Stablecoin legislation is just the beginning, the encryption industry is facing profound changes

Recently, the United States introduced a special regulatory bill for cryptocurrencies, which is of milestone significance. This marks the formal establishment of a regulatory framework for cryptocurrencies in the world's largest financial market, but this is only the beginning of the regulatory process. A more complex regulatory system is still under construction.

The new regulations will allow the use of ETH or Bitcoin for daily consumption and are expected to be included in pension and 401k account investment scopes. This breakthrough is attributed to the push from higher-ups, but the market reaction has been surprising. Despite the positive news, the price of Bitcoin is lower than last week's level. This phenomenon of "positive news leading to a peak" is not the first time, indicating a strong speculative atmosphere in the market.

However, the long-term outlook remains optimistic. The annual increase of Bitcoin has already been considerable, and short-term price fluctuations cannot obscure the fundamental changes brought about by the improvement of market structure and regulatory frameworks. It is worth noting that several large banks have stated that they will launch their own stablecoins or tokenized deposits, indicating that the transformation process of financial institutions may accelerate beyond expectations.

This milestone will bring about two fundamental changes: first, the deep integration of cryptocurrency and financial technology, reconstructing financial infrastructure; second, traditional payment systems will undergo structural transformation, and the importance of payment giants may significantly decline in the next decade.

However, there is also a market for the cautious view that payment giants are being rapidly replaced. Companies like Visa and MasterCard have accumulated decades of experience in customer service, dispute resolution, and merchant management, making this core competitiveness difficult to replace in the short term. Moreover, if giants like Alipay decide to enter the stablecoin space, the market landscape will become even more complex.

In a declining yield environment, stablecoin issuers relying on interest margin income will face challenges. Investors may turn to the DeFi space in search of higher returns. Over the next three years, we may see the emergence of segmented stablecoins targeting different scenarios, and the market will exhibit diversified development trends.

From the perspective of beneficiaries, traditional financial institutions, tokenized money market funds, and the DeFi sector may become the biggest winners. Meanwhile, intermediaries such as regional banks and investment banks may face greater risks. The laws of capitalist development point towards reducing transaction costs and enhancing consumer welfare, while encryption technology is reshaping the structure of capital markets.

The ETH/BTC exchange rate has recently surged significantly, reflecting a major shift in market expectations. The large-scale purchases by digital asset custody institutions have become the main driving force, based on the core logic that Ethereum will serve as the infrastructure layer for the stablecoin ecosystem. Although ETH still faces core issues such as its economic model, factors like organizational cultural innovation and improvements in the regulatory environment are bringing substantial fundamental improvements.

There is still a cognitive gap in the field of encryption. New investors only begin to pay attention when policies are implemented and become news, and the market has not yet fully priced in these changes. There is an interesting paradox in the market operation mechanism: the more decentralized a system is, the more centralized market leadership is required.

Recently, several major encryption companies have submitted IPO applications, but there is a clear divergence in valuation systems. Some private projects are valued at only 35% of their listed peers, while a certain trading platform has a price-to-earnings ratio as high as 60 times. It is expected that more IPO cases will emerge in the fourth quarter, and the market may see a rebound by the end of this year or early next year.

At the macro level, the current data basically meets expectations, and there is insufficient reason for interest rate cuts. It is necessary to beware of the potential impact of political interference on the independence of the Federal Reserve, which may lead to a long-term deterioration of inflation. The possibility of interest rate cuts this year is basically ruled out, and the key lies in whether the Federal Reserve can maintain its policy independence.

Overall, the encryption industry is facing profound changes. Factors such as the improvement of regulatory frameworks, the participation of traditional financial institutions, and the emergence of new business models are collectively driving the industry towards a more mature and standardized direction. Although market fluctuations are difficult to avoid in the short term, the long-term outlook remains bright.