8.24 AI Daily Changes in the Global Financial Situation: War Mitigation, AI Development and Monetary Policy Adjustment I. Headline 1. At the Trump-Putin summit in Alaska, the two leaders had an in-depth dialogue on the war in Ukraine. After the talks, the two sides issued a joint statement pledging to continue to seek a peaceful solution through diplomatic channels. This signal sends a glimmer of hope that the war will be eased. The statement noted that the two sides agreed to implement a comprehensive ceasefire in the eastern regions of Ukraine and to gradually withdraw their troops under the supervision of the United Nations. At the same time, a working group composed of representatives of all parties will be set up to negotiate the future status of Ukraine and Russia's security concerns. This paves the way for an end to the long-standing conflict. Analysts believe that the meeting between Trump and Putin reflects the two sides' demand for compromise on the Ukraine issue. The Russian side received security guarantees, while the American side avoided further escalation of the confrontation. Peace negotiations, while difficult and tortuous, are much less costly than ongoing wars. The easing of the situation in Ukraine will help restore confidence in the global economy and alleviate the energy and food crises. But it is also necessary to be wary of the possibility that Russia may take similar actions against other countries in the future. In general, the summit gave hope for a political settlement of the Ukrainian issue. 2. The AI bubble raises regulatory concerns, with experts calling for stronger governance, and the recent rapid development of AI (AI) technology has raised regulatory concerns. Some experts warn that an AI bubble is building and could pose serious economic and social risks if not properly governed. Breakthroughs in AI technology are mainly reflected in fields such as large language models and image generation. AI tools like ChatGPT and Midjourney have shown amazing capabilities, sparking public enthusiasm and investor frenzy. But at the same time, it also exposes the uncertainty and opacity of AI systems. Some tech giants and startups are burning money like crazy in the AI space, exacerbating the risk of a bubble. Analysts point out that the valuations of AI companies have been seriously detached from their actual value, and there is a lack of sustainable business models. Once the bubble bursts, it will be a heavy blow to the entire tech industry. At the same time, AI technology also has potential risks in terms of privacy, security, ethics, etc. Some experts called for governments and industry to strengthen AI governance and develop regulations to ensure that AI is controllable and explainable. Otherwise, the bursting of the AI bubble will have unpredictable consequences. In general, the development of AI needs to be viewed rationally, not only to encourage innovation, but also to strengthen regulation, and to promote economic development while ensuring social fairness and justice. 3. The Fed sends dovish signals, and global markets have mixed reactionsAt the annual meeting of the central bank in Jackson Hole, Fed Chairman Jerome Powell's speech sent a dovish signal, suggesting that the pace of interest rate hikes will be slowed. This signal triggered a mixed reaction in the global market. Powell said that the Fed will adjust monetary policy in a timely manner based on economic data, and the magnitude and pace of interest rate hikes may slow down in the future. He believes that the current labor market is weak, inflationary pressures have eased, and the risks of interest rate hikes need to be balanced. This remark was interpreted by the market as a dovish turn, and the US stock and crypto markets rose. Investors widely expect the Fed to begin its rate-cutting cycle later this year. But there are also analysts who are cautious about Powell's dovish signals. They noted that the inflation situation remains grim and there is uncertainty in the job market data. Overly loose monetary policy could cause inflation to spiral out of control again. In addition, central banks in other major economies have taken a more hawkish stance. Both the ECB and the Bank of England insisted that they would continue to raise interest rates to curb rising inflation. The divergence of global monetary policy is likely to exacerbate volatility in financial markets. Overall, the Fed's fine-tuned policy stance reflects the current complex economic situation. Further data needs to be observed to determine the appropriate direction of monetary policy. 