The Integration of Encryption and TradFi: Two-way Breaking the Wall and Innovative Compliance

Old Wang, who has been struggling in the A-share market for nearly twenty years, once scoffed at Bitcoin, calling it a "scam." However, recently he has started researching the purchase of Bitcoin ETFs and has even developed an interest in Meme coins. This shift reflects the blurring lines between encryption currencies and the TradFi market.

As the prices of Bitcoin and Ethereum hit new highs, the once clearly defined "crypto traders" and "stock traders" began to intermingle. Cryptocurrency enthusiasts are more frequently spreading their consensus and value concepts to the outside world, while stock market investors have quietly started to pay attention to Bitcoin and Ethereum, and begun to allocate small amounts.

This change is not coincidental. On one hand, government agencies, Wall Street, and regulatory bodies are beginning to actively participate; on the other hand, encryption companies are proactively seeking compliance and collaboration. After Bitcoin reached a new high, the invisible barriers between the encryption and TradFi markets have noticeably loosened, and a two-way breaking of barriers is underway. So, who is influencing whom? Is it the encryption narrative trying to enter the mainstream, or is the traditional industry starting to rethink Web3?

External Forces Actively Entering the Market: Policies, Capital, and Institutions are Joining the Game

This year's changes are particularly evident. It is no longer just insiders entertaining themselves, but rather external forces reaching out with olive branches. Capital has started to place bets, policies are gradually loosening, and votes are shifting. These "outsiders" are no longer mere spectators, but participants ready to take the stage. Moreover, their pace of action has clearly accelerated.

Although you may not have directly purchased cryptocurrency, the stocks you invest in may already be closely related to the "crypto circle." On July 16, after-hours trading in the US stock market saw a collective rise in cryptocurrency concept stocks, with many companies' stock prices soaring significantly. These companies either directly hold cryptocurrencies like Bitcoin and Ethereum, or their business involves blockchain mining, trading platforms, etc. They have transformed from fringe players into market focal points.

The political arena is also not falling behind. A certain politician has taken a positive stance on cryptocurrencies during his campaign and presidency, publicly stating the goal of making the U.S. the "crypto capital". After winning the election, he promptly signed an executive order, replacing several regulatory officials who held negative views on crypto. This series of actions has led the media to label him as the "first crypto president", and while it may seem like a publicity stunt, it indeed reflects a substantial policy shift. At the same time, Congress is also taking active steps. Recently, Washington welcomed "Crypto Week", with Congress intensively promoting multiple pieces of crypto legislation, including a regulatory framework for stablecoins and an overall regulatory framework for crypto assets. Although these bills have not yet been finalized, they have entered the formal legislative process, indicating that the crypto industry is moving towards a clearer regulatory direction.

Traditional financial institutions have actually always understood the value of encryption assets, but previously lacked stable policy expectations. Once this uncertainty diminishes, their speed of entering the market far exceeds expectations. For example, several well-known internet brokerages have begun to test the waters of encryption asset trading services. A large bank has even taken the lead in launching a digital asset platform for institutional clients, providing physical delivery trading services for Bitcoin and Ethereum. This is not just an attempt by individual institutions, but a trend across the entire industry. In addition, many large financial institutions are actively researching and launching services related to encryption, such as stablecoins and blockchain payment systems.

Public companies are also increasingly enthusiastic about the allocation of encryption assets. The world's largest independent BI company has been buying Bitcoin in large quantities since 2020 and currently holds over 600,000 coins, worth approximately $73 billion. The company's CEO actively promotes Bitcoin in various settings, viewing it as the best tool to hedge against inflation and store value. Driven by this, more and more public companies are starting to follow suit. For example, an American gaming company announced that it would use Ethereum as its main reserve asset, purchasing a large amount of ETH, becoming one of the public companies with the most Ethereum holdings globally. The company even raised funds through stock issuance, almost entirely invested in Ethereum, and used most of its holdings for staking to earn returns.

