jakiro
Author: Zhang Feng
In 2025, the Federal Reserve has transformed from a passive defensive supervisory role in the past to a key force in active participation and layout. Through a series of policy adjustments and technological innovations, it has profoundly affected the pattern of global financial markets.
From canceling the pre-approval system for bank encryption business, to promoting the “streamlined master account” reform, to uniting multiple agencies to build a regulatory framework and building its own cryptocurrency exchange, behind the Federal Reserve’s intensive actions are multiple strategic considerations to maintain the international status of the U.S. dollar, prevent systemic financial risks, and compete for the right to speak in finance in the digital era.
1. Key Processes of the Federal Reserve’s Crypto Business Intervention in 2025
In 2025, the Federal Reserve promoted the transformation of US encryption supervision from partial and fragmented to comprehensive and systematic in a dual-track approach of “policy loosening” and “infrastructure first”.
Policies should be loosened to eliminate institutional barriers for traditional banks to participate in crypto businesses.In April 2025, the Federal Reserve took the lead in revoking the pre-approval system for bank encryption business that was implemented in 2023, officially ending the “New Activities Supervision Plan”.This move means that when banks carry out crypto asset custody, mortgage lending and other businesses, they no longer need to obtain regulatory approval in advance, but will be included in the existing banking supervision and risk management framework.The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) also followed suit. The three major regulatory agencies jointly abolished a series of restrictive regulations, allowing the banking industry to independently deploy crypto financial services under the premise of controllable risks.
In June of the same year, the Federal Reserve further adjusted its regulatory guidance and made it clear that it would no longer regard “reputational risk” as a core indicator for evaluating banks’ crypto businesses.In the past, many banks avoided cooperation with encryption institutions to avoid public pressure. This adjustment has removed the psychological barriers for compliance cooperation between banks and encryption companies.In July, the Federal Reserve, OCC and FDIC jointly issued the “Bank Crypto Asset Custody Service Guidelines”, which detailed business operation specifications and risk control requirements, providing a clear compliance path for traditional financial institutions to get involved in the encryption field.
The regulatory framework has been established, and stablecoins have been included in unified federal supervision.In August 2025, the “GENIUS Act” officially came into effect, marking the entry into the era of federal unification of stable currency supervision in the United States.The bill requires stablecoin issuers to deposit 100% of their reserve assets in regulated financial institutions, and the reserve assets should be mainly high-liquidity, low-risk assets such as U.S. Treasury bonds, and establish strict auditing and information disclosure systems.
Under this framework, the Federal Reserve assumes leading regulatory responsibilities and is responsible for reviewing the compliance of reserve assets and the risk management capabilities of issuers.This legislation not only upgrades the regulatory level, but also together with the EU’s Crypto-Asset Market Regulation Act (MiCA) constitutes the two major benchmarks for global stablecoin regulation.
Payment and transaction infrastructure innovation.In October 2025, Federal Reserve Board Governor Christopher Waller formally proposed the “Streamlining Master Account” plan at the “Payment Innovation Conference”.This program allows qualified crypto institutions, stablecoin issuers and financial technology companies to directly access the Federal Reserve payment system without going through commercial banks as intermediaries.Although this type of account does not have complete bank account functions such as day overdraft, it can realize real-time settlement of crypto asset transactions, with the delay controlled within 1 second, significantly reducing settlement costs and time.This move breaks the monopoly of traditional banks in the field of payment and settlement and provides an efficient and low-cost capital channel for the encryption industry.
At the same time, the construction of cryptocurrency exchanges led by the Federal Reserve is also accelerating.The exchange is based on the hybrid blockchain architecture developed by the “Hamilton Project”, integrates the real-time gross settlement system (RTGS), and uses zero-knowledge proof technology to balance the needs of transaction privacy and regulatory transparency.Test data shows that its two-stage submission architecture (2PC) throughput has reached 1.7 million transactions per second, supporting cross-chain settlement of mainstream encrypted assets such as Bitcoin and Ethereum with tokenized treasury bonds, gold, etc.This will be the world’s first compliant crypto-asset trading platform led by a central bank and is expected to have a profound impact on the industry landscape.
2. Supervisory coordination mechanism between the Federal Reserve and SEC
In the U.S.’s “multi-party governance” crypto regulatory system, coordination between the Federal Reserve and the Securities and Exchange Commission (SEC) is particularly critical. The two have formed a complementary governance model of “functional regulation + institutional regulation”.
