We all know that Trump's political stage is never short of drama, and his attitude towards cryptocurrencies is even more so. From his early criticism of Bitcoin, calling it a "scam based on air", to his later attempts at NFT projects, the issuance of the Defi project World Liberty Financial (WLF), and the bold idea of incorporating Bitcoin into the national strategic reserve.From the successful strategic land purchases in American history to Bitcoin reserves: the forward-looking conception of the 2025 Bitcoin Strategic Reserve Draft”, his behavior reflects the drive for personal interests and also serves as a metaphor for the complex position of the encryption industry in the American political system.
Although the new regulations are still a year or two away from taking effect, and there is also considerable controversy over the definition of "broker", after all, the old set of regulatory policies cannot be so rigidly applied to crypto projects, so they may also be overturned. However, Aiying would like to discuss with you today from several dimensions the historical inevitability of the introduction of the new regulations, as well as how industry practitioners should make strategic choices.
Part I: The logical evolution from traditional colonization to new financial colonization
1.1 The resource logic of traditional colonization
The core of the traditional colonial era was to plunder resources through military force and territorial possession. Britain controlled India's cotton and tea through the East India Company, and Spain plundered gold from Latin America. These are typical examples of wealth transfer through direct possession of resources.
1.2 Modern Model of Financial Colonization
Modern colonialism is centered on economic rules, and wealth transfer is achieved through capital flows and tax controls. The United States' Foreign Account Tax Compliance Act (FATCA) is an important manifestation of this logic. It requires global financial institutions to disclose asset information of American citizens and forces other countries to participate in the United States' tax governance. The new DeFi tax rules are the continuation of this model in the field of digital assets. Its core is to use technical means and rules to force global capital transparency, obtain more tax revenue for the United States, and strengthen its control over the global economy.
Part II: America’s New Colonial Tool
2.1 Tax rules: from FATCA to new DeFi rules
Tax rules are the foundation of the US's new colonial model. FATCA has set a precedent for the weaponization of taxation by forcing global financial institutions to disclose the assets of US citizens. The new DeFi tax rules further extend this logic, expanding the US's control over the digital economy by requiring DeFi platforms to collect and report users' transaction data. With the implementation of this rule, the US will obtain more accurate capital flow data worldwide, thereby further strengthening its control over the global economy.
2.2 Combination of Technology and the US Dollar: The Dominance of Stablecoins
In the $2000 billion stablecoin market, US dollar stablecoins account for more than 95%, and the anchor assets behind them are mainly US Treasury bonds and US dollar reserves.USDTThe US dollar stablecoin represented by BTC and USDC, through its application in the global payment system, not only consolidates the global status of the US dollar, but also locks more international capital into the US financial system. This is a new form of US dollar hegemony in the digital economy era.
2.3 Attractiveness of financial products:Bitcoin ETFTrust products
Bitcoin ETFs and trust products launched by Wall Street giants such as BlackRock have attracted a large amount of international capital to flow into the U.S. market through legalization and institutionalization. These financial products not only provide greater enforcement space for U.S. tax rules, but also further integrate global investors into the U.S. economic ecosystem. The current market size is $1000 billion.
2.4 Tokenization of Real Assets (RWA）
Tokenization of real assets is becoming an important trend in the DeFi field. According to Aiying, the scale of U.S. Treasury bond tokenization has reached 40 billion U.S. dollars.Blockchain TechnologyIt has improved the liquidity of traditional assets and created new dominance for the United States in the global capital market. By controlling the RWA ecosystem, the United States can further promote the global circulation of national debt.
Part III: Economy and Finance—Deficit Pressure and Tax Fairness
2.1 US Deficit Crisis and Tax Loopholes
The US federal deficit has never been as worrying as it is now. In fiscal year 2023, the deficit is close to $1.7 trillion, and post-epidemic fiscal stimulus and infrastructure investment have exacerbated this burden. At the same time, the global market value of the cryptocurrency market once exceeded $3 trillion, but most of it is outside the tax system. This is obviously intolerable for a modern country that relies on tax support.
