Is the crypto world now "sitting at the same table" as traditional finance?

This issue focuses on three major signals: Circle obtains a US banking license; Visa announces support for USDC settlement; and the SEC changes its attitude to educate crypto users. This is not the crypto world being "co-opted" by traditional finance, but rather a proactive and deep integration and differentiation based on compliance. Traditional financial giants are entering the crypto world through compliance channels, while native crypto forces are exploring different paths to survival. Whether you're an observer focusing on industry trends, a builder seeking opportunities, or a prudent investor, this episode's guests, from legal, financial, tax, and frontline risk perspectives, will clarify the connections and clashes between the crypto industry and traditional industries, providing valuable insights. Meg: The topics at the pub are quite lighthearted, a departure from the often "dull" image of lawyers. It's a platform for Web3 Builders to capture hot topics and exchange viewpoints, making for a relaxed and down-to-earth discussion. Now, let's get to the main topic. Q1: What are your thoughts on Circle obtaining a banking license? CrypoMiao: Let's talk about Circle obtaining a banking license. From an industry researcher's perspective, this is undoubtedly a proactive move, not a compromise. Circle's core market is in the US compliance field, and its strategy is to focus on compliance and seize the initiative in the Web3 legalization process. Previously, Circle's compliance costs were extremely high, eroding a significant portion of its profits. However, after a successful IPO and receiving support from the capital market, they are more confident in promoting the integration of Web3 and Web2. Applying for a national banking license is a crucial step, not only to meet regulatory requirements but also to establish a leading position before regulations become clear. Once the US officially recognizes stablecoins for payment and settlement, USDC is likely to become the preferred choice. Furthermore, Circle has already obtained licenses in the EU, Abu Dhabi, and other locations; now, by completing its US banking and trust license, it means it can transfer custody business from third parties to its own bank, significantly reducing friction and costs in the intermediary process. This is essentially an integration of upstream business, further consolidating its competitive advantage. The partnership with Visa also confirms this—settlement cannot be separated from the banking interface, and internalizing this profit is a long-term strategy for Circle. In short, Circle is betting on the future: to become a cornerstone recognized by the mainstream financial system through thorough compliance before the US fully embraces stablecoins. To sum it up in one sentence: Circle is not compromising, but rather seizing the cornerstone position for future stablecoin payments and clearing through thorough compliance. Q2: What does Visa's choice of USDC mean? Jie Hui: As a global financial clearing giant, Visa connects banks, merchants, and national financial systems. Compliance and risk control are its lifeline; it would never dare to use a partner like USDT with opaque regulation and unclear auditing. Circle, on the other hand, operates very clearly within the US regulatory framework. Having just obtained a banking license, it is already far ahead in the race for legal standing, making Visa's cooperation almost inevitable. This doesn't mean USDT is out of the game. On the contrary, it may usher in a tiered era for stablecoins: **compliant stablecoins like USDC will become the "clearing layer," specifically connecting to traditional financial institutions like Visa; while USDT will continue to dominate the "circulation layer," remaining active in applications like exchanges and DeFi.** More importantly, this collaboration marks a fundamental shift in the identities of Circle and USDC—it has transformed from a crypto company into infrastructure recognized by the traditional financial system, marking a crucial "coming of age." In short: Visa's choice signifies the entry of stablecoins into a "tiered era," with USDC becoming a "clearing layer" recognized by traditional finance. This collaboration marks a fundamental shift in the identities of Circle and USDC. Q3: How do you view the SEC's shift in attitude from "risk prevention" to "universal education"? Gao Mengyang: The SEC's attitude has changed, which is actually related to the direction of the current US administration. It's become relatively open to the crypto industry. Circle and Tether have taken completely different paths: one is desperately trying to comply with regulations and squeeze into the traditional financial circle; the other is less transparent and more like crypto native. This forces us to consider: will crypto ultimately become part of traditional finance, or will it start afresh? To be honest, everyone is still exploring. CrypoMiao: Tether has also been audited, but about 20% of its reserves are in Bitcoin and gold, essentially using users' money to "bet." If other situations arise, USDT could also depreciate. This kind of operation is difficult to pass under strict regulation, so it takes a high-risk, high-flexibility approach, completely different from Circle's steady and cautious style. Jie Hui: Experienced investors actually prefer USDC for its stability. The SEC's current approach is clear: first, warn of risks; then, provide investor education; next, they'll likely clarify responsibilities and regulate many tokens as securities. Regulation is gradually taking shape. In fact, precisely because regulation is becoming clearer, the market is also changing. Many altcoins failed to take off in this round; some projects raised funds, had a brief period of hype, and then slowly faded away—I can't