Cryptocurrency regulation is loosening up! U.S. banking industry enters the market, but Bitcoin drops.

The Office of the Comptroller of the Currency (OCC) in the United States issued a statement last Friday, clarifying that national banks can participate in certain cryptocurrency-related activities, including custody of cryptocurrency assets, specific stablecoin services, and participation in distributed ledger network. This move marks an important step for the U.S. banking industry in the cryptocurrency field. It is worth noting that the OCC also canceled the guidance that previously required banks to obtain regulatory approval before engaging in cryptocurrency activities. Acting Comptroller Rodney Hood emphasized in the statement that the new rules clarify that banks must establish a comprehensive risk management system regardless of the technology used. This policy adjustment coincides with a cryptocurrency summit at the White House, and just hours before, Trump signed an executive order to establish strategic reserves for major cryptocurrencies such as Bitcoin. Hood stated in the declaration, "Today's measures will reduce the burden on banks participating in cryptocurrency-related activities and ensure that the OCC maintains oversight consistency over these bank activities, regardless of underlying technology." Specifically, the OCC revoked the banking guidance issued during the Biden administration, which essentially placed additional restrictions on banks participating in cryptocurrency activities. The revoked documents required banks to report cryptocurrency business plans to regulatory authorities in advance, explain risk control measures, and ensure regulatory approval. In addition, the OCC also withdrew from a 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 bank activities would be strictly reviewed. Industry positives outweigh macroeconomic negatives Nevertheless, cryptocurrency prices continued to decline on Monday, as the escalating trade tensions and the weakened expectations for further interest rate cuts by the Federal Reserve offset the positive impact of these news. Since the Federal Reserve hinted at a pause in interest rate cuts in mid-December last year, risk assets such as cryptocurrencies have been under pressure. The employment data released last Friday showed the U.S. unemployment rate rising to 4.1%, up from 4% the previous month, further exacerbating market uncertainty. Data shows that Bitcoin fell by 3.7% at one point, and then partially recovered, hovering around $83,000 at the time of writing. Augustine Fan, a partner at cryptocurrency derivatives software provider SignalPlus, said, "The soaring unemployment rate to a five-year high has increased concerns about economic recession, pushing down U.S. bond yields, with the market expecting an interest rate cut possibly by early summer." Jeff Mei, Chief Operating Officer of cryptocurrency exchange BTSE, said, "The market sees the results of the cryptocurrency summit as mediocre, and when the eagerly anticipated cryptocurrency reserves only include assets currently held by the government, major cryptocurrencies respond by falling." Currently, the U.S. government holds about $17 billion in Bitcoin and about $400 million in other tokens, mainly from assets seized in civil and criminal cases. Since February, investors have collectively withdrawn a net 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's data, Bitcoin has fallen by 25% from its all-time high of $109,241, and the market capitalization of the entire 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 when the trade tensions end and the Federal Reserve resumes interest rate cuts, will major cryptocurrencies start to move towards their historical highs again."