock and JPM as examples.

BITCOIN: Kind of cooked, tbh, and “dorky boomer tradfi” starts to look like Father Knows Best.

CIVIC BLOCKCHAIN: NYC Mayor’s Commission on Government Efficiency (COGE) hearings wrapped. Blockchain was mentioned exactly twice in 18 hours of public hearings and umpteen pages of written testimony. BabsNYC spoke up; 🗣 learn more about what happened.

DePIN: Does DePIN have a dog in the NY data center fight? Could it be a bipartisan safety zone?

REGULATION: Prediction markets getting roasted in NY; the Commodity Futures Trading Commission (CFTC) enters the ring; Kalshi wants to move the fight to Manhattan Federal court.

Still no clarity on Clarity: Senate Repubs burpee-d out a Clarity Act update, progress still stalled. 24/7 trading on the horizon. ⏱ 👀

DATA DIVE: SPECIAL BONUS: WHERE IN THE WORLD IS BLOCKCHAIN?

We are thrilled to feature special guest contributor Sarah Jane Hager, Data Analyst/Quant Strategist, who prepared a data-illustrated flyover of the industry, comparing blockchain valuations to local GDP and crypto ATM density to population. Spoiler alert: Ohio’s got a few surprises for you!

TOUCH GRASS: Noguchi’s NYC. I’ll take (his) Manhattan. Step away from the keyboard- these are IRL events worth your 3D time.

BABS ANNOUNCEMENTS

Thanks for reading 🫶

Kala Philo
Founder and Senior Editor

Finance is one of several broad categories of use cases for blockchain. Within finance, Wall Street and big banks are rolling out an alphabet stew of specialized on-chain products and chains.

We’re working on a compelling visual for all this, but for this month, let’s start with a simplified look at two large financial institutions almost everyone knows, BlackRock and JPMorgan.

Below doesn’t cover all their activity to date; it goes over the basics of why they got into blockchain in the first place.

BlackRock is a (ginormous) asset manager that uses blockchain to innovate on investment products, while JPMorgan is a bank that uses it to innovate on payments and settlement.

BlackRock is using public blockchain to give investors (from large institutions to accredited investors to retail brokerage customers) new, on‑chain ways to gain exposure to assets like Bitcoin and tokenized money market funds.

JPMorgan, the biggest US bank, is using private blockchain technology to give corporates, banks, and large institutional treasuries faster, compliant, more programmable ways to move and settle money than traditional “rails”.

BlackRock is the largest asset manager in the world, with $15.3T in assets under management (AUM). 

In January 2024, the SEC, then headed by the notoriously anti-crypto Gary Gensler, approved BlackRock's IBIT (iShares Bitcoin Trust ETF), a spot Bitcoin exchange-traded fund (ETF) traded on the NASDAQ, and ten competing funds. The broader markets hardly blinked, but this was the moment that pushed Bitcoin into the TradFi mainstream.

Who is BlackRock’s customer?

At the top level, BlackRock serves accredited and institutional investors (pensions, endowments, corporates), financial advisors, and everyday retail investors who access its iShares ETFs through regular brokerages.

What does BlackRock’s customer care about, in this context?

Those interested in Bitcoin care about regulated, liquid exposure to Bitcoin via a brokerage account, without a crypto wallet or private keys. They also know Bitcoin can be volatile, so they want products that keep that volatility in a defined slice of the portfolio and reduce operational and custody risk.

By contrast, some clients aren’t chasing Bitcoin at all. They want safe, dollar‑denominated yield on cash and T‑bills, with benefits that traditional financial rails can’t give them, like instant on‑chain settlement, 24/7 transferability between approved wallets, and the ability to use those tokens easily as collateral or working capital in other on‑chain services.

And in that context, what does BlackRock care about?

BlackRock cares about capturing new asset flows in an emerging category and defending the lead it already holds in the ETF business. They also care about positioning at the center of tokenized cash and money markets, showing that big, boring cash products can live on‑chain at scale

How does blockchain help BlackRock provide that?

