The SEC decides to save itself and encircle a patch of wild grass that grows wildly.

The Great Depression created the SEC, and the Crypto Assets ended the SEC.

Written by: Grandpa Zuo

The Great Depression of 1929 led to the establishment of the Securities Exchange Act of 1934 and the SEC (U.S. Securities and Exchange Commission), but unfortunately or fortunately, depending on whether you are an e/acc accelerationist or have a libertarian view under regulation, the SEC has since never stopped financial innovation or crises.

In 1998, LTCM (Long-Term Capital Management) faltered in Russian bonds using quantitative methods, almost leading to a repeat of the Great Depression of 1929, yet this did not hinder the implementation of ATS (Alternative Trading System) regulations in 1999, as quantitative, hedging, and arbitrage completely embraced information technology.

After the 2008 financial crisis, regulations were initiated against dark pool trading, but dark pools still exist. In 2025, after Gary Gensler's departure from the SEC, there was a determination to embrace the new trend of the future - everything can be put on the blockchain, and everything can be made compliant.

• On-chain: RWA is just the starting point. In the future, transactions, asset allocation, and yield generation will all revolve around the chain, just like embracing blockchain as one uses a computer.
• Compliance: Airdrops, Staking, IXO, and Reward, creating a uniquely American Super App (Reg Super-App), all DeFi re-Americanized.

The Survival Crisis of the SEC

The Great Depression created the SEC, and crypto assets ended the SEC.

Crypto Task Force

There is a trace to follow. The changes in the SEC's regulatory activities can be divided into Gary's departure in January and the new encryption policy after the current chairman Atkins took office in April, marked by the establishment of the Crypto Task Force, leading to the comprehensive "surrender" to Crypto by the end of July with Project Crypto.

To understand why Project Crypto has emerged, we must look for answers in the SEC regulatory dynamics from April to July, during which there were frequent actions. On one hand, lawsuits involving Ripple, Kraken, and others need to come to a dignified conclusion, while on the other hand, companies like Coinbase and Grayscale are becoming increasingly strong, actively requesting the SEC to relax regulations.

Especially the Ripple case marks the SEC's shift from "enforcement-based regulation" to "regulatory service". The subsequent restart of the IPO process by Kraken proves that the Crypto Assets concept has been fully accepted by the U.S. regulatory authorities, and Robinhood has also loosened its restrictions to promote tokenized stocks.

The approval of BTC/ETH ETF physical pledges and redemptions is a significant advancement, but more coins and more forms are still in a case-by-case review status, such as the ETF of Trump's own Trump Group, which is also in line.

Daring to obstruct the United States' solar encryption journey, this is no ordinary SEC; they must strike hard!

Image description: SEC 2025 encryption regulatory paradigm shift, image source: @zuoyeweb3

Thus, Trump chose to play against the norm, supporting the CFTC and initiating legislative actions such as the Genius Act. The CFTC is already on the path of expanding its powers, and the White House's cryptocurrency report further announced substantive acceptance of everything existing in DeFi.

The SEC has previously "transferred" the regulation of stablecoins to banking regulatory agencies, and more regulatory authority over digital assets has been assigned to the CFTC. The question of where the SEC goes next has become a reality that must be considered.

The more significant Clarity Act has not yet officially become law. If the SEC does not take proactive measures, it will be completely overshadowed by the CFTC, especially since the issuance of stablecoins has essentially touched the core of securities law. Before the Clarity Act becomes law, the SEC must start from administrative practice to preemptively delineate regulatory jurisdictions and create established facts.

However, under the current framework, there is little that the SEC can do, such as topics including the approval of more staking ETFs (like SOL), the issuance of any coin ETFs, tokenized stocks, securities, etc., as well as the approval of crypto companies going public and treasury (DATCO) companies. The SEC's attitude is to wait for change, with multiple delays and suspensions on various issues.

On July 17, there have been rumors that the SEC plans to merge with the CFTC. Following the SEC's Project Crypto, the CFTC's Crypto Sprint plan came shortly after, and the details are not important.

The division of responsibilities between the SEC and CFTC will end in the era of Crypto Assets. The SEC's choice to maximize its departmental interests can only be to embrace the new era and abandon all the old-world dogmas.

On-chain in the Real World

DeFi is fully compliant, marking the end of the offshore arbitrage era.

As previously mentioned, neither the Genius Act nor the Clarity Act specifically addresses DeFi regulation; the former only pertains to stablecoins, while the latter is too broad. Now, the SEC's Project Crypto provides detailed regulations from an administrative perspective, encompassing all aspects of DeFi from the angles of personnel, finance, and regulations.

No need to go overseas, come back to the United States.

In a nutshell, what offshore exchanges and overseas foundations can do can now be done domestically in the United States.

Whether it's stablecoins, IXO, or tokenization (stocks, bonds), although the regulatory affiliations differ, the SEC will not casually prosecute for illegal securities issuance as long as communication is handled well.

Secondly, how Tornado Cash founders judge that the SEC has no authority to interfere, but the SEC can ensure the safety of developers, ensure that Builders prefer to develop in the U.S., and encourage healthy and orderly competition.

DeFi has rules, money comes back to the United States.

In summary, there's no need to engage in overseas shelling or overly worry about the level of decentralization.

The token issuance, on-chain activities (staking, lending, trading, investing), and reward distribution involved in DeFi are all compliant, especially as self-custody trading has been elevated to the height of "American liberal values," various Crypto Assets staking ETFs will be fully opened.

Finally, avoid offshore regulatory arbitrage, and consider investing, developing, and starting businesses back in the United States to ensure that encryption occurs in the U.S.

RWA has regulations, coins on the American chain.

In a nutshell, on-chain has officially become the main theme.

Compared to DeFi, RWA has more specific regulations, distinguishing between various types such as stocks, bonds, equity, and physical assets, with the window for tokenized stocks and tokenization in private markets (Pre-IPO) now open.

This time will be a more profound transformation than computerization, from paper-based certificates to electronic transactions, and then to comprehensive on-chain integration. Any asset that can be financialized will be tokenized, and the information gap between a few and many will be completely eliminated. Of course, this may take many years.

Ultimately, DeFi will become a new form of finance, rather than a supplement to TradFi, and ETH will become a new vehicle for American financial hegemony.

Image description: SEC Project Crypto framework, image source: @zuoyeweb3

The title of this section is inspired by the slogan of RWA L1 Rialo developed by Subzero Labs. This time, RWA will no longer be synthetic assets or virtualized custody issuance, but will directly enable the possibility of on-chain any assets. For example, the newly listed Figma also retains the option of issuing tokenized stocks.

Stocks are tokenized stocks, and assets are tokenized assets.

Conclusion

A booster of financial bubbles or a necessary path for asset innovation.

After today, Project Crypto can be said to be the securities law moment for DeFi, but how much the departmental principles can be implemented, and how much they can be accepted by Trump and Capitol Hill, is left to fate.

However, the CFTC and SEC will fully merge, as future digital commodities and digital securities will be difficult to distinguish from each other.