On the Eve of the Great Transformation of Stablecoins: The Accelerated Wave and Possible Opportunities of Stablecoins Caused by the Rise of Circle --The full text is 3069 words, and it will take 6 minutes to read. All of it will be typed by hand. If you have any gains, please like, comment, save, and forward. Thank you. If the most inspiring topic for global financial professionals to discuss recently, whether it's web2/web3, it should be the lawless Circle that rose after the US stock market went public. In addition to Web3 players generally being pessimistic and not getting in the car to break their legs, and even angrily shorting, Web2 players are bullish on FOMO getting in the car. This terrifying explosive power has made many traditional financial giants uneasy and have to face the revolutionary impact that stablecoins may bring globally. This made me feel like I was sitting on the wheel of history rolling forward, a bit of a 'big era' rush. ~~~~~~~~~~~~ First, let's take a look at the scene described by @ CryptoHayes in his article "Libra: Zuck Me Gently": I recently talked to a board member of a large bank about stablecoins, and they said, 'We're done for.'. They believe that stablecoins are unstoppable and use the situation in Nigeria as evidence. I didn't know the extent of USDT penetration in the country before, but they told me that one-third of Nigeria's GDP is conducted in USDT, even though the central bank is very serious about trying to ban cryptocurrencies. ” From my own travel experience and understanding in multiple countries with poor currency autonomy, Nigeria should be a universal epitome of these countries. Any place with high inflation and exchange rate fluctuations will be the first to be impacted by stablecoins, blockchain wallets, or even U-cards, and administrative measures cannot prevent them. But compared to the previous underground black market, the characteristics of stablecoins and blockchain have greatly increased the difficulty of regulation, and stablecoins will become a "financial version of the star chain system" - funds can be freely settled without going through the central bank of the country. This is not just a financial reform, but has become a tug of war between national sovereignty and open markets. Many small countries' "coinage rights" will be further deprived. I think one of the most exciting dreams of Defi Summer was that global financial flattening is gradually becoming a reality. Imagine a scenario: users in Nigeria, Namibia, the Philippines, and even India and China, after exchanging their local currency for stablecoins and putting them in their wallets, coincidentally choose a DeFi protocol (such as USDe) to put them in at some point, enjoying a non depreciating, even annualized return of nearly 10 points. What does this TM feel like? The unification of the financial world! What a huge influx of new blood do asset managers, stablecoins, RWAs, and wallets face? This is similar to the past when we could only make local calls because long-distance calls were too expensive, and international long-distance calls were even more unimaginable. Suddenly, the Internet came, and global communication, even video, almost cost nothing. Communication became flat, and the cost of communication for people around the world dropped rapidly. The earth became a global village within reach. This is a major change, a financial revolution that may alter the behavior patterns of a large number of people on this planet, and we are now on the eve of the revolution. ~~~~~~~~~~~~~~~ But bigger changes will come from other countries with traditionally stable currencies, including the United States itself and even China. After the passage of the stablecoin bill, the US 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 Edition), while current first mover players Circle, Paxos, Fidelity, and BlackRock will accelerate the expansion of on chain USD business. I have no doubt that we will see the total market value of stablecoins rapidly surpass $500 billion from the current level of around $160 billion, becoming the main channel for on chain US dollars, and the stablecoin based payment settlement/AI/gaming/DepIN ecosystem will quickly become compliant. With the shift in policies, media exposure, major stablecoin issuers competing for market subsidies, and the president personally leading sales, the number of people holding stablecoins will first achieve an important breakthrough among developed countries in the United States. The proportion of people owning cryptocurrency digital wallets will also increase significantly, which is a breeding ground for further Web3 outbreaks in the future. After USDC/USDT compliance, logging into more financial apps in various countries will bring hundreds of millions of new user benefits. ~~~~~~~~~~~~~~ Speaking of China again: Recently, 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 openly discuss it. What Zhou Xiaochuan said is: "Stablecoins (especially dollar anchors) may promote dollarization, pose a threat to economic sovereignty and monetary policy independence, and should be included in the scope of prudent evaluation Pan Gongsheng responded from both practical and