Author：Cold Wind Meta

Author: Zhang Feng

By 2025, the Federal Reserve will have transformed from a passive, defensive regulatory role into a key force actively involved in and strategically planning for the future, profoundly influencing the global financial market landscape through a series of policy adjustments and technological innovations.

From abolishing the pre-approval system for banks' crypto business to promoting the "streamlined master account" reform, and then to building a regulatory framework with multiple institutions and establishing its own cryptocurrency exchange, the Federal Reserve's intensive actions are driven by multiple strategic considerations: maintaining the international status of the US dollar, preventing systemic financial risks, and vying for financial discourse power in the digital age.

I. Key Processes of the Federal Reserve's Entry into Crypto Business in 2025

In 2025, the Federal Reserve promoted the transformation of US crypto regulation from partial and fragmented to comprehensive and systematic through a two-pronged approach of "policy easing" and "infrastructure-first".

Policy easing removes institutional barriers for traditional banks to participate in crypto business.In April 2025, the Federal Reserve took the lead in revoking the pre-approval requirement for banks' crypto business, which had been in place since 2023, officially ending the "New Activities Oversight Program." This move means that banks no longer need prior regulatory approval to conduct crypto asset custody, mortgage lending, and other businesses, but are instead integrated into the existing banking regulatory and risk management framework. The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) followed suit, with the three regulatory agencies jointly repealing a series of restrictive provisions, allowing banks to independently develop crypto financial businesses under the premise of controllable risk.

In June of the same year, the Federal Reserve further adjusted its regulatory guidance, explicitly stating that "reputational risk" would no longer be a core indicator for assessing banks' crypto businesses. Previously, many banks avoided collaborating with crypto institutions to avoid public pressure; this adjustment removed psychological barriers to compliant cooperation between banks and crypto companies. In July, the Federal Reserve, together with the OCC and FDIC, released the "Guideline for Banks' Crypto Asset Custody Services," which detailed operational guidelines and risk control requirements, providing a clear compliance path for traditional financial institutions to enter the crypto space.

A regulatory framework has been established, and stablecoins are now subject to unified federal regulation.In August 2025, the GENIUS Act officially took effect, marking the beginning of a unified federal regulatory era for stablecoins in the United States. This act requires stablecoin issuers to deposit 100% of their reserve assets with regulated financial institutions, with these reserves primarily consisting of highly liquid, low-risk assets such as U.S. Treasury bonds. It also establishes a rigorous auditing and disclosure system.

Under this framework, the Federal Reserve assumes primary regulatory responsibility, overseeing the compliance of reserve assets and the risk management capabilities of issuers. This legislation not only elevates the level of regulation but also, together with the EU's Crypto-Asset Market Regulation Act (MiCA), forms the two major benchmarks for global stablecoin regulation.

Innovation in payment and transaction infrastructure.In October 2025, Federal Reserve Governor Christopher Waller formally proposed the "Simplified Master Account" scheme at the Payments Innovation Conference. This scheme allows qualified crypto institutions, stablecoin issuers, and fintech companies to directly access the Federal Reserve's payment system, eliminating the need for commercial banks as intermediaries. While these accounts lack full bank account functions such as intraday overdrafts, they enable real-time settlement of crypto asset transactions with latency controlled to within one second, significantly reducing settlement costs and time. This move breaks the traditional banks' monopoly in payment clearing and provides the crypto industry with an efficient and low-cost funding channel.

Meanwhile, the development of a cryptocurrency exchange spearheaded by the Federal Reserve is accelerating. Based on a hybrid blockchain architecture developed under Project Hamilton, the exchange integrates a Real-Time Gross Settlement (RTGS) system and employs zero-knowledge proof technology to balance transaction privacy with regulatory transparency. Test data shows that its two-phase commit (2PC) architecture has achieved a throughput of 1.7 million transactions per second, supporting cross-chain settlement of mainstream crypto assets such as Bitcoin and Ethereum with tokenized government bonds and gold. 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.

II. Regulatory Coordination Mechanism between the Federal Reserve and the SEC

In the U.S. crypto regulatory system of "multi-headed governance", the coordination and cooperation between the Federal Reserve and the Securities and Exchange Commission (SEC) is particularly crucial, forming a complementary governance model of "functional regulation + institutional regulation".