BlackRock’s IBIT is a spot Bitcoin ETF. The fund directly holds Bitcoin on the Bitcoin blockchain, with an institutional custodian, while investors own ETF shares that track Bitcoin’s price. Investors don’t own the underlying BTC directly; they get economic exposure through those shares.

In March 2024, BlackRock launched BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a tokenized fund on a public blockchain. BUIDL is a flagship Real World Asset (RWA) product: shares in a traditional fund exist as tokens on public blockchains, giving qualified institutional investors on‑chain access to Treasury yields with faster settlement, 24/7 transferability between approved wallets, and programmability.

JPMorgan is the largest bank in the U.S. and the world’s most valuable bank by market cap. CEO Jamie Dimon has spent years deriding Bitcoin and “crypto tokens,” even as JPMorgan ramped up its own permissioned blockchain platform, Kinexys (built out of its former Onyx blockchain unit), and began issuing its own bank deposit tokens on top of it.

Some read that as hypocrisy; others see a savvy TradFi banking CEO doing his job, talking down open networks while his bank builds similar rails that JPMorgan can fully control.

Who are JPMorgan’s customers (in this context)?

In this context, JPMorgan serves corporates, banks, and institutional clients that move large balances cross-border and within markets like the U.S.

What does JPMorgan’s customer care about?

They care about speed and predictability: settling payments in near real time, 24/7/365, instead of waiting days for correspondent banking to catch up. They also care about costs (fees) and liquidity - a clear, real‑time view of where their cash sits across currencies and accounts.

And in that context, what does JPMorgan care about?

JPMorgan cares about keeping the money, and the fees for moving it, inside its own network rather than losing it to public networks or fintech competitors. 

How does blockchain help JPM provide that?

Blockchain helps by letting JPMorgan tokenize bank deposits on Kinexys, a private network with no public crypto token involved, enabling instant, programmable settlement and round-the-clock FX. Kinexys has processed more than $4 trillion since launch, with roughly $7 billion moving through it daily.

For an overview of public, private and hybrid blockchains, check out the Finance section of our Issue 01.

Bitcoin crept into July below $60,000, rallied to $66,000, and fizzled out to close out the month at  $62,800.

Morale (and some Coldcard clients 😢 ) took an additional beating with news of the Coldcard attacks that resulted in $89 million worth of bitcoin drained from cold storage wallets in July. 

As Senior ETF Analyst for Bloomberg @EricBlachunas points out, the Coldcard exploit may be boosting interest in spot Bitcoin ETFs as an alternative to self-custody, making reliance on custodians “all of a sudden seem like a feature.” (We think he means “benefit”, but who's counting.)

At the exchange level, Julio Moreno, Head of Research at NYC-based analytics firm CryptoQuant, said small Bitcoin deposits under 10 BTC into exchanges totaled 7.3K BTC on July 31, the highest level since Feb. 6, and that it “could be related to the Coldcard hack, as people move their holdings looking for safety.”

Speaking of smaller investors, a bitcoin meetup in Spanish took place at PubKey NYC with maximialistas de BTC en casa! LATAM countries represented included: Peru, Costa Rica, Mexico, Argentina, El Salvador, and Mexico. Some cool projects were presented; check out the event page for more details on speakers

The CLARITY Act advanced in July as Senate Republicans released an updated 616-page draft on July 22, merging committee versions and adding new ethics restrictions, but major sticking points remain (SEC-CFTC jurisdiction split, stablecoin yield rules, DeFi and developer protections, and conflict-of-interest tied to POTUS and family making money off crypto).

We covered still other reasons Clarity may be stalled in last month’s newsletter.

NYC-based BlackRock and Goldman Sachs have publicly endorsed the bill. Fidelity and Franklin Templeton have signed on as well.

Also percolating: SEC Commissioner Hester Peirce said onchain vaults and lending strategies may still fall under securities laws, and the SEC and CFTC both pushed ahead on 24-hour trading and futures-market consultations.

