12.3 AI Daily: Cryptocurrency Regulation and Policy Tightening, Industry Faces New Challenges

I. Headlines

1. Fed Chair Powell Delivers Major Speech, Signals Key Policy Moves

Federal Reserve Chair Jerome Powell delivered a speech at a commemorative event, outlining important views on inflation, employment, and interest rate policy. Powell stated that although inflation has slowed, it remains well above the 2% target. To achieve price stability, the Fed will continue to raise interest rates and maintain a restrictive monetary policy for some time.

Powell emphasized that the labor market remains tight and the job market is still overheated. The Fed will closely monitor employment data changes to assess the appropriateness of monetary policy. He hinted that if the job market remains overheated, rates may need to be further raised.

Regarding the economic outlook, Powell believes that an economic slowdown is necessary to curb rising inflation. He warned that achieving the inflation target may require the economy to endure some pain. However, Powell is confident that the Fed has the ability to achieve a soft landing.

Powell’s speech triggered sharp market volatility. Analysts pointed out that Powell’s hawkish remarks raised expectations for further Fed rate hikes, which could worsen the risk of economic slowdown. On the other hand, Powell’s optimism about a soft landing also injected some confidence into the market.

2. Chinese Regulators Crack Down on Virtual Currency Trading and Speculation

The People’s Bank of China recently held a meeting with the Ministry of Public Security, Cyberspace Administration of China, and 13 other departments to coordinate efforts against virtual currency trading and speculation. The meeting pointed out that virtual currency trading activities carry risks of illegal fundraising, gambling, and other crimes, seriously disrupting economic and financial order.

The meeting required all units to deepen coordination, improve regulatory policies and legal foundations, focus on key links such as information flow and fund flow, strengthen information sharing, further enhance monitoring capabilities, and crack down on illegal and criminal activities.

Industry insiders noted that the expanded lineup of this meeting marks a shift in China’s crypto regulation from sectoral collaboration to systematic governance. In the future, regulation will move from basic fund flow monitoring to precise identification and professional handling of illegal financial activities.

Analysts indicated this change will reshape the regulatory landscape on three levels: upgraded overall coordination, deepened regulatory structure, and improved legal framework. Upgraded overall coordination means the intervention of the Central Financial Office, pushing regulation from departmental cooperation to higher-level, cross-sector coordination. Deepened regulatory structure means the National Financial Regulatory Administration will strengthen enforcement authority. Improved legal framework will upgrade regulation from being led by administrative documents to a more robust legal basis, connecting administrative and criminal law.

3. Japan Plans 20% Flat Tax on Crypto Trading Gains

The Japanese government is working to revise its tax policy on crypto trading gains, planning to apply a uniform 20% income tax rate regardless of transaction amount, putting crypto on par with stocks, investment trusts, and other financial products. The move aims to reduce investor tax burdens and activate the domestic trading market.

Currently, Japan taxes crypto trading gains under a comprehensive regime, combining them with salary and business income, and applying a progressive rate up to 55%. The government plans to replace this with a separate taxation regime, no longer combining crypto gains with other income, but taxing them independently.

The goal is to include this change in the 2026 tax reform outline, expected to be finalized by year-end. As tax reform progresses, it is expected that Japan will also lift restrictions on investment trusts containing crypto components.

Japan’s Financial Services Agency also plans to submit amendments to the Financial Instruments and Exchange Act in the 2026 regular session of parliament to further tighten crypto trading regulations. The amendment will explicitly prohibit insider trading using undisclosed information and require crypto issuers to fulfill disclosure obligations.

Analysts believe this will bring renewed vitality to Japan’s crypto market. Reasonable tax rates and regulatory policies will help attract more investors and support healthy industry growth. However, related risks should be monitored, and investor education and market supervision strengthened.

4. Sony Bank Plans to Issue USD-Pegged Stablecoin

According to Nikkei, Sony Bank is expected to issue a US dollar-pegged stablecoin in the US as soon as fiscal year 2026, intending to use it for payments within its ecosystem, including gaming and anime content.

Stablecoins are cryptocurrencies pegged to fiat currencies or other assets to maintain price stability. Sony Bank’s move is seen as a significant step into the crypto payments field.