Traditional funds are beginning to enter the encryption market openly and aboveboard. For many traditional investors, there are still thresholds and concerns regarding directly purchasing and custodizing cryptocurrencies, while the emergence of ETFs has resolved this issue, allowing traditional funds to enter the encryption market in compliance. At the beginning of 2024, U.S. regulators approved the first batch of Bitcoin spot ETFs, and several major Wall Street institutions launched their own Bitcoin ETF products. These ETFs allow investors to buy and sell Bitcoin and other encrypted assets in their securities accounts just like trading stocks. In July 2025, the U.S. welcomed the listing of the first batch of Ethereum spot ETFs, effectively opening a direct channel between traditional finance and the encryption market.

The power within the circle is actively going beyond: cross-border cooperation and compliance layout are advancing in parallel

Corresponding to the active entry of external forces into the encryption field, the internal efforts within the encryption industry are also striving to break out of their own circle, attempting to extend their influence from the crypto space to a broader mainstream world. This is mainly reflected in two aspects: first, cross-border cooperation of brands and ecosystems, allowing encryption elements to appear in traditional sports, entertainment, and other scenarios; second, global compliance layout, obtaining licenses and qualifications in various regions, and integrating into the mainstream financial system.

Encryption companies are trying to find ways to step out of their small circle, and the most direct method is to leverage mainstream entertainment and sports events to make their appearance on the international stage. F1 racing, the Premier League, Hollywood movies, NBA games... wherever there are large crowds and high traffic, the pioneers of the coin circle go there. For example, a certain trading platform sponsors an F1 team while also printing its logo on the jerseys of a well-known football club; even in an F1-themed movie starring a certain Hollywood celebrity, the racing suit he wears and the car he drives also feature the platform's logo. Another exchange once placed expensive advertisements during the Super Bowl, and there are platforms that directly obtained naming rights for NBA teams' home courts... The purpose behind these cross-border marketing efforts is very clear: to help "coin circle brands" break free from self-indulgence within the circle and enter the mainstream recognition system.

To truly break through the circle, relying solely on brand exposure is not enough; more importantly, it is necessary to gain mainstream trust and regulatory recognition. Therefore, major encryption giants have invested resources in recent years to apply for compliance licenses in key global markets and build a legal operational framework. In this regard, a certain exchange can be regarded as a benchmark on the path to compliance. It went public on NASDAQ in 2021, becoming the first publicly listed encryption exchange, which is backed by years of solid compliance investment—MSB licenses in multiple states of the United States, a BitLicense in New York, a MiCA license in Europe, and FCA registration in the UK, creating a fairly complete compliance network. Another exchange is also actively promoting its compliance process. At the beginning of 2025, it first reached a settlement with the U.S. Department of Justice, paving the way for its return to the U.S. market, and then successively obtained important licenses in Dubai, Singapore, the European Union, etc., essentially opening up the compliance channels in mainstream markets in the Asia-Pacific region, Europe, and the United States.

Many exchanges that emerged during the Web3 wave are now starting to address compliance shortcomings. Although they were not among the earliest to embrace compliance, their attitude and direction are clear. This is not simply about operating legally; it represents a new watershed in the industry: platforms that can truly last long are not competing based on marketing tactics, but on their ability to operate sustainably within the regulatory framework. Platforms with licenses can participate in competition with TradFi; those without a license can only remain within a small circle.

In addition to enhancing influence through brand promotion and obtaining licenses, the encryption industry itself is continuously innovating. Certain well-known wallet products are dedicated to creating a Web3 gateway, allowing ordinary users to easily experience blockchain services, rather than just staying at the conceptual level. More notably, an increasing number of encryption protocols are beginning to promote the development of RWA (Real World Assets on-chain), enabling users to trade Tesla, NVIDIA stocks, or bonds and other TradFi assets on the blockchain. This is not only a technological innovation but also opens the door for global users to fairly participate in traditional finance. In the past, purchasing overseas stocks required cumbersome procedures, but now with on-chain tokens, many crypto users can more conveniently enter this market.