4. Intel obtains 10% equity of the U.S. government, and the semiconductor industry policy has changed According to U.S. Secretary of Commerce Lutnick, the U.S. government has obtained a 10% stake in Intel Corporation. This is seen as an important move by the United States to revive the domestic semiconductor industry. According to the agreement reached between the two parties, the U.S. government will provide $39 billion in financial support in exchange for a 10% stake in Intel. The funds will be used for Intel's new state-of-the-art chip factory in the United States. Analysts believe that this move is aimed at strengthening the competitiveness of the United States in the field of semiconductors and reducing dependence on overseas supplies. In the context of the technological confrontation between China and the United States, ensuring the security of the chip supply chain is of paramount importance to the United States. However, the move has also raised some concerns. Some have questioned the legitimacy of government intervention in business decisions, fearing that it would distort market mechanisms. There is also an argument that excessive protectionism could exacerbate global tech fragmentation. At the same time, other tech giants are also actively expanding their chip business. TSMC, Samsung and other companies plan to invest billions of dollars to build factories in the United States. The global semiconductor landscape is being reshaped, and the competition will become more fierce in the future. Overall, Intel's partnership with the U.S. government marks a major shift in U.S. semiconductor industry policy, and its impact will be long-lasting and deserve continued attention. 5. Japan plans to relax its cryptocurrency tax policy to attract industry developmentThe Japanese government is planning to relax its tax policy on cryptocurrencies to attract more cryptocurrency companies to develop locally. This initiative aims to enhance Japan's competitiveness in the global cryptocurrency industry. It is reported that Japan's Financial Services Agency will formally put forward a tax reform plan at the end of August. The main content includes taxing cryptocurrency gains separately at a flat rate of 20% and allowing losses to be carried forward for three years. Currently, cryptocurrency earnings are considered "miscellaneous income" and can be taxed up to 55%. In addition, Japan will also launch cryptocurrency ETFs and include cryptocurrencies in financial regulation as a "financial product". This will provide more compliant avenues for cryptocurrency investments. Analysts believe that this series of measures by Japan will create a more friendly environment for the cryptocurrency industry. A reasonable tax policy and regulatory framework is conducive to attracting domestic and foreign enterprises to do business in Japan and promoting the healthy development of the industry. However, there are also views that the direction of Japan's regulation still needs to be clarified and needs to be in line with international standards. At the same time, the cryptocurrency market is highly volatile, and investors still need to remain cautious. In general, Japan is struggling to take its place in the cryptocurrency space. The relaxation of tax policies is just the beginning, and more policy support is needed in the future to truly achieve the take-off of the industry. 2. Industry News1. Bitcoin's market share fell to 58.23%, a new low since January this year, and Bitcoin's market share (BTC.D) fell 2.35% in the past week and is now at 58.23%, the lowest since January this year. DURING THE SAME PERIOD, THE TOTAL CRYPTO MARKET CAPITALIZATION INCREASED BY 0.24% OVER THE PAST WEEK, THE TOTAL MARKET CAPITALIZATION EXCLUDING BITCOIN (TOTAL 2) INCREASED BY 3.69%, AND THE TOTAL MARKET CAPITALIZATION EXCLUDING BITCOIN AND ETHEREUM (TOTAL 3) INCREASED BY 1.48%. The decline in Bitcoin's market share reflects the fact that investors are shifting their funds to other cryptocurrencies. The altcoin's rally may stem from investors' bullishness on emerging projects and concerns about Bitcoin's lack of breakthrough performance in the near term. However, Bitcoin's leading position as a cryptocurrency is still solid, and its price action will still have a significant impact on the overall market. Analysts believe that the decline in Bitcoin's market share may be a short-term phenomenon. As institutional investors continue to flood the crypto market, Bitcoin, as the most established and liquid asset, will still attract a lot of money. However, the rise of other cryptocurrencies also means that investors have more options, and the market landscape may change in the future. 2. Ethereum outflows and dominance signal a major shift in the market In 48 hours, more than 200,000 ETH left the exchange, showing strong buying interest and low selling pressure. Analysts believe that a potential supply crunch will propel Ethereum to a stronger rally towards all-time highs. Ethereum's market share is 14.59% and could rise to 20-22% if the 15.38% resistance level is breached. The shrinking supply on the exchange indicates that long-term holders are accumulating as the price stabilizes above $3,500. The continued development and innovation of the Ethereum ecosystem has driven investor demand for the asset. Ethereum's importance as the infrastructure for smart contracts and DeFi cannot be overstated. As more applications and protocols are deployed on the Ethereum network, their value will continue to increase. However, Ethereum also faces challenges such as scaling and high fees. Whether the launch of Ethereum 2.0 can solve these problems will determine its future development path. At the same time, other public chains are also developing, bringing certain competitive pressure to Ethereum. 