Cryptocurrency regulation is greatly relaxed! US banking industry enters the market, but Bitcoin falls

Zhitong Finance APP learned that the U.S. Office of the Comptroller of the Currency (OCC) issued a statement last Friday, clarifying that national banks can participate in some cryptocurrency asset-related businesses, including cryptocurrency asset custody, specific stablecoin businesses, and participation in distributed ledger networks. This move marks an important step for the U.S. banking industry in the field of cryptocurrency.

It is worth noting that the OCC also canceled the previous guidance that required banks to obtain pre-approval from regulators before conducting cryptocurrency business.

Acting Comptroller General Rodney Hood emphasized in the statement that the new regulations clarify that banks must establish a sound risk management system regardless of the technology used. This policy adjustment coincided with the White House’s cryptocurrency summit, and just a few hours ago, Trump signed an executive order announcing the establishment of a strategic reserve of major cryptocurrencies such as Bitcoin.

Hood said in the statement: "Today's move will reduce the burden on banks to participate in cryptocurrency-related activities and ensure that the OCC's supervision of these bank activities is consistent and not affected by the underlying technology."

Specifically, the OCC revoked the bank guidance issued during the Biden administration, which essentially set additional restrictions on banks' participation in cryptocurrency activities. The revoked document had required banks to report their cryptocurrency business plans to regulators in advance, explain risk control measures, and ensure that regulators have no objections.

In addition, the OCC also withdrew from statements previously issued jointly by multiple US regulators, which were essentially cautious about banks' involvement in cryptocurrency business. For example, a joint statement issued in 2023 did not prohibit banks from conducting cryptocurrency business, but warned that the industry had "significant volatility" and said that any related activities of banks would be strictly reviewed.

Industry positives are difficult to resist macro negatives

Nevertheless, cryptocurrency prices continued to fall on Monday as escalating tariff war tensions and weakening expectations of further interest rate cuts by the Federal Reserve offset the impact of these positive news.

Risk assets such as cryptocurrencies have been under pressure since the Federal Reserve hinted at a pause in interest rate cuts in mid-December last year. Employment data released last Friday showed that the US unemployment rate rose to 4.1%, an increase from 4% last month, further exacerbating market uncertainty.

Data showed that Bitcoin fell 3.7% at one point, and then recovered some of its losses. As of press time, the cryptocurrency hovered around $83,000. Augustine Fan, partner at SignalPlus, a provider of cryptocurrency derivatives software, said: "The surge in unemployment to a five-year high has heightened recession fears, pushing U.S. Treasury yields lower, and the market expects that rate cuts may be brought forward to early summer."

Jeff Mei, chief operating officer of cryptocurrency exchange BTSE, said: "The market believes that the results of the cryptocurrency summit are mediocre, and major cryptocurrencies fell when the much-anticipated cryptocurrency reserves only contain assets currently held by the government." The U.S. government currently holds about $17 billion in Bitcoin and about $400 million in other tokens, mainly from asset forfeiture 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 Bitcoin's record rise last year. According to Coingecko data, Bitcoin has fallen 25% from its all-time high of $109,241, and the market value of the entire cryptocurrency market has shrunk by more than $1 trillion from its peak.

Mei added: "Bitcoin is likely to fall to the $70,000-80,000 range in the next few weeks. Only after the tariff war ends and the Fed resumes cutting interest rates will the major cryptocurrencies move back to their all-time highs."