A paper order from the Federal Reserve has completely collapsed the wall of separation between traditional finance and the crypto world, and this transformation far exceeds most people's imagination.
Yesterday, the Federal Reserve quietly did something significant by directly dismantling the last barrier for banks to enter the crypto world. As a veteran who has been navigating the crypto industry for many years, I witnessed this moment come to fruition. Banks no longer have to worry about being held accountable for serving crypto clients.
This means that trillions of traditional capital sitting in bank accounts finally received a 'pass' to the crypto market. The era of friction is over, and a liquidity nuclear explosion is about to occur.
01 The Federal Reserve's policy upheaval
The Federal Reserve announced on April 24, 2025, the withdrawal of regulatory guidelines on bank cryptocurrency assets and dollar token activities, abolishing four regulatory notices on cryptocurrency risks issued in 2022 and 2023.
The key turning point occurred on August 15, when the Federal Reserve officially announced the cancellation of the 'New Activity Supervision Program,' which was originally established in 2023 to closely monitor banks' participation in cryptocurrency custody, lending, stablecoin operations, and other new activities.
This policy shift is monumental. It has removed the biggest barrier of regulatory uncertainty for banks entering the cryptocurrency space. Now, banks can freely provide services to crypto clients as long as they can understand and manage the associated risks.
Federal Reserve Governor Bowman stated: 'New technologies can bring efficiency to banks and allow customers to enjoy better products and services. We need to pave the way for responsible innovation.'
02 How banks embrace the crypto world
With the removal of regulatory barriers, the U.S. banking industry is rapidly adjusting its strategies and actively laying out plans in the cryptocurrency asset space. Traditional banks are expanding from simple custody services to more complex crypto financial products, including crypto asset staking, lending, trading, and structured products.
BNY Mellon has taken the lead in launching Bitcoin spot custody services and has begun clearing Bitcoin futures contracts. Large institutions such as JPMorgan and Wells Fargo have set up internal working groups to study the risk control requirements for crypto custody, planning to launch digital asset custody services as early as 2026.
Cryptocurrency custody services have become a battleground in the banking industry. Among more than 70 global banks surveyed, over 40% have already launched or plan to launch cryptocurrency asset custody services.
Even more exciting is that the Federal Reserve is proposing to establish a 'new type of limited-access master account' for all legally qualified institutions, allowing stablecoin issuers and other payment companies to directly access the Federal Reserve's payment system without relying on partner banks.
03 Market landscape under new capital injection
With traditional financial giants entering the market, the landscape of the cryptocurrency market is undergoing profound changes. Bitcoin's price surged approximately 20% shortly after the Federal Reserve announced regulatory easing, reflecting the market's positive response to regulatory clarity.
The participation of institutional investors is increasing at an unprecedented rate. Traditional hedge funds and pension funds are beginning to incorporate cryptocurrency assets into their asset allocation. By July 2025, global Bitcoin ETF inflows surpassed $50 billion, marking a significant entry of traditional financial capital into the cryptocurrency market through compliant channels.
The market structure is also changing. As Bitcoin consolidates above $100,000, funds are beginning to flow into major altcoins. Smart contract platforms like Ethereum and Solana are gaining increasing favor from investors.
04 My investment strategies and advice
In the face of this historic opportunity, my strategy is to allocate assets using a 'core + satellite' strategy. I will allocate 60% of my funds to core assets like Bitcoin and Ethereum, 20% to Layer 2 solutions, and the remaining 20% to high-quality altcoins supported by actual users and cash flow.
Layer 2 scaling solutions are a direction I am particularly optimistic about. With increased activity on the ETH network, second-layer solutions are crucial for cost-effective transactions. Leading projects like Mantle, Arbitrum, and Optimism have already shown strong growth momentum.
The Ethereum ecosystem remains the preferred choice for institutional funds. After rebounding from the flash crash low of $3,460, ETH has shown strong upward momentum. Ethereum's deflationary model, yield advantages, and institutional adoption make it an excellent platform with higher capital efficiency.
For risk-tolerant investors, the Solana ecosystem offers a higher risk-reward ratio. Solana accumulated $88 million in whale funds within three days, indicating on-chain confidence and institutional belief.
The market is always changing, but one unchanging principle is: while most people are still watching, the pioneers have already quietly laid out their plans. This policy shift by the Federal Reserve is not the end, but a new starting point for the integration of cryptocurrency assets into the global financial system.
The determination of the Trump administration to make the U.S. the 'global cryptocurrency capital' is evident. As more traditional funds pour in through the banking system, market depth and scale will grow exponentially.
If you are not ready yet, now is the time to reassess your portfolio. Feel free to share your thoughts in the comments: do you think this wave of traditional funds pouring in will first ignite mainstream coins or ecological altcoins?
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