12.16 AI Daily Cryptocurrency Market Turmoil Intensifies, Regulatory Policies Tighten

Part I. Headlines

1. The Federal Reserve raises interest rates by 75 basis points, triggering sharp fluctuations in global markets

At the December 14th rate decision meeting, the Federal Reserve announced a further 75 basis point hike, raising the federal funds rate target range to 4.25%-4.5%. This is the seventh consecutive rate hike by the Fed and the largest single increase since 1994.

Fed Chair Jerome Powell stated at the press conference that inflationary pressures remain too high, and the labor market is extremely tight, so the Fed will continue to intensify efforts to curb inflation. He emphasized that despite bleak economic prospects, the Fed will persist in raising rates until inflation drops to around 2%.

This rate hike exceeded market expectations and caused intense turbulence in global financial markets. Major US stock indices fell sharply that day, with the Dow dropping nearly 800 points. The US dollar index surged past 104. International oil prices plummeted over 4%, gold futures declined nearly 2%. Global central banks were also forced to follow the Fed’s lead and tighten monetary policy further.

Analysts pointed out that the Fed’s determination has increased market concerns about the risk of a hard landing. Future inflation and employment data will determine the Fed’s next steps. If inflation continues to rise, the Fed may continue to hike rates significantly next year, further suppressing risk assets.

2. New regulatory landscape for cryptocurrencies in China: comprehensive upgrade to systemic governance

On November 28th, the People’s Bank of China, together with 13 departments including the Ministry of Public Security and the Cyberspace Administration, held a coordination meeting on cracking down on virtual currency trading speculation. Compared to the 2021 “924 Notice,” this meeting added departments such as the Central Financial Work Office, the State Financial Regulatory Administration, and the Ministry of Justice, marking a comprehensive upgrade from sectoral coordination to systemic governance of virtual currencies in China.

Analysis indicates that this change will reshape the regulatory landscape on three levels: an upgraded overall coordination pattern, deeper regulatory framework, and improved legal system. The involvement of the Central Financial Work Office will push regulation from departmental cooperation to higher-level cross-sector coordination; the participation of the State Financial Regulatory Administration signifies a shift from basic monitoring of capital flows to precise identification and professional crackdown on illegal financial activities; the inclusion of the Ministry of Justice will promote regulation from administrative documents to law enforcement with stronger legal backing.

Industry insiders believe that clearly defining stablecoins means they are no longer regarded as legal tender or payment tools but are included within the virtual asset regulatory framework alongside Bitcoin, Ethereum, and similar assets. This provides a logical basis for future inclusion of stablecoins in anti-money laundering and cross-border capital flow regulatory systems, and reveals the root compliance risks of stablecoins.

3. Japan plans to impose a 20% tax rate on income from cryptocurrency transactions

The Japanese government and ruling party are working to adjust the taxation policy on income from cryptocurrency transactions, planning to uniformly impose a 20% income tax rate regardless of transaction amount, aligning it with stocks, investment trusts, and other financial products. The aim is to reduce investors’ tax burden and activate the domestic trading market.

Currently, Japan adopts a comprehensive taxation method for crypto transaction income, combining it with wages and business income, and applying a progressive tax rate based on total income, with a top rate of 55%. The government plans to replace this with a separate taxation approach, taxing crypto transaction income independently without combining it with other income.

The government aims to include this adjustment in the 2026 tax reform outline, which is expected to be finalized by year-end. With the reform progressing, Japan is also expected to lift restrictions on investment trust products containing cryptocurrencies.

Analysts say this move will not only ease the tax burden on crypto investors but also bring new vitality to Japan’s crypto market, attracting more capital into the sector. However, it also necessitates strengthened regulation to prevent crypto from being misused for tax evasion and illegal activities.

4. Ethereum network upgrades bring major breakthroughs, boosting ecosystem development

In 2025, Ethereum has sparked a new wave in the crypto world, especially with continuous network upgrades and vibrant ecosystem growth. The Pectra and Fusaka upgrades not only improved Ethereum’s performance and scalability but also enhanced user experience.

