Policy

A CBDC (Central Bank Digital Currency) is a digital version of a nation's fiat currency issued and controlled directly by the central bank, unlike decentralized cryptocurrencies or private stablecoins. CBDCs give governments programmable money with real-time transaction monitoring, potential spending controls, and the ability to implement monetary policy directly.

The Clarity Act (Digital Asset Market Clarity Act of 2025) is proposed U.S. legislation designed to establish clear regulatory boundaries between the SEC and CFTC for digital asset oversight. Passed by the House in July 2025 and awaiting Senate approval, it defines "digital commodities" as assets intrinsically linked to blockchain use, creates exemptions for token offerings on mature blockchains (up to $75 million in 12 months), and explicitly excludes decentralized finance activities from certain requirements while maintaining anti-fraud protections.

Dovish describes a central bank policy stance favoring lower interest rates and loose monetary conditions to support economic growth and employment, even at the risk of higher inflation. Dovish policymakers prioritize jobs and GDP expansion over inflation concerns and are quick to cut rates or expand the money supply during economic weakness. 

The Fed Put refers to the market's expectation that the Federal Reserve will intervene with rate cuts or liquidity injections to prevent major market crashes, creating an implicit safety net that limits downside. This belief developed from decades of Fed behavior (1987 crash, 2008 crisis, 2020 COVID) where the central bank rapidly cut rates and expanded its balance sheet to support falling markets.

The FOMC (Federal Open Market Committee) is the 12-member Federal Reserve committee that sets U.S. monetary policy by voting on interest rate changes and asset purchase programs eight times per year. The committee includes the seven Fed Governors (including the Chair) and five rotating regional Federal Reserve Bank presidents.

The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025) is the first federal law regulating stablecoins in the United States. Signed into law in July 2025, it requires stablecoin issuers to maintain 100% reserves backed by U.S. dollars, Treasury bills, or other low-risk assets. The legislation establishes dual federal and state oversight, mandates anti-money laundering compliance, and gives stablecoin holders priority claims over other creditors in bankruptcy proceedings.

Hawkish describes a central bank policy stance favoring higher interest rates and tighter monetary conditions to control inflation, even at the risk of slowing economic growth. Hawkish policymakers prioritize price stability over employment or GDP growth and are willing to raise rates aggressively to prevent inflation from taking hold. 

Quantitative easing (QE) is a monetary policy tool where central banks create new money to purchase government bonds and other securities, injecting massive liquidity into the financial system when interest rates are already near zero. QE expands the central bank's balance sheet, lowers long-term interest rates, and increases money supply that typically flows into various assets.

Quantitative tightening (QT) is the process where central banks reduce their balance sheets by allowing bonds to mature without reinvestment or actively selling securities, removing liquidity from the financial system. QT is the opposite of quantitative easing and typically occurs when inflation is elevated and the central bank wants to tighten financial conditions beyond just raising interest rates.