After the Americanization of Cryptocurrency, the Free City-State Ends

If you are amazed by Trump's victory, then revisiting the story of Alexander will calm us down, rather than indulging in the sadness of the decline of Athenian democracy.

In 338 BC, Alexander the Great defeated the coalition of Greek city-states under the city of Chaeronea, and then swept the world, starting the process of Hellenization worldwide. For example, the Gandhara region, which was influenced by him, developed exquisite Buddhist sculpture art, and then the Gandhara style profoundly influenced the Chinese cave sculpture art. The world has gone around in circles, but it is always connected and developed.

Crypto Americanization, the rule of law is in progress

Today, Trump is in the party (Republican Party), public opinion (Musk), executive, legislative, and judicial circles. In the next two years, he will be a solo dance, and the generous sponsorship of the cryptocurrency industry in various elections in this round of elections is destined to reap extremely rich rewards from Trump.

In contrast, where should the city-states of Dubai, Singapore, and Hong Kong go? The global regulatory storm against cryptocurrency exchanges started with high leverage and tax issues in 2022, and reached a climax after the collapse of FTX, and finally ended with CZ paying money, imprisonment, and banning the industry.

• BN's choice is global arbitrage, from mainland China, Japan, Singapore, to France and the UAE, where my heart is at peace is my hometown.

• CB's approach is to take the initiative, starting with hiring Chris Lehane to lobby, and following up with FairShake PAC to support crypto-friendly candidates. What doesn't kill me will make me stronger.

Image Caption: CB lobbying expenses

Image source: https://www.opensecrets.org‍

But Trump’s coming to power is not the end of chaos, nor is it the establishment of a new order.

In fact, Rome was not built in a day. After the collapse of FTX in 2022, the cryptocurrency industry actively began to save itself. Top players in the industry such as Coinbase, A16Z and Ripple began to take the initiative since then. The above figure also shows that the peak of expenditure was in 2022.

From the perspective of the entire US political structure, cryptocurrency is close to full legalization. This does not refer to the legalization of sub-tracks such as exchanges, stablecoins, public chains, and token issuance, but the subsequent supervision and legal framework. Specifically, the overall idea has taken shape.

• Congress -- FIT21 Act

• Regulation -- Switching from SEC to CFTC

• Executive -- Trump is ready to use Bitcoin as a strategic reserve, not issue CBDC, and pardon the founder of Silk Road

Image Caption: FIT21 Act

Image source: https://www.congress.gov

The FIT21 Act (Financial Innovation and Technology Act for the 21st Century) is the overall framework for these changes. It was passed by the House of Representatives in May. Considering the absolute advantage of Trump-Republicans in the Senate, the day when the bill becomes law is not far away.

Under the FIT21 framework, the main distinction is between digital assets and digital commodities, and the powers and responsibilities of the SEC and CFTC are divided.

1. Digital assets are under the jurisdiction of the SEC;

2. Digital commodities are under the jurisdiction of the CFTC.

For example, ETH is a necessity to maintain the operation of Ethereum, so it is obvious that it has practical value and should be classified as a "digital commodity" and can be regulated by the CFTC (Commodity Futures Trading Commission). Even SEC Chairman Gary Gensler agrees with this.

Some tokens are issued for financing (IXO), and their holders and issuers are only for the expected returns of the tokens, but do not have actual value for the public chain or products. They will be defined as digital assets and should be under the jurisdiction of the SEC, which is essentially regarded as securities issuance.

In addition, there are relevant compliance requirements for stablecoins and intermediaries, but after the division of SEC and CFTC responsibilities, token issuance will actually become legal. As long as the tokens can prove their actual use and value, they can get rid of Gary Gensler's "harassment", and a clearing mechanism will be established in the market to exclude fraudulent projects.

Although Gary Gensler openly opposes the bill, it is certain that his term has entered the countdown, and Trump has announced that he will fire him on the first day of his election.

In Trump's view, Bitcoin or more widely used cryptocurrencies are an option to solve the debt crisis, at least a partial option. In a broader sense, he will recognize cryptocurrencies from the American political level, and correspondingly, cryptocurrencies have expressed their support or control over him in advance.

Based on this, we can set up an observation point: If large-scale crypto advertising (supporters of this time rarely talk about cryptocurrencies directly except Trump) and exchanges can reappear in the discussion space of American political life, then crypto Americanization will be completely formed.

It is difficult for city-states to arbitrage, and there is no gap for big countries

"Clips" are part of Ethereum, just like barnacles to turtles. People even recognize that this is part of the ecosystem, but people have never thought of an ecosystem without parasites.

We list the names of three countries or regions as follows:

• Cayman Islands, British Virgin Islands

• Dubai, Singapore and Hong Kong

• Vietnam, Morocco and Mexico

If you are active in the venture capital, currency or overseas circles for many years, then the common point of the above countries or regions is that they actually serve as a cross-chain bridge between the East and the West. For example, after the outbreak of the Russia-Ukraine war, dignitaries from both sides met in Dubai, as if the killing and bloodshed in the distant region had not happened and had nothing to do with the source and direction of their funds.

However, with Trump's limited return, all of this will be related, but in the form of deglobalization, all parts of the world will be entangled and interacted. To dismantle the intricate relationships, it is necessary to have mutual connections to ensure consistent actions.

Between Dubai, Singapore and Hong Kong, cryptocurrencies can be reduced to two categories: exchanges and stablecoins. Among them, the exchange dispute is basically over. Hong Kong has "real compliance" exchanges such as Hashkey and OSL, while Dubai has taken in many global exchanges such as BN/OK/ByBit that cannot apply for Hong Kong licenses.

