From the “Decentralization” Narrative to Regulated Centralized Institutions

I’m tracking an emerging narrative and evaluating its credibility: the industry is shifting from “decentralization” to a narrative dominated by “traditional centralized institutions and compliance.”

I’m considering a critical question: Are we seeing the start of a new bull market—or just one last rally before a shakeout?

A Word of Warning

Technology should empower human progress, yet it’s so often hijacked by greed and short-term speculation. Why?

The shift from “decentralization” to a narrative pushing traditional centralized institutions and compliance hasn’t changed the outcome: the average investor is still the one left holding the bag.

Since the rollout of the Stablecoin Act, the world has witnessed a level of frenzy where publicly listed companies, investment firms, and Wall Street have become the biggest drivers of speculative excess.

The impact is no longer confined to traditional crypto traders. Risk is now spilling into legacy finance and affecting a much wider population.

Since the introduction of the stablecoin bill, the zero-sum game among crypto speculators has expanded into a broader circle—the damage is reaching far more people than before.

While the crypto market remains far smaller than the traditional financial markets that crashed in 2008, the underlying drivers are strikingly similar: opaque, high-leverage speculation; asset prices untethered from fundamentals; and systemic risks that transmit quickly through market linkages. When you see a pharmaceutical company like Windtree implementing a BNB reserve strategy, the cross-industry transmission of financial risk becomes alarming. Non-financial companies chasing short-term trends may end up allocating their core assets into highly volatile sectors they don’t understand—leaving their financial health and ordinary shareholders exposed when markets turn.

Let’s be clear: this narrative transition—from “decentralization” to “compliant traditional institutions”—marks the most centralized era in crypto’s history, and the era of record high prices.

The Mainstreaming Path of Crypto Assets

2009–2017
Decentralization, anonymity, censorship resistance

2018–2023
Rise of exchanges, institutional entry, regulatory experimentation

2024–2025
Compliance, securitization, Wall Street influence

Narrative Shift: Who’s Calling the Shots in Crypto Now?

Traditional Financial Institutions
(Goldman Sachs, JPMorgan, BlackRock) — Launching ETFs, issuing stablecoins, tokenizing securities

Public Companies
(MicroStrategy, Windtree, Qianxun Technology) — Holding crypto assets, hyping concepts, driving up stock prices

Wall Street Investment Banks
(Galaxy Digital, Grayscale) — Driving token securitization and structured products

Political Figures
(Trump, CZ, Elon Musk) — Leveraging crypto narratives for support, funding, and influence

Crypto asset risk is now bleeding into the traditional financial system, just as it did in 2008—on a larger scale and harder to control.

Lessons from the 2008 Financial Crisis:

Ø Financial derivatives disconnected from the real economy

Ø Out-of-control leverage and cascading risk

Ø Regulatory lag and systemic risk events

Ø Ordinary people ultimately bear the costs

Where It All Starts

Trump’s recent “pro-crypto” stance is a clear campaign pivot that signals political savvy. While his administration’s Treasury and OCC showed some openness to crypto (like letting banks provide custody services), Trump himself was skeptical early on, even calling Bitcoin “a scam based on thin air.”

His current pro-crypto messaging is about courting young voters, the tech sector, and crypto holders—setting a policy contrast with the Biden administration, especially SEC Chair Gary Gensler, known in the crypto industry as an anti-crypto regulator.

Within the Republican Party, opinions diverge. Some embrace innovation and free markets; others worry about criminal use and money laundering.

In his second term (from 2025), Trump aggressively promoted crypto-friendly policies: establishing a strategic Bitcoin reserve (by seizing $17 billion in Bitcoin) in March 2025, and signing the GENIUS Act to regulate stablecoins on July 19. These initiatives helped position the U.S. as the “global crypto capital,” with Bitcoin briefly surpassing $100,000.

He appointed close allies (Paul Atkins as SEC Chair), created a “Crypto & AI Czar” post (David Sacks), loosened regulation, and paused 12 separate investigations into companies like Coinbase and Binance.

