The trend of the United States embracing the crypto economy is irreversible

On the eve of Thanksgiving, Uweb, Asia's largest digital asset education institution, organized a study tour group to New York, and I was fortunate to be invited to participate, gaining immense insights. New York is undoubtedly the center of global capitalism and finance, and it is now becoming the center of the crypto economy. Therefore, even though the week-long itinerary was packed, I still felt it was not enough. This trip to New York coincided with several significant events: first, the longest government shutdown in U.S. history had just ended, and the AI industry faced widespread skepticism about its market value, leading to a phase of correction. During our time in New York, there was also a sudden crash in the crypto asset market, dropping over 10% overnight. Thus, at this intersection of money and information on Wall Street, we were exposed to a wealth of information. There was much I could write about, but given the tightening of domestic policies on digital assets and that the main readership of this public account is in China, I will omit some sensational details and focus on summarizing the viewpoints. Although the viewpoints are summarized by me, they come from various experts and mentors, who should be named and thanked. However, due to the sensitivity of public opinion on Chinese online platforms, some names will be omitted to avoid unnecessary trouble for others. I hope everyone understands.

I have summarized nine viewpoints, which will be published in two parts.

1. The U.S. economy is caught in a dilemma between stimulating growth and curbing inflation

The current U.S. attitude towards the crypto economy is to first "Americanize" it, so discussions about the crypto economy cannot be separated from an understanding of the overall U.S. economy.

During this study tour, we invited two economists to provide a comprehensive analysis of the U.S. economic situation, and their views were quite consistent. They both believe that the current U.S. economy presents a structural contrast. From the overall data, economic growth is strong, and inflation is stable, which is quite good. However, under closer scrutiny, growth is almost entirely driven by AI investments, with severe structural inflation. Excluding AI-related sectors, the economy is close to zero growth. The "return of manufacturing" actively promoted by Trump can optimistically be said to be "still laying the foundation," with no actual results seen yet. Although the overall CPI data looks good, inflation in the service sector is severe, especially with property insurance prices set to surge in 2025, and issues like tipping, long criticized, have not only failed to improve but have worsened. Coupled with the difficulty of employment for this year's graduates, the public's experience does not reflect the economic prosperity felt in the early part of Trump's first term. Economists describe the current U.S. economy as "K-shaped growth"—departments related to AI are rapidly developing, while the circumstances of the lower and middle classes continue to decline.

Americans are not like Chinese people. Chinese people do not care much about their personal well-being; they can be excited about beautiful macroeconomic data and passionately discuss abstract topics like whether China can "defeat the West" in technological competition, showing a sense of selflessness. However, during our visit to New York, we observed that Americans are not as elevated; even Wall Street elites are more concerned about their day-to-day lives rather than winning or losing. Therefore, attractive numbers do not matter; Americans are actually quite vocal in their complaints. If this situation continues, the Republican Party may lose at least one chamber in next year's midterm elections.

Economists also see this situation but have differing opinions on how to handle it. Some believe that interest rates must not be lowered in December, while others think that lowering rates to stimulate the economy should take priority. In one setting, I asserted that Powell would not compromise and therefore would not lower rates in the near future, but another seasoned financial expert believed that the Federal Reserve would buckle under pressure and definitely lower rates. Unexpectedly, our differing views were reconciled in an unexpected way: reports surfaced that Powell would retire four months early in January, and the new chair appointed by Trump would quickly push for rate cuts. In this way, the hard-nosed chair Powell preserved his integrity, while the domineering President Trump achieved his goal, resulting in a win-win situation.

Thus, although there was a crash in the crypto asset market during our time in New York, leading to widespread lamentations about the arrival of a bear market, I remain bullish about the future. However, given the current situation in the U.S., once rates are lowered, inflation is likely to rise immediately. How long can this liquidity feast last?

2. AI is the sole driver of U.S. growth

The U.S. GDP grew by 4.1% in the third quarter, with growth related to AI accounting for 4.0%. The U.S. economy is almost entirely reliant on AI. Moreover, in VC investments, there has emerged a trend of "no investment without AI." It is clear to anyone that this situation is unsustainable and should be viewed as an extreme case in the current AI boom, but it also reflects the role AI plays in the current U.S. economic growth.