Analysts point out that Sony Bank’s main goal in issuing a stablecoin is to provide a more convenient payment method for its gaming and entertainment ecosystem. Users can use the stablecoin to purchase game content, subscribe to services, etc., without frequent fiat currency conversion.

Additionally, the stablecoin may become the digital currency foundation for Sony Group in emerging areas such as the Metaverse. With the rise of the Metaverse concept, major tech companies are laying out related technologies and applications. Stablecoins may become Sony’s payment and value vehicle in virtual worlds.

However, stablecoin regulation remains a major challenge. The US Securities and Exchange Commission has recently intensified its oversight of stablecoin issuers, which may impact Sony Bank’s issuance plans.

Overall, Sony Bank’s move reflects the trend of tech giants accelerating their presence in cryptocurrency and the Metaverse. But stablecoin regulation still requires attention, and industry prospects may be affected.

5. Crypto Market Volatility: Bitcoin Briefly Falls Below $90,000

On December 1, the crypto market saw sharp volatility, with Bitcoin briefly falling below the $90,000 mark. Analysts believe that signals of rate hikes from the Bank of Japan’s governor and hawkish remarks from Fed Chair Powell may have triggered this downturn.

Data shows Bitcoin hit a low of $87,017 that day, down nearly 5% from the previous session. Major altcoins such as Ethereum also declined to varying degrees. Meanwhile, global crypto market capitalization evaporated by nearly $100 billion at one point.

Industry analysts said BOJ Governor Kazuo Ueda’s hints of continued policy rate hikes triggered a sell-off in Asia-Pacific equities, and the crypto market was affected by spillover effects. In addition, Powell’s hawkish comments heightened expectations of further Fed rate hikes, further weighing on risk assets.

However, some analysts believe the downturn was mainly a technical correction. Bitcoin previously broke through the key $92,000 resistance, with upward momentum obviously slowing. Without new positive catalysts, profit-taking and risk aversion led to a pullback.

Looking ahead, analysts generally believe the crypto market will continue to be driven by the macro environment. Inflation, rate decisions, and employment data will continue to impact market trends. Investors should closely monitor relevant signals and manage risks cautiously.

II. Industry News

1. Bitcoin Briefly Falls Below $87,000, Triggers Market Panic

On December 1, Bitcoin’s price briefly fell below the $87,000 mark, triggering market panic. Analysts noted that the downturn was mainly due to hawkish comments from the BOJ governor, weak Chinese economic data, and remarks from MicroStrategy CEO Michael Saylor.

BOJ Governor Kazuo Ueda said that if forecasts for economic activity and prices are achieved, the BOJ will continue to raise policy rates based on improvements in the economy and prices. This statement heightened expectations for Japanese rate hikes, pushing two-year government bond yields above 1% and triggering a sell-off in risk assets. At the same time, China’s November manufacturing PMI showed non-manufacturing activity contracting for the first time in nearly three years, intensifying concerns about regional economic growth.

Meanwhile, comments from MicroStrategy CEO Michael Saylor also became an important factor in Bitcoin’s decline. Saylor said he would be happy to accept the nomination if Trump appointed him Fed Chair. This increased market concerns about MicroStrategy’s prospects, leading to a significant sell-off in Bitcoin.

Analysts believe Bitcoin’s brief drop below $87,000 reflects market concerns about global liquidity prospects. Although the Fed is expected to start a rate-cutting cycle in December, Japanese rate hike expectations and China’s economic slowdown may offset the effects of easing policies. Investor sentiment has turned cautious, and crypto market activity may be affected. However, analysts also point out that Bitcoin is still near major support levels; if it stabilizes and sees inflows, a rebound is still possible.

( 2. Ethereum Hit by Whale Sell-Off, Drops Over 5% Intraday

On December 1, Ethereum faced a whale sell-off, with intraday losses exceeding 5%. Data shows that one Ethereum whale opened a $18 million short position with 2x leverage within one hour, already realizing a $1 million unrealized gain.