Potential Democratic Attack Lines

Partisan divide:

The Democratic Party has traditionally been more cautious about crypto. The Biden administration (2021–2025) pushed regulation (e.g., EO 14067). Senator Elizabeth Warren and others have publicly raised concerns about crypto’s risk for money laundering. In May 2025, Democrats introduced the “End Crypto Corruption Act” to counter Trump’s policies.

Republicans are split too: in July 2025, 13 GOP members voted against the GENIUS Act, showing the issue transcends party lines.

Points of attack may include:

• Legal scrutiny: After leaving office, Trump’s family business (World Liberty Financial) could face SEC probes, especially with $500 million in $TRUMP token profits potentially tied to insider trading. Senator Richard Blumenthal began a preliminary investigation in May 2025.
• Political attacks: Congressional hearings could expose Trump’s conflicts of interest (e.g., a $75 million deal with Justin Sun), eroding his credibility.
• Policy reversals: If Democrats retake power, they may unwind the Bitcoin reserve—selling $17 billion in assets, undermining crypto market confidence.

How We Should View Stablecoins and Their Legislation

Bitcoin and Ethereum originally stood for “censorship resistance,” self-sovereignty, and escape from the grip of traditional finance—the spirit of technological rebellion.

Today, with the U.S. legislating on stablecoins, the drivers are no longer anonymous cypherpunks like Satoshi, but corporate giants: Circle, BlackRock, Franklin Templeton, Fidelity, Visa, Mastercard—even pharma companies.

Consider Hong Kong as an example.

Hong Kong’s Stablecoin Ordinance takes effect August 1, 2025, with licensing applications also launching.

Licenses won’t be available by simply downloading a form and submitting a standard application. Instead, applicants will be invited individually to apply.

This “invitation-only” approach means the HKMA will pre-screen and communicate with potential applicants to assess their eligibility. Only those preliminarily approved will receive formal application materials.

Use-case scenarios are one of the authority’s top priorities. The HKMA takes licensing very seriously.

HKMA CEO Eddie Yue reiterated at the Hong Kong Investment Funds Association’s annual meeting on June 23: applicants must articulate a concrete, practical use case—“no use case, no application form.”

Already, 50–60 firms—including Chinese state-owned enterprises, financial institutions, and internet giants—have expressed interest in a license.

Hong Kong’s requirements for stablecoin issuers, especially on AML and anti-terrorism finance, are as stringent as for banks or e-wallets, and the initial phase will see only a select few receive licenses.

When the Legislative Council officially passed the Stablecoin Ordinance Bill on May 21, 2025, Hong Kong’s stock market immediately began speculating on stablecoin-related stocks, a momentum that spread to the broader digital asset sector.

Applicants are diverse. Hong Kong-listed medtech company Huajian Medical (01931.HK) announced on July 17 plans to build a “NewCo+RWA” Web3 exchange around high-tech medical innovation assets, including issuing a proprietary stablecoin (IVDDollar). The company, focused on in vitro diagnostic devices and consumables, reported 2024 revenue of 3.162 billion yuan and net profit of 274 million yuan. On July 14, it also announced board approval for a dual primary listing on Nasdaq.

On July 18, 2024, as the stablecoin licensing regime was being finalized, the HKMA approved three groups from over 40 applicants for the stablecoin sandbox: Yuancoin Innovation Tech, JD CoinChain (Hong Kong), and a consortium of Standard Chartered (Hong Kong), Animoca Brands, and HKT. These groups are participating in different phases of sandbox testing.

The Asymmetric Imagination Gap

Crypto is driving a powerful fantasy: that the passage of stablecoin legislation will spark new rounds of speculative trading.

But does having compliance-safe stablecoins really create new avenues for on-chain investment?

Is that truly the case?

