Bank of Japan Rate Hike and U.S. Crypto Market Structure Uncertainty Impact Global Crypto Landscape
On December 18, 2025, the Bank of Japan (BOJ) raised its short-term policy rate by 25 basis points to 0.75%, the highest level in 30 years, in a unanimous decision. Despite the hike, the BOJ stated that real rates would remain exceptionally low and further increases depend on inflation and economic trends, maintaining an overall accommodative policy stance. Following this decision, cryptocurrency markets extended their decline, with Bitcoin briefly falling below $86,000 and Ethereum near $2,800. Losses were led by the AI token complex, which dropped about 5.34%, alongside broad declines across CeFi, Layer 1, DeFi, PayFi, Layer 2, and Meme sectors. However, some tokens such as Zcash, Beldex, and Bitcoin Cash bucked the downward trend.
Meanwhile, in the United States, the Senate is negotiating a crypto market structure bill amid uncertain prospects and a resumption of talks planned for January 2026. Political risks, including a potential government shutdown triggered by a federal spending deadline on January 30, could delay the bill. If the legislative process stalls, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) will continue to influence crypto policy under existing authorities without new legislation.
The possibility of a shift in House control to Democrats could restore Maxine Waters as chair, with DeFi regulation and ethics issues being central areas of contention. A Democratic Senate might also see Elizabeth Warren as chair of the Senate Banking Committee, potentially increasing scrutiny of crypto policies. Democrats are advocating for ethics standards aimed at banning conflicts of interest related to government officials' crypto ties, efforts the White House has rejected. DeFi regulation remains a major sticking point, with Democrats seeking oversight while the industry warns such measures could threaten DeFi models.
Industry groups are urging faster legislative action, pushing for an early January bill draft and a formal markup. Coinbase advocates for reward programs, while some associations oppose reopening issues settled by the GENIUS Act. Additionally, the Fairshake PAC's war chest of over $100 million signals its potential influence on candidates' crypto positions. Without new laws, policy direction could shift under regulators' evolving interpretations, with SEC Chair Gary Gensler favoring securities classifications and CFTC Chair Rostin Behnam indicating a different stance.
