Federal Reserve Eases Crypto Regulations, Influencing Institutional Investment

By: crypto insight|2025/12/18 17:30:13

Key Takeaways

The U.S. Federal Reserve and the SEC have made significant policy changes favoring crypto integration, marking a shift towards a more accepting regulatory stance.
New guidelines from the Federal Reserve now allow insured and uninsured banks to engage more broadly in crypto-related activities, enhancing potential for market growth.
The SEC has updated custodial regulations, ensuring broker-dealers maintain robust control over clients’ crypto assets, which improves investor protection and regulatory clarity.
While these regulatory changes lay groundwork for future growth, current market sentiment remains cautious with Bitcoin trading volumes still lower.
Institutional involvement and improved market infrastructure are anticipated to mature the crypto market gradually.

WEEX Crypto News, 18 December 2025

Major Regulatory Overhauls in the Crypto Sector

Over recent weeks, the U.S. financial regulatory landscape has undergone transformation with the Federal Reserve and the U.S. Securities and Exchange Commission (SEC) taking unprecedented steps towards easing cryptocurrency regulations. These changes are set to bolster institutional engagement and revitalization of the crypto market, yet immediate effects on pricing structures remain cautiously optimistic.

Federal Reserve’s New Guidelines

The Federal Reserve has retracted a restrictive 2023 policy statement, which had previously limited state member banks’ engagement with cryptocurrencies. This rollback explicitly recognizes the innovative role of cryptocurrencies in enhancing banking efficiency and service delivery. Consequently, both insured and uninsured banks are now permitted to participate in activities involving crypto-assets, such as providing storage, custodial services, and facilitating asset tokenization. This move aligns with broader federal trends aimed at fostering more inclusive participation in digital financial ecosystems.

In alignment with the Federal Reserve, other regulatory bodies like the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have also relaxed rules. The FDIC now allows banks to manage crypto assets and offer tokenized deposits without needing prior approval. Furthermore, the OCC has confirmed that banks can hold cryptocurrencies such as Bitcoin, Ethereum, Solana, and XRP to support blockchain operations and settlement processes.

SEC’s Updated Custody Requirements

Complementing the Federal Reserve’s liberalization, the SEC’s trading and markets department has introduced updated guidelines regarding the custody of digital assets. Specifically, the SEC has mandated that broker-dealers must have comprehensive control over their clients’ crypto assets. This includes managing private keys, facilitating asset transfers, and assessing blockchain-related risks while having contingency plans in place. This robust framework not only strengthens investor protection mechanisms but also provides clearer compliance pathways for institutions venturing into crypto markets.

Implications for Market Sentiment

Overall, the strategic amendments by the Federal Reserve and SEC are perceived as constructive measures potentially boosting institutional confidence in digital assets. However, this regulatory softening does not instantaneously translate into market exuberance. Despite these policy advancements, Bitcoin trades persist at suppressed levels, indicating tepid trading activity and lingering cautious sentiment among investors.

Despite these challenges, the reforms do provide a promising foundation for mid- to long-term market recovery. As institutional participation widens and technical infrastructure sees enhancements, the crypto market is likely to progress towards a more mature and regulated framework. This anticipated evolution points to a future where digital assets are seamlessly integrated with traditional financial systems, meeting compliance standards and investor expectations alike.

Future Prospects for Crypto Market Growth

It remains evident that the recent regulatory adjustments are designed not as immediate market stimuli but as strategic enablers of sustainable growth. By reducing compliance barriers for traditional financial institutions, these changes are set to invigorate the market’s liquidity and facilitate the tokenization of real-world assets. The clear directive is aimed at nurturing an environment conducive to increased capital flow and innovation within the digital asset sphere.

FAQ

What recent changes have the Federal Reserve and SEC made to cryptocurrency regulations?

The Federal Reserve has retracted previous restrictive policies, now allowing broader participation of insured and uninsured banks in crypto-related services. Concurrently, the SEC has updated its custodial guidelines, ensuring tighter control and security of cryptocurrency assets by broker-dealers.

How do these regulatory changes impact institutional investment in cryptocurrencies?

By relaxing regulations and enhancing clarity around compliance, these amendments encourage greater institutional investment. They aim to lower entry barriers and instill more confidence in the crypto market’s viability and security, potentially increasing liquidity and institutional presence.

What immediate market effects can we expect following these changes?

While the regulatory changes lay a robust foundation for future growth, immediate effects on market sentiment remain subdued. Bitcoin and overall crypto trading volumes are still experiencing modest activities, reflecting a cautious investor outlook.

How do these changes affect banks in relation to cryptocurrencies?

Banks can now engage more comprehensively in crypto-related services, including asset custody and tokenization services. The reforms empower banks to enhance their service offerings and explore additional avenues for innovation in line with digital asset growth.

Could these policy shifts influence the future structure of the crypto market?

Yes, these policy shifts are anticipated to drive a gradual transition towards a more structured and regulated market environment. They provide clarity, enhance security, and align banking operations with evolving digital asset technologies, thereby potentially attracting broader market participation and capital infusion.

For those looking to participate in this dynamic market, consider platforms like WEEX—where you can easily register and begin trading in a secure environment: [Sign up on WEEX](https://www.weex.com/register?vipCode=vrmi).

-- Price

The privacy-focused crypto wallet Mixin announced today the launch of its U-based perpetual contract (a derivative priced in USDT). Unlike traditional exchanges, Mixin has taken a new approach by "liberating" derivative trading from isolated matching engines and embedding it into the instant messaging environment.

Users can directly open positions within the app with leverage of up to 200x, while sharing positions, discussing strategies, and copy trading within private communities. Trading, social interaction, and asset management are integrated into the same interface.

