Exchange Rate $85,499 | Block height 970043

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"Price and truth are not the same thing," Quoth the Raven wrote last weekend. "They just looked similar while money was nearly free."

For fifteen years, the price of lending to the world's richest governments had very little to do with the truth about their finances. This week the bond market started closing that gap, fast. The U.S. 10-year Treasury yield crossed 5.3% on Wednesday for the first time since 2002, then reached 5.34% on Thursday, capping Treasuries' worst quarter since 1994. The 30-year also hit its highest level since 2002. It isn't only America that is facing elevated rates. Britain's 30-year borrowing costs passed 6% for the first time since 1998, France just had its worst bond quarter since 1987, and Japanese yields rose by double digits for a fifth straight quarter. Washington has already paid $1.02 trillion in interest in the first eleven months of this fiscal year.

The Treasury tried to lean against it, tripling its long-bond buybacks to $6 billion in September.

Why now? Bloomberg's Joe Weisenthal argues it's political: investors charge more when they stop trusting governments to make hard choices, which is why France now pays more to borrow than Italy. He also borrows a point from legal scholar Lev Menand. The gold and silver in old coins was "collateral," a security deposit in case the state behind the money disappeared. Bond buyers are now, in effect, asking for that deposit back.

Matthew Piepenburg sees the bill arriving for a system that creates money by issuing credit. By his count, long Treasuries have lost about 90% in twelve years when priced in gold. And as Lyn Alden put it, "some people are losing the argument for what interest rates should be," and the market is settling it for them.

Governments sold bonds to generations of savers as "risk-free." Bitcoin has no deficit to fund and no election to survive. This quarter, the world's safest asset had its worst stretch in three decades, and bitcoin rose 43%.

On Wednesday, the SEC proposed a custody framework for registered investment advisers, mutual funds, and business development companies holding bitcoin and other digital assets. It would permit self-custody "under certain specified conditions," allow state-chartered trust companies to act as custodians, and update audit rules for advisers and the rules for broker-dealers holding fund assets. Chairman Paul Atkins said the existing rules, written under the Investment Advisers Act and Investment Company Act of 1940, "have not kept pace" and that "onchain markets should not be relegated offshore." A 60-day comment period opens once the proposal is published in the Federal Register.

For years, the rule was that a financial adviser couldn't hold bitcoin the way bitcoin is meant to be held. If this passes, the people who manage other people's money will be allowed to do what any saver with a hardware wallet has been doing since 2009.

Judy Shelton is now counselor to Treasury Secretary Scott Bessent, bringing one of Washington's best-known advocates of gold-convertible government debt into his office during the worst quarter for Treasuries since 1994. The New York Times' DealBook first noted the appointment on September 16, and it drew wide attention this week as yields kept climbing despite Treasury's buybacks. In a 2012 Cato Journal paper, Shelton proposed "Treasury Trust Bonds": zero-coupon securities that the holder could choose to redeem in dollars or in a set quantity of gold. She has since pitched a 50-year bond backed by U.S. gold reserves, arguing that investors would accept lower yields in exchange for protection against a falling dollar.

A bond that promises to pay you in gold is a welcome development, because it would anchor the pure fiat regime to sound money, but it also shows the government admitting that lenders worry about being repaid in money that keeps losing value.

Strategy bought 1,665 bitcoins for $142.7 million in the week ended September 27, at an average of $85,681 each. That brings its holdings to a record 847,666, above June's previous peak of 847,363. Strive added 1,107 to reach 27,462.

On Wednesday, comments closed on MSCI's proposed "non-operating companies" test. The Bitcoin Policy Institute's Conner Brown argues the test is a repackaged version of MSCI's October 2025 plan to remove companies holding 50% or more of their assets in digital assets. JPMorgan had estimated that plan would force about $2.8 billion in Strategy selling, and up to $8.8 billion if other index providers followed. Brown notes the August consultation's file metadata still referred to "DATCOs," or digital asset treasury companies. MSCI's indexes benchmark about $21 trillion, and a decision is expected by October 16.

Three firms control two-thirds of the index market, and their committees are anonymous, with no appeal process. A bitcoin you hold yourself can't be reclassified or quietly dropped from an index.

