Original Title: "How Cryptocurrency Concept Stocks Reshape the Global Financial Landscape - Space Review"
Original Source: Waterdrip Capital
On July 3, Waterdrip Capital, in collaboration with BlockBeats, Victory Securities, Huobi Research Institute, and data mover Phyrex Ni, held a high-quality X Space discussion on the phenomenon of the rise of "cryptocurrency concept stocks." Below are the core viewpoints from the event.
01 What are "Cryptocurrency Concept Stocks"? Why are they worth attention now?
"Cryptocurrency concept stocks" are not a new concept, but with companies related to cryptocurrency, such as Circle, accelerating their listings, market attention has significantly increased.
Dashan, a partner at Waterdrip Capital, stated that he was exposed to the cryptocurrency stock track as early as 2023 through research on Hong Kong-listed Boya Interactive and US-listed MicroStrategy. Dashan pointed out, "The premium offered by the stock market is far higher than that of the cryptocurrency circle itself, making cryptocurrency concept stocks a 'new high ground for liquidity outside the cryptocurrency circle'." Currently, Waterdrip Capital has invested in 5 listed cryptocurrency concept stock companies, with a goal to expand to 15 by the end of the year.
Paolo, an ecological partner at Victory Securities, categorized cryptocurrency concept stocks into three major sectors: "coin-chain-exchange," corresponding to stablecoins (like Circle), public chains (like ETH, SOL), and trading platforms (like Coinbase, Robinhood). He believes Coinbase is a typical strong-cycle trading platform, exhibiting a "Davis double-click" effect, where trading activity and valuation multiples rise together in a bull market. He added, "Robinhood is a bridge for Web2 users to enter Crypto and is also promoting the on-chain transformation of US stocks."
Data mover Phyrex Ni recalled that after BlackRock applied for a spot BTC ETF in 2023, COIN and MSTR became barometers for judging whether the ETF would be approved. Although BTC price fluctuations were minimal, market buying power for both significantly increased, prompting him to start increasing his positions. "ETFs are the entry point for traditional institutions to allocate to crypto, and cryptocurrency concept stocks are their preferred channel." Phyrex continues to monitor Circle and Robinhood, believing that as valuations decline, there will be opportunities to re-enter.
Chloe, head of Huobi Research Institute, based on her own research and trading experience, pointed out that the early optimism for Coinbase stemmed from its high compliance business stickiness on the B-side, which has shown stable growth even in bear markets, maximizing returns for a large number of dollar VCs at the time of listing, creating a paradigm effect.
02 What drives the "Cryptocurrency Concept Stock Boom"?
From an external perspective, three forces constitute the main driving force:
First, the policy turning point is clear. The departure of SEC Chairman Gensler is seen as an important turning point for the loosening of regulations on cryptocurrency stock listings. Dashan mentioned that the SEC had long been backlogged with over 100 IPO applications from cryptocurrency companies. After Gensler's departure, companies like Circle, Kraken, and Fireblocks have restarted their listing processes, creating a "thick accumulation and thin release" effect.
Second, incremental capital is entering the market. It is estimated that the combined pre-IPO valuation of these companies has exceeded $100 billion. If calculated at a 10% financing ratio, at least $10 billion in real capital will flow into the cryptocurrency concept stock market. Institutional investors often enter first, subsequently driving retail investors, forming a "capital + liquidity" dual-driven model.
Third, the comparative advantage of listing channels. According to Paolo and Chloe, compared to the valuation chaos, exit difficulties, and lack of retail protection mechanisms in the cryptocurrency circle, the IPO mechanism in the US stock market is clear, with transparent valuations and complete regulations, making it the preferred exit method for many leading projects and attracting the attention of traditional VCs and hedge funds.
From the perspective of the cryptocurrency industry itself, the evolution within the cryptocurrency circle has also become an important internal factor:
First, the intensification of competition and the bad money effect. Both Dashan and Paolo pointed out that in recent years, VCs and trading platforms have tended to bet on token projects with inflated FDV valuations and extremely long cash-out cycles, leading to a scarcity of quality assets and a decline in retail investor returns, with the market gradually leaning towards irrational speculation on meme coins. In contrast, cryptocurrency concept stocks, due to their scarcity and clear regulations, are more likely to attract capital and create wealth effects.
Second, the structural transfer of discourse power. Dashan mentioned what Kraken Co-CEO Arjun Sethi said about the "Trojan horse moment" in the cryptocurrency industry—an increasing amount of traditional financial liquidity and assets are beginning to migrate on-chain, with the Web3 camp influencing stock prices through on-chain assets, gradually gaining discourse power in a highly regulated market. This means that the integration of "on-chain assets + traditional valuation systems" is shaping a new investment paradigm.
Finally, Chloe added that the participation threshold in the US stock market is relatively low, with diverse exit paths, making it more friendly to both primary funds and retail investors. The wealth effect brought by Coinbase's listing is still a reference model in the industry, while the rise in OTC premiums for projects like Circle further confirms the continuity of this trend.
03 From Token Issuance to Listing, Will Cryptocurrency Projects Move Towards a "Dual-Track System"?
As more cryptocurrency projects face the path choice of "issuing tokens or listing" in the primary market, and with brokerages and state-owned enterprises pouring into the cryptocurrency concept stock field, the market is beginning to pay attention: Are cryptocurrency companies moving towards a "dual-track system" of token issuance and listing? How will the mainstream exit methods evolve in the future? Several guests provided in-depth analysis from the dimensions of regulation, cost, valuation, and market structure.
