12.6 AI Daily: Cryptocurrency Industry Ushers in a New Era of Regulation

I. Top Stories

1. Fed Chair Powell Signals Hawkish Stance, Bitcoin Plunges Over 10%

Federal Reserve Chair Jerome Powell stated in a speech that to control inflation, the Fed may need to raise interest rates to higher levels than previously expected. These hawkish remarks immediately triggered sharp fluctuations in financial markets, with Bitcoin plummeting over 10% that day and briefly falling below the $17,000 level.

Powell emphasized that although inflation has slowed somewhat, it remains well above the 2% target. To restore price stability, the Fed may need to raise rates to a higher level than previously anticipated and maintain that level for some time. This suggests the Fed will continue raising rates and maintain a high-interest-rate policy.

Analysts pointed out that Powell’s speech has heightened market expectations for further aggressive Fed rate hikes. A high-interest environment increases investors’ opportunity costs, thereby depressing valuations of risk assets. As an emerging alternative investment, Bitcoin was the first to be sold off.

Meanwhile, the US Dollar Index surged following Powell’s speech, adding further pressure to cryptocurrencies. Overall, Powell’s hawkish comments have sparked recession fears, with investors fleeing risk assets in search of safe havens.

2. Japan Plans 20% Flat Tax Rate on Cryptocurrency Trading

The Japanese government is preparing to adjust its tax policy on cryptocurrency trading income, planning to impose a flat 20% income tax rate on all transactions, regardless of amount, bringing it in line with stocks, investment trusts, and other financial products. This aims to reduce investors’ tax burden and energize the domestic trading market.

Currently, Japan applies comprehensive taxation on crypto trading income, combining it with other income categories and applying a progressive tax rate, with a maximum rate of up to 55%. This high tax policy is considered a hindrance to the development of Japan’s crypto market.

The new policy will adopt separate taxation, no longer combining crypto trading income with salary or business income, but instead taxing it separately at 20%. This adjustment is expected to be included in the 2026 tax reform outline.

Analysts note that this move will significantly reduce the tax burden for crypto investors and attract more capital into Japan’s crypto market. At the same time, the unified 20% rate will also simplify taxation procedures and reduce investors’ compliance workload.

Notably, as tax reform progresses, Japan is also expected to lift restrictions on investment trust products containing crypto assets, providing institutional investors with more diversified investment options.

3. Lazarus Hacker Group Upgrades Attacks with AI Technology

According to a report from cybersecurity firm AhnLab, North Korean hacker group “Lazarus” has been the most active in the past year, mainly using “spear-phishing” attacks disguised as lecture invitations, interview requests, and similar emails to lure targets.

The report notes that Lazarus is believed to be responsible for several major attacks, including the February 21st By hack and the recent $30 million exploit on Korean exchange Up.

Of particular concern, with the proliferation of AI applications, hacker groups like Lazarus will find it easier to generate convincing phishing emails, spoofed pages, and deepfake content, further complicating future threats.

Analysts point out that Lazarus’ upgraded attack methods are mainly aimed at acquiring more crypto assets. Crypto exchanges and wallet platforms, with their concentration of high-net-worth users, have become prime targets for such groups.

To counter these threats, AhnLab recommends that companies establish multi-layered defense systems, including regular security audits, timely patch updates, and enhanced staff training. It also calls for individual users to use multi-factor authentication, handle unknown links and attachments with caution, and avoid overexposing personal information.

4. Multiple Chinese Agencies Crack Down on Virtual Currency Trading Speculation

The People’s Bank of China recently convened a meeting with the Ministry of Public Security, the Cyberspace Administration, and thirteen other departments to coordinate a crackdown on virtual currency trading speculation. The meeting highlighted that such activities pose risks of illegal fundraising, gambling, and other crimes, seriously disrupting economic and financial order.

The meeting called for deeper inter-agency cooperation, improvement of regulatory policies and legal frameworks, focus on key areas such as information and capital flows, enhancement of information sharing, improved monitoring capabilities, and strict crackdown on illegal activities.

