Recently, many readers have noticed that the first major exchange has entered the US stock trading market, and there is considerable interest in the impact this event may have on the crypto ecosystem and users.

First, let me respond to a reader's comment:

When I refer to the third major exchange, I mean H; I stopped using these three major exchanges a long time ago. In fact, I haven't used any exchange for quite a while. However, when they release new things or products, I still pay attention, but I don't participate.

Regarding the first major exchange entering the US stock market, many people initially feel excited, but my first feeling is complicated.

Before sharing my feelings, let me talk about the potential impact this may have on the exchanges:

- It is favorable for the exchange's platform tokens;

- It helps exchanges attract more traffic;

But I believe what most people care about is the impact this may have on the participants.

From this perspective, my feelings are indeed complicated.

Why?

Because very few media outlets mention the risks for participants in this matter.

The root of this risk lies in the exchange's KYC mechanisms.

In today's exceedingly complex environment, failing to clearly understand the risks for participants, once caught in trouble, it will no longer be a matter of making or losing money, but whether one can avoid severe repercussions.

Let's state a common knowledge:

Many European and Asian countries allow their citizens to trade foreign stocks on exchanges as long as the exchange is legally registered in their country and the trader has completed KYC in their country; everything else is largely left to them.

However, in certain regions, due to restrictions on the free exchange of currency, all external financial activities are strictly limited.

Recently, some regions have implemented extremely strict capital control measures, such as prohibiting exchanges from other regions from attracting local residents to buy and sell US stocks, and strictly regulating local individuals' investments abroad, along with clear punitive regulations and measures.

With regulations clarified and rules issued, the guillotine is hanging overhead.

As long as one gets involved, when and how controls will be implemented is just a matter of time.

Even minor transgressions could lead to severe consequences, and larger transactions could potentially be fatal.

What kind of users' "urgent needs" does this operation by the first major exchange satisfy?

Is it the residents of European and Asian countries that already have the ability to freely buy and sell US stocks?

Clearly not.

I do not deny that in those countries, there may indeed be some users who find it troublesome to buy and sell US stocks using fiat currency through their local legal exchanges, and instead, find it more convenient to trade US stocks using stablecoins.

However, that portion of users is probably not the majority.

Who really makes up this significant demand?

It is those users in regions where the currency cannot circulate freely, and the avenues for external capital are strictly controlled, yet who are urgently looking for investment opportunities abroad.

These users originally traded US stocks through certain institutions in the world’s financial centers, but now due to the rollout of regulatory measures, heavy blows have been dealt to the institutions that used to serve those users, leaving them no choice but to seek other avenues for their capital.

Thus, the first major exchange has opened its arms.

But the question is:

Since regulatory agencies can deliver heavy blows to institutions providing US stock trading in financial centers, could there be a day when they will also strike hard against the first major exchange?

Of course, it's possible.

The continuous rollout of measures by regulators at this time is not without reason.

And now that the major exchange is boldly undertaking this large operation, it is openly competing with regulators for user funds.

That is essentially betting on whose fist is harder in the end.

When gods fight, it is always the small ones who suffer.

Some may say that these fleeing funds have already registered for KYC compliance through other means at major exchanges, so they won't trigger regulations.

I think this underestimates the regulators—regulators are aware, they just haven’t been very strict in the past.

But times have changed, and in such a sensitive environment, it's impossible for regulators to continue allowing funds to flow out in this manner.

If not, why have we begun to see a series of measures and regulations being implemented, along with concrete actions tightening the outflow of various funds?

Therefore, it's best not to harbor such a mentality of luck.

Unless these funds are truly not tax residents of a certain region legally.

Let’s speculate, on the day when heavy blows are struck against the major exchange, how might the exchange react?

The possible actions can be roughly three:

- Ignore it, and directly fight back;

- On the surface, appear righteous, but in practice, cooperate honestly with regulators and drive away these traders;

- Even more, to ease relationships with regulators and appease their sentiments, they may privately submit a full list of some traders to regulators—leaving a line for future meetings.

According to past history and experience, readers can guess what the major exchange might do.

Here, I will attempt to analyze the second action.

This action, in the past, would have meant that those fleeing funds would simply find other channels and continue to wander. But now, facing such harsh regulations, I estimate it would be difficult for these funds to escape again; once caught, the consequences would be much more severe.

Therefore, for the first major exchange's entry into US stocks, ordinary users should consider the risks involved and think clearly about the consequences and risks before planning their actions.

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