The GENIUS Act clearly categorizes payment stablecoins as its regulatory target. First, it puts strict controls on licensing and prohibits issuers from paying interest on stablecoins. Issuers must meet bank-grade compliance. Foreign issuers operating in the U.S. must register with the OCC and hold enough reserves at U.S. financial institutions to serve their American customers.

For non-financial public companies, the law specifies that unless they primarily engage in financial activities, their wholly owned subsidiaries and affiliates cannot issue payment stablecoins.

Second, the Act imposes tough reserve requirements to protect stablecoin redemption—this is its core safeguard.

Supporting rules include: (1) A hard ban on rehypothecating reserves—issuers can’t pledge, lend, or otherwise gamble with their reserves. (2) Monthly public disclosure of reserve details—including outstanding stablecoin count, reserve total and composition, average maturity, and custody location—with CEO and CFO signatures. Issuers with total stablecoins above $50 billion must also release annual financials, including related-party transactions.

Third, the law ramps up anti-money laundering expectations. Issuers must run comprehensive AML and KYC programs, keep payment stablecoin records, monitor and report suspicious activity, and use technical and procedural controls to block illegal funds and terrorism financing.

Foreign issuers must also comply with reciprocal arrangements set by the U.S. Treasury and foreign regulators—or else they can’t offer their overseas stablecoins in America. If another jurisdiction’s regulations are comparable to the GENIUS Act, the Treasury may form reciprocity agreements.

In short, the GENIUS Act is designed to build trust and manage risk in payment stablecoins—not to fuel speculative crypto investments.

Does the Stablecoin Act Actually “Benefit” Crypto?

The critical question: After someone receives a stablecoin, what do they really do with it?

Stablecoins and real-world assets (RWAs) require blockchains to function—stablecoins are pegged to fiat or government bonds, mapped via smart contracts, and serve as a bridge between legacy finance and Web3.

China’s top payment platforms (WeChat Pay >1.1 billion MAU, Alipay 900 million MAU) effectively run quasi-stablecoins backed by legal reserves, with transaction fees as low as 0.6%. This is far more competitive than international payment players like PayPal.

Companies with cross-border operations (JD.com, Ant Group) are actively pushing into stablecoins.

Advantages include: (1) A massive user base and established payments infrastructure (think Amazon) practically guarantees widespread stablecoin adoption; (2) Major internet companies have the technical muscle to deliver; (3) Combining B2B supply chains with retail payments (B2C) strengthens stablecoin network effects.

The GENIUS Act (in effect July 19, 2025) expressly limits its regulatory scope to “payment stablecoins”—defined as digital assets for payment, transfer, or settlement, fully backed 1:1 by fiat and meeting bank-grade compliance (OCC registration, etc.).

It doesn’t regulate “investment stablecoins” directly—but by banning issuer interest payments and rehypothecation, it indirectly restricts yield-bearing stablecoins like DAI.

Reserves may be used for redemptions only—not staking, lending, or speculative trades—which means USDC (for example) is structurally limited to payments. In July 2025, Circle’s CEO said USDC will focus on cross-border payments, with daily volume reaching $1.2 billion.

Stablecoins with clear investment or yield features (like algorithms or those whose value depends on issuer actions) likely fall outside the GENIUS Act’s scope and instead face regulation from the SEC or under other strict financial rules.

This creates a “gray zone” for investment-type stablecoins—they’re not formally regulated or outright banned, so they live in a legal limbo.

Issuers are banned from paying interest—muting the financial features at the issuer level.

But there’s no rule banning users from staking stablecoins in DeFi or putting them into RWAs—so the financial features at the user level remain.

The Real Answer Is in a Different Bill

Stablecoins may be approved as “payment instruments,” but they’re quickly deployed for speculation—secondary market trading, collateral, institutional positions, and more.

This is the underlying reason why the market expects the stablecoin bill to “benefit” crypto.