3. Crypto Spotlight: 5 Recent Coin Developments Drive Market Momentum This week's altcoin gains reflect market adoption and technological innovation driving investor interest. Network upgrades and protocol enhancements are directly related to trading activity and ecosystem growth. Emerging altcoins show the potential to be profitable, even in the broader market. Solana surged 13% in 24 hours to reach $207.10, approaching the resistance level of $207.21 and has strong support at $177.77. Solana's Bonding Curve mechanism and the upcoming Saga phone are expected to drive its price up even further. Chainlink's native token, LINK, also exhibits a short-term bullish pattern, accompanied by an increase in trading volume. LINK's oracle services are critical to the DeFi ecosystem, and their demand is likely to drive up prices. Aptos has had a strong performance over the past week, with both trading volume and TVL increasing. As an emerging Layer 1 blockchain, Aptos' upgradeability and high throughput have attracted the attention of developers. Sui showed a similar upward trend, with TVL increasing by more than 30% in a week. Sui's Move virtual machine and parallel execution advantages are expected to drive its adoption in the GameFi and DeFi space. Maple, on the other hand, is up 4.06% over the past 24 hours, driven by its unsecured loan agreements and institutional lending business. Overall, the performance of these tokens reflects the dynamism of the cryptocurrency market. Technological innovation and ecosystem development are key factors driving price increases. However, investors should also be alert to potential risks and invest cautiously. 4. A surge in Fed interest rate discussions could pose a red flag for the crypto marketSantiment said in a report on Saturday that a surge in social media discussion around the highly anticipated Federal Reserve's September interest rate decision could be a warning sign for cryptocurrency. "Historically, there has been a surge in discussion around a single bullish narrative, which may indicate that the market is overly optimistic and may signal a local peak." Santiment said the number of social media mentions related to the Fed and interest rate cuts have jumped to their highest level in 11 months. The cryptocurrency market has always been highly sensitive to the macroeconomic situation. The Fed's interest rate decision will directly affect the performance of risk assets. If the Fed hints that it will slow down the pace of interest rate hikes, it could push crypto prices higher. Conversely, a larger-than-expected rate hike could trigger a sell-off. However, overly optimistic sentiment can also be risky. If the market is too optimistic about the rate cut, if the Fed's actual actions do not match expectations, it could trigger a sharp correction. Therefore, investors need to remain cautious and keep a close eye on the Fed's interest rate decision and its impact on the market. Also be aware of mood changes on social media to avoid being swayed by overly optimistic expectations. Overall, the cryptocurrency market is still at a relatively early stage and is highly sensitive to the macroeconomic situation. Investors need to fully assess risks and look at market expectations rationally to avoid falling into irrational frenzy. 5. Japan plans to impose a 20% flat tax on cryptocurrency transactions and promote the issuance of ETFs through tax law revisions According to reports, Japan's Financial Services Agency plans to request a review of the treatment of cryptocurrency transactions in fiscal 2026 and plans to refer to the treatment of listed stocks. The request, which will be made official at the end of August, includes the transfer of crypto earnings to a separate tax bracket and the application of a flat rate of 20%. Currently, cryptocurrency income is considered "miscellaneous income" in Japan, with a progressive tax rate of up to 55% and excluding local taxes. The proposal from the Financial Services Agency of Japan will also make it easier for Japanese companies to launch domestic crypto ETFs in order to boost the competitiveness of the Japanese crypto industry. In addition to the tax reform, the FSA plans to enact a legislative bill in 2026 to include cryptocurrencies in the Financial Instruments and Exchange Act as a "financial product" rather than a "means of payment" regulated by the Payment Services Act. This series of measures aims to create a more friendly regulatory environment for the Japanese cryptocurrency industry and attract more investors and businesses. The flat 20% tax rate will reduce the tax burden on investors, while the launch of crypto ETFs will also provide investors