Dubai: Middle East Peace Hotel

When the SEC was frantically chasing Ripple, Ripple said it would bring itself to Dubai to reduce the global competitiveness of the United States. Such familiar tactics have been used repeatedly by companies such as Coinbase and A16Z, and the final winner has the legal power to reset the agenda.

Specifically, Dubai is more focused on exchange business, and its regulatory framework is under VASP (Virtual Asset Service Providers). Different from the division of SEC and CFTC, Dubai has chosen to tailor a new regulatory system for the crypto industry, but please don't take it too seriously, because FTX also obtained the license and quietly withdrew it after the incident, proving that no one can regulate the black box.

What's more interesting is that USDT has penetrated into oil trading, and completed the first $45 million in oil trade financing support last month, but it should be noted that it is not direct buyers and sellers using USDT for transactions. This is to open up new markets outside of traditional crypto trading, which is worth encouraging.

Tether's other gesture of goodwill is to cooperate with local companies to issue stablecoins anchored to AED (UAE Dirham) according to the regulations of the UAE Central Bank, and the winner is TON. Telegram turned to Dubai after fleeing Russia, and the UAE Central Bank also issued special regulations for stablecoins, so that all crazy behaviors have a legal basis. Get on the bus first and buy the ticket later. As long as it can bring profits to the local area, everything is welcome.

But all this is not as good as the above. Dubai or the UAE is still a marginal follower of the United States and the West. Although CZ lives in the UAE, he still chooses to take the initiative to go to the United States to settle the lawsuit, even though the UAE is not on the list of 100 signed extradition treaties in the United States.

There is also Telegram founder Nikolai Durov, who has multiple nationalities including the UAE, but he will still be arrested by France. All of the above appear to show that although Dubai can protect you from the wind and rain, its ability is limited, and the core still depends on yourself.

Singapore: A sweet place for Chinese

Compared to the exotic feeling of Dubai, Singapore, which is an eight-hour flight from Beijing, is obviously closer to Shenzhen and Fujian. The more than 200 years of going to Southeast Asia has created a huge overseas Chinese community. For example, after being investigated by the FBI, Justin Sun chose Singapore as his first choice for escape, which is close to China and far from the United States. But it can also be said that compared to Dubai, Singapore is more suitable for living close to the mainland.

After the collapse of FTX, Singapore's Temasek also conducted a review as a participating investor, and the government's policy on cryptocurrencies has become more cautious, but this does not affect the grandeur of Token 2049 and the stunning concept of PayFi on Solana Break Point.

In addition, Singapore's largest bank DBS (DBS Bank) has not given up on following up on the cryptocurrency industry. The most important thing is the issuance of USDG (Global Dollar). DBS is the US dollar reserve management bank, and Paxos is responsible for the issuance. Paxos is the issuer of the former BUSD. As early as 2022, it obtained the MPI (Large Payment Institution License) License from the Singapore MAS (Monetary Authority). The same license holders also include Alibaba and Coinbase.

The cooperative issuance of USDG this time is an important attempt after the introduction of the MAS's 2023 stablecoin regulatory framework. Localized US dollar compliant stablecoins will not be the opponent of USDT for the time being, but point out the direction of the future.

In general, Dubai and Singapore are equal, and it is difficult to distinguish between the two. However, in terms of the comfort level of Chinese life, Dubai's 300,000 cannot be compared with Singapore's 4 million.

Hong Kong: The dilemma of true compliance

The biggest difference between Hong Kong and Singapore and Dubai is the long history of the Hong Kong Stock Exchange. However, at a time when mainland technology stocks are weak and overseas appeal is declining, Hong Kong's encryption policy has never made great strides.

Although it followed the United States in passing the BTC/ETH spot ETF, its traffic and scale are completely unable to compete with the US ETF.

Picture Description: Hong Kong BTC Spot ETF Data

Picture Source: https://sosovalue.com/zh/assets/etf/hk-btc-spot

In terms of stablecoins, Hong Kong's idea is still to cooperate with large companies, such as JD.com and other companies, but the problem is that although they can operate in compliance, they are completely unable to open up new scenarios under the current market structure, resulting in the inability to make a move.

Welcome to the new era

Compared with the policies of the above three companies, exchanges cannot operate globally in compliance, and no company can accept the fragmented liquidity. Hashkey Global and Coinbase Global have appeared one after another. After all, compliance cannot be eaten, and business is the way of heaven.

The neoliberal globalization that began in the 1980s is about to end, and regionalization will be the mainstream, just like Singapore's regional stablecoins, Dubai's local compliance licenses, and Hong Kong's non-mainland user exchanges.

But in Trump's layout, not only China will be targeted, he will equally spread hatred to all non-US economies. American First is not about human relations, and there are no common values ​​under MAGA.

In Trump's plan, a 15% corporate tax is a must-achieve economic change, and this is an important bargaining chip for Ireland and other countries to attract US capital into Europe. In his first term, the plan failed to be implemented globally due to the strong lobbying power of large companies. Now is the time to end it all.

If the price is uniform, then the United States is obviously more advantageous, Trump said.

In short, the confrontation between the world's major powers will return to the hard power of industry, high technology, etc., leaving less and less room for the small giants to maneuver, and they will even compete with each other. The competition in the stock era will be extremely cruel, and cryptocurrency is also the only remaining global industry. In this sense, cryptocurrency is also an important symbol of connecting the world.