Define regulatory boundaries based on asset attributes.The Federal Reserve’s regulatory focus is on the encryption business in which banks participate, the issuance and circulation of stable coins, and the capital channel between encryption and traditional finance; the SEC exercises jurisdiction over cryptoassets that meet the definition of securities (such as security tokens and some ICO tokens) in accordance with securities-related laws, and is responsible for the registration of trading platforms, behavioral regulations and investor protection.
Since 2025, the two parties have further clarified their rights and responsibilities through joint statements and other forms: In April, they reached a consensus to place most stablecoins under the federal regulatory framework led by the Federal Reserve, and the SEC only provided supplementary supervision for synthetic stablecoins with securities properties; in July, regarding Coinbase’s pledge service, the SEC determined that it was a securities brokerage business, while the Federal Reserve focused on reviewing the status of fund custody and reserves to form a regulatory synergy.
Joint enforcement to guard against regulatory arbitrage.As the cross-field characteristics of encryption business become increasingly obvious, the Federal Reserve and SEC have established an information sharing and joint enforcement mechanism.In the field of asset custody, the Federal Reserve sets capital adequacy and reserve standards, and the SEC supervises information disclosure and investor protection; in the field of tokenized securities, both parties jointly issued the “Tokenized Securities Supervision Guidelines”, clarifying that relevant assets must meet both payment settlement and securities regulatory requirements.
Such collaboration effectively curbs regulatory arbitrage.For example, a platform tried to circumvent regulation with a “stablecoin + security token” composite product. The Federal Reserve discovered abnormal fund flows through payment system monitoring, and the SEC immediately launched a securities compliance investigation, which ultimately prompted the platform to make rectifications, reflecting the full coverage of supervision.
3. Policy interaction between the Federal Reserve and Congress
The Fed’s encryption business layout needs to be carried out under the legislative authorization of Congress. The two parties have formed a cooperative relationship of “legislative guarantee + operational autonomy”, but they also face games brought about by partisan politics.
Legislative authorization provides the basis for policy implementation.The legal basis for the Federal Reserve’s participation in the crypto market mainly comes from Section 13 of the Federal Reserve Act, which authorizes it to provide credit support to various institutions under “exceptional and emergency circumstances.”In 2025, Congress passed a number of legislation to further empower the Federal Reserve: the “GENIUS Act” clarified its leading role in stable currency supervision; the “Payment System Innovation Act” provided a legal basis for the “streamlined master account” reform, allowing non-bank payment institutions to access the central bank’s payment system.
Congress has fully absorbed the professional opinions of the Federal Reserve in the legislative process. For example, the 100% reserve and regular audit requirements in the “GENIUS Act” are derived from the Federal Reserve’s earlier policy recommendations. When promoting the construction of exchanges, the Federal Reserve also proactively adopts public-private cooperation, technology open source and other models to comply with Congress’s requirements to “control taxpayer risks.”
Policy balancing across partisan divides.There are clear partisan differences in attitudes toward encryption regulation within Congress: Republicans tend to relax regulation, promote the United States to become a “global encryption center,” and support expanding the scope of application of “streamlined master accounts”; Democrats are more concerned about financial stability and consumer protection, and advocate strengthening risk control while opening the market, such as adding stricter anti-money laundering provisions to the GENIUS Act.
The Federal Reserve strives to maintain policy neutrality and independence in the partisan game, and seeks balance by designing open programs with risk constraints.The “Streamlined Master Account” opens access while setting balances and functional limits, which not only responds to the demand for market openness, but also embeds a risk prevention and control mechanism; the exchange uses zero-knowledge proof technology to protect transaction privacy while leaving a transparent channel for supervision, which has been recognized by both parties.
4. The direct impact of the Federal Reserve’s involvement in the encryption business
Promote the transformation of traditional banking business.After the policy was relaxed, large banks such as Bank of New York Mellon and JPMorgan Chase quickly launched services such as Bitcoin custody, and the proportion of crypto-related revenue in the banking industry increased significantly.Small and medium-sized banks mostly choose to cooperate with encryption platforms to provide related services, and industry differentiation has intensified.At the same time, the “streamlined master account” reform has weakened the intermediary position of banks in payment and settlement, prompting banks to transform into high value-added businesses such as crypto-asset structured products and cross-border crypto payment solutions.