Analysts say the expanded lineup at this meeting signals that China’s crypto regulation is upgrading from sectoral coordination to a comprehensive, systematic approach. The involvement of the Central Financial Office will elevate regulation to a higher level of cross-sectoral coordination.

Meanwhile, the addition of the National Financial Regulatory Administration means regulation will shift from basic capital flow monitoring to precise identification and professional investigation of illegal financial activities. The Ministry of Justice’s involvement will upgrade regulation from administrative document-driven to a legal framework with stronger judicial backing.

Overall, these actions will reshape China’s crypto regulatory landscape, reinforce enforcement authority, and provide strong support for maintaining economic and financial order.

5. Sony Bank Plans to Issue USD-Pegged Stablecoin in the US

According to Nikkei News, Sony Bank plans to issue a US dollar-pegged stablecoin in the US as early as fiscal year 2026, with plans to use it for payments within its gaming and anime content ecosystem.

This move is seen as an important step in Sony’s foray into Web3 and the metaverse. By issuing a stablecoin, Sony can provide a new payment method for its gaming and entertainment products and explore new blockchain-based business models.

Analysts say Sony’s main objective is to inject liquidity into its ecosystem and leverage blockchain technology for innovative applications such as cross-border payments. Unlike traditional game point cards, the stablecoin can circulate within Sony’s ecosystem and also be freely traded in external markets.

Additionally, the stablecoin could become Sony’s breakthrough for entering DeFi and other crypto finance sectors. In the future, Sony could develop various financial products based on the stablecoin, offering services such as lending and wealth management.

However, regulatory issues remain a major challenge for stablecoins. US regulators have been cautious toward stablecoins. Sony needs to ensure its stablecoin complies with relevant regulations to avoid regulatory risks.

II. Industry News

1. Bitcoin Briefly Drops Below $87,000, Triggers Market Panic

During Asian trading hours on December 1, Bitcoin briefly fell below $87,000, touching an intraday low of $86,317. Analysts believe this drop was mainly due to hawkish comments from the Bank of Japan governor and China’s crackdown on virtual currency trading speculation.

Bitcoin’s price plunged with heavy volume at the highs, with a large bearish candlestick breaking multiple moving averages and creating a rapid downward structure. Traders rushed to take profits, triggering a chain of liquidations and intensifying downward momentum. Data shows that over the past 24 hours, more than 19,500 BTC net flowed out of OTC exchanges, indicating funding pressure.

Analysts say short-term downside pressure remains for Bitcoin. Whether it can find support in the $88,600–$89,000 range will determine its next move. If it fails to hold this level, Bitcoin may drop further to $87,000 or lower. However, from a long-term perspective, Bitcoin’s fundamentals remain strong, and this correction could be a good entry opportunity.

2. Ethereum Faces Stagnation, DeFi Sector Leads Losses

Ethereum was not spared on December 1, dropping over 5% intraday and falling below the $2,900 mark. At the same time, the DeFi sector led the decline with a 6.4% drop, with some popular tokens like Yearn suffering a hack resulting in $3 million in losses.

Analysts point out that Ethereum has been consolidating around $3,000, lacking strong upward momentum. The lackluster rise is mainly due to doubts about its future prospects in DeFi, NFT, and other hot sectors. In addition, Ethereum lacks a clear deflationary mechanism like Bitcoin, which also limits its price performance.

Nevertheless, Ethereum’s ecosystem continues to develop, with broad application prospects in programmable blockchains and Web3. As more upper-layer applications are launched, Ethereum is expected to regain its upward trend. Investors should closely monitor its technological innovation and cautiously time their investments.

3. Altcoins Diverge, AI and GameFi Concepts Favored

Against the backdrop of mainstream tokens generally falling, the altcoin sector showed mixed performance. AI and GameFi concept tokens bucked the trend, rising 6.84% and 7.67% respectively. Notably, SoSoValue(SOSO) and MemeCore(M) surged by 8.43% and 7.15% respectively.