First, token issuance and listing are no longer "either-or"; more and more projects will "walk on two legs."
Phyrex Ni recalled the Coinbase listing case, noting that in the proposal submitted to the SEC at that time, there was already a "dual-path" option: either IPO or IPO + token issuance simultaneously, and the regulators did not express any objections, ultimately it was Coinbase that chose "not to issue tokens for now." This indicates that "issuing tokens after listing" or "listing after issuing tokens" is not a rigid regulatory constraint. Coinbase has recently hinted that it may issue a native token on the Base chain in the future, further signaling this possibility. Phyrex emphasized that while tokens and stocks cannot be equivalently bound, their underlying value can be reflected in incentives, trading liquidity, and the company's fundamentals, forming a complementarity for project parties.
Chloe also stated that many projects are trying to return tokens to their essence as community incentive tools while viewing the stock market as a financing outlet with higher liquidity and valuation. For example, companies can issue tokens to distribute points and provide trading incentives while achieving equity financing exits; VCs can also cash out their financing commitments through more liquid trading platforms.
Second, cost and valuation inversion lead more projects to prefer "abandoning token issuance and opting for listing."
Currently, the cost of listing on leading trading platforms remains high, and top projects often need to give up a large number of tokens as Launchpad costs. Once these tokens enter the market, project parties must buy them back, creating significant financial pressure. In contrast, under the US stock registration system, the costs of mergers or reverse mergers are more controllable, often completed for several million dollars. This is more cost-effective for projects valued at $10 million to $20 million. Dashan bluntly stated, "Some projects, after comparing valuation and costs, are more inclined to take the traditional capital market route." In the trend of increasing marketization of financing efficiency and exit paths, the choice of which route to take essentially depends on capital costs and liquidity performance.
Third, brokerages and traditional institutions are entering the market in large numbers, promoting the establishment of "dual-track system" infrastructure.
Paolo cited Robinhood as an example, pointing out that it has accurately grasped the nodes of the cryptocurrency surge across multiple cycles, significantly increasing revenue by supporting the trading of assets like Dogecoin—this year, cryptocurrency trading revenue has even surpassed that of the stock segment. Robinhood's future three-step strategy (supporting crypto deposits → 24-hour trading of stock RWA → full on-chain integration) is driving the integration of cryptocurrency and traditional asset trading infrastructure.
On the other hand, Chinese brokerages like Guotai Junan International have obtained relevant licenses, and other brokerages are actively applying or collaborating to lay out compliant trading and new asset allocation services. Paolo noted, "Even though the senior management of brokerages is still quickly catching up, the business teams have already fully sensed the trend and are beginning to enter the market substantively."
Fourth, the role transformation of project parties: shifting from a trading platform orientation to exploring multiple paths.
In the past, project parties would give up a large number of tokens to go live on trading platforms, even cutting development budgets to meet market maker requirements. Now, Chloe mentioned that the token issuance process often requires reserving several million dollars in chips, covering user airdrops, trading platform listings, market-making arrangements, etc., with financing thresholds continuously rising. Choosing to list on the US stock market allows for financing and exit through the equity system and clear compliance framework. For projects with strong capital reserves and clear strategic planning, synchronously laying out token incentives and equity exits may become the mainstream model.
04 Traditional Brokerages and State-Owned Institutions Fully Enter the Market
Paolo, an ecological partner at Victory Securities, pointed out that in the past month, Chinese brokerages, including Guotai Junan International and Futu, have successively obtained licenses related to virtual assets. "It is not an exaggeration to say that we have hosted dozens of brokerages for cooperation discussions within a week." Hong Kong stock brokerages are accelerating their entry and intensifying their layout:
· Seizing entry qualifications: From applying for VASP licenses, compliance path consulting, to deploying new asset trading categories like RWA and stablecoins, the pace is tight;
· Connecting underlying systems: Many brokerages are accessing trading platforms like VDX through a B2B model, building an "integrated asset allocation channel for cryptocurrency concept stocks";
· Upgrading user experience: Brokerages with a large number of Web2 users and AUM are beginning to explore the feasibility of combining traditional structured strategies (like snowballs, shark fins) with BTC and other cryptocurrency assets as an attempt to expand cryptocurrency asset allocation methods.
· Paolo emphasized: "Even though the senior management of brokerages is still quickly catching up, the business teams have already fully sensed the trend and are beginning to enter the market substantively."
05 Conclusion: This is the beginning of a new narrative
If the core narrative of the last bull market was Bitcoin, Ethereum, and the "token economy," then in this cycle, "cryptocurrency concept stocks" are rising as a new paradigm connecting the cryptocurrency world and traditional finance. They not only break down the three barriers of regulatory trust, liquidity, and exit mechanisms but also open a growth channel for project parties, investors, and institutions that runs parallel to compliance and innovation. The cryptocurrency world is no longer an isolated island on the fringes of the financial system but is gradually integrating into and even reshaping the underlying architecture of global finance—this is not only a shift in cycles but also a reconstruction of narratives and an evolution of paradigms.
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