On Thursday, Jack Dorsey's Block launched its first major consumer advertising campaign for bitcoin, under the tagline "Some things don't make sense. Bitcoin does." The spots feature everyday Americans talking about cost-of-living worries and frustration with the financial system. They will run on YouTube, X, Meta, Instagram and Fox Sports, and before screenings of Avengers: Doomsday and Dune 3, through December 31. Block says it is aiming at roughly 60 million "bitcoin-curious" Americans and leading with bitcoin's fixed supply and decentralization, not its price. "This campaign is our first major illustration of what a Bitcoin-centric financial system could look like," said Miles Suter, Block's bitcoin lead. It's a step up from last November, when Block parked a "Capital Gains Coffee Truck" in Washington to lobby lawmakers for a tax exemption on small bitcoin payments. Now it's pitching consumers directly.

In the same week the world's "risk-free" asset had its worst quarter in three decades, one of America's biggest payments companies went on prime time to pitch the one money with a fixed supply.

50T Funds CEO Dan Tapiero told BMTV "I think we've begun a bull phase," adding that this year is "the first time" the TradFi and blockchain worlds are really meeting, rather than one replacing the other.

Bitwise head of research Ryan Rasmussen said one sovereign wealth fund the firm spoke with is funding part of its bitcoin allocation by selling gold and foreign-exchange reserves.

HANetf launched the world's first euro-hedged bitcoin fund. HSBC handles the currency hedge, so European savers get bitcoin's price without the dollar-euro swing.

Spain's tax authority confirmed that bitcoin held in wallets where the owner controls the private keys falls outside its Form 721 foreign-asset filing, because whoever holds the keys holds the asset.

The Dutch cabinet dropped its plan to tax unrealized gains and will instead tax realized profits at 36%. Financial assets move in 2028, and the letter leaves open whether bitcoin is taxed then or in 2030.

The Smarter Web Company won FCA approval for "MORE," the UK's first bitcoin-backed preferred share. It pays a 12% dividend weekly and is expected to list in London on October 14, with up to £8 million going to bitcoin.

Belarus registered its first two digital asset banks, licensed to offer bitcoin deposits, lending, and custody once the National Bank accredits them.

Learn one key idea about bitcoin each week. This week:

Is it the miners, the developers, or the biggest holders? In a new piece for Fidelity Digital Assets, senior research analyst Daniel Gray explains why the real answer is nobody.

Two jobs. Miners keep the chain moving by adding a new block roughly every ten minutes. Nodes, computers running bitcoin software, enforce the rules by checking every transaction and block. A miner that breaks the rules isn't overruled. It's ignored, and doesn't get paid.

Big isn't the same as in charge. Nodes run by exchanges carry more weight than one person's node at home, because they verify more value. But in 2017, 58 companies representing about 83% of mining power signed the "New York Agreement" to change bitcoin's rules, and they lost. Ordinary node runners and developers refused to go along. Miners realized they'd end up mining a new coin nobody recognized, and they backed down.

Change is hard on purpose. New rules only apply to people who choose to upgrade, and upgrades aim for about 95% support before they switch on. Anyone can copy bitcoin's code, but nobody can make anyone else value the copy.

Your exit is your vote. Gray's worry is that as more people hold bitcoin through exchanges and funds, a few big operators could end up speaking for millions. The safeguard is unilateral exit: being able to withdraw your coins without anyone's permission, and taking your economic weight with you. This week, after a $388 million hack, customers of the exchange Bitget used exactly that right, pulling 4,098 bitcoins in a single hour.

Gray closes with economist Friedrich Hayek's idea of spontaneous order: complex coordination that emerges when many people follow their own incentives, with no central planner. Miners want to get paid, holders want their coins safe, and everyone needs someone to trade with. All of that self-interest keeps pulling everyone back onto the same chain.

The takeaway: nobody controls bitcoin, and everyone who holds their own keys is part of the reason why.

In the first eleven months of this fiscal year, roughly how much did Washington pay in interest on the national debt?

A. $250 billion
B. $500 billion
C. $1 trillion
D. $2 trillion

Check your answer at the end of the page.

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Answer: C. Washington paid $1.02 trillion in interest through August, passing $1 trillion with a month of the fiscal year still to go. That's 2.8 times what it paid in fiscal 2021, and the CBO projects $2.1 trillion a year by 2036. With the 10-year now above 5.3%, every dollar the government rolls over gets more expensive to borrow.

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