Before our study tour in New York, the AI stock market experienced a decline, with AI benchmark stock Nvidia dropping over 10% from its peak, and Oracle even falling over 30%. Therefore, on Wall Street, the bubble in AI investments is a hot topic. When I visited Silicon Valley in August, the VCs there were largely in firm denial about the AI bubble theory. However, in November on Wall Street, opinions differed, reflecting the contrasting attitudes of innovative thinking and financial thinking.

Most on Wall Street believe that the current U.S. AI infrastructure investments are financially unhealthy, meaning that the money invested in AI data centers is not a worthwhile investment. Some pointed out that the impressive financial statements of companies like Nvidia ultimately rely on orders from companies like OpenAI, which have promised $1.4 trillion in orders but can only generate less than $20 billion in revenue. Wall Street analysts are calculating the numbers and find this doesn't add up.

But does this mean there is a bubble in AI? Even on Wall Street, opinions vary. Some believe there is a bubble financially because the entire AI industry's revenue is weak, making it difficult to even pay interest on investments. However, others are optimistic, believing that AI applications are rapidly expanding and will soon provide a strong boost to U.S. economic growth. Some even argue that AI applications are driving rapid innovation in areas such as small-scale nuclear power, hydrogen energy, aerospace technology, robotics, and 6G, potentially enabling U.S. economic growth at a rate of 10% in the 2030s. If this is the case, current investments in the AI industry, even if they show short-term financial losses, are entirely worthwhile. After the investment phase, the market will automatically adjust prices, allowing investors to profit in the long run.

This perspective is not unfamiliar to Chinese people. China's high-speed rail, from a financial perspective, has long been a massive loss, but many believe it has propelled the overall growth of China's economy and industrial level, making it worthwhile to endure some losses in the short term. There are similar voices within the U.S. During our time in New York, Trump signed an executive order to launch the Genesis Mission, emulating the Manhattan Project to use government resources to promote AI development, which reflects this line of thinking.

3. Although there are still debates, the trend of the U.S. embracing the crypto economy is irreversible

One important purpose of our trip to New York was to observe Wall Street's attitude towards the crypto economy. Over the past decade, Wall Street has generally been anti-crypto. After nearly a year of relentless promotion by the Trump administration, has their attitude changed?

From my observations, a shift is occurring, roughly at 10-20%.

First, if anyone claims that Wall Street is now wholeheartedly embracing the crypto economy, that would be misleading. Wall Street is still Wall Street; it has been built over hundreds of years, creating the world's most advanced, complete, and prosperous financial ecosystem, enjoying the wealth and power that comes with it. They are satisfied with the status quo and are unlikely to be as excited as tech geeks about a technology that claims to disrupt, or at least transform, the financial infrastructure centered around them. Within Wall Street, JPMorgan is a major representative of the anti-crypto movement. Unverified market rumors suggest that the crash in the crypto market on November 20 was related to JPMorgan's targeting of MicroStrategy. Regardless of the reliability of this claim, there remains a strong stubborn force on Wall Street that refuses to accept and opposes crypto, which is undeniable.

However, a shift is happening. Wall Street traders and fund managers have long been highly attentive to and involved in the crypto market, but the key is still the attitude of institutions. Wall Street institutions are not a monolith; from banks to asset management, from investment banks to brokerages, from exchanges to hedge funds, different ecological niches lead to different perspectives on crypto.

At least from the perspective of some institutions, blockchain technology can help them solve two problems:

First, it can enable financial businesses to operate globally through blockchain. Especially in the context of de-globalization, blockchain can penetrate the regulatory barriers of countries with poor governance, allowing Wall Street to continue expanding its business. In this sense, the higher the financial barriers in other countries and the more blocked traditional channels are, the greater the appeal of on-chain finance to Wall Street.

Second, it attracts young people. In recent years, one issue that has caused Wall Street considerable headaches is that young people who grew up in the internet age are increasingly impatient with Wall Street's outdated and cumbersome service models, preferring to trade cryptocurrencies instead. If financial services can be built on blockchain, it could attract young people back.