with more options. However, some are concerned that too lax regulation could pose risks. The cryptocurrency market still lacks a mature regulatory framework, and investors need to remain cautious. Overall, this series of moves by Japan reflects the growing mainstream acceptance of cryptocurrencies. As the regulatory environment improves, the cryptocurrency market is expected to receive more influx of capital, driving further growth of the industry. III. Project News1. Sui Network: The Rise of a Rising Star in the Move Ecosystem Sui Network is a new blockchain project developed by Mysten Labs that aims to provide high-performance, low-cost infrastructure for Web3 applications. The project is built on the Move programming language, a secure and resource-efficient language originally developed by Meta. What's new: Sui Network officially launched its mainnet in May this year and was in the spotlight at the TOKEN2049 conference in mid-August. During the conference, there was a significant increase in the price of the Sui token, which sparked a lot of discussion in the market. The Sui team also announced a partnership with Grayscale Trust to launch the USDC stablecoin on the Sui chain. Sui's innovation lies in the adoption of a new blockchain architecture design, which achieves high throughput and low latency through technologies such as parallel execution and dynamic sharding. In addition, Sui has introduced a new type of ownership model designed to improve the composability and interoperability of assets. Market Impact: As a rising star project in the Move ecosystem, Sui's emergence provides a new option for blockchain developers. With its high performance and innovative design, Sui is expected to attract more developers and projects to the Move ecosystem, driving the development of the entire ecosystem. At the same time, Sui's cooperation with Grayscale Trust is also expected to bring more liquidity and users to it. Industry feedback: Analysts generally believe that Sui represents a new direction in blockchain technology, and its innovative design is expected to solve some of the pain points currently faced by blockchain. However, there are also concerns about Sui's sustainability as a new project. Overall, the industry is cautiously optimistic about Sui's prospects. 2. Aptos: A high-performance blockchain built by Meta engineersAptos is an emerging blockchain project created by former Meta engineers to provide high-performance, secure, and scalable infrastructure. The project uses the Move programming language and introduces several innovative technologies to improve throughput and scalability. What's new: Aptos officially launched its testnet in March of this year, with a major launch at TOKEN2049 in mid-August. The Aptos team has announced that it will launch mainnet in the fourth quarter of this year, with plans to launch a governance token shortly after mainnet launch. The core innovation of Aptos is the adoption of a new consensus mechanism called "block STM", which enables high throughput and low latency. In addition, Aptos has introduced a new type of data model designed to improve resource efficiency and scalability. Market Impact: As another heavyweight project in the Move ecosystem, the emergence of Aptos will undoubtedly further promote the development of the Move ecosystem. With its high performance and innovative design, Aptos is expected to attract more developers and projects to join the Move camp, injecting new vitality into the entire ecosystem. Industry feedback: Industry insiders generally believe that the Aptos team has rich blockchain experience and technical strength, and its innovative design is worth paying attention to. However, there are also concerns about whether Aptos will be able to deliver on its promise in terms of performance and security. Overall, the market is open and expectant about the outlook for Aptos. 3. LayerZero: A new option for cross-chain bridgesLayerZero is a project focused on cross-chain interoperability, aiming to provide a secure and efficient communication bridge between different blockchains. The project employs an innovative "trust-minimized" design that enables cross-chain asset transfers without relying on centralized entities. Update: The LayerZero team recently announced that they will acquire StarGate, another cross-chain bridge project, for $1.1 billion. This acquisition will make LayerZero one of the leading cross-chain interoperability solutions. The innovation of LayerZero is the adoption of a new consensus mechanism called "UltraMerge", which enables cross-chain communication without relying on any trust assumptions. In addition, LayerZero supports a number of different blockchains, including Ethereum, BNB Chain, Avalanche, and more. Market impact: With the continuous development of the blockchain ecosystem, cross-chain interoperability has become an increasingly important topic. As an innovative cross-chain bridge solution, LayerZero is expected to provide a more secure and efficient way for asset transfer and data exchange between different blockchains. Industry feedback: Industry insiders generally believe that LayerZero's "trust-minimized" design is an important innovation that can effectively solve the security risks faced by current cross-chain bridges. However, there are also concerns about whether LayerZero's performance and scalability will meet future needs. Overall, the market is open and expectant about the prospects of LayerZero. 