Analysts believe AI and GameFi concepts have been favored recently due to market recognition of their future potential. Artificial intelligence is seen as the next technological wave, expected to penetrate various industries; blockchain gaming is also highly anticipated as a new entertainment hub in the metaverse era.

However, some analysts express concern that the current hype may be overly speculative and lack fundamental support. They remind investors that AI and GameFi are still in the early stages and patience is needed for technology and applications to mature; blind chasing should be avoided.

4. Crypto Market Sentiment Sluggish, Investors Cautious

Overall, crypto market sentiment was subdued on December 1, with major coins generally under pressure. According to Alternative data, the crypto Fear and Greed Index dropped to 24 that day, entering the “Extreme Fear” zone.

Analysts say the shift in sentiment is mainly due to macro uncertainties. The Fed may slow rate hikes, but inflation pressures are unlikely to ease in the short term; geopolitical tensions also add instability to the market. Against this backdrop, most investors are taking a wait-and-see attitude, waiting for greater clarity.

However, some analysts remain optimistic, arguing that the crypto market is undergoing a necessary deleveraging process, which is healthy for long-term development. In addition, institutional capital is gradually entering the market, providing new momentum for growth. Investors should be patient and seize the right entry opportunities.

III. Project News

1. Sui Blockchain Mainnet Launches, Leading New Move Ecosystem Wave

Sui is a new layer-1 blockchain developed by Mysten Labs, designed to provide high-performance, low-cost distributed applications for the Web3 era. Sui uses the Move programming language and is known for its scalability and security.

Latest Update: After extensive development and testing, the Sui mainnet officially launched on December 1, 2025. This marks a new phase for the Move ecosystem, with Sui becoming the first Move-based blockchain for the masses. After mainnet launch, Sui supports smart contract deployment, NFT minting, DeFi applications, and more. The Sui team also released supporting tools including Sui Wallet and Sui Explorer, providing a complete user experience.

Market Impact: The launch of Sui will advance the Move ecosystem, attracting more developers and projects. As the first mass-market Move chain, Sui will serve as the ecosystem gateway, paving the way for future projects. Sui’s excellent performance and low cost are expected to drive large-scale adoption of Web3 applications. Sui will also promote interoperability between the Move ecosystem and other blockchains.

Industry Feedback: Industry insiders generally consider Sui’s launch a major milestone for the Move ecosystem. The Sui team excels in technical innovation and ecosystem building, injecting new energy into the Move ecosystem. However, some analysts caution that Sui needs to further improve its ecosystem and attract more quality projects and users to truly lead the Move ecosystem to take off.

2. Aptos Launches AMM DEX Liquidswap

Aptos is an emerging layer-1 blockchain created by former Meta employees, using the Move programming language. Aptos focuses on high performance, security, and scalability.

Latest Update: The first AMM decentralized exchange in the Aptos ecosystem, Liquidswap, is officially live. Liquidswap was incubated by the Aptos Ecosystem Foundation, written in Rust, and supports high throughput and low fees. Liquidswap supports automated market-making trades between Aptos ecosystem tokens and offers liquidity mining incentives.

Market Impact: The launch of Liquidswap further enhances the Aptos DeFi ecosystem by providing a source of liquidity. As the first AMM, Liquidswap will attract more assets and liquidity to Aptos, driving the development of Aptos DeFi applications. In addition, Liquidswap’s low fees and high throughput will improve the user experience for Aptos ecosystem users.

Industry Feedback: Analysts believe Liquidswap is a key component of the Aptos ecosystem and will drive its DeFi development. However, there are concerns about security and audit issues as Liquidswap is the first AMM. The Aptos ecosystem needs more quality projects to realize the blockchain’s full potential.

3. Gensyn Launches AI-Driven Smart Contract Development Platform

Gensyn is an innovative company focusing on AI and blockchain integration, aiming to enhance blockchain development efficiency with artificial intelligence.