Therefore, more and more institutions on Wall Street are beginning to consider blockchain, with RWA and DeFi being the current focal points of their attention. A senior investment banking expert on Wall Street told me that the Jewish community on Wall Street is already "itching to get started," which is an important signal that cannot be ignored.

However, if we only look at Wall Street, I do not believe the situation has reached an irreversible stage. If we imagine that the next U.S. government were to comprehensively suppress the crypto economy like during the Biden administration, would Wall Street return to square one? At least for now, Wall Street has not invested much in crypto, so it could easily backtrack.

However, if we broaden our perspective to the overall U.S., we can conclude that the process of the U.S. embracing the crypto economy is irreversible.

During this study tour, we encountered a family fund manager from a prominent Democratic figure, who told us that Democratic leaders have recognized that crypto is the choice of young people. During the Biden administration, in an effort to appease the stubborn forces on Wall Street, the Democratic Party ruthlessly suppressed the crypto economy, alienating young people, which is an undeniable reason for the Democratic Party's potential loss in the 2024 election. In today's American politics, the political inclinations of middle-aged and older individuals have been established, and winning the votes of young people is decisive for both parties. Therefore, even if the next Democratic administration comes to power, it will not reverse its crypto policies. She also revealed that this family fund has made significant allocations to crypto assets.

At the same time, some economists and central bankers we interacted with also cast votes of approval for the crypto economy from another perspective. One economist told us that according to their research, since the passage of the Stablecoin Act in July 2025, the global usage rate of the dollar has increased, indicating that stablecoins have indeed strengthened the dollar's position as expected. This serves as a strong incentive for congressional legislators, which is why Congress is actively pushing for the passage of the Market Structure Act.

In summary, my viewpoint is that the consensus among U.S. policymakers to embrace the crypto economy is strengthening and expanding. In this context, Wall Street will also move forward in line with the trend.

4. The primary scenarios for stablecoin payments are in the B-end, not the C-end

I remember that before the passage of the Stablecoin Act in July this year, there was a general optimistic expectation within the crypto community. Including myself, many had envisioned that once the stablecoin law was enacted, dozens or even hundreds of major U.S. companies would issue dollar stablecoins, leading ordinary consumers to start using stablecoins in large numbers. Especially major internet companies, issuing stablecoins to enhance their network economic effects, seemed like a very reasonable expectation.

But none of this has happened, at least not yet. While the issuance of stablecoins has steadily increased, there has not been a significant trend towards diffusion in e-commerce or offline application scenarios. Why is this?

We discussed this with some senior experts in the banking and internet payment industries in New York and reached a shocking conclusion: for a considerable period, the landing scenarios for stablecoins in real payment will be concentrated in the B-end, primarily between institutions, rather than in the C-end.

The reason this conclusion is shocking is that within the crypto industry, a large number of entrepreneurs and researchers firmly believe that the advantages of stablecoins—instant global transactions, integrated payment and settlement, and ultra-low fees—provide overwhelming competitive advantages over traditional bank and internet transfers. Therefore, once stablecoins are promoted, they will quickly dominate the market in retail and e-commerce C-end daily payment scenarios. Many investment institutions and entrepreneurs have invested significant resources in stablecoin payment tools, hoping to seize the opportunity. However, in recent months, some stablecoin payment products with unique technology and cost advantages have encountered enormous resistance in promotion, or have simply failed to gain traction.

A leading expert in global electronic and internet payments analyzed the reasons behind this. He explained that the total global stablecoin payment volume in 2024 is projected to be $46 trillion, which sounds large, but $37 trillion of that is actually programmatic trading by robots on chains and exchanges. Of the remaining $9 trillion, the vast majority still occurs in on-chain asset trading and transfer, with real payment scenarios almost negligible. Why? Because stablecoins do not have advantages in everyday payments compared to credit cards and internet payments.