Reshape the competitive landscape of the encryption market.Compliance has become a core competitiveness, the market share of regulated stablecoins has increased significantly, and the scale of mainstream stablecoins such as USDC has grown rapidly.Compliance exchanges led by the Federal Reserve have attracted a large amount of institutional funds by virtue of their direct system connection advantages, while traditional platforms such as Coinbase have turned to providing compliance technology services to institutions.The valuation logic of crypto assets has also changed. The proportion of transactions anchored by US dollar stablecoins has increased significantly, and the linkage between the crypto market and traditional finance has increased.
Strengthen the US dollar and international financial control.The vast majority of global stablecoins are anchored to the U.S. dollar, and their reserve assets are mainly U.S. Treasury bonds, forming a “stablecoin-crypto trading-U.S. debt” funding cycle, further consolidating the international status of the U.S. dollar.At the same time, the Federal Reserve has strengthened its cross-border financial sanctions capabilities through on-chain analysis technology, effectively curbing the use of crypto assets to circumvent sanctions, and attracting global legal crypto capital to the U.S. market.
5. Triple Logic of Strategic Transformation
Maintain the international dominance of the U.S. dollar.Faced with competition from digital renminbi and euro stablecoins, the U.S. dollar’s share of cross-border payments has declined.The Federal Reserve realizes that failure to incorporate the encryption system into the U.S. dollar ecosystem may lead to the marginalization of the U.S. dollar in the digital financial era.Therefore, by establishing the U.S. dollar as the main settlement unit in the crypto world and binding U.S. Treasury bonds as stable currency reserves, the Federal Reserve has created a new cycle that strengthens the hegemony of the U.S. dollar.
Prevent the transmission of systemic risks.The crypto market is increasingly connected to the traditional financial system, and risk transmission cases are common.Events such as the bankruptcy of Signature Bank have shown that isolation supervision is no longer sufficient to deal with risks.By leading the construction of exchanges and implementing “streamlined master account” reforms and other measures, the Federal Reserve has brought crypto activities into the regulatory horizon and achieved market development with controllable risks.
Fight for the right to formulate rules for digital finance.In the context of increasingly digital finance, the output of technical standards and rules has become the core of national competitiveness.The Federal Reserve promotes its architecture through open source technology projects such as the “Hamilton Project” and attempts to lead the development of standards for global encryption and central bank digital currencies.At the same time, the increasing influence of the encryption industry in U.S. politics has also promoted a moderate opening of the regulatory environment.
6. Will promote the compliance, institutionalization and globalization of encryption business
Institutional transformation of market ecology.Institutional investors will become the main force in the market, and pension funds, mutual funds, etc. will accelerate their entry through compliance channels.The product structure will also shift from focusing on spot transactions to diversified compliance products such as tokenized treasury bonds, encrypted ETFs, and structured financial management.The DeFi field will be divided. Compliance projects will develop through integration with traditional finance, while projects that are completely decentralized and avoid supervision may gradually become marginalized.
Global regulatory standards are becoming more unified.The U.S. regulatory model characterized by “functional supervision + technology neutrality” and the stable currency framework established by the “GENIUS Act” will provide a reference for other countries.Through multilateral platforms such as the G20 and the Financial Stability Board (FSB), the United States actively promotes the internationalization of its regulatory concepts and technical standards and promotes cross-border encryption regulatory coordination.
Technology develops towards a balance between compliance and efficiency.Technologies such as zero-knowledge proofs, on-chain analytics, and privacy computing will be more widely used to balance regulatory transparency and user privacy.The integration of blockchain and traditional financial infrastructure has become the focus of innovation, promoting encrypted transactions from closed loops on the chain to cross-system interconnection.The competition for dominance of technical standards will also become increasingly fierce, becoming an important dimension of digital financial competition.
The Federal Reserve’s in-depth involvement in the encryption business since 2025 marks an important power adjustment in the global financial system in the digital age.Through policy loosening, infrastructure investment, domestic coordination and the export of international rules, the Fed not only aims to consolidate the status of the US dollar and prevent and control financial risks, but also aims to shape the global order of future digital finance.Its actions have significantly changed the operating logic of the encryption market and promoted the development of the industry in the direction of institutionalization and compliance.
Looking to the future, the crypto market may enter a new stage of “central bank-led compliance.”For global players, understanding the strategic intentions and policy logic of the Federal Reserve and adapting to the rules system it promotes are the keys to seizing opportunities and coping with challenges in the digital financial era.Whether the Federal Reserve can achieve a long-term balance between innovation incentives and risk prevention and control, and whether it can continue to strengthen the hegemony of the US dollar through encryption layout, will still be tested in the dual test of international competition and domestic politics.
