Markets are undergoing another phase of macro-driven repricing as liquidity tightens and risk appetite weakens across asset classes. Regulatory divergence is becoming more pronounced between regions, ETF flows remain volatile, and derivatives markets are recalibrating leverage assumptions. At the same time, long-horizon actors continue building exposure and infrastructure beneath the surface. This week’s developments reflect a market still in reset mode, where structure and policy matter more than short-term momentum.
South Korea tightens crypto oversight ahead of second-stage legislation
South Korea’s Financial Supervisory Service announced a sharp escalation in crypto market oversight, targeting market manipulation, IT failures, and exchange integrity risks. Planned investigations will focus on price manipulation by large traders, artificial price inflation around suspended tokens, abusive API-based trading, and misinformation campaigns propagated via social media. The regulator also plans to impose tougher penalties on financial firms for IT-related incidents following recent operational failures.
The move follows a high-profile incident at Bithumb, where a technical error led to the mistaken transfer of 620,000 BTC during a promotional campaign. While nearly all of the funds were recovered, the episode exposed operational risks at centralized venues and accelerated regulatory scrutiny around infrastructure resilience and internal controls.
In parallel, the FSS has formed a task force to prepare for the Digital Asset Basic Act, South Korea’s next major phase of crypto regulation. The group will develop disclosure standards for token issuance, listing support frameworks for exchanges, and licensing manuals for digital asset service providers and stablecoin issuers. The final version of the legislation is expected in the first quarter, reinforcing South Korea’s shift toward formalized, enforcement-led crypto oversight.
China expands crypto ban to RWA tokenization and offshore stablecoins
Chinese regulators reiterated that crypto-related activity remains illegal in the mainland while significantly expanding enforcement language to include real-world asset tokenization and offshore yuan-linked stablecoins. A joint notice from the central bank and multiple state agencies stated that speculative activity tied to virtual currencies and tokenized assets has disrupted financial order and should be prohibited unless explicitly approved.
For the first time, regulators explicitly barred the issuance of offshore stablecoins pegged to the renminbi without approval, regardless of whether the issuer is located inside or outside China. Authorities also clarified that RWA tokenization—defined as converting ownership or income rights into blockchain-based certificates—is illegal unless conducted on approved financial infrastructure.
The notice further tightened restrictions on offshore structures, applying “same business, same risk, same rules” supervision to tokenization activities conducted overseas but linked to domestic assets or rights. The move underscores Beijing’s intent to ringfence financial innovation within state-sanctioned systems while continuing to promote yuan-centric digital currency initiatives rather than private crypto rails.
JPMorgan sees long-term bitcoin upside despite macro-driven drawdown
JPMorgan analysts argued that bitcoin could reach $266,000 over the long term as it increasingly competes with gold as a hedge asset, even as near-term sentiment remains weak. The bank noted that bitcoin’s volatility relative to gold has fallen to record lows, making it more attractive on a volatility-adjusted basis as investors reassess portfolio hedges.
In the short term, however, crypto markets remain under pressure. Bitcoin has fallen below estimated production costs, raising the risk of miner capitulation if prices remain suppressed. Analysts highlighted that the recent drawdown reflects a broader liquidation of leveraged macro exposure rather than crypto-specific stress, with gold and silver also experiencing sharp corrections.
ETF flows and derivatives positioning continue to signal caution. Bitcoin and Ethereum ETFs have seen sustained outflows, while deleveraging in futures markets has been milder than last quarter’s liquidation wave. Stablecoin supply has contracted alongside the overall market cap, which JPMorgan views as a mechanical adjustment rather than a structural exit from crypto.
ETF outflows resume as volatility pressures spot demand
U.S. spot bitcoin ETFs recorded another $545 million in daily outflows, extending a two-day withdrawal total of more than $800 million. BlackRock’s IBIT led redemptions, followed by Fidelity and Grayscale products, as bitcoin briefly fell to its lowest level since October 2024 amid broader risk-off sentiment.
Ethereum ETFs mirrored the trend, posting nearly $80 million in outflows concentrated in just two funds. By contrast, spot XRP ETFs recorded modest inflows, while Solana products continued to see redemptions, underscoring differentiated demand across assets.
Despite the volatility, the structural footprint of ETFs remains significant. Since launch, U.S. spot bitcoin ETFs have accumulated over $54 billion in net inflows and now represent more than 6% of bitcoin’s total market capitalization, reinforcing their role as a permanent channel for institutional access rather than a transient trade.
CME explores tokenized cash and onchain collateral for derivatives
CME Group disclosed plans to develop a tokenized cash product, potentially launching in 2026 in partnership with Google Cloud. The initiative could allow onchain settlement and margining using tokenized cash or deposits, expanding the role of blockchain-based collateral in regulated derivatives markets.
Executives emphasized that any token accepted for margin would be subject to strict risk controls, issuer scrutiny, and appropriate haircuts. CME indicated greater comfort with tokens issued by systemically important financial institutions, while remaining cautious about accepting collateral from less-established issuers.
The effort aligns with broader industry experimentation around crypto collateral, following regulatory pilots allowing stablecoins and digital assets to be used for margin. CME also reiterated plans to move crypto futures and options toward round-the-clock trading, positioning digital assets as a testing ground for always-on market infrastructure.
Strategy adds bitcoin as drawdown deepens
Strategy continued accumulating bitcoin during the selloff, acquiring an additional 1,142 BTC at an average price below $79,000. The company now holds more than 714,000 BTC, representing over 3.4% of total supply, though the recent downturn has pushed its position into unrealized losses.
The purchases were funded through ongoing equity issuance, reinforcing Strategy’s long-term conviction while exposing shareholders to dilution risk. Management stated that bitcoin would need to fall to roughly $8,000 and remain there for several years before threatening the firm’s ability to service its convertible obligations.
Despite reporting one of the largest quarterly losses in U.S. public company history due to mark-to-market effects, analysts noted that Strategy’s capital structure remains conservative relative to prior cycles. The episode highlights the growing divide between balance-sheet-driven bitcoin accumulation and short-term equity market sentiment.
At Finery Markets, we continue to track how regulation, liquidity conditions, and market infrastructure are reshaping institutional crypto participation. Follow us for deeper analysis on execution models, collateral frameworks, and the evolving role of digital assets in global markets. This newsletter is provided for informational purposes only and does not constitute investment or financial advice.
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