Abstract: The policy turning point has arrived, and the Fed is redefining the position of crypto assets in the financial system. The monetary policy direction of the Fed has always been a barometer for global financial markets, and the crypto asset market is no exception. Whenever the Fed releases dovish or hawkish signals, Bitcoin and other crypto assets often rise or fall in response.

On the morning of October 15, 2025, a speech by Fed Chairman Powell caused a stir in global markets. While hinting at a possible interest rate cut this month, he unusually mentioned that the Crypto Assets industry is becoming increasingly “mainstream” and predicted that banks would strengthen their cooperation with this industry.

The Fed's policy shift has indirectly promoted the optimization of the regulatory framework. In 2025, the SEC approved Ethereum staking ETF and Solana ETF, marking the first time Crypto Assets were incorporated into the traditional financial system. Institutions like JPMorgan began offering spot trading services for Crypto Assets, while BlackRock's Bitcoin ETF surpassed $40 billion in scale within 200 days, indicating that institutional funds are accelerating their inflow. Behind this speech lies a profound transformation in U.S. monetary policy and financial regulation. The year 2025 became a “watershed” for U.S. crypto regulation, with a series of previously stringent restrictions being quietly relaxed.

01 Shift in monetary policy: Recovery of risk appetite during the interest rate cut cycle

Powell's statement is not surprising. There are signs of a slowdown in the U.S. labor market, with new job additions falling below expectations for several months. For the Fed, maintaining high interest rates may exacerbate financing pressures on businesses and squeeze consumer spending, while a moderate rate cut would provide a buffer for an economic “soft landing.”

After the announcement of interest rate cut signals, market risk appetite quickly heated up. Bitcoin, Ethereum and other mainstream Crypto Assets generally rose in the weeks following the policy announcement, and the investment behavior of traditional financial institutions also showed new differentiation.

This market reaction confirms Powell's previous judgment: the association between Crypto Assets and the traditional financial system is becoming increasingly close. Changes in monetary policy are beginning to be transmitted directly and rapidly to the crypto market.

02 Regulatory Paradigm Shift: From “Specialized Monitoring” to “Integrated Supervision”

What is more deserving of attention is the systemic adjustment of the Fed's regulatory framework. In 2023, the Fed established the “Novel Activities Supervision Program” to provide separate supervision for banks engaging in new activities such as Crypto Assets and blockchain.

This special regulatory project will be terminated by August 2025. The Fed announced that banks engaged in Crypto Assets and fintech activities will be incorporated into the regular regulatory process. This change represents a shift in the regulatory model from specialized monitoring to “integrated supervision.”

Reuters reported that this move aims to reduce redundancy and improve efficiency. Banking Dive commented that this means the regulatory “differentiated labels” on banks' crypto operations are beginning to fade.

03 Policy Easing: Coordinated Actions of Three Major Regulatory Agencies

2025 will be the year of policy relaxation for US crypto regulation:

• **•**March 2025, the FDIC abolishes the 2022 notification rule regarding banks' crypto activities, no longer requiring banks to obtain FDIC approval before engaging in crypto business;
• **•**During the same period, the Office of the Comptroller of the Currency (OCC) issued Interpretive Letter 1183, clarifying that national banks may engage in Crypto Assets custody and stablecoin activities without prior regulatory approval;
• **•**April 2025, the Fed rescinded the guidance letter requiring state member banks to provide prior notice before engaging in crypto activities issued in 2022;
• **•**July 2025, the Fed, FDIC, and OCC jointly issued a statement on the risk management of bank custody of Crypto Assets, with a neutral tone emphasizing compliance rather than restriction.

This series of policy adjustments marks a fundamental shift in regulatory thinking: from “first set defenses and then observe” to “incorporate into the framework and regulate development.”

04 Stablecoins and CBDC: Clarifying Regulatory Framework

On the policy level, the regulatory logic has also become more nuanced. Fed Governor Christopher Waller explicitly stated in a mid-year speech that stablecoins for payments should be backed by at least an equivalent amount of safe, highly liquid assets, ensuring that users can redeem them at face value.

This position is consistent with the direction of the GENIUS Act passed by Congress in 2025 and provides a clear legal basis for the issuance of stablecoins.

At the same time, discussions about central bank digital currency (CBDC) have reached a conclusion. In the new legislative environment, the possibility of the Fed directly issuing digital dollars to the public has been largely ruled out, leaving room for the development of private stablecoins.

05 Market Impact: Traditional Financial Institutions Accelerate Entry

The clarification of the regulatory environment has removed entry barriers for traditional financial institutions. Several large banks have publicly stated that they are exploring services such as Crypto Assets custody and trading. Crypto services are transitioning from “marginal business” to “standard configuration”.

For the crypto industry, the predictability of regulation greatly reduces policy risk. The cooperation channels between banks and crypto institutions are more open, and the flow of funds is more compliant and orderly.

The series of measures taken by the Fed reflects a regulatory approach of “returning to order.” Crypto assets are no longer seen as an outsider to the financial system, but are instead incorporated into an established institutional framework for regulation.

The policy shift in 2025 paves the way for the integration of crypto assets and traditional finance. When the interest rate cut cycle meets regulatory relaxation, the crypto market may be standing at the starting point of a new round of development. Although loose monetary policy is beneficial for the crypto market, there is still uncertainty regarding regulatory scrutiny. The U.S. tariff policy (effective November 1) and SEC approval delays may trigger short-term volatility. Furthermore, the liquidity pressure on leveraged funds (such as the flash crash event on October 11) has not fully recovered, and market pullback risks should be closely monitored.