Curious about the alternate universe of 24-hour trading? Check out this interesting fact sheet 🤓 from the New York Stock Exchange (NYSE).

Fun fact for you to drop at the next sports bar happy hour: Kalshi and Polymarket are both prediction markets, but they’re built on different rails. Kalshi is not chain-native; it’s a CFTC-regulated U.S. exchange that operates like a traditional platform, while increasingly integrating crypto as a funding/payment layer.

Polymarket was originally crypto-native; its main wallet‑based, on-chain platform remains offshore and unregulated by the CFTC. To operate legally in the US, they added a CFTC‑regulated U.S. exchange (Polymarket US) that gives Americans access to a subset of its markets via brokerages and traditional clearing.

Each company is accessorizing with meet-me-in-the-middle add-ons - Kalshi is adding crypto, while Polymarket’s glow-up was a TradFi‑style, CFTC‑regulated U.S. exchange. 💅

Regulatory battle heats up over alleged sports gambling. State of NY not having it; Kalshi’s counting on cover from a bigger dog in the fight. 

October 2025: The New York State Gaming Commission sent a cease-and-desist letter to Kalshi over its event and sports-related contracts. This matters because sports make up 70% to 90% of Kalshi’s trading volume.

Late 2025: Kalshi preemptively sued the New York gaming regulator in federal court, trying to block the state from enforcing its local gambling laws.

July 8, 2026: U.S. District Judge Analisa Torres of the Southern District of New York denied Kalshi's request for a preliminary injunction and temporary restraining order against the state commission. 🛑

Late July 2026: Federal appeals courts rejected Kalshi's subsequent requests for emergency injunctions and temporary relief while the core ruling is appealed.

July 31, 2026: Negotiations broke down, and New York Attorney General Letitia James, alongside Gov. Kathy Hochul, formally sued Kalshi, alleging it operates an illegal gambling enterprise and demanding up to $36 billion in fines and restitution. CFTC enters the ring and sues NY.  🥊

Cliffhanger: August 2026: Kalshi immediately filed to move the state's new lawsuit into Manhattan federal court, arguing that federal commodity laws preempt state powers, setting up a clash over venue and jurisdiction.

The strategy seems to be to move the legal wrangling to the federal level so that the states can't overrule the CFTC's authority. Chairman Mike Selig is (obvio) supportive of prediction markets. Donald Trump Jr. is an advisor for Polymarket and Kalshi, with related financial interests in both.

References: CNBC, Times Union, NY Law Journal

Gov. Hochul has been busy. On July 14, she issued the first statewide moratorium on new hyperscale data centers for AI. So why talk about data centers in a blockchain newsletter?

AI training/inference and Bitcoin mining are technically unrelated, but they require similar physical inputs: electricity, land, chips, cooling systems, grid access, and finished data center capacity.

Also, across the US, some Bitcoin miners are attempting to pivot to AI use cases. In NY, the timing is a challenge. Former Bitcoin miner Greenidge Generation (now Vulcan Infrastructure and Power) seems to be caught in the crossfire of the data center debacle.

New York isn't a contender for giant Northern VA-style data centers; the state's model is smaller, spread-out compute near the city or old industrial sites upstate. And, thinking beyond the AI/bitcoin frame, guess what else is primed for smaller, spread-out compute?

DePIN (decentralized networks of independently-owned servers or infrastructure).

While currently not a fit for LLM training, DePIN could be part of a systemic solution to expand overall compute capacity. DePIN could also be a way to get vocational programs and citizens involved, which could appeal to NYC and Albany stakeholders and provide an alternative to the “big tech power grab” story.

The space is very nascent, lacks organized blockchain industry leadership, but has unexplored potential.

The COGE commission wrapped with 264 live testimonies and 603 written submissions, over 1,220 New Yorkers across 10 hearings. babsNYC Founder and Editor Kala Philo submitted testimony at the Queens hearing on July 13. 