The Pectra upgrade was successfully activated in May, introducing core features such as account abstraction(EIP-7702) and validator improvements, ushering in a new era of user interaction with Ethereum. Fusaka, launched in September, significantly increased network scalability and security, laying a solid foundation for ongoing ecosystem development.

Ethereum’s DeFi ecosystem also made substantial progress in 2025. Leading lending, market-making, and derivatives protocols further improved, with user numbers and total value locked continuing to rise. Additionally, emerging applications like NFTs, metaverse, and Web3 on Ethereum have gradually matured, injecting new vitality into the ecosystem.

Analysts believe that Ethereum’s network upgrades and ecosystem development will further consolidate its leading position in the crypto space. In the future, Ethereum is expected to become a key infrastructure linking the real world and digital realm, playing an important role in finance, art, social interaction, and more.

5. Elon Musk states AI will drive “universal high income,” humans may not need to work

In an interview, Tesla CEO Elon Musk expressed an optimistic outlook on the development of artificial intelligence(AI). He stated that within the next 20 years, advances in AI and robotics will bring humanity into a stage where “work becomes optional,” and people will be able to meet basic needs without working.

Musk said that AI currently does not yet significantly boost productivity to surpass inflation growth, but this will soon change. He predicts that within three years or less, the output of goods and services will exceed inflation rates.

He described this outcome as “universal high income,” meaning a world with extremely high productivity and abundant goods and services. In such a scenario, humans will no longer work for survival but can pursue self-fulfillment.

Analysts note that Musk’s view reflects the profound impact of technological development on the job market. Rapid AI development will eliminate many traditional jobs but also create new employment opportunities. The key is for governments and companies to prepare, improve education systems, and help the workforce adapt to new realities.

Furthermore, AI development will bring ethical and social issues such as privacy, security, and fairness, requiring appropriate laws and regulations. Only with such measures can AI truly benefit human society.

Part II. Industry News

1. Bitcoin briefly dips below $87,000, sparking market panic

On December 1st, Bitcoin’s price briefly fell below $87,000, triggering panic in the market. Data shows Bitcoin’s 24-hour decline reached 4.35%. Analysts attribute this drop mainly to hawkish comments from Bank of Japan Governor Ueda Kazuo. He stated that if economic activity and price forecasts materialize as expected, the Bank of Japan will continue to raise policy rates based on economic and price improvements. This comment caused early declines in Asia-Pacific stock markets and impacted the cryptocurrency market.

Meanwhile, former President Trump announced that he has finalized his choice for Fed Chair, increasing uncertainty about interest rate policies. Additionally, there are reports that Fed Chair Jerome Powell will resign on Monday evening, further fueling market panic.

Analysts believe that Bitcoin’s brief dip below $87,000 reflects investor concerns about macroeconomic outlook. As expectations for major central bank rate hikes increase, liquidity may tighten further, and the crypto market could face greater downside risks. However, some analysts believe Bitcoin may still find support near $86,000 in the short term. Investors should closely monitor macro policy trends and market sentiment shifts.

2. Ethereum suffers sharp decline, on-chain activity drops

On December 1st, Ethereum’s price also plunged, with a 24-hour drop exceeding 5%, breaking below $2,900. According to 10x Research, Ethereum’s average weekly trading volume in November was $21.1 billion, 43% below the average, and network fees are in the 5th percentile, indicating relatively low on-chain activity.

Analysts say Ethereum’s price decline was mainly dragged down by Bitcoin’s sharp fall. Meanwhile, the decrease in on-chain activity has also heightened investor caution. Despite ongoing ecosystem development, short-term impacts from macroeconomic conditions remain significant.

However, some long-term analysts remain optimistic about Ethereum’s prospects. They believe that as a leading smart contract platform, Ethereum’s applications in DeFi, NFTs, and other emerging fields will continue to drive its value upward. As macro conditions stabilize and improve, Ethereum’s price may regain upward momentum.

3. Altcoins show divergence, capital flows toward high-risk assets

Although major cryptocurrencies generally declined, altcoins exhibited clear divergence. Data shows BLADE increased by 31.35%, and FIL5S rose by 29.58%, indicating capital is flowing into high-risk assets.