4. Hyperbolic: The Combination of AI and BlockchainHyperbolic is an innovative project that combines artificial intelligence with blockchain technology. The project aims to leverage AI technology to optimize the performance and efficiency of blockchains, while also exploring other use cases of AI in the blockchain space. What's new: The Hyperbolic team recently announced the closing of a $25 million funding round led by renowned investors Andreessen Horowitz and Polychain Capital. The funds will be used to accelerate the development and roll-out of the project. Hyperbolic's innovation lies in the combination of AI technology and blockchain. The project uses AI algorithms to optimize aspects such as the blockchain's consensus mechanism, transaction processing, and resource allocation, aiming to improve the performance and efficiency of the blockchain. In addition, Hyperbolic also explores other application scenarios of AI in the blockchain space, such as smart contract optimization, anti-fraud, and more. Market Implications: With the continuous development of AI technology, the combination of AI and blockchain has become an emerging trend. As a pioneer in this field, Hyperbolic's innovative design and application exploration are expected to bring new development opportunities and changes to the blockchain. Industry feedback: Industry insiders generally believe that Hyperbolic's innovative concept is worth paying attention to and looking forward to. However, there are also concerns about whether the application of AI technology in the blockchain space can actually bring about substantial improvements. Overall, the market is open and cautiously optimistic about Hyperbolic's prospects. Economic dynamics1. Powell's dovish speech signals interest rate cuts, and the Fed's policy stance may shift to the economic backdrop: The U.S. economy has experienced the impact of high inflation and interest rate hike cycles over the past year. The latest data showed that inflation was above the 2% target for 53 consecutive months, and the unemployment rate remained low at 3.5%. Nonetheless, signs of a slowdown are becoming increasingly apparent, with GDP falling 0.6% year-on-year in the second quarter. Key Events: At the Jackson Hole Central Bank Annual Meeting on August 22, 2025, Fed Chair Jerome Powell delivered a clear dovish signal. He said that the balance of economic risks has changed, borrowing costs are dragging down the economy, and inflation risks are controllable, suggesting that there is a high probability that interest rates will be cut in September. This is in stark contrast to the previous hawkish stance. Market reaction: U.S. stocks soared after Powell's speech, with the Dow soaring nearly 850 points and the S&P 500 near all-time highs. The decline in Treasury yields reflects optimistic expectations for economic stimulus from interest rate cuts. Investors expect the Fed to start a rate cut cycle in September and cut rates 2-3 times throughout the year. Expert Opinion: Goldman Sachs analysts believe that a weak non-farm payrolls data for August will help determine a rate cut in September. Goldman Sachs expects that regardless of whether the economy slows down or normalizes, the Fed is likely to end the current rate cut cycle by the first half of 2026. Guotai Haitong Securities predicts that interest rates will be cut by 25 basis points in September, and there will be a maximum of two interest rate cuts throughout the year. 2. China's economic data is mixed, and policy fine-tuning challenges Background: China's GDP grew 6.3% year-on-year in the second quarter, in line with expectations, but down from 4.5% in the first quarter. Industrial production and investment data were weak, while consumption data performed better. Inflationary pressures eased, with CPI rising 2.7% year-on-year in July and PPI flat. Important Events: The Chinese government has recently introduced a series of policies, including RRR and interest rate cuts, and the issuance of special treasury bonds, with the aim of stabilizing growth and preventing risks. However, the effect of the policy remains to be seen, and the downward pressure on the economy continues. At the same time, the risk of local government debt has intensified and the real estate market has been sluggish. Market reaction: Investors are divided on China's economic outlook. On the one hand, increased policy efforts have boosted confidence; On the other hand, property risks and inflationary pressures are concerning. The RMB exchange rate fluctuated slightly, and the offshore market once fell