Morning Minute: Crypto Sinks After Hawkish FOMC

Morning Minute is a daily newsletter written by Tyler Warner. The analysis and opinions expressed are his own and do not necessarily reflect those of Decrypt. And check out our new daily news show covering all of the top stories in 5 minutes, downloadable on Apple Pod or Spotify.

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Today’s top news:

• Crypto majors fall another 1% after a hawkish FOMC; BTC at $64k
• Saylor’s STRC falls to $89 and new low; MSTR -5%
• Illinois becomes first state to pass crypto tax, applying 0.2% to broker txns and holdings
• CME is suing the CFTC over their approval of perps in the US
• Moody’s launched onchain credit ratings on Solana

🏦 Warsh’s First Fed Meeting Comes In Hawkish

The Fed held its benchmark rate at 3.50% to 3.75% on Wednesday, a fourth straight hold, at Kevin Warsh’s first meeting as chair. That was expected; Warsh’s hawkish tone was not.

Ahead of the meeting, the Fed shared its updated dot plot, lifting the median year-end 2026 rate projection to 3.8% from 3.4% in March, which means the committee now pencils in at least one hike this year rather than a cut. A full half of the members favor a hike as soon as 2026, citing a firm labor market and inflation at a three-year high. Warsh himself declined to submit a dot.

That was hawkish on its own, but it was Warsh’s commentary that confirmed it. Warsh repeatedly stressed the Fed’s commitment to price stability in his press conference, a signal he may not deliver the cuts many expected from a Trump nominee, and he removed the easing bias from the statement. He made it very clear that getting inflation back to the Fed’s 2% goal is the priority and that he wants to make it happen. The market read that as “hikes are coming.”

The reaction was sharp. The 2-year Treasury yield jumped more than 16 basis points to 4.22%, and the Dow fell 507 points after hitting a record earlier in the day. Rate expectations repriced hard: odds of a hike by the September meeting rose to roughly 70% (20% chance of a double hike), up from about 30% a day earlier. the December meeting now prices an 88% chance of at least one hike, and expectations for any 2026 rate cut have collapsed to zero.

For crypto, this impacts the potential summer recovery and “winter is over” bounce. That thesis leaned on the war ending and liquidity loosening, and a hawkish Fed pushes the other way, with rising yields, a firmer dollar, and no cuts ahead are tightening conditions for risk assets. Bitcoin dropped to $64,000 in the aftermath, MSTR fell 5% and STRC made a new low at $89. But given stocks have recovered this morning and are green pre-market, it appears this may be more of a crypto problem than a broader market problem. Perhaps the Saylor overhang is the actual driver here.

Either way, it appears we may be in for a summer of chop and potential grind lower.

🚩 Illinois Becomes 1st State to Pass A Crypto Tax

Illinois Governor J.B. Pritzker signed a $55.9 billion state budget that includes the Digital Asset Privilege Tax Act, a 0.2% tax on crypto activity that takes effect January 1, 2027. It makes Illinois the first US state to tax digital asset transactions directly rather than just taxing gains.

On paper, the tax falls on digital asset brokers, the exchanges, custodians, and platforms that exchange, transfer, or store crypto for customers. They have to register with the state, remit 0.2% of the value involved, and face felony charges for violations, and out-of-state brokers are covered once their Illinois sales pass $100,000. It’s projected to raise about $60 million.

The reason the industry is alarmed is that the cost will not stop at the businesses. The tax is built like a sales tax, triggered by activity on behalf of a customer in the state, so brokers are expected to pass it straight through to users. An Illinois resident who buys, sells, moves, or has crypto held through an exchange will effectively pay the 0.2% in fees, on every taxable transaction, not once a year on gains. Yes, the tax will apply simply for holding Bitcoin on an exchange like Coinbase—and then for every buy/sell and every transfer. No bueno.

Industry groups including the Crypto Council for Innovation and a16z have called it the first state tax that hits people simply for transacting in crypto, arguing it singles out digital assets in a way no tax does for stocks or bonds.

And then there is the precedent. If Illinois gets away with this new tax without many companies jumping ship, expect other states to copy it. And of course, the other option is to gradually increase from 0.2% over time.

As for the Act itself, the timing makes it hard to fight. The provision was added late to the budget, Pritzker has already signed it, and the legislature is out of session, so there’s little near-term path to changing it before 2027. Lawsuits may be the only recourse. But based on the initial reactions, those are certainly coming (and soon)…

🌎 Macro Crypto and Markets

Corporate Treasuries & ETFs

Meme Coin Tracker

• Meme leaders were red; DOGE -2%, SHIB -3%, PEPE -2%, PENGU -5%, TRUMP -1%, BONK -2%, SPX -9%, FARTCOIN -5%
• AVICI (+47%), CARDS (+23%), and Jotchua (+65%) led movers on Solana
• Base movers included SYND (+150%) and LBM (+50%)

📈 Myriad Market of the Day



💰 Token, Airdrop & Protocol Tracker

🚚 What is happening in NFTs?

• NFT leaders were mostly flat; Punks even at 33.5 ETH, BAYC -2% at 9 ETH, Pudgy even at 4.48 ETH; Hypurr’s -5% at 239 HYPE
• World Flag (+150%) and Hilma af Klint (+800%) led top movers