even remember their names. The industry is undergoing a reshuffling, which may also be a process of moving towards formalization. In short: The SEC's transformation is a systematic regulatory prelude, aiming to establish a framework of responsibility, which accelerates the industry's reshuffling and formalization process. Q4: This round of regulatory environment is favorable to the industry, but many operations have not yielded satisfactory returns. Under this new trend, which sectors are likely to become the main drivers of the next round of market activity? CrypoMiao: I think the next round, besides stablecoins, will be more about the availability of compliant on-chain pricing tools, allowing many real-world assets to be "on-chain." For example, RWA (Real-World Assets), and various security tokens, such as equity and storage rights in non-listed companies. Although the current scale may only be a few hundred billion, the potential is huge. So why does Circle need a banking license? Because when massive transactions occur on-chain, every transaction must go through a compliant banking channel for clearing. It doesn't just want to be a Web3 company; it wants to become the underlying clearing layer for traditional assets on-chain. Beyond these directly money-related aspects, more application-oriented technologies may emerge in the next 3 to 5 years, such as **copyright on-chain**, decentralized storage, blockchain-encrypted identity login, and even game equipment truly belonging to players. The first batch of Web3 applications will definitely be related to payments and transactions, but gradually, application giants like Tencent and Meta will emerge. This **evolution** will take time, but I think the direction is clear. In short: RWA (Real-World Assets) and security tokens are the clear direction in the medium term, while in the long term, super applications based on new financial infrastructure will emerge. Q5: With the increasing compliance of the industry, have the legal risks for practitioners really decreased? Which areas remain high-risk zones? Gao Mengyang: I think the risks haven't actually decreased; in fact, they might be greater. Because when we talk about compliance, we're mostly not referring to compliance within China, and the regulatory attitude in China has always been very clear. For individuals, holding virtual currency in mainland China isn't illegal, but policy doesn't support it. Your own investment behavior, whether you make a profit or a loss, is more of a business risk. The real legal minefield is actually the withdrawal process—when you sell USDT for fiat currency, it's difficult to determine the source of the money. Dirty USDT certainly carries risks, but the investigation and consequences of "dirty money" are much more severe; the banking system can trace many intermediaries. This is what individual users need to be most wary of. If you're a professional in the industry, the risks are much more complex. Perhaps only projects that explicitly block Chinese users, lack a Chinese interface, or have user agreements excluding China have relatively controllable risks—it's somewhat like doing remote outsourcing for overseas projects. In short, while personal investment is not prohibited by law, withdrawals require extreme caution. Practitioners must clearly understand their position and the nature of their projects; compliance is not just lip service, but must be assessed based on specific user groups and operational details. In short: Global compliance does not equate to domestic legality; personal withdrawals are the biggest pitfall; and the risks for practitioners vary drastically depending on the project's location and the target user group. Quick Q&A Time: Question 1: What are your views on the evolution of the crypto world? Jie Hui: I've held Bitcoin since 2017, initially with the belief that "one coin equals a villa." Although it has risen quite a bit, the target hasn't been reached yet, and given the high risks of depositing and withdrawing funds, I haven't made any moves. I feel that the crypto world used to be very "wild," full of utopian ideals of permissionless access and code as law; now, with large institutions entering the market, compliance, licensing, and KYC have become mainstream, a significant change. However, the underlying consensus and decentralized rules of Bitcoin haven't changed, and as a holder, he will continue to hold on.

Question Two: What do young people lack most?

Gao Mengyang:I think what everyone lacks most is **risk awareness**. Individual investors need to be wary of the risk of "dirty money" when withdrawing funds; practitioners need to be even more careful, especially in China, where this industry is not encouraged, and many places are struggling to make ends meet. He emphasized that prevention is always more important than remediation!

Question Three: Looking ahead to Web3 in the next 5 years.

CrypoMiao: I think in the early stages it will be more like a hybrid of banking and technology, because financial infrastructure is needed to connect Web2 and Web3, such as clearing houses and exchanges. But in 3 to 5 years, the focus will shift to the application layer, such as on-chain storage, encryption, and content platforms, at which point it will be more like the pure internet. Conclusion: The crypto industry has not been simply "incorporated," but has entered a deeper round of differentiation and restructuring under compliance pressure. Compliance is not the finish line, but a screening mechanism that determines which entities can continue to remain within the system. For individuals, during periods of significantly heightened uncertainty, risk control should always take precedence over profit assessment; and for professionals, what is often more important than technical skills is a clear understanding of their own position and the boundaries of their business.