US Sanctions UK Crypto Exchanges Over Iran Ties

Iranian President Masoud Pezeshkian has accused leaders from the United States, Israel, and Europe of exploiting Iran's economic struggles to incite recent nationwide protests and provide agitators with the means to "tear the nation apart."

In a live broadcast on state television, Pezeshkian claimed these foreign powers sought to destabilize the country. "They rode on our problems, provoked, and were seeking—and still seek—to fragment society," he stated.

Figure 1: Iranian President Masoud Pezeshkian claims Western powers supplied resources to protesters with the goal of dividing the nation.

Pezeshkian argued that external actors manipulated genuine grievances to achieve a political agenda. "They brought them into the streets and wanted, as they said, to tear this country apart, to sow conflict and hatred among the people and create division," he said, adding, "Everyone knows that the issue was not just a social protest."

Unrest, Crackdown, and a Heavy Human Toll

The two-week wave of protests, which erupted in late December, was initially sparked by an economic crisis defined by soaring inflation and rising living costs. The demonstrations eventually subsided following a bloody crackdown by clerical authorities.

Casualty figures vary significantly. According to the U.S.-based human rights group HRANA, at least 6,563 people were killed, including 6,170 protesters and 214 security forces. However, Iranian Foreign Minister Abbas Araqchi provided a different count to CNN Turk, stating that 3,100 people were killed, a figure that included 2,000 security forces.

Figure 2: International vigils and protests draw attention to the severe crackdown in Iran, with signs calling for an end to the violence.

US Weighs Options as Regional Tensions Mount

The situation has drawn sharp focus from Washington. U.S. President Donald Trump has repeatedly expressed support for the demonstrators and warned that the U.S. was prepared to act if the killing of protesters continued. On Friday, U.S. officials confirmed that Trump was reviewing his options but had not yet decided on potential military strikes against Iran.

Adding to the military tension, the Israeli news website Ynet reported on Friday that a U.S. Navy destroyer had docked at the Israeli port of Eilat.

In an effort to de-escalate, regional allies including Turkey, the United Arab Emirates, and Saudi Arabia have engaged in diplomatic outreach to prevent a direct military confrontation between Washington and Tehran.

Diplomacy Stalls Over Missile Program

Despite these efforts, diplomatic progress remains stalled. The United States is demanding that Iran curb its missile program as a precondition for resuming talks. Tehran has unequivocally rejected this demand.

Speaking in Turkey on Tuesday, Foreign Minister Araqchi declared that Iran's missiles would "never be the subject of any negotiations." He asserted that Tehran was prepared for either negotiations or warfare and was ready to work with regional countries to promote peace and stability.

Araqchi also dismissed any possibility of internal collapse, telling CNN Turk that "regime change is a complete fantasy." He added, "Our system is so deeply rooted and so firmly established that the comings and goings of individuals make no difference."

Billionaire investor Stanley Druckenmiller is challenging the prevailing view of Kevin Warsh, Donald Trump's nominee for Federal Reserve Chair, arguing that his longtime mentee is far more flexible on monetary policy than his hawkish reputation suggests.

As financial markets size up Warsh, many recall his emphasis on inflation risks just days before the 2008 Lehman Brothers collapse, which cemented his image as an interest-rate hardliner. But Druckenmiller dismisses this rigid portrayal.

"I've seen him go both ways," Druckenmiller stated, pushing back against the idea that Warsh is ideologically committed to high rates.

A Flexible Approach to Monetary Policy

President Trump has consistently criticized current Fed Chair Jerome Powell for not cutting borrowing costs, making his choice of Warsh, a perceived hawk, a point of confusion for many investors. Some worry Warsh’s stated goal of shrinking the Fed's balance sheet could inadvertently drive long-term rates higher.

However, Druckenmiller, who has had Warsh as a partner at his family office since 2011, offers a different perspective. He points to several instances where Warsh advocated for looser policy:

• Financial Crisis: Warsh supported rate cuts to combat the downturn.

• Pandemic Outset: He favored an easing of policy to stabilize the economy.

• 2018 Commentary: The pair co-authored an article warning the Fed against raising rates too quickly, advice the central bank eventually followed after markets reacted negatively.

