Firi Weekly: A Week of Interest Rate Decisions

Fed Rate Cut Expected Wednesday:
- Markets show a 96.0% certainty of a 25-basis-point (0.25%) cut in the dollar interest rate this week, marking the first rate reduction this year despite inflation rising to 2.9%.
BlackRock Plans ETF Tokenization:
- The world’s largest asset manager considers tokenizing exchange-traded funds on public blockchains, joining the $29 billion real-world assets market.
Hong Kong Banks Seek Stablecoin Licenses:
- HSBC, ICBC, and Standard Chartered are reportedly applying—or preparing to apply—for licenses under Hong Kong’s new stablecoin regulatory framework, signaling institutional interest in stablecoins in Asia as well.
Crypto Firms Surge on NASDAQ:
- Figure and Gemini stocks jumped 24% and 15%, respectively, on their first trading day last week, following Circle’s 168% and Bullish’s 83% debut gains earlier this year.

Last Week’s Big Three

BlackRock Goes Onchain: Bloomberg reports that BlackRock, the world's largest asset manager, is considering tokenizing select exchange-traded funds (ETFs). This initiative would involve issuing ETFs directly on public blockchains, enabling seamless trading and transactions within decentralized ecosystems. Should BlackRock proceed, these tokenized ETFs would join the expanding universe of Real-World Assets (RWAs) — traditional assets including equities, commodities, private credit, and U.S. Treasury securities that have been converted to blockchain-based tokens.

While stablecoins have dominated headlines with explosive growth throughout 2025, BlackRock's potential entry signals broader institutional validation across multiple asset classes. The firm's participation would lend substantial credibility to the entire digital asset ecosystem, potentially accelerating mainstream adoption.

Stablecoin Season in Hong Kong: According to the Hong Kong Economic Journal, banking giants HSBC and Industrial and Commercial Bank of China (ICBC) are preparing applications for stablecoin licenses in Hong Kong. Additionally, UK-based Standard Chartered, alongside ICBC, is expected to secure approval in the initial licensing round from the Hong Kong Monetary Authority (HKMA), the region's central banking institution. These institutions are seeking authorization under Hong Kong's new stablecoin regulatory framework, which took effect August 1st with a six-month transition period for compliance.

Industry observers note that Hong Kong's regulatory framework proved more stringent than anticipated, potentially creating barriers for smaller firms and innovative startups. Nevertheless, the enthusiasm from major banking institutions demonstrates clear commercial potential in the stablecoin sector.

Crypto Continues NASDAQ Listing Spree: The public market appetite for crypto-linked companies remains robust. Earlier this year, Circle, issuer of USDC, the second-largest stablecoin, and institutional crypto exchange Bullish both achieved heavily oversubscribed initial public offerings. Circle's shares exploded 168% above their IPO price on the first trading day, while Bullish gained an impressive 83%.

Last week witnessed two additional crypto firms entering public markets: blockchain lender Figure debuted Thursday, while U.S. crypto exchange Gemini launched Friday. Both offerings attracted strong investor demand before listing, with Figure climbing approximately 24% above its IPO price and Gemini surging nearly 15% during inaugural trading.

The pattern is unmistakable — institutional investors are demonstrating voracious appetite for equity exposure to cryptocurrency infrastructure providers, possibly viewing these firms as essential building blocks of the digital asset ecosystem.

Behind the Charts

Chart 1: U.S. Consumer Inflation Rate (CPI) Year-over-Year

The U.S. Bureau of Labor Statistics (BLS), the federal agency responsible for tracking price changes across the economy, released August's consumer inflation data last Thursday, revealing a 2.9% year-over-year increase. While this figure aligned precisely with market consensus, it represents an acceleration from July's 2.7% reading and marks the highest inflation print since January this year.

Chart 2: The Markets’ Expectations of a Cut This Week

Despite inflation trending higher than the previous period, markets remain overwhelmingly confident that the Federal Reserve will implement its first interest rate cut of the year on Wednesday. At present, the markets are pricing in a 96.0% probability of a 25-basis-point (0.25%) cut and a 4.0% chance of a more aggressive 50-basis-point interest rate cut.

This anticipated rate cut should, in theory, benefit digital assets by encouraging investors to embrace higher-risk investments. However, this relationship holds only if the U.S. economy maintains relative strength. As noted in last week’s Firi Weekly, there are growing signs of economic weakness in the U.S. This could transform rate cuts from a tailwind into a headwind for cryptocurrency markets. In scenarios where rate reductions signal economic distress rather than policy normalization, risk assets—including digital currencies—may face selling pressure.

A Number to Remember

$29 billion

The Real-World Assets (RWA) sector, which would include BlackRock's potential tokenized ETFs, crossed the $29 billion threshold for the first time last week. This milestone represents a surge of $13.5 billion year-to-date — nearly 86% growth — demonstrating that tokenized assets are experiencing explosive expansion even surpassing that of the stablecoin market.

On Our Radar

Key developments we are monitoring this week:

Wednesday’s Potential U.S. Rate Cut: The Federal Reserve's interest rate decision on Wednesday commands our full attention. Any deviation from the market's baseline expectation of a 25 basis point cut — whether holding rates steady or cutting by 50 basis points — could trigger significant market volatility across both traditional and digital assets.
What About the U.K. Interest Rate? The Bank of England (BoE), the United Kingdom's central bank, announces its rate decision Thursday, one day after the Fed. Markets expect the BoE to maintain its current 4% rate. However, given recent turbulence in UK government bond markets earlier this month, investors will scrutinize not just the decision but the accompanying commentary for signals about future policy direction.
Anything New About the U.S. Solana ETFs? Solana has demonstrated impressive momentum in recent weeks, drawing attention to the October 16 deadline when the U.S. Securities and Exchange Commission (SEC), the federal agency that regulates financial markets, must approve or deny pending applications for Solana spot ETFs. Given the substantial impact that Bitcoin and Ethereum ETFs have had on their respective underlying assets, the potential approval of Solana ETFs represents a critical catalyst worth monitoring closely.

Mads Eberhardt15/09/2025

Should not be considered financial advice. Crypto may involve high risk.