Today in crypto, California enacted a new law setting guardrails on AI chatbots. Meanwhile, Hyperliquid CEO Jeff Yan and data firm CoinGlass warned that centralized exchanges may be underreporting liquidations. The US government entered its third week of shutdown, leaving decisions on 16 crypto ETFs in limbo.

California governor signs laws establishing safeguards over AI chatbots

California Governor Gavin Newsom announced that the US state would establish regulatory safeguards for social media platforms and AI companion chatbots in an effort to protect children.

In a Monday notice, the governor’s office said Newsom had signed several bills into law that will require platforms to add age verification features, protocols to address suicide and self-harm, and warnings for companion chatbots. The AI bill, SB 243, was introduced by state Senators Steve Padilla and Josh Becker in January.

Padilla cited examples of children communicating with AI companion bots, allegedly resulting in some instances of encouraging suicide. The bill requires platforms to disclose to minors that the chatbots are AI-generated and may not be suitable for children, according to Padilla.

“This technology can be a powerful educational and research tool, but left to their own devices the Tech Industry is incentivized to capture young people’s attention and hold it at the expense of their real world relationships,” Padilla said in September.

The law will likely impact social media companies and websites offering services to California residents using AI tools, potentially including decentralized social media and gaming platforms. In addition to the chatbot safeguards, the bills aim to narrow claims of the technology “act[ing] autonomously” for companies to escape liability.

SB 243 is expected to go into effect in January 2026.

Centralized exchanges face claims of massive liquidation undercounts

Hyperliquid co-founder and CEO Jeff Yan claimed that the way centralized crypto exchanges, and Binance specifically, report data is likely to underrepresent liquidations.

Bitcoin (BTC) fell to $102,000 on Friday after US President Donald Trump announced sweeping tariffs on China. Similarly, Ether (ETH) fell to $3,500, and Solana (SOL) dropped below $140 in a marketwide sell-off.

CoinGlass data indicated that on Friday, $16.7 billion of long liquidations and $2.456 billion of short liquidations occurred, making it the biggest liquidation event in crypto history.

In a Monday X post, Yan pointed to a documentation page on the world’s top crypto exchange, Binance, explaining that the platform will only include the latest liquidation happening in each second interval in the order snapshot stream.

This stream pushes real-time updates about force-liquidated positions. Batching outputs this way allows for higher performance, but Yan explained that only reporting the last liquidation may lead to underreporting of mass liquidation events, as they process more than 100 liquidations per pair per second.

“Because liquidations happen in bursts, this could easily be 100x under-reporting under some conditions,“ Yan wrote.

Yan’s statement echoed a Saturday X post from crypto data platform CoinGlass. The platform said that “the actual [liquidated] amount was likely much higher” since “Binance only reports one liquidation order per second.”

US gov shutdown enters third week with ETF “floodgates” ready to burst

America’s federal government has entered its third week of shutdown, leaving as many as 16 exchange-traded funds (ETF) awaiting approval should the shutdown continue into November.

Most of the US government came to a standstill on Oct. 1 when the Republicans and Democrats failed to reach a funding agreement. This has caused agencies, including the US Securities and Exchange Commission, which approves ETF applications, to run with only essential staff. 

The crypto industry was set for a flood of ETFs in October, with the SEC set to make their final decisions on at least 16 crypto ETFs, and another 21 applications filed in the first eight days of October, but the shutdown has left everything in limbo, with deadlines passing and no action taken.

For it to end, Congress, both the House of Representatives and the Senate, must pass legislation to fund the government. Once the bills pass, President Donald Trump can sign them into law, and the shutdown will end.