This expert stated that advocates of stablecoin payments mistakenly believe that they can defeat traditional electronic payments simply by leveraging a fee advantage of 1% to 3%. This is a complete arrogance and delusion. The traditional electronic payment system has established a complete trust loop and ecosystem, possessing strong network effect advantages, and offers a better user experience than the current mainstream stablecoin payment tools. Whether it is users of WeChat and Alipay in China or VISA users in the U.S., the payment experience is already quite perfect. In a sense, the fees charged by VISA are the premium of its network effects. Stablecoins find it difficult to penetrate this moat.

So where do stablecoins have opportunities? This expert believes that the advantage of stablecoins lies not in speed and low cost, but in the programmability afforded by smart contracts. By programming stablecoins through smart contracts, structured and conditional payments can be achieved, such as proportionally paying multiple recipients upon receipt of funds, similar to the third-party guarantee payments of Alipay. Such structured payments based on contractual conditions are extremely common in inter-institutional payments, and this is where stablecoins can truly shine.

Therefore, he believes that the current innovation and entrepreneurial direction in the stablecoin industry has "gone off track," neglecting its true advantages and the real needs of users while challenging an opponent it has no chance of defeating, which is bound to lead to an unoptimistic outcome. The stablecoin industry should immediately focus on B-end scenarios and leverage the advantages of smart contracts, as this represents the dimensional advantage of stablecoins over traditional payments.

This perspective was enlightening for me, as we have been collaborating with the Monetary Authority of Singapore on stablecoin cross-border trade payment experiments for the past few years, discovering that all scenarios are B2B, and the anticipated C-end scenarios have not materialized. This led me to think that if the primary scenario for stablecoin payments is B2B, then enterprise-level wallets and enterprise-level account management systems become a weak link. This seems to be where innovation should be focused.

5. Wall Street's confidence is seizing the dominant power in crypto finance, but two orders will coexist and interact in the long term

If you are an overseas Chinese Twitter user, it won't take long to observe the overseas Chinese crypto community and you will get the impression that the center of the crypto economy is in Dubai and Singapore. However, this impression may be misleading, as the focus of the crypto world is shifting towards New York.

During our week in New York, nearly all the Wall Street experts we interacted with expressed the same judgment: the crypto economy is transitioning from the era of retail investors to the era of institutional investors. In their view, this transformation is both an inevitable trend of market development and a signal of the re-emergence of U.S. institutional power. Once we enter the institutional era, the global center of the crypto economy will inevitably return to the U.S., especially New York and Miami. The former is the center of capital, regulation, and compliance, while the latter, with its open tax system, innovative policies, and vibrant entrepreneurial atmosphere, has become the most active testing ground for the integration of crypto and the real economy. Their reasoning is simple: Wall Street has advantages in capital scale, institutional strength, and talent, while the overall size of the crypto world is still too small; the entire industry is not even as large as a single stock on Wall Street. In the face of a genuine capital flood and regulatory restructuring, the so-called "decentralized finance" may only be decentralized in a relative sense.

In the view of these experts, the ongoing compliance system construction in the U.S.—whether it is the Stablecoin Act, the Market Structure Act, or future regulations on crypto securities, custody, and trading—does not aim to regulate retail investors or stifle innovation, but rather to issue a "Westward Expansion" license to Wall Street. Once the institutional framework is established, institutional capital can enter the market on a large scale under legal protection, gaining control over pricing, discourse, and liquidity. From that moment on, the rules, benchmarks, and even the ecological landscape of the crypto market will be reshaped, with Wall Street at the core of this transformation.

However, this does not mean that Asia's offshore crypto ecosystem will disappear. On the contrary, Dubai, Singapore, and Hong Kong will continue to be important footholds for global crypto innovation. They provide the flexibility brought by regulatory gray areas, cultural inclusivity, and entrepreneurial spirit—elements that the U.S. system cannot fully replace. Therefore, the future global crypto landscape will present a state of "dual systems coexisting." New York represents the institutionalized, financialized, and dollarized mainstream onshore crypto economic ecosystem, while the Asian offshore ecosystem represents an alternative system of openness, experimentation, and cross-border collaboration. The two will interact in the long term, but with clear distinctions in their roles.

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