Blast to shut Ethereum layer 2 as Bitcoin ETFs regain inflows

Blast is closing its Ethereum layer-2 network after determining that the chain costs more to run than it earns. The decision comes as US spot Bitcoin exchange-traded funds returned to positive flows and the Securities and Exchange Commission proposed changes that could make it easier for advisers and funds to hold digital assets.

Cointelegraph reported that Blast does not see a viable route to financial sustainability and is asking users to transfer their holdings to Ethereum’s main network. The project plans to reduce its withdrawal waiting period to 24 hours. Withdrawals will briefly stop while Blast unwinds assets placed through Lido, a process expected to last about a week.

Users can use Blast’s interface to withdraw until October 26. Funds will not disappear after that date, but accessing them will require users to work directly with the bridge contracts connecting Blast and Ethereum.

Blast’s retreat from early growth

Blur founder Tieshun “Pacman” Roquerre introduced Blast in 2023 with a pitch centred on native returns for Ether and stablecoins. The network also offered incentives connected to an expected token distribution. That approach drew more than $2 billion before Blast’s mainnet went live in February 2024.

Its initial expansion did not last. The decline of the non-fungible token market weakened the environment in which Blast had gained attention, and the network’s decentralised finance deposits subsequently collapsed. Cointelegraph reported that Blast’s total value locked in DeFi is now down by more than 98% from a peak of about $2.2 billion reached in June 2024.

The shutdown illustrates the pressure facing blockchain networks whose activity and incentives do not generate enough income to cover infrastructure and operational expenses. Blast’s users are being given a route back to Ethereum, but the process requires attention to withdrawal deadlines and, later, direct interaction with bridge contracts.

Bitcoin funds open the month higher

US spot Bitcoin ETFs recorded $102.7 million in net subscriptions on the first trading day of October, reversing the $148.7 million in withdrawals recorded the previous day. The figures came from SoSoValue data cited by Cointelegraph.

Across the funds, combined net assets reached $109.3 billion. Their cumulative net inflows stood at $57.6 billion. The monthly rebound followed a particularly strong third quarter, during which the products received $6.34 billion in net inflows. September accounted for $2.65 billion of that total.

Bitcoin also gained during the quarter, rising 42.7%. At the time of Cointelegraph’s report, the cryptocurrency was trading at approximately $85,900, up 2.1% over the preceding 24 hours, according to CoinGecko.

Market sentiment remained optimistic, although it eased slightly. Alternative.me’s Crypto Fear & Greed Index fell to 72 from 74 the day before, leaving the measure in the “Greed” category.

SEC considers broader custody arrangements

The SEC’s proposal addresses a practical problem for investment advisers seeking to offer clients exposure to crypto assets: finding an institution that qualifies to safeguard a particular token. When suitable custody services are unavailable, advisers may be unable or unwilling to include that asset in client portfolios.

Under the proposal, advisers could hold clients’ crypto themselves in situations where no eligible crypto custodian exists, provided they met specified conditions. State-chartered trust companies could also take on crypto custody roles.

The regulator’s move could remove one obstacle for financial businesses that want to expand into digital assets. SEC Chair Paul Atkins said the crypto market had developed from a specialist area into a multi-trillion-dollar investment class, while regulation had failed to advance at the same pace.

The Digital Chamber has previously highlighted the shortage of qualified custodians. In a submission to the SEC in May 2025, the industry group said some advisers had rejected token allocations or asked portfolio companies to hold assets until an acceptable custody solution became available. The proposed changes are intended to address that constraint, though the article did not give a timetable for final rules.