Druckenmiller also noted that Warsh is open-minded about the methods of former Fed Chair Alan Greenspan, who oversaw a period of high productivity growth.

The Silicon Valley Connection

Druckenmiller believes Warsh’s unique qualifications come from his deep connections to Silicon Valley, cultivated through his role at Stanford University. This proximity, he argues, gives Warsh an unparalleled understanding of technology's economic impact.

"I could not think of a single other individual on the planet better equipped," Druckenmiller said.

The core of this argument is that a surge in AI-driven productivity could allow the Fed to lower interest rates without triggering inflation. This view is reportedly shared by Trump's Treasury Secretary nominee, Bessent, who already knows Warsh through their mutual connection with Druckenmiller.

"I'm really excited about the partnership between him and Bessent," Druckenmiller added. "Having an accord between the Treasury secretary and Fed chair is ideal."

Wall Street Remains Divided on Warsh

Despite Druckenmiller's endorsement, many on Wall Street consider Warsh an unusual choice. If confirmed, he would need to reconcile his past hawkish statements with a president demanding lower rates.

Warsh won the nomination after promising a "regime change" at the Fed, including shrinking the balance sheet and arguing that AI-driven growth would suppress inflation.

David Robin, an interest-rate strategist at TJM Institutional Services, described the pick as a "data-dependent, Fed-credibility choice," which could reassure markets. Still, he added, "I'm hard-pressed to think Trump would appoint anyone who didn't commit to lower rates over time starting in June."

Others are more critical. In a Bloomberg Opinion piece, Jonathan Levin argued that turning the nomination into a public spectacle and selecting Warsh would likely unsettle markets and satisfy no one, including Trump himself. Levin also claimed Warsh’s established hawkish profile would make it more difficult for him to build credibility in the role.

The United States is finding itself increasingly on the sidelines of global trade and diplomacy as its traditional allies begin to reassess their ties and forge new partnerships independently. In the face of a more volatile and hostile US foreign policy, major economic powers are pursuing their own commercial and strategic interests, leaving the world's largest economy out of the conversation.

Recent developments show a clear trend of nations resetting relationships and deepening commercial ties without Washington's involvement. Key examples include China's preliminary trade agreement with Canada and its diplomatic rapprochement with the United Kingdom. At the same time, the European Union is advancing trade agreements with India and the South American Mercosur bloc.

This shift comes after a year of President Donald Trump's "America First" policy during his second term, which has seen the administration apply punitive tariffs and issue territorial threats to both adversaries and allies in an effort to assert American dominance. However, this strategy appears to be encouraging partners to diversify their relationships, partly as a hedge against Trump's unpredictability.

A Global Recalibration of Interests

Analysts suggest this movement is not a return to a Cold War-style division but rather a "recalibration" of national interests in a changing world.

"Given what's happening with the U.S. and its foreign policy... the 'middle powers' need to find their own agency and figure out different approaches," Damian Ma, director of Carnegie China, told CNBC. He explained that countries are now more likely to form alignments based on specific, "à la carte" interests rather than on comprehensive, values-based alliances.

Ma predicts that the moves by the U.K. and Canada are just the beginning, forecasting a "flood of countries recalibrating their approach" to superpowers like the U.S. and China. The final outcome of this global realignment remains uncertain, but the initial steps are already being taken.

Diplomacy in Motion: A Flurry of Non-US Deals

The new year has been marked by a surge of diplomatic activity that notably excludes the United States. China, in particular, has hosted a series of high-profile visits from international leaders, including Canadian Prime Minister Mark Carney, Irish Prime Minister Michael Martin, Finnish Prime Minister Petteri Orpo, and British Prime Minister Keir Starmer.

Figure 1: Canadian Prime Minister Mark Carney and Chinese President Xi Jinping finalize a new trade understanding in Beijing on January 16, 2026.

These meetings have produced tangible results:

• China and Canada agreed to reduce trade barriers, a move that drew a furious response from President Trump.

• The U.K. and China agreed to lower barriers to trade and travel as part of a relationship reset under Prime Minister Starmer.

• The European Union signed a long-awaited free trade deal with India and has made significant progress on its trade agreement with the Mercosur bloc.