Simplified Trading Experience: No KYC Required, Opening a Position in Five Steps

Based on its non-custodial architecture, Mixin has eliminated friction from the traditional onboarding process, allowing users to participate in perpetual contract trading without identity verification.

The trading process has been streamlined into five steps:

· Choose the trading asset

· Select long or short

· Input position size and leverage

· Confirm order details

· Confirm and open the position

The interface provides real-time visualization of price, position, and profit and loss (PnL), allowing users to complete trades without switching between multiple modules.

Social-Native Trading: Strategy and Execution Completed in the Same Context

Mixin has directly integrated social features into the derivative trading environment. Users can create private trading communities and interact around real-time positions:

· End-to-end encrypted private groups supporting up to 1024 members

· End-to-end encrypted voice communication

· One-click position sharing

· One-click trade copying

On the execution side, Mixin aggregates liquidity from multiple sources and accesses decentralized protocol and external market liquidity through a unified trading interface.

By combining social interaction with trade execution, Mixin enables users to collaborate, share, and execute trading strategies instantly within the same environment.

Referral Mechanism: Non-institutional users can receive up to 60% fee split

Mixin has also introduced a referral incentive system based on trading behavior:

· Users can join with an invite code

· Up to 60% of trading fees as referral rewards

· Incentive mechanism designed for long-term, sustainable earnings

This model aims to drive user-driven network expansion and organic growth.

Self-Custody Architecture and Built-in Privacy Mechanism

Mixin's derivative transactions are built on top of its existing self-custody wallet infrastructure, with core features including:

· Separation of transaction account and asset storage

· User full control over assets

· Platform does not custody user funds

· Built-in privacy mechanisms to reduce data exposure

The system aims to strike a balance between transaction efficiency, asset security, and privacy protection.

A New Path for On-Chain Derivatives

Against the background of perpetual contracts becoming a mainstream trading tool, Mixin is exploring a different development direction by lowering barriers, enhancing social and privacy attributes.

The platform does not only view transactions as execution actions but positions them as a networked activity: transactions have social attributes, strategies can be shared, and relationships between individuals also become part of the financial system.

Regulatory Background

Mixin's design is based on a user-initiated, user-controlled model. The platform neither custodies assets nor executes transactions on behalf of users.

This model aligns with a statement issued by the U.S. Securities and Exchange Commission (SEC) on April 13, 2026, titled "Staff Statement on Whether Partial User Interface Used in Preparing Cryptocurrency Securities Transactions May Require Broker-Dealer Registration."

The statement indicates that, under the premise where transactions are entirely initiated and controlled by users, non-custodial service providers that offer neutral interfaces may not need to register as broker-dealers or exchanges.

About Mixin

Mixin is a decentralized, self-custodial privacy wallet designed to provide secure and efficient digital asset management services.

Its core capabilities include:

· Aggregation: integrating multi-chain assets and routing between different transaction paths to simplify user operations

· High liquidity access: connecting to various liquidity sources, including decentralized protocols and external markets

· Decentralization: achieving full user control over assets without relying on custodial intermediaries

· Privacy protection: safeguarding assets and data through MPC, CryptoNote, and end-to-end encrypted communication

Mixin has been in operation for over 8 years, supporting over 40 blockchains and more than 10,000 assets, with a global user base exceeding 10 million and an on-chain self-custodied asset scale of over $1 billion.

$600 million stolen in 20 days, ushering in the era of AI hackers in the crypto world

Ethereum's biggest enemy is actually AI hackers

Vitalik's 2026 Hong Kong Web3 Summit Speech: Ethereum's Ultimate Vision as the "World Computer" and Future Roadmap

Ethereum's Two Core Tenets: A "World Computer" + Global Broadcast Channel.

On the same day Aave introduced rsETH, why did Spark decide to exit?

The results of two decision-making philosophies have now been quantified

Full Post-Mortem of the KelpDAO Incident: Why Did Aave, Which Was Not Compromised, End Up in Crisis Situation?

Bad Debt, Liquidity Crisis, and DeFi Risk Reassessment

After a $290 million DeFi liquidation, is the security promise still there?

Replacing intermediary credit with code does not automatically equate to greater security

ZachXBT's post ignites RAVE nearing zero, what is the truth behind the insider control?

Perhaps what the cryptocurrency market truly needs is to transform what ZachXBT has done into institutional arrangements: stricter listing review standards, more transparent token distribution information disclosure, and more binding continuous monitoring mechanisms for exchanges.

Vitalik 2026 Hong Kong Web3 Carnival Speech Transcript: We do not compete on speed; security and decentralization are the core

Vitalik Buterin reveals the ultimate vision of Ethereum as a "world computer," announcing a hardcore roadmap for the next five years focusing on scalability, zkEVM, and quantum resistance.

Consumer-grade Crypto Global Survey: Users, Revenue, and Track Distribution

The number of active users of consumer-grade encryption has long reached tens of millions, but it is not in the sight of Silicon Valley and New York.

Prediction Markets Under Bias

Why do authoritative narratives always exclude prediction markets?

Stolen: $290 million, Three Parties Refusing to Acknowledge, Who Should Foot the Bill for the KelpDAO Incident Resolution?

The most dangerous scenario right now is that if ETH suddenly drops, Aave's bad debt could snowball even further.

ASTEROID Pumped 10,000x in Three Days, Is Meme Season Back on Ethereum?

「Space Dog」 Triggers ETH Mainnet Price Surge, Sparking SOL Community Anxiety

ChainCatcher Hong Kong Themed Forum Highlights: Decoding the Growth Engine Under the Integration of Crypto Assets and Smart Economy

Why can this institution still grow by 150% when the scale of leading crypto VCs has shrunk significantly?

The merger of the two major payment companies, Bridge and BVNK, establishes their industry position and revenue scale.