Analysts say this round of Ethereum selling may be related to hawkish remarks by the BOJ governor. Kazuo Ueda stated that if economic activity and price forecasts are achieved, the BOJ will continue to raise policy rates based on economic and price improvements. This statement heightened expectations for Japanese rate hikes and triggered a large sell-off in risk assets.

Meanwhile, there are also some negative factors within the Ethereum ecosystem. The well-known DeFi protocol Yearn suffered a hack, resulting in the theft of about $3 million in crypto assets. Although the attack did not affect Yearn’s core products, it still sparked concerns about DeFi security.

On the other hand, Grayscale Asset Management plans to list a Zcash ETF on the NYSE, but the inability to use privacy features has sparked community doubts. This may increase investor concerns about regulatory risk, affecting Ethereum and other cryptocurrencies.

However, analysts also noted that the Ethereum ecosystem remains strong, with new applications emerging. As long as the macro environment stabilizes, Ethereum prices are still likely to recover in the future. Investors should closely monitor interest rate trends, geopolitical risks, and manage risk prudently.

) 3. Altcoins Stand Out, Funds May Be Rotating into High-Risk Assets

On December 1, altcoins performed strongly, possibly indicating that funds are rotating into high-risk assets. Data shows that altcoins such as BLADE and FIL5S rose 31.35% and 29.58% respectively that day, significantly outperforming the broader market.

Analysts point out that the recent strong performance of altcoins may be related to investor sentiment. After sharp declines in major coins such as Bitcoin and Ethereum, some funds may be seeking high-risk/high-reward investments for profits in the next market cycle.

At the same time, altcoin project teams are actively marketing to attract investor funds. For example, it was announced that 50% of trading fees generated from Giggle trading pairs that day would be automatically converted to Giggle tokens and partially burned at Giggle Academy. Such marketing activities help boost investor sentiment.

However, analysts also warn that altcoin investment is extremely risky, and investors should be especially cautious. History is full of examples of altcoins skyrocketing and then quickly going to zero. Investors should manage positions wisely and closely monitor project developments and token issuance mechanisms.

Overall, the short-term activity of altcoins may reflect one side of market sentiment. But investors need to recognize the inherent high risk and view price surges rationally—do not blindly follow trends. Only by keeping risks within tolerable limits can reasonable returns be achieved in future market cycles.

III. Project News

1. Sui Blockchain Mainnet Launches, Leading New Wave in Move Ecosystem

Sui is a new blockchain project created by the core team that previously developed Diem### (Facebook’s crypto project). Sui uses the Move programming language and a new execution engine to build a high-performance, low-cost decentralized application platform.

On November 30, the Sui mainnet officially launched, marking a key stage for this ambitious project. After launch, the Sui ecosystem will welcome its first batch of DApps and DeFi applications, including the decentralized exchange Ce and NFT marketplace Monetized Pixels. Meanwhile, the Sui Foundation will launch the SUI token for transaction fees and ecosystem incentives.

Sui brings new opportunities for the Move language. Compared to Ethereum’s Solidity, Move is considered safer and more efficient, with potential to drive blockchain innovation. Besides Sui, projects like Aptos and Linera are also embracing Move. Industry insiders expect the Move ecosystem to grow rapidly over the next year, becoming another major public chain camp alongside Ethereum.

However, Sui faces many challenges, including fierce competition from other public chains and the difficulty of developing the Move ecosystem. Whether Sui will ultimately succeed remains to be seen. Undoubtedly, Sui brings new vitality and possibilities to the blockchain world.

2. Blur Decentralized Exchange Goes Live, New NFT Trading Experience

Blur is a new NFT trading platform using the AMM model and decentralized architecture to provide users with an unprecedented NFT trading experience.

On November 30, Blur officially launched its testnet, attracting attention from many NFT traders and investors. Unlike traditional centralized NFT exchanges, Blur allows users to trade NFTs directly on-chain without trusting third parties. Blur also offers advanced trading features such as NFT basket trading and NFT options, greatly increasing trading flexibility.

Blur uses the AMM model to incentivize market makers to provide liquidity through the BLUR token. Users can stake BLUR tokens to mine and receive a share of trading fees. Blur will also launch DAO governance, letting the community decide the platform’s direction.