The commission has prioritized five areas for charter amendments headed to the November ballot, of which two are relevant to blockchain: 

Contracting & procurement - Multiple vendors and agencies keeping separate books on the same contract is exactly the reconciliation problem distributed ledgers solve.

Permitting reform consolidates a fragmented, multi-office process into a single hub to better serve users. But old-school consolidation has a downside: fewer custodians means more concentrated tampering risk, the same pattern NYC has been grappling with in deed records for at least seven years, if not longer.  Blockchain as the backend architecture for the hub could solve the tampering weakness in the consolidation model.

If I may…(Kala’s take):

The bigger point is that the Mamdani administration is initiating reforms to NYC’s tech infrastructure to improve efficiency and trust in government.

However, it seems the civic tech reforms for the largest city in the US will probably just involve improving front-end UX, as well as tinkering and patching up centralized databases across agencies, vendors, and other stakeholders. 

In some cases that might be exactly what is needed, but in others, it's not, and there should be a process for evaluating whether or not a decentralized solution would be a better investment of taxpayer dollars in the long term. Requiring that process is essentially what I proposed in babsNYC’s COGE testimony.

The irony is that the most aligned civic tech solution for futureproofing the Mamdani administration's citizen-centric values is blockchain. It’s a political hot button at the moment, due to ongoing, high-profile gaffes in the financial use case sector (and crypto firms/NYSE aligning with A. Cuomo, of all people, certainly doesn’t help optics at City Hall). 

But none of that means that city officials’ and the public’s limited understanding of civic blockchain’s potential should have the last word. Is NYC blockchain business leadership sleeping on this, leaving an opening for SF or even Boston-based firms to “quietly” (as Chat likes to say) build relationships? Call me loca (it wouldn’t be the first time), but much, much stranger things have happened.

🏆 A special feature by guest contributor Sarah Jane Hager, Data Analyst and Quant Strategist

It’s been a tough year in blockchain. Bitcoin is down, deal activity is low, and the only tech anyone seems to be able to talk about these days is AI. But even though 2026 has been a bear year so far, movement is beginning to pick back up again.

The realization that institutions are increasingly using blockchains, stablecoins, and smart contracts to support their operations is hitting the mainstream. Also, Augustus is in the news, armed with an OCC national bank charter, as a crypto clearing bank for the AI age.

So at this mid-bounce point, I thought we should take stock of the space and ask a question: “Where in the world is the blockchain industry?”

The industry

We took the market cap of major blockchain companies and divided it by the GDP of their headquarter cities to identify major industry hubs across the globe.

Obviously, San Salvador, capital of El Salvador, dominates this metric. El Salvador has an extremely friendly regulatory environment, so much so that Tether decided to move its headquarters there in 2025. Taking them out of the ranking, the picture becomes a little clearer. 

Dubai and the San Francisco Bay Area come out as relatively large industry hubs. NYC is also able to pull some major players, but remains dominated by many other industries, especially in TradFi. This also makes sense with the regulatory environment in New York State. In 2015, it began to require all cryptocurrency companies to acquire a BitLicense to operate in the state. This move even drove out Kraken, the world's largest crypto asset exchange. The impact of the BitLicense will also impact other areas of this analysis.

Miami also holds a notable ratio in the dataset of >1%. The city is known culturally as more of an industry hub. Many TradFi players, such as Citadel, are headquartered there, with major digital asset trading teams in the city, and social media has convinced me there’s a big crypto bro scene there. It’s possible that, as time passes, there will be a higher market cap concentration as well.

The consumers

We studied the ratio of local population to crypto ATMs as a proxy for local consumer demand for crypto products both internationally and within the US. The data sourced from coinatmradar.com, a site that uses a combination of research and crowdsourced data to map these installations across the globe, and their blogging activity suggests the website is actively maintained to this day.

There are likely some examples of over- or under-reporting of machines due to the crowdsourced nature of the information, but it’s a useful exercise nonetheless as a proxy for understanding how people may use digital currencies in their daily lives.