Taxation is the cornerstone of state power. Historically, the United States has always sought to expand its tax base under deficit pressure.Hedge FundRegulatory reform is the poster child for plugging fiscal gaps by expanding the coverage of capital gains taxes, and now cryptocurrencies have become the latest target.
2.2 Financial sovereignty and the defense of the US dollar
But this is not just a tax issue. The rise of DeFi and stablecoins challenges the dollar's dominance in the global payment system. Although stablecoins are an extension of the dollar, by anchoring the dollar, they create a parallel "private currency" system, but they also bypass the control of the Federal Reserve and traditional banks. The US government realizes that this decentralized form of currency may pose a long-term threat to its financial sovereignty.
Through tax supervision, the United States not only intends to obtain financial benefits, but also tries to re-establish its control over capital flows and defend the hegemony of the US dollar.
Part 4: Industry Perspective—Practitioners’ Choices and Trade-offs
3.1 Assessment of the Importance of the US Market
As a DeFi project practitioner, the first step is to rationally evaluate the strategic value of the U.S. market to the business. If the platform's main trading volume and user base come from the U.S. market, then withdrawing from the U.S. may mean huge losses. If the U.S. market does not account for a high proportion, then a complete withdrawal becomes a viable option.
3.2 Three major response strategies
- Partial compliance: a middle path
- Establish a US subsidiary (such as Uniswap.US) to focus on meeting the compliance needs of US users.
- Separate the protocol from the front end and reduce legal risks through DAO or other community management methods.
- Introduce a KYC mechanism to report only necessary information for US users.
- Complete Exit: Focus on Global Markets
- Implement geo-blocking to restrict access to US users by IP.
- Focus resources on markets that are more friendly to cryptocurrencies, such as Asia Pacific, the Middle East, and Europe.
- Complete decentralization: adherence to technology and philosophy
- Abandon front-end services and completely shift the platform to protocol autonomy.
- Develop trustless compliance tools (such as on-chain tax reporting systems) to technically circumvent regulation.
You can also refer to Aiying’s previous articles:
- [Revelation] The court ruled that Lido DAO is a partnership: Legal challenges and compliance paths for Web3 decentralized governance
- [Case Study] MyTrade pleads guilty to market manipulation. How do cryptocurrency market makers respond to legal challenges?
- [Case Revelation] The key strategy behind the Defi project Bancor lawsuit, how do Web3 projects circumvent US jurisdiction?
Part 5: Further Thinking - The Future Game between Regulation and Freedom
4.1 Evolution of legislation and long-term trends
In the short term, the industry may delay the implementation of the rules through litigation. But in the long run, the trend of compliance is difficult to reverse. Regulation will lead to polarization in the DeFi industry: one end is fully compliant large platforms, and the other end is small decentralized projects that choose to operate in secret.
The United States may also adjust its policies under the pressure of global competition. If other countries (such as Singapore and the United Arab Emirates) adopt more relaxed regulations on cryptocurrencies, the United States may relax certain restrictions to attract innovators.
4.2 Philosophical Reflections on Freedom and Control
The core of DeFi is freedom, while the core of the government is control. There is no end to this game. Perhaps the future crypto industry will exist in a form of "compliant decentralization": technological innovation and regulatory compromise coexist, and privacy protection and transparency move forward alternately.
Aiying Conclusion: Historical Inevitability and Industry Choice
This bill is not an isolated incident, but an inevitable result of the development of American political, economic and cultural logic. For the DeFi industry, this is a challenge and an opportunity for transformation. At this historical juncture, how to balance compliance and innovation, protect freedom and bear responsibility is a question that every practitioner must answer.
The future of the encryption industry depends not only on technological progress, but also on how it finds its place between freedom and rules.