Blur may usher in a new experience for NFT trading. The decentralized model should improve transparency and fairness, and the AMM model can provide better liquidity for NFTs. However, Blur still faces challenges in user education and ecosystem development.

OpenSea welcomed Blur, believing competition will drive industry progress. Some analysts worry that Blur may fragment NFT liquidity and intensify disorderly competition in the industry. Whether Blur will succeed remains to be seen.

( 3. Aptos Launches Upgradeable Smart Contracts, Ushering in New Era for Developers

Aptos is a new public chain created by former Meta employees, using the Move programming language and known for high performance and upgradability. On November 30, Aptos announced the launch of upgradeable smart contracts, an innovation that promises a new programming experience for developers.

Traditional blockchain smart contracts are immutable once deployed, bringing many inconveniences to developers. Aptos’ upgradeable smart contracts allow developers to upgrade and fix contract code without breaking existing data. This not only improves development efficiency but also enhances contract security.

The launch of upgradeable smart contracts marks a new phase for the Move ecosystem. Developers can leverage Move’s strengths to write safer, more efficient contracts. Meanwhile, Aptos is actively building its DApp ecosystem to attract more developers.

Industry insiders believe Aptos’ upgradeable smart contracts will drive blockchain application innovation and offer developers a new programming paradigm. However, Aptos still faces challenges in ecosystem building and user education. Whether it will ultimately succeed remains to be seen.

Overall, Aptos’ innovation brings new vitality to the Move ecosystem and opens new possibilities for blockchain application development.

IV. Economic Trends

) 1. Fed Slows Rate Hikes, Inflation Pressure Persists

The US economy showed a complex trend in Q4 2025. GDP grew 2.1% year-over-year, slightly below the previous quarter’s 2.3%. Inflation eased but remains above the Fed’s 2% target. The unemployment rate stayed at a relatively low 4.6%.

At the December monetary policy meeting, the Fed raised rates by 25 basis points, bringing the federal funds rate target range to 5.25%-5.5%. This was the Fed’s ninth consecutive rate hike, but at a slower pace than before. Powell stated that while inflation pressure has eased, it remains high and further hikes are needed to control price increases.

Markets reacted mixed to the Fed’s decision. Investors generally believe slower rate hikes help ease recession risks, but are also concerned that inflation may not be fully controlled. The stock market was volatile in the short term, and the US dollar index declined slightly.

Goldman Sachs Chief Economist Jan Hatzius believes the Fed’s hiking path may be nearing its end. He expects the Fed to pause hikes in the first half of 2026 and begin cutting rates in the second half. However, he also warns that inflation pressure may persist, and the Fed needs to remain patient.

2. China’s Economic Recovery Accelerates, Policy Support Strengthens

China’s economy showed a recovery trend in Q4 2025. GDP grew 4.9% year-over-year, up from 4.3% in the previous quarter. The manufacturing PMI rose to 52.7, indicating faster manufacturing expansion.

The Chinese government introduced several policies to support economic recovery. The central bank continued prudent monetary policy, keeping liquidity reasonably ample. Fiscal policy was strengthened, with infrastructure investment up 15.6% year-over-year. China also launched measures to support a real estate market recovery.

Markets responded positively to China’s recovery prospects. The RMB appreciated slightly against the US dollar, and Shanghai and Shenzhen stocks rose. Foreign direct investment in China increased 8.9% year-over-year, indicating continued foreign confidence in China’s economic outlook.

CICC Chief Economist Chen Wenwei said China’s recovery is mainly due to the waning impact of the pandemic and increased policy support. He expects China’s economic growth to further rebound to about 5.5% in 2026. However, he also cautioned that geopolitical risks and global economic slowdown may pose some pressure on China.

3. Europe’s Energy Crisis Eases, Recession Risks Decline

Europe’s economy performed better than expected in Q4 2025. Eurozone GDP rose 0.2% year-over-year, meaning Europe has temporarily avoided a recession. Inflation remains high at 6.5%, but is down from double-digit levels earlier in the year.

The easing of the energy crisis is the main reason for Europe’s better-than-expected performance. Natural gas prices fell sharply in Q4, down nearly 70% from their peak. This is mainly due to increased LNG purchases and the push for renewable energy development in Europe.