below the 7.2 mark. The stock market was flat, with the Shanghai Composite down nearly 3% for the month. Expert Opinion: CICC believes that the current policy focus is to support the economy, but it needs to balance the relationship between growth and inflation. In the future, monetary policy may be moderately tightened, while maintaining a moderate expansion of fiscal policy. Goldman Sachs warned that the risk of local government debt could become the next "gray rhinoceros" event. V. Regulation & Policy 1. The Financial Services Agency of Japan proposes to reduce the tax rate on cryptocurrencies to 20% and incorporate it into financial regulationsThe Financial Services Agency of Japan proposes to reduce the tax rate on cryptocurrency gains from a maximum of 55% to a flat rate of 20% and to include cryptocurrencies under the Financial Instruments and Exchange Act. The move aims to boost the development of the local cryptocurrency industry and attract talent and capital. The proposal will be formally presented at the end of August. In addition to the tax reform, the FSA plans to enact a legislative bill in 2026 that would define cryptocurrencies as a "financial product" rather than the current "means of payment." This means that cryptocurrencies will be subject to the same regulation as traditional financial products such as stocks. Currently, cryptocurrency income is considered "miscellaneous income" in Japan, subject to progressive tax rates and excluding local taxes. High tax rates and regulatory uncertainty have been major factors hindering the development of the Japanese cryptocurrency industry. Industry insiders generally welcomed the move, believing that it would help attract more investors and enterprises into the field. Jun Kakogawa, President of the Japan Association of Cryptocurrency Exchanges, said: "The inclusion of cryptocurrencies in the financial regulatory system is a step in the right direction. This will provide more protection for investors while also creating a more conducive environment for the development of the industry. "2. The Hong Kong Monetary Authority (HKMA) Expands the Scope of Cryptoasset RegulationThe Hong Kong Monetary Authority (HKMA) recently issued a notice that it will fully implement new capital rules for crypto-asset banks in Hong Kong based on the Basel Committee on Banking Supervision standards from 1 January 2026. According to the new regulations, cryptoassets refer to "digital assets" that mainly rely on cryptography and distributed ledger technology, including Bitcoin, Ethereum, stablecoins, etc. In contrast to the Basel Committee definition, the Hong Kong Monetary Authority (HKMA) has removed the term "private" and broadened the scope of supervision. The move aims to strengthen the supervision of banks' crypto asset risks and prevent systemic risks. According to the new rules, crypto assets held by banks will be included in the calculation of risk-weighted assets, and more capital will need to be allocated. Industry insiders have mixed views on the move. Proponents believe that clear regulation can help prevent risks and create a conducive environment for the development of cryptoassets in Hong Kong. Opponents worry that over-regulation will stifle innovation and undermine Hong Kong's status as a financial centre. "We need to strike a balance between risk regulation and innovation development. The new rules aim to create conditions for the healthy development of cryptoassets in Hong Kong, rather than banning them altogether. "3. Fed Powell's dovish speech triggers expectations of interest rate cutsFed Chairman Powell's speech at the annual Jackson Hole central bank meeting sent a dovish signal, triggering market expectations for a rate cut in September. In his speech, Powell said that the downside risks to employment outweigh the upside risks to inflation, and the Fed may need to adjust its policy stance. This is in stark contrast to the hawkish tone of its July meeting. Powell's turn was seen as a response to political pressure from the Trump administration. Trump has long criticized the Fed for raising interest rates too quickly, arguing that it will hinder economic growth. A number of institutions expect the Fed to cut interest rates by 25 basis points in September and continue to cut rates throughout the year. Guotai Haitong Securities believes that the Federal Reserve will cut interest rates up to 2 times this year. The expectation of a rate cut has improved the market's sentiment towards risk assets. Cryptocurrencies such as Bitcoin rose after Powell's speech. However, some analysts are cautious about Powell's turnaround. Goldman Sachs believes that Powell is only leaving room for a rate cut in September, but there is still uncertainty about the size and pace of rate cuts, and further evaluation of economic data is needed. Overall, Powell's dovish speech triggered expectations of a rate cut, but there are still many uncertainties in the Fed's monetary policy path, and the market needs to continue to pay attention.
