If we talk about what has recently stirred the passion of global finance professionals for discussion, whether in web2 or web3, it should be the wildly rising Circle after its listing on the US stock market.

Aside from Web3 players generally being bearish and missing the boat, even shorting out of anger, Web2 players are bullish and FOMOing into the market. This terrifying explosive potential has made many traditional financial giants restless, forcing them to confront the revolutionary impact that stablecoins may bring globally.

This makes me feel like I’m once again sitting on the wheels of history rolling forward, very much like the feeling of a “great era.”

First look @CryptoHayesThe scene written by Xiao Hei in his article “Libra: Zuck Me Gently:”

“I recently spoke with a board member of a large bank about stablecoins, and they said, ‘We’re doomed.’ They believe stablecoins are unstoppable, citing the situation in Nigeria as proof. I didn’t realize the extent to which USDT has penetrated the country, but they told me that one-third of Nigeria’s GDP is conducted using USDT, even though the central bank is very serious about trying to ban cryptocurrencies.”

From my own travel experiences and understanding in several countries with poor currency sovereignty, Nigeria should be a general representation of these countries. Wherever there is high inflation and significant exchange rate fluctuations, it will be the first place impacted by stablecoins, blockchain wallets, and even U cards; administrative measures cannot eliminate this.

However, compared to the previous underground black market, the characteristics of stablecoins and blockchain have significantly increased the difficulty of regulation. Stablecoins will become a “financial version of the Starlink system”—funds can be freely settled without going through the central bank of the country. This is not just a financial reform, but has turned into a tug-of-war between national sovereignty and open markets.

The “monetary sovereignty” of many small countries will be further deprived.

I feel that one of the most exciting dreams during the Defi Summer — the flattening of global finance is gradually becoming a reality.

Imagine a scenario: users from Nigeria, Namibia, the Philippines, and even India, after exchanging their local currency for stablecoins and placing them in their wallets, all chose a DeFi protocol at a certain moment (such as USDe) to enjoy returns that not only did not depreciate but even approached an annualized yield of nearly 10 percent.

What the hell does this feel like? A unified financial world~! Those in asset management, those in stablecoins, those in RWA, those in wallets, are all facing such a huge influx of new blood?

It’s like when we could only make local calls because long-distance was too expensive, and international long-distance was even more unimaginable. Suddenly the internet came, and global communication became possible, even video calls hardly cost anything, communication became flattened, and the communication costs for people around the world rapidly decreased, turning the Earth into an accessible global village.

This is a major transformation, a financial revolution that could change the behavior patterns of a large population on this planet, and we are now on the eve of the revolution.

But greater changes will come from other traditionally stable currency countries, including the United States itself and even China.

After the stablecoin bill is passed, the dollar stablecoin will be legalized, and mainstream finance will enter on a large scale. Banks and payment giants (Visa, PayPal) will directly issue stablecoins (such as PYUSD, USDC bank version), while the current first movers Circle, Paxos, Fidelity, and BlackRock will accelerate the expansion of on-chain dollar business.

I have no doubt that we will see the total market value of stablecoins possibly quickly surpassing 500 billion dollars from the current approximately 160 billion dollars, becoming the main channel for on-chain dollars, while the payment settlement/AI/gaming/DePIN ecosystem based on stablecoins will rapidly become compliant.

With the shift in policies, media exposure, major stablecoin issuers competing for market subsidies, and the president personally promoting products, the number of people holding stablecoins will first achieve significant breakthroughs among developed countries in the United States. The proportion of people with cryptocurrency digital wallets will also increase dramatically, creating a breeding ground for the further explosion of Web3 in the future.

After USDC/USDT complies, it will be launched on more financial apps in various countries, bringing hundreds of millions of new user dividends.

Let’s talk about China again:

Recently, the former and current governors of the People’s Bank of China, Zhou Xiaochuan and Pan Gongsheng, have begun to pay attention to the global impact of the US dollar stablecoin and have publicly discussed it.

Zhou Xiaochuan said: “Stablecoins (especially those pegged to the US dollar) may promote dollarization, posing a threat to economic sovereignty and the independence of monetary policy, and should be included in the category of prudent assessment.”

Pan Gongsheng responded from both practical and regulatory perspectives, indicating that the central bank has included stablecoins in the overall promotion of digital currency and is addressing potential risks through institutional and policy mechanism construction.

