Firi Weekly: U.S. Interest Rate Cut

Fed Cuts U.S. Rate To 3.75 Percent:
- The Fed’s third 25-bps cut this year lowered the policy rate to 3.75% last week, but Fed members are still very much split on the direction of the dollar rate next year.
SEC Backs DTCC Plan To Tokenize Major Assets:
- A three-year no-action letter lets DTCC issue tokenized Russell 1000, major index ETFs, and U.S. Treasuries on selected public blockchains from the second half of 2026, enabling cheaper 24/7 settlement.
YouTube Adds Stablecoin Payouts For U.S. Creators:
- U.S. creators can now receive YouTube earnings in PayPal’s PYUSD stablecoin, via PayPal, boosting real-world usage of a token with a market capitalization of roughly $3.86 billion.
Global Stablecoin Supply Hits New $310 Billion Record:
- Total stablecoin circulation reached an all-time high of about $310 billion despite weaker crypto prices than at October’s peak, signaling sustained demand for the ultimate 2025 hit of crypto.

Last Week’s Big Three

The U.S. SEC Says A Quiet “Yes” To Tokenization: Last week, the U.S. Securities and Exchange Commission (SEC) sent a No-Action Letter to the Depository Trust & Clearing Corporation (DTCC) on tokenizing traditional assets. DTCC is the primary U.S. clearing and settlement utility for equities and corporate bonds, processing transactions worth hundreds of trillions of dollars every year. In practical terms, it is the central record-keeper and post-trade infrastructure for a large share of U.S. securities.

The No-Action Letter effectively clears DTCC to tokenize specific assets: the Russell 1000 equity index, ETFs tracking major indexes, and U.S. Treasuries. DTCC plans to issue these tokenized instruments directly on selected public blockchains, under a three-year framework, with rollout expected in the second half of 2026.

Tokenizing these assets on public blockchains could enable 24/7 trading, faster and cheaper settlement, broader global access and easier interoperability with decentralized finance (DeFi) protocols. Coming from the world’s largest securities settlement firm, this is a significant signal. DTCC is not only exploring tokenization in pilots, it now has explicit regulatory comfort to begin implementing it at scale.

How Do You Custody Crypto? Ask the SEC: Also last week, the SEC published a guide on digital asset custody. The document, shared on the agency’s website and social channels, outlines best practices and the risks associated with different methods of storing cryptocurrencies and other digital assets.

At first glance this may look like a minor update, but it is important that a major market regulator, which has historically been perceived as hostile to crypto, is now publishing practical guidance on how to hold digital assets safely. Alongside the DTCC No-Action Letter, this helps illustrate a gradual shift: the SEC is increasingly engaging with crypto as an asset class that needs rules and infrastructure, not simply enforcement headlines.

YouTube To Allow Payments In Stablecoins: YouTube has reportedly begun allowing U.S. creators to receive payouts directly in PayPal’s U.S. dollar-backed stablecoin, PYUSD. The functionality is enabled through PayPal, so YouTube itself does not handle or hold the stablecoin on its own balance sheet. PYUSD currently has a total market capitalization of around 3.86 billion dollars.

Even though YouTube sits one step removed from the stablecoin, this is still a constructive development for adoption. It adds one more large-scale platform where individuals can earn directly into a stablecoin balance, then choose to hold it, convert it, or spend it across the wider crypto ecosystem.

Behind the Charts

Chart 1: U.S. Dollar and EURO Interest Rates

Last week, the U.S. Federal Reserve (Fed) delivered its third consecutive 25-basis-point cut this year, lowering the U.S. policy rate to 3.75%.

Because the move was widely anticipated, market reaction around the decision itself was muted. Price action across crypto last week was relatively flat. The start of this week, however, has been notably weaker, with a broad sell-off in risk assets, including both equities and cryptocurrencies.

The trigger appears to be a mix of softer overall risk appetite and a U.S. labor market report on Tuesday this week that showed more pronounced weakness in employment trends over the past six months. A slower job market can reinforce expectations of slower growth, which typically weighs on risk assets, even if it increases the likelihood of further rate cuts.

Chart 2: Expected U.S. Dollar Rate Cuts by Fed Officials in 2026

Alongside the rate cut, the Fed also published updated projections from nineteen Fed officials on the expected path of interest rates next year. These projections reveal a notably divided committee.

Some officials expect a relatively steady pace of cuts in 2026, others see only modest easing, and three officials actually project a slight increase in the U.S. dollar policy rate. A scenario where rates rise again would generally be a headwind for crypto, since tighter financial conditions tend to reduce liquidity in the economy and risk-taking.

In other words, 2026 looks set to be a macro-driven year. The path of growth, inflation and employment will heavily influence how the Fed resolves this internal split, and the crypto market will likely follow those macro signals closely.

A Number to Remember

$310 billion

That is the new all-time high in total stablecoin supply reached last week. This milestone comes even though crypto prices are below the levels seen in October, when stablecoins last set a record high.

On Our Radar

On our radar over the coming weeks:

Overall Risk Sentiment: We are watching broad risk sentiment across global markets, especially equities. If equity markets continue to weaken, it will likely weigh on crypto as well, given how closely digital assets now trade with other risk assets.
ETF Flow: Both the U.S. Bitcoin and Ethereum ETFs saw modest net inflows last week. So far this week, though, flows have turned negative, with net outflows likely reflecting the weaker risk backdrop in equities and other assets. We are monitoring whether this outflow pattern becomes the new baseline. A sustained shift into net outflows would be a negative signal for crypto prices.
What Happens in Ukraine? In the past week, there has been increased diplomatic activity between Ukraine, European partners and the United States regarding a potential ceasefire in Russia’s invasion of Ukraine. Any concrete development in that direction, or disappointment if talks stall, could affect broader markets.

Mads Eberhardt

Written 18/12/2025

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