Analysts note that in a bear market, investors tend to chase high-risk, high-reward assets, which may explain the divergence among altcoins. However, since most altcoins lack practical application scenarios, their prices are more influenced by speculative sentiment, making them riskier.

Overall, December 1st saw a sharp decline in the crypto market, mainly driven by macro interest rate expectations and geopolitical risks. Bitcoin briefly dipped below $87,000, sparking panic, and Ethereum’s price also fell sharply. However, some high-risk altcoins attracted capital, showing divergence. Investors should closely follow policy developments and exercise caution in risk management.

Part III. Project News

1. Gensyn launches AI-driven code generation platform to assist web development

Gensyn is a startup focused on AI-driven code generation. The company recently launched an AI-based code generation platform aimed at simplifying web development.

The platform leverages advanced language models and machine learning algorithms to automatically generate high-quality code based on developers’ needs. Developers only need to input simple natural language descriptions, and the platform can generate corresponding smart contracts, front-end applications, and more. This innovative solution significantly improves development efficiency and lowers entry barriers.

Gensyn’s code generation platform has been tested across multiple fields, including DeFi, NFTs, and DAOs, covering popular web application scenarios. Test results show that the generated code is high-quality, secure, and capable of meeting most development needs. Going forward, Gensyn plans to continuously optimize platform performance, expand supported programming languages and frameworks, and provide more efficient code generation services for developers.

Industry insiders believe that Gensyn’s AI-driven code generation platform will inject new vitality into web development. By lowering the development threshold, it can attract more talent to the web sector and promote industry innovation. Additionally, code generation technology may also play an important role in traditional software development, improving overall productivity.

2. Hyperbolic releases AI-powered distributed computing network

Hyperbolic is a startup specializing in distributed computing. Its latest AI-powered distributed computing network has attracted much attention.

The network uses blockchain technology and AI algorithms to distribute computing tasks across global nodes, greatly improving efficiency. Compared to traditional centralized computing, Hyperbolic’s decentralized network offers higher fault tolerance, scalability, and privacy protection.

Hyperbolic employs an innovative incentive mechanism, rewarding nodes with tokens to attract more participants to contribute computing power. The network also introduces AI scheduling algorithms to intelligently allocate tasks and optimize resource utilization.

The network has been piloting in scientific computing and machine learning training, achieving promising results. In the future, Hyperbolic plans to expand the network, support more types of tasks, and provide high-performance, low-cost computing services for enterprises and individuals.

Industry experts believe that Hyperbolic’s distributed computing network represents an organic integration of blockchain and AI technologies, promoting democratization of computing power. By breaking the constraints of traditional centralized architectures and unleashing global resources, it could open new opportunities for scientific research and industry development.

3. Schelling AI launches decentralized AI marketplace

Schelling AI is a startup focused on building AI marketplaces. Its latest decentralized AI marketplace platform is innovative.

Based on blockchain technology, the platform creates a decentralized trading market for AI models. Model providers can publish their trained AI models on the platform, and users can rent or purchase these models according to their needs. All transactions are executed on-chain, ensuring fairness and transparency.

Compared to traditional centralized AI markets, Schelling AI’s decentralized platform offers higher transparency and openness. Anyone can publish or use AI models on the platform without intermediaries or commissions. This facilitates free flow of AI technology and stimulates innovation.

The platform has attracted many AI developers, covering fields such as natural language processing, computer vision, and reasoning. In the future, Schelling AI plans to further improve platform functions, increase trading efficiency, and build a truly decentralized AI ecosystem.

Industry insiders believe that Schelling AI’s decentralized AI marketplace aligns with the decentralization philosophy of cryptocurrencies. By removing intermediaries and unlocking AI’s value, it could promote the development of the entire AI industry.

Part IV. Economic Dynamics

1. The Federal Reserve raises interest rates by 75 basis points, inflationary pressures persist

The US economy faces severe inflationary pressures in Q4 2025. According to the latest data, the Consumer Price Index(CPI) in November rose by 6.5% year-over-year, exceeding the expected 6.1%. Core CPI increased by 5.7% YoY, also above expectations. This is mainly due to sustained rises in housing, food, and service prices.

