Cryptocurrency regulation significantly relaxed! The U.S. banking industry enters the market, but Bitcoin has dropped

According to the Zhitong Finance APP, the Office of the Comptroller of the Currency (OCC) released a statement last Friday, clarifying that national banks can engage in certain cryptocurrency asset-related businesses, including cryptocurrency asset custody, specific stablecoin operations, and participation in distributed ledger networks. This move marks an important step for the U.S. banking industry in the cryptocurrency field. It is noteworthy that the OCC also rescinded previous guidance requiring banks to obtain prior approval from regulatory agencies before engaging in cryptocurrency activities. Acting Comptroller Rodney Hood emphasized in the statement that the new regulations clarify that banks must establish a comprehensive risk management system regardless of the technology used. This policy adjustment coincides with the White House holding a cryptocurrency summit, and just hours earlier, Trump signed an executive order announcing the establishment of strategic reserves for major cryptocurrencies like Bitcoin. Hood stated in the announcement: "Today's action will alleviate the burden on banks participating in cryptocurrency-related activities and ensure that the OCC's oversight of these banking activities remains consistent, unaffected by the underlying technology." Specifically, the OCC has revoked the banking guidance issued during the Biden administration, which effectively imposed additional restrictions on banks' participation in cryptocurrency activities. The rescinded documents required banks to report their cryptocurrency business plans to regulatory agencies in advance, outline risk control measures, and ensure there were no objections from regulators. Additionally, the OCC has withdrawn from a previous joint statement issued by multiple U.S. regulatory agencies, which essentially took a cautious stance on banks participating in cryptocurrency activities. For example, a joint statement released in 2023 did not prohibit banks from engaging in cryptocurrency activities but warned of "significant volatility" in the industry and stated that any related activities by banks would be subject to strict scrutiny. Industry Benefits Hard to Offset Macro Headwinds Despite this, cryptocurrency prices continued to decline on Monday due to escalating tariff war tensions and a weakening expectation of further interest rate cuts by the Federal Reserve, which offset the positive news. Since the Federal Reserve hinted at pausing interest rate cuts in mid-December last year, risk assets like cryptocurrencies have been under pressure. Employment data released last Friday showed that the U.S. unemployment rate rose to 4.1%, up from 4% the previous month, further exacerbating market uncertainty. Data showed that Bitcoin fell by as much as 3.7% before recovering some ground, and as of the time of writing, the cryptocurrency hovered around $83,000. Augustine Fan, a partner at cryptocurrency derivatives software provider SignalPlus, stated: "The surge in unemployment to a five-year high has intensified recession fears, driving U.S. Treasury yields lower, with the market expecting rate cuts could come as early as the beginning of summer." Jeff Mei, COO of cryptocurrency exchange BTSE, stated: "The market views the outcomes of the cryptocurrency summit as mediocre, and when the highly anticipated cryptocurrency reserves only include assets currently held by the government, major cryptocurrencies fell in response." Currently, the U.S. government holds approximately $17 billion in Bitcoin and about $400 million in other tokens, primarily from asset seizures in civil and criminal cases Since February, investors have withdrawn a total of $4.4 billion from U.S. Bitcoin ETFs, which played a key role in last year's record surge in Bitcoin. According to CoinGecko, Bitcoin has fallen 25% from its historical high of $109,241, and the total market capitalization of the cryptocurrency market has shrunk by over $1 trillion from its peak. Mei added, "Bitcoin is likely to fall to the $70,000-$80,000 range in the coming weeks. Only after the tariff war ends and the Federal Reserve resumes interest rate cuts will major cryptocurrencies begin to move towards historical highs again."