The China Internet Finance Association, alongside multiple regulatory bodies, released a warning on Dec. 5 regarding illegal virtual currency activities, marking its first such announcement in three years. The association has issued four major policy statements at critical market junctures since 2020. On April 13, 2022, it published guidelines prohibiting the use of Bitcoin and other virtual currencies for NFT pricing and settlement, which led to the rapid cooling of China's digital collectibles market and the shutdown of numerous platforms. The May 18, 2021 announcement, which reiterated that virtual currency trading contracts lack legal protection and banned financial institutions from providing related services, triggered a market crash the following day, with Bitcoin dropping over 30% from above $43,000 to below $30,000. An April 2, 2020 warning highlighted risks associated with offshore trading platforms, subsequently leading to intensified regulatory crackdowns on over-the-counter trading channels and widespread account freezes.

The China Internet Finance Association issued guidelines on April 13, 2022, calling on member institutions not to invest in NFTs or provide financing for such investments. The initiative prohibited practices that would dilute NFT non-fungible characteristics, including fractional ownership or batch creation that could constitute token issuance financing. On December 5, the association and six other industry bodies released a joint risk alert reaffirming that virtual currencies cannot be used as currency within China and that no real-world asset tokenization activities have been approved by Chinese financial regulators.

Seven Chinese financial associations, including the National Internet Finance Association of China, released a joint risk warning on Dec. 5 against illegal activities involving virtual currencies and related assets. The warning states that virtual currencies cannot circulate or be used as currency in China, and that Chinese financial regulators have not approved any real-world asset tokenization activities. The associations urged the public to remain vigilant and avoid participating in virtual currency or real-world asset token activities, as well as illegal fundraising and securities issuance disguised as cryptocurrency "mining" operations.

The International Monetary Fund warned on Thursday that stablecoins could accelerate currency substitution in nations with fragile monetary systems, undermining central banks' control over capital flows. The IMF noted that the growth of dollar-backed stablecoins and their ease of cross-border use may drive individuals and businesses in economically unstable regions to favor U.S. dollar stablecoins over local currencies.

Kevin Hassett, director of the White House National Economic Council, saw his odds of becoming Federal Reserve chair reach 80% in prediction markets on Dec. 5 after Trump identified him as a potential candidate, BlockBeats reports. Hassett holds Coinbase stock and has participated in cryptocurrency policy discussions. BiyaPay analysts said lower interest rates and regulatory shifts could benefit Bitcoin, Ethereum, and crypto-related equities, while cautioning about amplified volatility.

Bank of Japan officials are prepared to raise interest rates at their late-December policy meeting, lifting the policy rate to its highest level since 1995, sources familiar with the matter said. The move depends on no major shocks hitting the economy or financial markets beforehand. Officials view the hike as an adjustment to monetary easing rather than tightening, given real rates remain below zero, and will signal further increases if economic projections materialize, JinShi reports.

Italy's securities regulator Consob announced on Dec. 5 that virtual asset service providers currently registered with OAM must submit applications to become regulated crypto asset service providers by Dec. 30, 2025, or cease operations under the EU's Markets in Crypto-Assets Regulation. Providers failing to apply must shut down by that date and no later than June 30, 2026. Consob advised investors to verify whether their service providers plan to apply for CASP licenses and check registration with ESMA or OAM, emphasizing that unauthorized providers must close all contracts and return client funds by the December deadline.

The Bank of Japan is leaning toward raising interest rates at its December meeting while keeping the door open for further policy tightening, people familiar with the matter said. USD/JPY dropped approximately 30 basis points following the news, trading at 154.96. The potential rate hike reflects ongoing monetary policy adjustments by the central bank.

The U.S. Department of Commerce will release the September Core PCE Price Index annual rate on Friday at 11:00 PM Beijing time (Dec. 5), BlockBeats reports. The forecast stands at 2.9%, unchanged from the previous reading of 2.9%.