Globally, these are the top 10 countries with the highest rates of Crypto ATM installation relative to population.

Canada, Australia, and the US are the top three in terms of raw number of Crypto ATMs and also relative to total population. El Salvador is obviously also in the top 10, while some Eastern European states fill out the rest of the ranking. 

Note: Countries with 5 or fewer Crypto ATMs were filtered out as their infrastructure is not seen as a meaningful statistic.

Domestically, the pattern is more interesting. This chart shows the top 10 US Cities by population as well as their adoption ratio.

This shows how consumer ATM density varies significantly in major US cities, with Dallas, TX at an extremely high density adoption ratio while San Antonio, a major city in the same state, sees much lower infrastructure installed to support consumer demand. On average, major US cities have an average crypto ATM density of around 1 per 5,000 people, a significant amount of infrastructure.

Notably missing from this chart is New York City. After the BitLicense requirement was created in 2015, there was only one company ATM operator that appears to have received the license, Coinsource. This company voluntarily surrendered its license in 2023, and there doesn’t seem to be any other licensed ATM operators in this state at this time. All this to say, there definitely are still crypto ATMs in the state (I’m sure you’ve seen them around), but they’re all either illegal or out of operation. So there is technically none.

Further down we can see a more interesting breakdown. These are the 10 US cities with the largest raw number of crypto ATMs that were not included in the previous list. As you can see, the reported density is pretty extreme. 

Some of these in South Florida, a known crypto hub, are pretty logical. Others, however, such as Richmond, Norfolk, Harrisburg, and Bedford, make less sense at first glance. The source uses self-reported information, so it’s likely there’s an overcount in some of these smaller towns, or that the crypto ATMs are actually housed in the surrounding areas instead of confined within this locale.

For Bedford, OH, specifically, this number is likely also inclusive of ATMs in the surrounding suburban areas of Cleveland. That being said, a quick Google search reveals a genuinely surprising amount of crypto ATMs in the small town of ~12,000 and across suburban Cleveland. 

This could be caused by a few factors. First, the regulatory environment in Ohio is increasingly friendly to cryptocurrency operators. Second, the state is a major transit hub with large amounts of goods and people constantly passing through the city.

One theory is that large, unbanked migrant populations who use stablecoins or other digital currencies to send money home have created demand for this infrastructure. Truckers, local businessmen, farmers, and other manufacturers may also have some use for the currency in paying suppliers or receiving payments from consumers. Determining the precise factors, however, would require further study.

But, yeah - Bedford, Ohio. Major cryptocurrency hub. Who knew?

Connect with Sarah on LinkedIn

A short list of IRL things to do in the most amazing city on the planet. Not sponsored unless otherwise noted. Send us your picks here.

Noguchi Museum

Kala braved the early July heat wave and had a sweaty but memorable visit. The current exhibit, “Noguchi in New York”, offers a multi-layered, tonal understanding of the artist and NYC’s development over decades.

Definitely worth stepping away from the screen for this experience. 💯 recommend. 

Feeling faint waiting on the E train at WTC? Pop in those earbuds while you enjoy a free sauna experience, courtesy of MTA and climate change, at one of several stations where platform temps exceed 100 F in the summer, in the city.  

Despite the heat, it'll be alright
And babe, don't you know it's a pity
The days can't be like the nights
In the summer in the city
In the summer in the city

While they look pretty cool on this cover, The Lovin’ Spoonful wrote Summer in the City in 1966, inspired by an at-the-time historic NYC heat wave.

If you enjoy babsNYC, please pass it along to your other friends who are curious about money, systems, blockchain, and enjoy big-picture thinking about practical tech solutions.

And that’s it! Much like many New Yorkers in August, we’re taking a break. Several of them, actually - here,  here,  here, and here.

Stay tuned! We’re cooking up some big announcements for our September Issue.


Guest posts 🤝
Interested in guest posting? Reach out here.