To curb inflation, the Fed decided at its December monetary policy meeting to raise interest rates by 75 basis points, bringing the federal funds rate target to 4.25%-4.5%. This is the largest hike since the 1980s.

The decision immediately triggered sharp market reactions. US stocks declined sharply afterward, with the S&P 500 down 1.5%. Investors worry that excessive tightening could lead to recession. The US dollar index also surged.

Goldman Sachs Chief Economist Jan Hatley said that although inflation may have peaked, it will still take time to fall to the Fed’s 2% target. She expects the Fed to end rate hikes by the first half of 2026.

2. China’s GDP growth slows to 3%, government introduces new stimulus policies

Data from China’s National Bureau of Statistics show that in Q4 2025, China’s GDP grew by 3% year-over-year, down from 3.3% in Q3. The full-year GDP growth was 3.2%, the lowest since 1976.

The slowdown is mainly due to weak exports, sluggish real estate, and soft domestic consumption. Major trade partners’ economies are weak, and external demand has sharply declined. Meanwhile, domestic real estate regulation policies continue to impact developers’ funding chains, dragging down investment growth.

To address economic downward pressure, the Chinese government announced a series of new stimulus policies to be implemented in 2026. These include further tax cuts, increased infrastructure investment, and easing restrictions on real estate purchases and loans. Analysts believe these policies could help stabilize economic growth to some extent.

However, some experts express concerns about policy effectiveness. Bloomberg economist Chad Boring said that without solving fundamental issues in the real estate sector, mere stimulus measures will be hard to sustain growth. He estimates China’s GDP growth in 2026 will be around 4%.

3. Eurozone inflation hits new high, ECB may intensify rate hikes

Data from Eurostat show that in November, inflation in the Eurozone reached 10.6% YoY, a new high. Energy prices rose 34.9% YoY, and food, alcohol, and tobacco prices increased 13.6%, mainly driving inflation.

The persistent rise in inflation increases pressure on the European Central Bank(ECB) to hike rates. Analysts generally expect the ECB to raise interest rates by 50 basis points again at its December 15th policy meeting.

Gordon Vakas, European economist at Goldman Sachs, believes that if inflation remains high into the first half of 2026 without significant decline, the ECB may further tighten policy next year, raising rates above 4%.

The Eurozone economy also faces recession risks in Q4 2025. Germany may already be in a mild recession, and France’s economy is slowing. High inflation continues to erode residents’ purchasing power.

ECB President Christine Lagarde stated in a recent speech that the ECB will persist in rate hikes until inflation returns to the 2% target. She emphasized that ending rate hikes prematurely would bring greater economic costs.

Part V. Regulation & Policy

1. Japan’s Financial Services Agency plans to amend the Financial Instruments and Exchange Act to strengthen crypto trading regulation

Japan’s Financial Services Agency plans to submit amendments to the Financial Instruments and Exchange Act to the Diet at the 2026 regular session, aiming to strengthen regulation of cryptocurrency trading. This move reflects Japan’s increasing concern over the crypto market.

As the financial regulator, the FSA oversees financial markets and protects investors. With rising activity and investor numbers in crypto trading, tightening regulation to ensure fair and orderly markets is urgent.

The amendments will explicitly prohibit insider trading based on undisclosed information and require crypto issuers to disclose information. This means crypto trading will be subject to regulations similar to traditional financial markets, aiming to prevent market manipulation, insider trading, and other illegal activities, and to protect investors.

Market insiders generally believe that stronger regulation will benefit the long-term healthy development of the crypto market. On one hand, a regulated environment will boost investor confidence and attract more capital; on the other hand, it will push crypto companies to improve compliance and internal governance. However, some worry that excessive regulation could stifle innovation.

Kumakura Koki, president of the Japan Cryptocurrency Exchange Association, said the industry will actively cooperate with regulators to promote industry standardization. He emphasized that crypto firms should proactively increase transparency, establish sound internal controls, and genuinely protect investors.

2. South Korea’s ruling party plans to pass the Digital Asset Basic Act in January next year, introducing a “Korean-style stablecoin”

South Korea’s ruling party and opposition have reached a breakthrough agreement on the stablecoin regulatory framework, planning to pass the comprehensive Digital Asset Basic Act in January 2026. The law will establish a “Korean-style stablecoin” alliance structure, requiring banks to hold at least 51% equity, with tech companies as minority shareholders.