It’s also today’s biggest risk for crypto:

Ø When “payments” are the label but “investment” is the substance, regulators focus on payments while markets reroute stablecoins into speculation;

Ø Compliant issuers, but unregulated users—the regulatory chain breaks, risk leaks into the broader financial system;

Ø This could replay 2008’s “AAA-rated, widely traded, liquidity-mismatched, poorly regulated” dynamic—creating systemic risk anew;

The Clarity Act divides responsibility: the SEC regulates stablecoin and digital asset trading and anti-fraud; the CFTC oversees digital commodity registration and trading.

It defines digital assets as “digitized representations of value secured by cryptography and recorded on a distributed ledger.” But securities, stablecoins, deposits, certain commodities, derivatives, art, and asset pools—even if digital—are carved out and remain under existing regulation.

Within 180 days of enactment, digital asset exchanges and brokers must provisionally register with the CFTC until the SEC and CFTC issue formal rules.

The CFTC also oversees digital commodity trading and contracts involving “permitted payment stablecoins”—but it can’t create detailed regulations for stablecoins or their issuers.

The bill also recognizes that blockchain-based, exclusively-held, peer-to-peer transferrable investment contracts can be treated as digital assets under its rules.

Investment contract-type digital assets that meet specific criteria (such as running on a mature blockchain or raising less than $75 million annually) are exempt from SEC registration and instead register with the CFTC.

The SEC regulates permitted payment stablecoin issuers trading on broker-dealers, exchanges, or other trading systems, and retains jurisdiction over commodity transactions that would otherwise be exempt from CFTC oversight.

SEC rules against fraud, manipulation, and insider trading apply equally to permitted payment stablecoins and digital commodities—the agency’s jurisdiction is comprehensive.

The upshot:

Ø Payment stablecoins may not be securities themselves,

Ø But once they trade on exchanges or broker-dealers, the SEC’s regulatory powers kick in.

Stablecoins used on trading venues fall squarely under the SEC’s authority.

The SEC’s power now extends beyond issuance and reserves (the GENIUS Act’s focus) to cover all secondary market activity.

In effect, the GENIUS Act (for issuance/reserves) and the Clarity Act (for trading/integrity) together close the regulatory loop—creating a U.S. digital asset regime that’s broad, comprehensive, and mutually reinforcing.

This ends the myth that “digital commodities aren’t the SEC’s business.” Even if the core product is a commodity, fraud or manipulation in trading brings SEC intervention. The agency now covers every inch of the digital asset world, ensuring market fairness and integrity.

DeFi faces an imminent “compliance filter”: projects lacking transparency, liquidity, or a compliance pathway will exit the space.

Assuming a project is “compliant” and thus investable just because it registers with the CFTC is a dangerous illusion—registration does not mean fundamental value.

How I Find Value Projects—Especially in a New Narrative Era

1. Sustainable and scalable revenue

Does the project make money? Does it offer a necessary service? If so, the next question is scalability.

Think about highways: every car that passes pays a toll, but there’s a limit to throughput. When the road is crowded, operators can grow revenue by adding lanes or raising tolls.

If more “traffic” means more revenue, the project is scalable. The best ones see revenue multiply much faster than costs.

2. Robust tokenomics

Projects that regularly buy and burn their own tokens inherently make the remaining tokens more valuable. This mirrors traditional stock buybacks—increasing earnings per share even without higher profits. The ideal is rising profits and a shrinking token supply.

3. Transparency

Full on-chain data accessibility and verifiability is a must.

4. Compliance

Global financial law already exists, even if “blockchain” isn’t mentioned or uniformly enforced everywhere. That’s no excuse to ignore it. (Fully decentralized chains like Bitcoin are exceptions.)

Is the project compliant with the Clarity Act or the GENIUS Act? Does the SEC view it as a security?

5. Clear product and service vision with continual innovation

The best projects rarely pivot away from their original mission. Having to “reinvent” means sunk investments are likely worthless. Frequent rebranding is another red flag.

Projects that keep expanding along their core vision are usually healthy; those that diverge from their origins often signal weak fundamentals.

