Autor Cointelegraph By Jesse Coghlan

The European Parliament has passed legislation allowing tech firms to scan messages for child sexual abuse material until 2028, a controversial law dubbed “chat control” by critics.EU lawmakers on Thursday largely voted against extending the regulation, dubbed “Chat Control 1.0,” but stopping it required 361 lawmakers to reject it. Only 314 voted to stop the law, and 276 supported it.The vote advances reviving the “chat control” rules that expired in April, and has been a controversial topic among privacy and cryptography advocates, as the originally designed law breaks the principle behind encrypting messages.Parliament, however, passed an exemption to exclude “communications to which end-to-end encryption is, has been or will be applied,” handing a small win to cypherpunks. Pirate Party MEP Markéta Gregorová, whose party put forward the amendment to exempt end-to-end encrypted messages, said its success was “a bittersweet victory.” “Protecting encryption was one of our priorities, and I am therefore glad that we managed to secure an absolute majority for an amendment that at least preserves encryption. At the same time, however, voluntary mass scanning unfortunately passed,” she said.The law’s supporters argue it is vital to protect children and combat the spread of abusive material.The parliament’s laws with amendments will be sent back to the Council of the EU, a body of ministers from the bloc’s member nations who will approve or reject the legislation.Chat Control battle “just getting started”The vote on Thursday comes after the European Parliament voted through a rarely used urgent procedure on Tuesday that brought lawmakers back to vote on whether to extend a legal framework for the laws that expired in April.Since the framework expired, messaging platforms such as WhatsApp have been allowed to take their own voluntary measures to seek out those sharing abusive material.In March, Parliament had rejected a temporary extension of the scheme while a new permanent version of the law, dubbed “Chat Control 2.0,” was under discussion, before the European People’s Party, the largest group in Parliament, revived the extension in the urgent procedure vote on Tuesday.The party had largely voted against extending the laws in March because of amendments that restricted the scope of scans, but its leader, Manfred Weber, has been looking for ways to push through the extension without changes.Related: EU committee advances digital euro bill after key voteBreyer, the former MEP, said the “political battle over the permanent ‘Chat Control 2.0’ is just getting started.”“The resistance we saw in Parliament today was so strong that finding a majority for permanent, suspicionless mass scanning in future negotiations is a complete pipe dream,” he said.Negotiations for the permanent law, or “Chat Control 2.0,” will resume in September, with lawmakers disputing whether message scanning should be targeted or applied broadly.Features: Crypto industry looks to stablecoins and DeFi revisions in MiCA 2.0

Decentralized finance (DeFi) tokens have held up unusually well against Bitcoin over the past month, suggesting the market may be “quietly re-rating” the sector, says crypto index fund maker Bitwise.Bitcoin (BTC) fell about 22% in June, while Bitwise’s index tracking tokens from major DeFi protocols fell only 4% over the same period, Bitwise said in a report Thursday.“DeFi usually swings much harder than Bitcoin, so holding up this well is unusual, and almost no one is talking about it,” it said. DeFi tokens have a reputation for being highly volatile during crypto market swings, as they’re the first to be sold by risk-averse traders. However, Bitwise said this is changing as traditional institutions have begun to use the protocols, which have stabilized the wider DeFi ecosystem.“We think DeFi is quietly re-rating,” Bitwise said. “Token economics are improving, the gap between usage and token value is closing, and real institutions are building on names like Morpho and Jupiter, with Aave alone generating ~$900 million in the past year.”“We expect DeFi’s outperformance to keep playing out in Q3, the kind of shift the market tends to notice late,” it added.Source: BitwiseBitwise’s DeFi index fund weighs assets by market capitalization, and its current holdings are weighted 61% toward Hyperliquid (HYPE), the native token used by the crypto perpetuals exchange of the same name that has gained more than 160% so far this year.The index also holds Uniswap (UNI), Ondo (ONDO) and Aave (AAVE), among others, all of which have fallen by double-digit percentages year to date.DeFi value locked drops over 2026While HYPE has propped up the value of DeFi tokens, total value locked in DeFi has fallen nearly 40% so far this year through June, declining to just over $70 billion from roughly $115 billion in January, CryptoRank reported June 24.The crypto data aggregator attributed the market decline to the major correction in early October, which came after the crypto market peak, when Bitcoin hit a high of more than $126,000.However, the company said the current drawdown remains smaller than during the 2022 bear market, suggesting a more resilient DeFi market.Bitwise says expect stablecoins, volatility if CLARITY failsIn its report, Bitwise also noted key upcoming events it expects will affect the crypto market.It said it expects “a steady run of large firms to announce stablecoin projects” ahead of the GENIUS Act, a stablecoin-regulating bill the US made law last year that takes effect in January 2027.Related: EU lawmakers urge assessing DeFi, staking, NFT regulationStablecoin supply has held amid the crypto market downturn, it added, and their growth will positively affect blockchains such as Ethereum and Solana this quarter as regulators finalize their rules for the GENIUS Act.Bitwise said it also expects the next three months will be “make-or-break for the CLARITY Act,” the crypto market structure bill currently under review and negotiation in the Senate that Bitwise said has an unlikely chance of passing before the November elections.“If it passes, we believe it likely marks this bear market’s bottom,” Bitwise said. “If it fails, expect volatility initially, then a clearing of uncertainty as the industry keeps building under a pro-crypto SEC and CFTC.”Features: DeFi hacks shake institutional confidence as risks outpace yields