Define regulatory boundaries based on asset attributes.The Federal Reserve's regulatory focus is on crypto businesses involving banks, the issuance and circulation of stablecoins, and funding channels between crypto and traditional finance; the SEC, on the other hand, exercises jurisdiction over crypto assets 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, their conduct, and investor protection.

Since 2025, the two sides have further clarified their rights and responsibilities through joint statements and other means: In April, a consensus was reached to place most stablecoins under the federal regulatory framework led by the Federal Reserve, with the SEC only providing supplementary regulation for synthetic stablecoins with securities attributes; In July, the SEC determined that Coinbase's staking service was a securities brokerage business, while the Federal Reserve focused on reviewing the custody and reserve status of funds, thus forming a regulatory synergy.

Joint enforcement is needed to prevent regulatory arbitrage.As the cross-sectoral nature of crypto businesses becomes increasingly apparent, the Federal Reserve and the SEC have established an information-sharing and joint enforcement mechanism. In the area of asset custody, the Federal Reserve sets capital adequacy and reserve standards, while the SEC oversees information disclosure and investor protection. In the area of tokenized securities, the two parties jointly issued the "Regulatory Guidance on Tokenized Securities," clarifying that related assets must simultaneously meet payment and settlement and securities regulatory requirements.

Such collaboration has effectively curbed regulatory arbitrage. For example, a platform once attempted to circumvent regulations by using a hybrid product of "stablecoin + security token." The Federal Reserve detected abnormal fund flows through its payment system monitoring, and the SEC subsequently launched a securities compliance investigation, ultimately prompting the platform to rectify its practices, demonstrating the comprehensive coverage of regulation.

III. Policy Interaction Between the Federal Reserve and Congress

The Federal Reserve's cryptocurrency business strategy needs to be carried out under congressional legislation, forming a collaborative relationship of "legislative protection + operational autonomy," but it also faces the challenges brought about by partisan politics.

Legislative authorization provides a basis for policy implementation.The legal basis for the Federal Reserve's involvement in the crypto market primarily stems from Section 13 of the Federal Reserve Act, which authorizes it to provide credit support to various institutions in "extraordinary and emergency" situations. In 2025, Congress passed several pieces of legislation further empowering the Federal Reserve: the GENIUS Act clarified its leading role in stablecoin regulation; and the Payment Systems Innovation Act provided a legal basis for "streamlining the master account" reforms, allowing non-bank payment institutions to access the central bank's payment system.

Congress fully incorporated the Federal Reserve's professional advice during the legislative process. For example, the 100% reserve requirement and periodic audit requirement in the GENIUS Act originated from the Federal Reserve's earlier policy recommendations. When promoting the construction of the exchange, the Federal Reserve also proactively adopted models such as public-private partnerships and open-source technology to meet Congress's requirement to "control taxpayer risk."

Balancing policies across partisan differences.There are clear partisan differences in attitudes toward crypto regulation within Congress: Republicans favor lenient regulation, push for the U.S. to become a "global crypto hub," and support expanding the scope of "simplified master accounts"; Democrats, on the other hand, are more focused on financial stability and consumer protection, advocating for strengthening risk management while opening up markets, such as by adding stricter anti-money laundering provisions to the GENIUS Act.

Amid partisan politics, the Federal Reserve strives to maintain policy neutrality and independence, seeking a balance by designing open schemes with risk constraints. The "streamlined master account" approach, while opening up access, sets balance and functional limitations, responding to market demands for openness while embedding risk control mechanisms. Exchanges' adoption of zero-knowledge proof technology, on the other hand, protects transaction privacy while providing a transparent channel for regulation, gaining bipartisan approval.

IV. The Direct Impact of the Federal Reserve's Intervention in the Crypto Business

Promote the transformation of traditional banking business.Following the policy easing, large banks such as Bank of New York Mellon and JPMorgan Chase quickly launched services like Bitcoin custody, leading to a significant increase in the proportion of crypto-related revenue in the banking industry. Smaller banks, on the other hand, mostly opted to partner with crypto platforms to provide related services, exacerbating industry differentiation. Meanwhile, the "streamlining master account" reform weakened banks' intermediary role in payment clearing, prompting them to shift towards high-value-added businesses such as structured crypto asset products and cross-border crypto payment solutions.