6. Substitutability and absorption potential

Assess key technical, competitive, and strategic factors.

The bigger picture: What does stablecoin legislation really mean?

At its core, stablecoin regulation isn’t bullish for speculative tokens—it’s about:

Ø Cementing the role of stablecoins as financial infrastructure (regulating issuance, reserves, and who can issue)

Ø Letting established financial institutions (banks, brokers, payment platforms) access blockchain legally and compliantly

Ø Encouraging regulated platforms to connect with quality blockchain projects—expanding the ecosystem for viable crypto assets

Bottom line:

This law benefits protocol-type projects with sustainable revenues, compliance capacity, and financial services DNA. It’s not a fundamental boon for pure meme coins or speculative Layer1s.

Specifics:

Ø Coinbase is a “Berkshire Hathaway”-type Web3 infrastructure company—stable and strategically important for the long term, not a speculative bet.

Ø Circle, as USDC’s issuer, will benefit directly from stablecoin laws.

Ø Coinbase, the leading U.S. compliant exchange, also holds shares in Circle and benefits indirectly.

Ø Ethereum, the backbone of “on-chain dollars,” stands to gain as stablecoin regulations drive demand for its infrastructure role—though near-term volumes may not spike.

Ø SOL is a favorite among traders, but as regulatory clarity increases, its valuation premium should fade. Risks remain: the SEC has tried to classify SOL as a security, and its inflation is still high.

Ø LINK is one of the rare protocols with real revenue and services through all cycles—a strong long-term hold.

Ø UNI (Uniswap) carries high risk and high reward. If it implements protocol fee sharing and neutralizes regulatory threats, it could be revalued. Inflation is high, governance token utility is still limited, and the SEC is targeting it. If Uniswap is declared an “exchange,” enforcement could follow.

Ø AAVE has a stable revenue model and solid fundamental logic, but compliance remains the biggest cap on its valuation.

Ø Pendle is a niche interest rate derivatives market—speculative and limited by market size and regulatory haze. Its complex financial engineering makes compliance hard.

Ø ONDO stands to gain the most from stablecoin regulation, serving as a premium bridge between RWAs and the blockchain world.

Ø Pyth Network (PYTH) is a critical piece of the on-chain oracle infrastructure with long-term potential.

Ø Aptos (APT) could develop as the next major Layer1 outside of Ethereum—worth watching.

Ø Celestia (TIA) is an early bet on modular Web3 tech with solid prospects.

Ø BUIDL (BlackRock Tokenized Fund) exemplifies the institutionalization trend—stable in the short term, a long-term winner as TradFi merges with crypto.

Ø TRAC (OriginTrail) blends real-world use and DeFi, with relatively low regulatory risk and strong growth potential.

Technical side: highly substitutable. The basic tokenization standards (like ERC-20) and smart contract programming used to “write asset data to a blockchain” are open and widely adopted. Any competent blockchain dev team can replicate these basics.

Non-technical moat (very high): ONDO’s real edge is its compliance architecture, legal framework, ability to work with traditional financial players (custodians, asset issuers), and regulatory expertise. This is a multidisciplinary system involving finance, law, regtech, and institutional operations. Academically, it’s known as “institutional technology”—where compliance itself becomes a competitive moat. The true skill isn’t coding, it’s embedding complex legal and financial processes into an executable blockchain protocol—a moat that’s hard to copy.

Chainlink is the decentralized oracle network connecting on-chain smart contracts with real-world data—bridging the blockchain data silo and trust gap.

Oracles, as a service, are replicable to some extent—see Band Protocol, Pyth Network, etc.

But Chainlink’s real moat lies in its network effect and industry trust—it’s hard for rivals to match its scale and reputation.

Technically, it’s moderately substitutable, but its ecosystem network effect and trust are exceptionally hard to replace.

Big tech companies (cloud providers needing blockchain data) and traditional data giants (like Bloomberg looking to go on-chain) may all seek to control critical blockchain data access points.

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