Although China’s iron fist has an unusual effect compared to third world countries in terms of controlling its citizens, promoting lockdowns, and financial regulations, it is undeniable that the public’s awareness and demand for stablecoins has been increasing.

Recently, I believe the domestic crackdown on U cards is not unrelated to the demand for financial regulation, after all, the proliferation of US dollar stablecoins directly conflicts with China’s foreign exchange controls.

Currently, the main strategies for dealing with stablecoins in China can be summarized as “blocking”, “relaxing”, and “exchanging”.

1. Block includes
Control the exchanges, OTC venues, and RMB deposit and withdrawal channels, etc., but the effect is limited.

2. The included items
Promote the digital renminbi (e-CNY) as a legal domestic alternative, guiding e-commerce, inbound and outbound scenarios, and port settlement systems to gradually pilot the digital renminbi.
This thing started to be promoted in 2023, and there was a pilot project for cross-border taxi rides/payments between Hong Kong and Shenzhen, but with “strict regulation, low returns, and mainly off-chain,” it basically shouldn’t be able to take off.

3. Exchange includes
Encourage overseas institutions to issue RMB-pegged stablecoins (CNH stablecoin) such as:
HKDC (Hong Kong Monetary Authority Initiative)
MobiDollar (Standard Chartered Bank participation)
Red Date (the overseas version of the Blockchain Service Network BSN)

The essence is to issue coins through a “friendly third party” to achieve the circulation of the Renminbi rather than being directly led by the central bank; it is impossible to open up the mainland directly.

But recently, JD openly stated that it wants to create a stablecoin to reduce the time costs in international settlements, which has made more domestic entrepreneurs start to understand this concept. Let’s observe as we move forward.

Potential opportunities for retail investors:

1. Investment Opportunities

Due to the requirement of 100% US Treasury reserves, stablecoins will become “digital Treasury Bond ETFs,” and US Treasuries will increasingly become the underlying source of returns for stablecoins. Therefore, the annualized yield for users holding stablecoins may rise from 0% to 3-5%, approaching US Treasury yields.

In simple terms, in the future, whether you put U in exchanges, wallets, or Perpdex, most places will offer relatively high-security financial products, similar to Alipay’s Yu’ebao, and the closer it is to US Treasury bonds, the safer it will be.

This is a huge attraction for drawing in outsiders to the coin circle. For example, I asked many retail friends in China, and they are very happy with a 2% return on their investments; they wouldn’t even believe a 5% return.

Now you can earn interest by holding stablecoins, without being restricted by Chinese financial management or bank accounts, without needing to open an account in Hong Kong, and transferring without being hassled by banks. Would you do it?

2. Defi project

Defi OGs all know that Defi is like financial fun/fun stacking, based on the underlying yield of US Treasuries, many tricks can be played to increase stablecoin yields.

Besides the current leader AAVE, other established ones like Ethena, Pendle, and even Frax have the opportunity to benefit.

But I am looking forward to more Defi innovations stimulating the market, including the fixed income projects that were tried in last summer.

New projects mean many opportunities, such as early participation in airdrops/contributing funds to earn coins/becoming a contributor/secondary holding, etc.

3. RWA track

The integration of yield-bearing stablecoins (with interest) and RWA (real-world asset) protocols will become a major trend, with on-chain bonds and asset pools directly supporting stablecoins.

Now even @coinbaseEveryone is trying to directly support on-chain stocks (tokenized stocks), and RWA is really gaining momentum.

RWA series tokens - both old and new have more opportunities compared to other traditional crypto tracks. Currently, what I am most focused on is $ONDO $PlumeI also feel good about the new one, I will update it later.

Final summary:

The compliance of stablecoins is a significant event for the reconciliation/integration of cryptocurrency with the real world, which may affect the lives of hundreds of millions of ordinary people. There are also huge opportunities contained within this, and the unexpected rise of $CRCL beyond the expectations of the crypto community is just one indication.

We may have stayed too long in the small web3 world, failing to place ourselves in a larger pond, a bigger stage to assess the expectations and FOMO of outsiders regarding a financial innovation (myself included, as I have only seen a maximum of 100).

But let’s seize more opportunities together, the new world has just begun.

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