The European Central Bank raised rates by 50 basis points in December, bringing the benchmark rate to 3%. ECB President Christine Lagarde stated that while inflation pressure has eased, it remains high and further hikes are needed to control price increases.

Citi Europe Economist Willem Buiter believes Europe will see a moderate recovery in 2026. He expects Eurozone GDP growth of 1.1% and a slight drop in unemployment. However, he also warns that geopolitical risks and weak global demand could slow Europe’s recovery.

V. Regulation & Policy

1. Chinese Regulators Issue Notice on Strengthening Virtual Currency Regulation

On December 3, the People’s Bank of China, Ministry of Public Security, Cyberspace Administration, and 13 other departments jointly issued the “Notice on Strengthening Virtual Currency Regulation.” The notice aims to further regulate virtual currency-related activities and maintain financial order and social stability.

As the leading financial regulator, the People’s Bank has repeatedly stated that virtual currencies do not have the same legal status or repayment ability as fiat currencies. This notice further clarifies the illegal nature of virtual currency, defining related activities as illegal financial activities.

Key points of the notice include:

• Reiterating that virtual currencies are not legal tender and should not be circulated or used in the market.
• Explicitly classifying stablecoins as a form of virtual currency, with risks of being used for money laundering, fundraising fraud, and other illegal activities.
• Requiring all units to continue the prohibitive policy on virtual currencies and crack down on related illegal financial activities.
• Strengthening interdepartmental cooperation, improving regulatory policies and legal foundations, and enhancing monitoring capabilities.

The notice aims to prevent financial risks and maintain economic and financial order. Industry insiders believe that explicitly defining stablecoins provides a logical basis for including them in AML and other regulatory regimes.

Market reactions are mixed. Some investors worry that stricter regulation will further suppress the crypto market, while others believe clear regulation is beneficial for the industry’s long-term health. Experts say regulators need to balance innovation and risk prevention to create a favorable environment for the crypto industry.

2. US SEC Releases Draft Framework for Crypto Asset Regulation

On December 3, the US Securities and Exchange Commission (###SEC###) released a draft framework for crypto asset regulation, aiming to create a more transparent and orderly environment for the crypto market.

As the US securities market regulator, the SEC has long worked to bring crypto assets under its existing regulatory framework. The release of this draft marks a major step forward in crypto asset regulation.

Main points of the draft include:

• Clarifying the securities nature of crypto assets and bringing them under securities laws.
• Requiring crypto asset issuers and trading platforms to comply with securities law requirements such as disclosure and AML.
• Providing more investor protection and reducing investment risks.
• The draft will take effect on January 1, 2026, allowing for an industry transition period.

SEC Chair Gary Gensler stated that the draft framework aims to create a fair, efficient, and transparent environment for the crypto asset market, while protecting investors. He emphasized that the SEC will continue to communicate with the industry to ensure the regulatory framework keeps pace with market developments.

The crypto industry has mixed reactions. Some companies welcome regulation, believing it brings certainty and trust, while others worry that overregulation will stifle innovation. Experts believe the framework needs to balance investor protection and innovation support.

3. European Commission Adopts Unified Crypto Asset Regulation Rules

On December 3, the European Commission adopted a set of rules for crypto asset regulation, aiming to establish a unified regulatory framework across the EU.

As the EU’s executive body, the European Commission has long promoted regulatory harmonization for crypto assets. The newly adopted rules will provide a unified standard for member states.

Key points of the new rules include:

• Requiring crypto asset issuers and service providers to obtain regulatory approval.
• Specifying disclosure requirements for crypto asset issuance and trading.
• Establishing AML and anti-terrorist financing compliance measures.
• Providing greater investor protection and reducing investment risks.

EU Commissioner for Financial Services Mairead McGuinness stated these rules will create a fair, transparent, and secure environment for the EU crypto asset market while supporting innovation. She emphasized that a unified regulatory framework will strengthen the EU’s global influence in crypto assets.

The crypto industry’s response is mixed. Some companies welcome unified standards, believing they will support industry growth, while others worry overregulation may curb innovation. Experts say the EU needs to balance investor protection and innovation support, and maintain communication with the industry.