The encryption industry is actively taking action and striving to break boundaries: enhancing brand influence through cross-industry collaboration, gaining mainstream trust through compliance operations, and bridging the connection between reality and the virtual world through product innovation. These efforts have already begun to show results—now you can see advertisements from crypto companies in Times Square in New York and on the streets of London; ordinary people can also easily access decentralized financial services through mobile wallets.

The Intersection of the Crypto World and the US Stock Market: Who Will Dominate the Future?

When the crypto world meets the US stock market, one question quietly becomes important: Is the crypto world trying to bring the encryption narrative into the mainstream, or is the traditional industry beginning to re-understand Web3?

The crypto industry advocates for on-chain native transaction logic, asset liquidity, and the possibilities of open finance, thereby reshaping financial infrastructure. For example, the rise of DeFi allows anyone to engage in lending, trading, and wealth management without the need for banks, posing a direct challenge to traditional banking operations. Similarly, stablecoins, as the "digital cash" of the crypto world, have begun to shine in cross-border payments and trade settlements. These all demonstrate the breakthroughs that encryption technology brings to traditional financial infrastructure: transactions can occur continuously 24/7, settlements can be completed in seconds, and anyone with internet access can participate, no longer constrained by the operating hours and entry thresholds of traditional institutions. It can be foreseen that the underlying architecture of the future financial system may gradually become blockchain-based.

While encryption attempts to change TradFi, traditional forces are also profoundly altering encryption. The most obvious is the intervention of regulation: governments and financial regulatory agencies worldwide are accelerating the formulation of regulations for cryptocurrencies, integrating them into existing regulatory frameworks. Additionally, the massive influx of traditional capital could also change the power dynamics in the encryption field. When Wall Street giants become the largest holders of Bitcoin, and when the boards of publicly traded companies decide to include Ethereum in their balance sheets, the pricing power and discourse power of the encryption market have, to some extent, shifted to traditional institutions. This is somewhat ironic for the original proponents of decentralization and anti-authority ideals in encryption, but it is an inevitable process for the industry to move towards the mainstream.

For the encryption industry, gaining traditional recognition means a larger user base and pool of funds; for TradFi, absorbing encryption innovations can improve efficiency and expand business boundaries. Therefore, rather than saying who breaks through whom, it is more appropriate to say that we are in a new stage of bilateral integration. In this integration process, there are two keywords that run throughout - innovation and Compliance. Only by insisting on innovation can we continuously create new value and growth points, attracting attention from outside the circle; only by embracing Compliance can we gain mainstream trust and support, integrating into the existing system. These two are complementary and indispensable.

On one hand, innovation is the fundamental driving force for breaking through. Since its inception, the encryption industry has relied on continuous technological and model innovations to promote development. From the decentralized ledger of Bitcoin to the smart contracts of Ethereum, and the emergence of new concepts such as DeFi, NFT, and DAO, each innovation has expanded the boundaries of the industry and attracted new participants. At this stage, what the industry needs is truly disruptive killer applications. This could be a brand new financial service model that makes TradFi look pale in comparison; or it could be a platform connecting the real world, making everyday life more convenient for ordinary people through blockchain. For example, if ordinary people can easily complete cross-border payments of digital assets using stablecoins through encryption applications, with instant settlement and almost zero fees, then traditional remittance services will need to innovate, and a large number of outside users will naturally flock into the encryption ecosystem. Alternatively, when blockchain-based identity verification and data sharing mechanisms are widely applied, people will no longer need to repeatedly submit cumbersome proof materials, greatly improving efficiency. Even if these users do not trade cryptocurrencies, they have already become a part of the blockchain world.

On the other hand, compliance is a necessary condition for breaking through. If the encryption industry wants to truly break the mold, it must solve the trust issue, and compliance is the key to building trust. In the past few years, we have seen too many chaos caused by a lack of regulation: exchanges running away, assets...