From Regulatory Wilderness to Compliance Road: The Evolution of the Crypto Assets Industry

As the Crypto Assets industry gradually enters the mainstream, we are experiencing a turning point. Over the past decade, blockchain technology has opened up a parallel world that transcends traditional regulation. However, today this industry is bowing to Compliance, seeking to align with the traditional financial system.

Compliance Trend

The rise of Crypto Assets has largely benefited from its characteristics outside of regulation. From the early ICOs to the later DeFi boom, and now to the stablecoin revolution, all of these have been built on this foundation. However, with the approval of landmark events such as the BTC ETF, the "golden era" of native Crypto Assets seems to have come to an end.

The industry is beginning to pursue Compliance, attempting to fill the gaps left by traditional finance. Stablecoins, real-world assets ( RWA ), and payment solutions have become development priorities. Meanwhile, pure asset issuance remains prevalent, where a story or a series of contract addresses can spark heated discussions.

The root of this transformation lies in the fact that blockchain technology currently lacks effective means to constrain malicious behavior. Although we can ensure the honesty of nodes and the decentralization of DeFi, it is difficult to control the actions of project parties. Many ambitious non-financial applications struggle to take off, not only due to technical limitations but also due to a lack of effective governance mechanisms.

Compromising with Compliance may be the only way forward for the future development of non-financial applications, even though this process is filled with irony and helplessness. We are entering an era of "on-chain hegemony," where bottom-up innovation opportunities are being squeezed.

The Dominance of Stablecoins

On-chain hegemony is mainly reflected in two aspects: the dominant position of stablecoins and the replay of traditional internet models.

In terms of stablecoins, fiat-backed stablecoins and yield-bearing stablecoins (YBS) are dominating the market. The recently passed "Genius Act" provides a clear regulatory framework for stablecoin issuance, which may signal the industry's entry into a new phase. The act requires stablecoin issuers to obtain licenses and be subject to regulation, hold 1:1 reserve assets, and regularly disclose reserve conditions. This not only alleviates market concerns about certain stablecoins but also paves the way for the large-scale adoption of blockchain payments.

However, this also means that on-chain transaction media are officially incorporated into the regulatory system. This may bring new challenges to areas such as DeFi, such as the risk of stablecoins being frozen.

On the other hand, YBS stablecoin is becoming a new hotspot. From hedge funds to market makers to exchanges, all parties are scrambling to enter this field. Although this model has its innovations, the current craze seems to have deviated from its original intention, becoming more of an APY battle.

Evolution of Asset Issuance

Public chains are still the largest asset issuance platforms, but their models are increasingly aligning with traditional internet. The profit models of some projects are no different from Web2, and the feedback to the community is becoming less and less. Asset issuance platforms are becoming the focal point of attention for major institutions.

Launchpad has become a new favorite for investors chasing high profits, but its operating model also has issues. Some projects have even completely detached from blockchain, relying solely on issuing coins for fundraising. This extreme speculation is continuously lowering the industry's bottom line.

In the face of this situation, some people have proposed new concepts such as DeSci, attempting to balance speculation and innovation. However, these attempts seem difficult to compete with the currently popular meme and AI projects. As the market cools down, some projects have begun to adopt more direct Ponzi models, further raising concerns about the future of the industry.

The Rise of Attention Economy

The project's promotion strategy has also changed. Compared to technical presentations, more projects choose to directly "buy" attention, using marketing methods similar to those of short video platforms. Although attention is undoubtedly one of the most valuable assets today, there is still controversy over how to measure and utilize it.

Some projects attempt to quantify attention value through AI, but whether this model can capture long-term value remains to be seen. Currently, tokens are gradually becoming a "fast-moving consumer good", with project parties and KOLs taking what they need, but true innovation and value creation seem to have been overlooked.

Future Outlook

As stablecoins and blockchain payments go mainstream, the Crypto Assets industry is facing a reshaping of identity. However, for the industry "natives," what is truly needed may be on-chain native innovative solutions, rather than simply mimicking the Web2 model.

Although the current situation seems to confirm some early supporters' predictions about Bitcoin, we still look forward to surprises in the future. The development path of the Crypto Assets industry may be tortuous, but its potential and influence cannot be ignored.