Figure 2: President Donald Trump's address at the World Economic Forum in Davos on January 21, 2026, was met with concern from his own cabinet and international partners.

This wave of independent deal-making followed Trump's speech at the World Economic Forum in Davos, where he openly insulted and criticized allied leaders, including France's Emmanuel Macron and Canada's Carney. According to Jimena Blanco, chief analyst at Verisk Maplecroft, data shows a measurable spike in verbal tensions between the U.S. and key allies over the last year, including Canada, Denmark, Japan, and France.

Allies Diversify, But Won't Divorce the US

Despite the challenging diplomatic environment, analysts believe a full break with the U.S. is unlikely. Instead of reversing their integration into the global economy, American allies are diversifying their economic exposure to shield themselves from policy shifts in Washington.

"The EU, Canada, Japan, Australia and the U.K. can't afford to disengage with the U.S. but are instead widening trade with large emerging markets as well as with each other," Blanco noted, adding that emerging markets are the "major winners" of this strategy.

Ivan Krastev, chair of the Centre for Liberal Strategies, described the current situation as a rocky patch rather than grounds for divorce. "Europe is too dependent on the U.S. not only for its security, but also technologically and economically, to prefer the divorced life today," he stated. For Europe and other allies, the immediate focus is on demonstrating their continued importance to the U.S. while simultaneously exploring other avenues for trade and cooperation.

The New Playbook: Agility and Resilient Supply Chains

Ultimately, the U.S. remains too critical to be completely isolated due to its influence on technology, trade, currency, and security. However, the long-term trend points toward a rebalancing of global relationships.

Joseph Parkes, senior analyst at Verisk Maplecroft, believes the nature of globalization is set to change. "Trade fragmentation will create new and different groupings of countries seeking to increase economic resilience," he said. In this new landscape, "geopolitical agility" will become essential for businesses to navigate uncertainty.

This shift is accelerating a move away from "just-in-time" supply chains toward more resilient "just-in-case" models. Companies are increasingly turning to "nearshoring" and "friendshoring"—sourcing materials from trusted allies—to strengthen their operations. In parallel, governments will continue to expand their network of trade agreements to build strategic flexibility and reduce their dependence on any single country.

The United States government entered a partial shutdown on Saturday after Congress failed to pass a 2026 budget before a midnight deadline.

The political stalemate centers on funding for the Department of Homeland Security (DHS). Democratic senators are demanding new restrictions on federal immigration agents following a deadly incident during protests against the Trump administration's deportation policies.

Democrats Demand Reforms on Immigration Enforcement

The core of the dispute is a Democratic push to attach new rules to any funding for the DHS. This move comes after federal agents shot and killed two U.S. citizens, Alex Pretti and Renee Good, during protests in Minneapolis.

To approve new funding for the agency, Democrats are insisting on several key reforms, including:

• Stricter warrant requirements for immigration enforcement actions.

• A ban on immigration officers wearing masks.

• A mandate for all agents to wear body cameras.

Congress Weighs Temporary Funding Deal

The House of Representatives had previously approved a package to fund all six remaining federal departments. However, the legislative process hit a snag in the Senate.

Now, the House must vote on an amended bill passed by the Senate. This new version provides only temporary, two-week stopgap funding for the DHS, a measure designed to allow negotiations on immigration enforcement to continue. The House is scheduled to convene on Monday to vote on this compromise.

President Donald Trump has already given his approval to the Senate-backed package. He has urged the House to act quickly to resolve the shutdown and avoid a repeat of the record 43-day shutdown that occurred last fall.

Federal Workers Face Uncertainty

If the current shutdown extends beyond a few days, it will directly impact tens of thousands of federal employees. Workers may be placed on unpaid leave or be forced to work without pay until a funding agreement is reached.

While Congress has already passed six of the twelve annual funding bills, the stalled package is critical as it funds the largest portion of the federal government's operations.

U.S. President Donald Trump has nominated Federal Reserve Governor Kevin Warsh to succeed Jerome Powell as chair of the central bank. The announcement, made Friday on Truth Social, initiates what is expected to be a high-stakes confirmation battle in the Senate.