US Democratic Senator Ron Wyden has urged Senate leaders to ensure that crypto developer protections stay in the crypto market structure legislation that lawmakers are looking to pass ahead of the midterms.Wyden told Senate Minority Leader John Thune and Senate Majority Leader Charles Schumer to preserve a section of the CLARITY Act known as the Blockchain Regulatory Certainty Act (BRCA), according to a letter shared by Crypto in America podcast co-founder Eleanor Terrett on Wednesday.“Developers who make and release software that allows people to manage their own digital assets — and, critically, where the developer does not control user assets — should not be treated as money transmitters solely because they create or publish software,” Wyden wrote.The letter comes after certain groups and lawmakers opposed the BRCA. A group of law enforcement organizations and a coalition of Catholic organizations last month argued it could create gaps in the oversight of illicit activity.Meanwhile, crypto groups have urged the Senate to keep the section intact, arguing that developers of non-custodial technology can’t control user funds and should not be treated as financial intermediaries.Negotiations over provisions in the bill are ongoing. Senate leaders are pushing for the bill to be passed this month, and will want to bring to the floor a bill that has wide support to avoid prolonged debate.BRCA needed for US to remain competitive: WydenIn his letter, Wyden argued that treating crypto developers as money transmitters “punishes technological innovation and advancement in strategically important areas at a time when the United States must remain globally competitive.”He added that the BRCA reflects guidance from the Financial Crimes Enforcement Network and gives legal certainty for developers of open-source and non-custodial projects “to continue building and developing the decentralized finance ecosystem right here in the United States.”“Smart policy will empower law enforcement to do its job and facilitate innovation at the same time,” Wyden wrote. “As the Senate continues its consideration of the Clarity Act, I urge you to include the Blockchain Regulatory Certainty Act in any legislative package.”Related: Gaming groups urge Congress to ban prediction markets sports betting in CLARITY ActThe Senate has other provisions in the CLARITY Act that are at issue before it can go to a floor vote, with some lawmakers calling for tighter ethics provisions on government officials’ involvement in crypto after US President Donald Trump revealed he made $1.4 billion from his crypto interests last year.Lawmakers who back the bill want to pass it before this Congress is out to avoid having to reintroduce it into a new Congress next year.However, the timeline for the bill to pass before the midterm elections in November is tightening, as Congress will also take a monthlong recess in August.That tight timeline saw Galaxy Digital recently cut its odds of the CLARITY Act becoming law this year to 50%, saying that the Senate is running out of time to move on the bill before its August recess.Features: Crypto lobby spending on Republicans far outpaces Democratic support 