Reshaping the competitive landscape of the crypto market.Compliance has become a core competitive advantage, leading to a significant increase in the market share of regulated stablecoins, with mainstream stablecoins like USDC experiencing rapid growth. Federal Reserve-backed compliant exchanges are attracting substantial institutional funding due to their direct system connections, while traditional platforms like Coinbase are shifting towards providing compliance technology services to institutions. The valuation logic for crypto assets is also changing, with a significant increase in the proportion of transactions pegged to USD-denominated stablecoins, strengthening the connection between the crypto market and traditional finance.

Strengthen the dollar's control over international finance.The vast majority of global stablecoins are pegged to the US dollar, and their reserve assets are mainly US Treasury bonds, forming a "stablecoin-crypto transaction-US Treasury bond" funding cycle, further consolidating the international status of the US dollar. At the same time, the Federal Reserve has strengthened its cross-border financial sanctions capabilities through on-chain analytics technology, effectively curbing the use of crypto assets to circumvent sanctions and attracting global legitimate crypto capital to the US market.

V. The Three Logics of Strategic Transformation

Maintain the international dominance of the US dollar.Faced with competition from digital yuan and euro stablecoins, the dollar's share in cross-border payments has declined. The Federal Reserve recognized that failing to integrate the crypto world into the dollar ecosystem could lead to the dollar's marginalization in the digital finance era. Therefore, by establishing the dollar as the primary settlement unit in the crypto world and pegging it to US Treasury bonds as a stablecoin reserve, the Federal Reserve has created a new cycle to strengthen the dollar's hegemony.

Prevent the transmission of systemic risks.The crypto market is increasingly intertwined with the traditional financial system, leading to frequent cases of risk transmission. Events such as the collapse of Signature Bank demonstrate that isolated regulation is no longer sufficient to manage risk. The Federal Reserve, through measures such as leading the development of exchanges and implementing streamlined master accounts, has brought crypto activities under its regulatory purview, achieving market development within a controllable risk framework.

The struggle for the right to set rules for digital finance.In the context of increasing financial digitalization, the export of technological standards and regulations has become a core element of national competitiveness. The Federal Reserve, through projects like the Hamilton Project, is open-sourcing its architecture in an attempt to dominate global standards setting for cryptocurrencies and central bank digital currencies. Simultaneously, the rising influence of the crypto industry in US politics has also driven a moderate opening of the regulatory environment.

VI. We will promote the compliance, institutionalization, and globalization of encryption services.

The institutionalization of the market ecosystem.Institutional investors will become the main force in the market, with pension funds and mutual funds accelerating their entry through compliant channels. Product structure will also shift from being primarily based on spot trading to a diversified range of compliant products such as tokenized government bonds, crypto ETFs, and structured wealth management products. The DeFi sector will see differentiation, with compliant projects developing through integration with traditional finance, while fully decentralized projects that circumvent regulation may gradually become marginalized.

Global regulatory standards are converging.The U.S. regulatory model, characterized by "functional regulation plus technological neutrality," and the stablecoin 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 U.S. actively promotes the internationalization of its regulatory concepts and technical standards, and facilitates cross-border coordination of crypto regulatory practices.

Technology is evolving towards a balance between compliance and efficiency.Zero-knowledge proofs, on-chain analytics, and privacy-preserving computation technologies will be used more widely to balance regulatory transparency and user privacy. The integration of blockchain with traditional financial infrastructure is becoming a key area of innovation, driving crypto transactions from closed-loop on-chain transactions to cross-system interconnection. The competition for dominance in technology standards will also intensify, becoming a crucial dimension of competition in digital finance.

The Federal Reserve's deep involvement in the crypto business since 2025 marks a significant power shift in the global financial system in the digital age. Through policy easing, infrastructure investment, domestic coordination, and the export of international rules, the Fed aims not only to consolidate the dollar's status and control financial risks, but also to shape the global order of future digital finance. Its actions have significantly changed the operating logic of the crypto market, driving the industry towards institutionalization and compliance.

Looking ahead, the crypto market may be entering a new phase of "central bank-led compliance." For global participants, understanding the Federal Reserve's strategic intentions and policy logic, and adapting to the regulatory framework it promotes, is crucial to seizing opportunities and addressing challenges in the digital finance era. Whether the Federal Reserve can achieve a long-term balance between innovation incentives and risk control, and whether it can continue to strengthen the dollar's hegemony through its crypto strategy, will remain to be tested by both international competition and domestic politics.