regulatory perspectives, indicating that the central bank has incorporated stablecoins into the overall promotion of digital currencies and is addressing potential risks through institutional and policy mechanism construction. Although China's iron fist has an unusual effect on national control, propaganda blockade, and financial regulation compared to third world countries, it cannot be denied that the public's awareness and demand for stablecoins have been increasing. I think the recent crackdown on U-cards in China is closely related to the demand for financial regulation, as the proliferation of US dollar stablecoins directly conflicts with China's foreign exchange controls. At present, the main strategies for dealing with stablecoins in China can be summarized as "blocking", "loosening", and "swapping". 1. Blocking includes Control exchanges, OTC venues, RMB deposit and withdrawal channels, etc., but the effect is limited 2. Explanations include Promote the use of digital RMB (e-CNY) as a legal alternative in China, and guide e-commerce, immigration scenarios, and port settlement systems to gradually test the waters of digital RMB. This thing has been promoted for 23 years, and there have been pilot projects for cross-border taxi hailing/payment between Hong Kong and Shenzhen. However, with strong regulation, low returns, and a focus on off chain services, it is unlikely to be feasible. 3. Change includes Encourage overseas institutions to issue RMB anchored stablecoins (CNH stablecoins), such as: HKDC (promoted by the Hong Kong Monetary Authority) MobiDollar (with participation from Standard Chartered Bank) Red Date (Overseas Version of Blockchain Service Network BSN) The essence is to issue currency through a "friendly third place" to achieve the circulation of RMB, rather than being directly led by the central bank. It is impossible to directly open up the mainland. But recently, JD.com openly stated that it wants to develop stablecoins to reduce the time cost in international settlement, which has made more domestic entrepreneurs start to understand this thing. Let's take a look while we walk. ~~~~~~~~~~~~~~ Possible opportunities for retail investors: 1. Financial opportunities Due to the need for 100% US bond reserves, the stable currency will become the "digital treasury bond bond ETF", and US bonds will become more and more obvious as the bottom income source of the stable currency, so the annualized holding of stable currency by users will probably rise from 0% to 3-5%, close to the US bond income. Simply put, in the future, no matter if you put U in an exchange or wallet, Perpdex， Most places will provide financial products with high security, such as Yu'e Bao of Alipay, and the closer to the annualization of US debt, the safer it will be. This is a very attractive move to attract outsiders into the cryptocurrency industry. For example, I asked many retail investors in China, and they were happy with just 2 points of financial returns, but they couldn't believe it even with 5 points. Now you can earn interest by holding stablecoins without being restricted by China Wealth Management Connect/bank accounts. You don't need to open an account in Hong Kong, and you don't need to be harassed by banks when transferring money. Can you do it? 2. Defi Project Defi OG knows that Defi is the financial music brother/stack music, and based on the underlying returns of US bonds, many tricks can be played to increase the yield of stablecoins. In addition to the current leading AAVE, other established players such as Ethena, Pendle, and even Frax have the opportunity to benefit. But I am more looking forward to stimulating the market with more Defi innovations, including the fixed income business project that I tried in the last summer. The new project means many opportunities, such as early participation in airdrops/participating in fund placements to earn coins/becoming a contributor/secondary holding, etc. 3. RWA Track The integration of income based stablecoins (with interest) and RWA (Real World Assets) protocols will become a trend, with on chain bonds and asset pools directly serving as support for stablecoins. Now even @ coinbase is trying to directly support stock on chain (tokenized stocks), RWA is really gaining momentum. RWA series tokens - old/new, will have more opportunities than other traditional crypto tracks. Currently, I am most concerned about ONDO Plume, and I also feel good about the new ones. I will update them later. ~~~~~~~~~~~~~~ Final summary: The compliance of stablecoins is a major event of reconciliation/integration between cryptocurrencies and the real world, which may affect the lives of billions of ordinary people. There are also huge opportunities in between, and the unexpected surge of CRCL beyond the expectations of cryptocurrency enthusiasts is just one of the signs. Perhaps we have stayed in the small world of web3 for too long and have not been able to put ourselves in a bigger pond or stage to evaluate the expectations and FOMO of outsiders for a financial innovation (including myself, I have seen at most 100 before). But let's seize more opportunities together, the new world is just beginning.