Latest Update: Gensyn has launched an AI-driven smart contract development platform. The platform integrates advanced language models and code generation technology, automatically generating smart contract code based on developers’ natural language descriptions. Developers only need to describe contract functions, and the platform generates corresponding Solidity, Move, and other code.

Market Impact: Gensyn’s AI development platform will greatly improve smart contract development efficiency and lower the entry barrier. Traditionally, smart contract development requires proficiency in languages like Solidity, which involves a steep learning curve. With Gensyn, developers need no coding experience—just describe their needs. This will attract more developers to blockchain and drive industry growth.

Industry Feedback: Industry insiders welcome Gensyn’s platform as a beneficial attempt at AI-blockchain integration. However, some are concerned about the security and reliability of AI-generated code, which needs further improvement. Overall, Gensyn brings new ideas to blockchain development and is worth watching for future progress.

IV. Economic Trends

1. Fed Hikes Rates by 75 Basis Points, Inflation Pressure Persists

The US economy faces severe inflation pressures in Q4 2025. According to the latest data, the core Personal Consumption Expenditures Price Index ((PCE)) rose 5.8% year-over-year in November, above the expected 5.6%. This data reflects the widespread presence of inflationary pressure in the economy.

To address persistently high inflation, the Fed decided at its December monetary policy meeting to raise rates by another 75 basis points, bringing the federal funds rate target range to 4.25%-4.5%. This is the Fed’s seventh consecutive large hike, reflecting its determination to curb inflation.

The market’s reaction to the Fed’s decision is mixed. On one hand, investors worry that excessive tightening could trigger a hard landing and recession. On the other, some analysts believe only further rate hikes can effectively anchor inflation expectations.

Goldman Sachs Chief Economist Jan Hartley said: “While rate hikes will negatively affect economic activity, failing to curb rising inflation expectations will ultimately cost even more. The Fed needs to balance these two risks.”

Overall, the US economy faces a dilemma of both inflation and recession risks. The direction of Fed policy will determine the future economic trajectory.

2. China’s Manufacturing PMI Returns to Expansion, Economic Recovery Outlook Brightens

China’s economy showed signs of recovery at the end of 2025. According to the National Bureau of Statistics, the official manufacturing Purchasing Managers’ Index ((PMI)) for November was 51.4%, up from 49.2%, returning to expansion territory. This indicates a rebound in manufacturing activity, injecting new momentum into economic growth.

Additionally, the non-manufacturing business activity index for November was 56.7%, up 1.1 percentage points from last month, showing robust expansion in the services sector. This is mainly due to the continued recovery of domestic consumption.

The Chinese government has recently introduced a series of policies to boost economic growth, including increased infrastructure investment, support for manufacturing, and expanded domestic demand. These measures have already shown results, injecting new vitality into the economy.

Goldman Sachs Asia Economist Zhu Haibin said: “China’s economy is in a recovery process, and GDP growth is expected to reach around 5.5% in 2026. However, global economic slowdown and geopolitical tensions may still pressure exports and investment.”

Overall, China’s economy is steadily recovering, with both manufacturing and services improving. However, external uncertainties may still pose challenges to economic development.

3. Eurozone Inflation Hits New High, ECB May Step Up Rate Hikes

At the end of 2025, the eurozone faces severe inflation challenges. According to preliminary EU statistics, eurozone inflation in November was 10.6%, up from 10.5% in October, hitting a new high. Surging energy prices are the main driver of higher inflation.

To curb rising inflation expectations, the European Central Bank decided at its December policy meeting to raise rates by 50 basis points, bringing the deposit rate to 2.5%. However, some policymakers believe this increase is still not strong enough.

ECB Governing Council member Christine Lagarde said at a press conference: “We need to continue stepping up, raising rates to a level sufficient to bring down inflation. Persistently high inflation imposes a heavy burden on the economy and households.”

Market participants expect the ECB to continue raising rates multiple times in 2026 to curb rising inflation expectations. However, excessive tightening could also slow economic growth.