Paradigm has raised $1.2 billion for its fourth fund, which will expand the crypto venture capital firm’s investments into artificial intelligence and related technologies.The company said on Wednesday that its latest fund will invest “first in crypto, and now across AI, robotics and other frontiers.”“We continue investing in crypto and the reinvention of markets and the financial system,” Paradigm added, highlighting its investments in the crypto perpetuals exchange Hyperliquid and the prediction markets platform Kalshi.Paradigm launched in 2018 and has raised more than $4 billion for three funds focused on crypto. Its interest in AI follows a trend of originally crypto-focused companies that have been lured to the lucrative and fast-growing sector.Source: Matt HuangThe Wall Street Journal reported in February that Paradigm was seeking to raise $1.5 billion for a new fund that would invest in AI and robotics.The company’s management reportedly decided to broaden its investments as it didn’t want to be restricted and miss out on attractive deals. There was also a noted overlap between crypto and AI, such as with AI agents.Crypto exchanges such as Crypto.com and Coinbase have made big bets on AI agents, offering the technology to their users and updating their platforms to cater to the bots.Crypto funding sinks as AI funding peaksOther crypto venture companies have moved beyond crypto, including Framework Ventures, which raised $400 million for its fourth fund last month for investments in crypto as well as AI, robotics and energy.In May, crypto venture firm Haun Ventures raised $1 billion to back crypto startups and expanded into AI for the first time.Global venture funding hit a record $510 billion in the first half of 2026, a new record for half-year investments that surpassed the $440 billion invested across all of last year, Crunchbase reported on July 2.Related: Morpho’s $175M raise shows where crypto VC money is flowingAI companies made up the majority of the investment, with OpenAI and Anthropic accounting for more than 40% of funding in the first half of the year.Meanwhile, crypto captured only a portion of all venture flows, with funding into crypto in the first half hitting $10.8 billion, according to Cryptorank.Paradigm highlighted that some of its non-crypto investments included the autonomous drone delivery service Zipline, the robotic metal fabrication platform SendCutSend and the AI company Nous Research, which created the open-source AI model Hermes Agent.It added that it would “continue to research and build where it accelerates” the crypto industry, and noted the blockchain tools Foundry and Reth and the AI projects EVMbench and Centaur.Features: AI’s power crunch turns Bitcoin miners’ grid access into an asset

EU lawmakers are set to vote again on controversial legislation dubbed “chat control” by its critics, which would allow tech firms to scan messages for child sexual abuse material.On Tuesday, the European Parliament voted through a rarely used urgent procedure that will bring lawmakers to a vote Thursday on whether to extend the legal framework, which expired in early April.“Today’s vote violates our own rules of procedure, the European Parliament decided to use an urgent procedure for Chat Control 1.0,” Pirate Party MEP Markéta Gregorová said on Tuesday. “This means that on Thursday, we will once again vote on extending the derogation that allowed online platforms to scan our private communications.”The upcoming vote could revive the so-called “chat control” rules that are controversial among privacy and cryptography advocates, as tech companies must scan end-to-end encrypted messages.Since the legal framework expired in April, messaging platforms such as WhatsApp have been allowed to take their own voluntary measures to seek out those sharing abusive material.Rejecting proposal requires absolute majorityGregorová said rejecting or amending the proposal will require an absolute majority of 361 votes in Parliament.The vote Tuesday narrowly passed, with 331 in favor, 304 against and 11 abstaining.In March, Parliament rejected a temporary extension of the scheme proposed by the European Commission while a new version of the law was under discussion, in a vote of 311 against, 228 for and 92 abstaining.Euronews reported Tuesday that the latest proposal was revived by the European People’s Party, the largest group in Parliament, which largely voted against the measure in March because of amendments that restricted the scope of the chat scans.However, European People’s Party leader Manfred Weber has been looking for ways to push through the extension without changes.Related: Privacy advocates slam reCAPTCHA update they say locks out de-Googled phones“The European People’s Party is abusing its position as the largest political group to bring back, through a procedural loophole, a proposal that Parliament had already rejected,” Gregorová said. “This is unprecedented.”EU member states agreed to reinstate an interim “chat control” measure last month, which would allow service providers to detect, report, and remove abusive material until 2028.Features: Crypto industry looks to stablecoins and DeFi revisions in MiCA 2.0