Powell’s term as Fed Chair concludes in May, giving Trump an opportunity to install a candidate who has been a frequent critic of the central bank's direction. This move signals a potential "regime change" in monetary policy, aligning with the White House's desire for greater influence over interest rate decisions.

Trump expressed strong confidence in his nominee, a 55-year-old former Fed official and Morgan Stanley banker. "I have no doubt that he will go down as one of the GREAT Fed chairmen, maybe the best," the president stated, noting their long acquaintance. The selection confirmed widespread speculation, as prediction markets and Wall Street commentators had increasingly signaled Warsh as the frontrunner.

What a Warsh-Led Fed Means for Crypto

The nomination arrives during a period of volatility for digital assets. Bitcoin recently saw a sharp decline, falling from a high near $90,400 to a low of about $81,300. As of late Friday, Bitcoin was trading at $83,967, marking a 6.5% drop over the past week despite a 1.2% gain in the last 24 hours.

Historically, the Federal Reserve's interest rate policy has been a major driver for the crypto market. Digital assets like Bitcoin typically behave as "risk-on" investments, sensitive to broader financial conditions.

• Higher Interest Rates: When the Fed raises rates, safer investments like U.S. Treasurys offer more attractive yields. This tends to pull capital away from volatile assets, including cryptocurrencies.

• Lower Interest Rates: Conversely, cutting rates increases liquidity in the financial system. With more cash available, investors often seek higher returns by moving into riskier bets, which can benefit crypto.

Warsh vs. Powell: A Contrast in Views

Kevin Warsh is widely viewed as more hawkish on monetary policy than Jerome Powell. He has a track record of criticizing quantitative easing and the expansion of the Fed's balance sheet, suggesting he may favor tighter monetary conditions.

On cryptocurrency, Warsh holds a notably more positive stance than his predecessor. While Powell has consistently downplayed Bitcoin's economic significance, Warsh has offered a different perspective. In a recent discussion, he pushed back against the idea that Bitcoin undermines the Federal Reserve's ability to manage the economy.

Instead, Warsh argued that Bitcoin could function as a source of market discipline, providing an alternative signal for economic health without directly threatening the Fed's core functions. This viewpoint marks a significant departure from the current leadership's cautious and often dismissive tone toward digital currencies.

The U.S. government officially entered a partial shutdown on Saturday after Congress missed a midnight deadline to approve a new spending package.

The Senate managed to pass the funding deal with a bipartisan vote of 71 to 29. However, with the House of Representatives out of town, a vote on the measure is not expected until Monday. As a result, the partial shutdown began at 12:01 a.m. Eastern Time.

Unlike the record 43-day shutdown last fall that cost the economy an estimated $11 billion, this funding gap is expected to be brief. Lawmakers from both parties have been working to isolate a contentious debate over immigration enforcement to prevent it from disrupting broader government functions.

The Sticking Point: DHS and Immigration Tactics

The core of the delay is a dispute over funding for the Department of Homeland Security (DHS) and the tactics used by its federal immigration agents.

Senate Democrats threatened to block the entire funding package after immigration agents shot a second U.S. citizen in Minneapolis. The death of nurse Alex Pretti on Saturday has led to widespread public outrage and prompted the Trump administration to de-escalate operations in the area. This was the second death of a U.S. citizen with no criminal record involving immigration agents this month.

In response, Democrats are pushing for several new restrictions on DHS agents:

• An end to roving patrols

• A requirement for agents to wear body cameras

• A prohibition on agents wearing face masks

• A requirement for agents to obtain a search warrant from a judge, not internally

Republicans have indicated they are open to considering some of these proposals.

How Congress Plans to End the Shutdown

The deal approved by the Senate provides a clear path forward by separating DHS funding from the rest of the government's budget. This allows critical agencies like the Pentagon and the Department of Labor to receive their approved funding immediately.

Meanwhile, funding for the Department of Homeland Security will be extended for just two weeks. This short-term extension is designed to give negotiators from both parties the time they need to reach a final agreement on new immigration enforcement rules.

Historically, short funding gaps are not unusual. According to the Congressional Research Service, the government has experienced 10 shutdowns of three days or fewer since 1977, most of which had a minimal real-world impact.