Global Cryptocurrency Turmoil: G20 Regulatory Warnings, New Crypto Bank Approved, and US-China Tensions Shake the Market
From a $1.9 billion crypto collapse to new stablecoin and tokenization projects, global markets are struggling amid escalating US-China trade tensions and increasing regulatory pressure.
A Turbulent Week for the Global Crypto Market
The crypto market has entered one of the most turbulent weeks of 2025, with over $1.9 billion in market capitalization wiped out in a single day due to the collision of geopolitical and regulatory shocks. The renewed trade conflict between the US and China, a new warning from the G20 Financial Stability Board (FSB), and new developments in the banking and blockchain sectors have created a perfect storm for digital assets. Bitcoin (BTC) briefly fell below $111,000, as investors scrambled for safe-haven strategies amid rising global uncertainty.
G20 Regulators Warn of “Major Gaps” in Global Crypto Regulation
The FSB has issued a stern warning, pointing out “major gaps” in crypto regulation among major economies. Its report notes that inconsistent frameworks and fragmented enforcement could allow bad actors to exploit cross-jurisdictional loopholes. The committee urges enhanced cross-border cooperation to fill these gaps and prevent systemic risks from escalating further, especially as tokenized assets, stablecoins, and DeFi protocols continue to grow unchecked.
US-China Trade War Escalates: Direct Hit to Crypto Market Sentiment
The market plummeted sharply following President Trump’s announcement of a 100% tariff on Chinese tech imports. Beijing responded with retaliatory measures, reigniting fears of a full-scale trade war.
This geopolitical event hit risk assets hard, and cryptocurrencies were no exception. Bitcoin, Ethereum, and Solana all suffered double-digit intraday losses, while leveraged traders faced the worst liquidations since 2022. Analysts warn that prolonged tensions between the world’s two largest economies could dampen global liquidity and trigger further volatility in digital markets.
Palmer Luckey’s Crypto Bank Gets Regulatory Green Light
In contrast to the turmoil, a historic milestone emerged in the US financial sector: Erebor Bank, co-founded by Oculus founder Palmer Luckey, received preliminary approval from the Office of the Comptroller of the Currency (OCC).
This marks one of the first steps in the US toward fully compliant, crypto-integrated financial institutions. The bank will connect traditional finance with digital assets after obtaining final approval from the FDIC, which many see as a turning point in US crypto banking policy.
UK Pushes for Tokenization of Investment Funds
Across the Atlantic, the UK Financial Conduct Authority (FCA) has proposed groundbreaking regulations allowing the tokenization of investment funds.
This move aims to digitize the fund industry, reducing settlement times and increasing transparency through blockchain. Industry leaders see it as a strategic effort for London to reassert itself as a global financial center in the post-Brexit era, competing with Singapore and Dubai in the Web3 innovation race.
G7 Banks Explore Stablecoins Backed by Major Currencies
Meanwhile, a consortium of G7 banks—including Goldman Sachs, Deutsche Bank, UBS, and Citibank—is reportedly exploring the issuance of stablecoins pegged to major fiat currencies.
These bank-backed digital currencies would serve as regulated alternatives to existing stablecoins such as USDT and USDC, potentially providing a safer bridge between fiat and crypto transactions while complying with central bank standards. If approved, this move could transform cross-border payments and redefine how institutional finance interacts with blockchain.
Market Outlook: Is the Storm Temporary or a Reset?
Despite panic selling dominating the past few days, some analysts believe this correction was overdue after months of leveraged gains. On-chain data shows that large holders (“whales”) are accumulating BTC and ETH at discounted prices, suggesting a possible stabilization phase.
However, the combination of geopolitical uncertainty, tightening regulation, and macroeconomic slowdown means crypto investors should brace for volatility lasting through Q4 2025.
A New Era of Regulated Crypto Finance
Despite the chaos, the latest headlines indicate the crypto industry is maturing. Governments worldwide are pushing for clearer rules, banks are experimenting with regulated digital currencies, and visionaries like Palmer Luckey are building bridges between old and new finance.
However, as the US and China clash in a new round of economic warfare, the path forward for cryptocurrencies remains uncertain—while also being strategically critical.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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