1. Core Event: Regulation returns from 'special consideration' to 'regular framework'
On Friday local time, the Federal Reserve suddenly announced the termination of its special regulatory program for cryptocurrencies and other 'new financial activities'—this means the 'special review mechanism' specifically targeting banks' crypto businesses will officially exit starting in 2023.
Previously, if banks engaged in crypto custody, stablecoin issuance, and other businesses, they needed to pass the Federal Reserve's 'additional filing + special assessment' dual threshold, and even submit risk plans far exceeding normal business; after the new regulations take effect, these businesses will be included in the regular compliance review system of financial institutions, just like foreign exchange trading and stock underwriting. This adjustment is not 'laissez-faire' but a significant shift in regulatory attitude: from 'cautionary interception' to 'guidance within rules.'
2. Why 'loosen' at this time? Three underlying logics support this.
The shift in regulatory policy is not accidental. The Federal Reserve's 'release' is essentially a reassessment of the interaction between the crypto industry and the financial system:
1. Industry maturity forces regulatory upgrades
Over the past two years, the crypto market has experienced multiple rounds of risk washouts, including the FTX collapse and stablecoin runs. Surviving leading institutions (like Coinbase, Circle) have established relatively complete risk hedging mechanisms; banks have also accumulated practical experience through pilot programs (like JPMorgan's crypto custody technology and Bank of America's on-chain fund tracking system), and the label of 'crypto business = high risk' is gradually fading.
2. Consensus on risk controllability
The Federal Reserve explicitly mentioned in its announcement that it has 'fully grasped the risk points of crypto business and bank management practices.' Simply put: after two years of observation, regulators confirm that banks can isolate crypto business risks from the traditional financial system through measures such as 'customer identity verification,' 'fund chain penetration supervision,' and 'leverage restrictions.'
3. Implicit driver of global financial competition
When the EU passes the (Regulation on Markets in Crypto-Assets) (MiCA) and Singapore launches a 'crypto-friendly licensing system,' if the U.S. continues to maintain 'special repression' on the crypto industry, it may lead to the outflow of quality projects and capital. This adjustment is also a 'strategic repositioning' in the global financial innovation race.
3. Impact disassembly: Three types of entities will face 'structural changes'
This policy adjustment is by no means an isolated event; its ripple effects will permeate multiple levels of the financial system and the crypto market:
- For traditional financial institutions: from 'wait-and-see' to 'accelerated entry'
Previously hesitant banks and asset management institutions (like Goldman Sachs, Fidelity) will lower their trial-and-error costs. It is expected that in the next 6-12 months, the scale of banks' crypto custody may double, and the speed at which traditional funds enter the crypto market through compliant channels will significantly accelerate.
- For the crypto market: 'compliers eat meat, violators exit'
Compliant stablecoins (like USDC) will become the biggest winners—their issuers' cooperation threshold with banks has lowered, and circulation scenarios may extend from crypto trading to traditional areas such as cross-border payments and supply chain finance. On the contrary, non-compliant 'air coins' and 'pyramid schemes' will accelerate their elimination due to tightened funding channels, and market differentiation will further intensify.
- For the regulatory system: from 'plugging loopholes' to 'building rules'
The focus of regulation will shift from 'prohibiting risks' to 'defining rules.' For example, the Federal Reserve may soon issue 'firewall regulations' between crypto assets and traditional financial accounts, clarifying capital adequacy requirements for banks' crypto businesses—this means the era of 'barbaric growth' in the crypto industry is completely over, and 'dancing with shackles' has become the new normal.
4. Industry outlook: a 'second half' with both opportunities and challenges
The Federal Reserve's 'loosening' is essentially issuing a 'certificate of access' to the crypto industry, but it is by no means a 'pass.'
The opportunity lies in: the deep integration of 'compliant funds' from traditional finance with 'technological innovation' from the crypto market, which may give rise to more efficient cross-border settlements and more transparent asset ownership models.
But the challenges are equally evident: the compliance costs for small and medium-sized crypto institutions will rise significantly (they need to meet bank-level risk control standards), and the entry of traditional financial institutions may exacerbate market monopolies—leading institutions with funding and resource advantages may squeeze the survival space of smaller players.
This regulatory adjustment feels more like a coming-of-age ceremony for the crypto industry: it has finally been integrated into the mainstream financial system, but it must also learn to prove its value within the rules. Whether this is ultimately a 'blessing' or a 'curse' may depend on whether the industry can seize this opportunity to transform from a 'speculative tool' into 'financial infrastructure.'