Deutsche Bank Europe Economist David Fuchs said: “The ECB is seeking a balance—combating inflation while avoiding a hard landing. This will be a difficult process.”

In summary, inflation is the main challenge facing the eurozone economy. The ECB’s policy direction will determine the outlook for inflation and economic growth.

V. Regulation & Policy

1. SEC Chair Gary Gensler Calls for Strengthened Crypto Regulation

Policy Background: US Securities and Exchange Commission (SEC) Chair Gary Gensler has repeatedly called for strengthened regulation of the crypto industry. As one of the main US financial regulators, the SEC plays a crucial role in maintaining market fairness and investor protection. With rapid growth in the crypto market, lack of regulation has become a key barrier to industry development.

Policy Details: In his latest Congressional testimony, Gensler reiterated that the crypto market lacks sufficient investor protection and is fraught with risks. He called on Congress to grant the SEC more regulatory authority to ensure that crypto issuers and trading platforms comply with existing securities laws. Gensler also suggested that stablecoins be subject to banking regulation to prevent misuse for illegal activities.

Market Reaction: Gensler’s remarks sparked widespread attention and discussion in the market. Some crypto companies and investors worry that excessive regulation will stifle innovation, but others believe appropriate regulation is beneficial for long-term healthy development. Crypto prices experienced brief volatility following Gensler’s speech.

Expert View: Crypto legal expert Christopher Blanken believes Gensler’s call reflects regulators’ concerns about crypto risks. He states that a reasonable regulatory framework can protect investor interests and provide certainty and confidence for industry development. However, Blanken also warns that overly strict regulation could hamper innovation, and a balance must be sought between protection and development.

2. UK Financial Conduct Authority Releases Crypto Asset Regulatory Framework Consultation

Policy Background: The UK Financial Conduct Authority (FCA) is the country’s main financial regulator. With the continued expansion of the crypto asset market, developing a sound regulatory framework to protect consumers and maintain financial stability is urgent. The FCA has previously stated its intention to strengthen crypto asset regulation.

Policy Details: On December 6, the FCA released a consultation paper on its crypto asset regulatory framework. This framework aims to establish unified regulatory rules for crypto asset activities, including anti-money laundering, consumer protection, operational resilience, and prevention of financial crime. The FCA plans to officially implement the new framework from January 1, 2024.

Market Reaction: UK crypto firms generally welcomed the move, believing a clear regulatory framework provides industry certainty. However, some companies worry that overly strict rules will increase compliance costs. Investors hope the new framework will improve market transparency and security.

Expert View: Fintech legal expert Sarah Ashburner said the FCA’s regulatory framework shows the UK government’s “embrace and regulate” approach to crypto assets. She believes reasonable regulation is favorable for the industry’s long-term growth, but the details and implementation of the framework still need refinement.

3. Monetary Authority of Singapore Releases Digital Token Payment Services Bill Consultation

Policy Background: The Monetary Authority of Singapore (MAS) is the country’s main financial regulator. To address the rapid development of digital token payment services, MAS decided to establish a dedicated regulatory framework to ensure the security and efficiency of payment systems.

Policy Details: On December 6, MAS released a consultation paper on the Digital Token Payment Services Bill. The bill aims to provide unified regulatory standards for digital token payment services, including licensing requirements, anti-money laundering obligations, and technology risk management. The bill also stipulates penalties for violations. MAS plans to officially implement the new law in the first half of 2024.

Market Reaction: Singaporean digital payment firms welcomed the move, believing a clear regulatory framework is favorable for long-term industry growth. However, some companies worry that overly strict rules will raise compliance costs and operational burdens. Consumers hope the new law will enhance payment security.

Expert View: National University of Singapore fintech professor Chen Siyi believes the bill demonstrates Singapore’s forward-looking approach to digital payment regulation. She says reasonable regulation will help maintain Singapore’s status as a fintech hub, but regulators must maintain good communication with industry to ensure the new rules are practical.