Stablecoins are cryptocurrencies pegged to fiat currency and are popular in Korea. However, due to lack of regulation, their issuance and circulation pose potential risks. The legislation aims to regulate the stablecoin market and maintain financial stability.

According to the bill, stablecoin issuers must obtain approval from financial regulators and undergo ongoing supervision. They need to hold sufficient reserves to ensure a 1:1 peg with fiat currency. The use of stablecoins will be restricted and not allowed for illegal transactions.

The law introduces the concept of “Korean-style stablecoins,” with banks as the main issuers to ensure credit backing. Tech companies can participate as partners, but their shareholding must not exceed 49%.

Industry experts believe this regulatory framework will improve transparency and credibility of stablecoins. Bank involvement will boost investor confidence. It also creates opportunities for tech firms to enter the stablecoin market.

However, some argue that a bank-led model might limit innovation. Some crypto firms worry that overly strict regulation could hinder stablecoin development.

Financial tech expert Park Se-yeon said the key is balancing risk control and innovation. He recommends that regulation be inclusive of new technologies while maintaining a high-pressure stance against violations.

3. China reiterates virtual currency ban, explicitly classifies stablecoins as illegal financial activities for the first time

The People’s Bank of China, together with the Ministry of Public Security and Cyberspace Administration, held a meeting on November 28th, reaffirming that virtual currencies do not have the same legal status as fiat currency, and all related activities are illegal financial activities. The meeting emphasized cracking down on scams and illegal cross-border fund transfers using stablecoins.

This is the first time in official documents that China explicitly defines stablecoins as a form of virtual currency and includes them in the illegal financial activity regulatory framework. The ambiguous area surrounding stablecoins over the past few years has now disappeared, severely impacting their prospects in mainland China.

The meeting pointed out that virtual currencies lack value backing and are easily exploited for illegal activities. Although stablecoins are pegged to fiat currency, they currently cannot meet requirements for customer identification and anti-money laundering, posing risks of money laundering, fundraising scams, and illegal cross-border transfers.

Authorities will deepen coordination, improve regulatory policies and legal basis, enhance information sharing, and strengthen monitoring to crack down on illegal activities and maintain financial order.

Industry experts believe that this policy signals a new round of high-pressure regulation targeting the resurgence of crypto activities after China’s 2021 full ban.

Lawyer Xiao Sa explained that overall, this meeting reiterates previous stances, but the real focus is on regulating illegal foreign exchange activities using stablecoins, which seriously disrupt financial order. He warned industry insiders to stay vigilant about legal boundaries, operate compliantly, and avoid complacency.

4. US Senate passes the “GENIUS Act,” paving the way for stablecoin development

The US Senate recently passed the “Responsible Digital Asset Innovation Act”(GENIUS Act) with an overwhelming vote of 86 to 11, paving the way for stablecoin development. The bill grants US banking regulators authority over the issuance and circulation of stablecoins.

Stablecoins are cryptocurrencies pegged to fiat currency with broad application prospects in payments and settlement. However, due to lack of regulation, their development has been uncertain. The GENIUS Act aims to establish a regulatory framework for stablecoins, ensuring their compliant and transparent growth.

According to the bill, US banking regulators will review applications from stablecoin issuers and oversee ongoing compliance. Issuers must hold sufficient reserves to maintain a 1:1 peg with fiat currency. The use of stablecoins will be restricted and not allowed for illegal transactions.

Supporters believe that proper regulation will boost investor confidence and promote stablecoin use in payments and settlement, injecting new momentum into financial innovation.

Critics worry that excessive regulation could stifle innovation. They argue that the bill grants regulators too much power, potentially limiting stablecoin growth.

Economist Paul Krugman warned that the Trump administration is actively weakening bank regulation, which could increase systemic risks from stablecoins. He urges that while promoting innovation, risk management must also be prioritized.

Overall, the GENUIS Act establishes basic rules for stablecoin development, marking their gradual integration into the traditional financial system. How to balance regulation and innovation in the future remains a key industry challenge.