Crypto Assets and TradFi Integration: Breaking the Circle Both Ways

Old Zhang is a seasoned investor who has been navigating the stock market for nearly twenty years, often discussing concepts such as price-to-earnings ratio, economic moats, and value investing. Three years ago, he held a strong negative view of Bitcoin, considering it a scam. However, at a recent gathering, Old Zhang began to research buying Crypto Assets, inquiring about the code for Bitcoin ETFs and the concept of Meme coins.

With Bitcoin reaching new highs and Ethereum prices breaking through, the once distinct lines between Crypto Assets investors and stock investors are beginning to blur. Insiders in the Crypto Assets space are more frequently sharing their consensus and value concepts with the outside world, believing that this field is finally worth understanding for more people. At the same time, many stock market investors are also starting to pay attention to Bitcoin and Ethereum. Although they verbally claim to just be taking a casual look, they have actually made some allocations.

This trend did not emerge suddenly. On one hand, government agencies, Wall Street, and regulatory bodies have started to get involved; on the other hand, crypto companies are actively seeking compliance and collaboration. After Bitcoin reached new highs, the gap between the crypto market and the TradFi market has clearly diminished, and the bidirectional integration is beginning to accelerate. So, who is really influencing whom? Is it the Crypto Assets trying to integrate their narrative into the mainstream, or is the traditional industry starting to reevaluate Web3?

1. TradFi Actively Entering the Encryption Field

The changes this year are particularly evident. It’s not just the enthusiasm of insiders, but more the active participation of outsiders. Capital is investing, policies are loosening, and voters are leaning—this group of "outsiders" is clearly not here to observe, but is ready to officially join. Moreover, the speed of this participation has noticeably accelerated recently.

Even if you haven't directly invested in Crypto Assets, the stocks you hold may already be closely related to the "crypto circle." On July 16, during the after-hours trading session of the US stock market, Crypto Assets concept stocks collectively rose, with many companies' stock prices surging significantly. These companies either directly hold Bitcoin, Ethereum, and other Crypto Assets, or their businesses involve blockchain mining, trading platforms, etc. They have transformed from marginal players to market focal points.

The political arena is also actively responding. A certain political figure has taken a positive stance on Crypto Assets during the campaign and governance, publicly stating the ambition to make the United States the "Crypto Capital". After winning the election, he quickly signed an executive order and replaced several regulatory officials who held a negative attitude towards encryption. This series of actions has led the media to call him the "first Crypto President". Although it seems like a gimmick, it reflects a substantial policy shift. Meanwhile, Congress is also taking active steps. Recently, Washington welcomed "Crypto Week"—Congress is vigorously advancing several pieces of Crypto legislation, including a stablecoin regulatory framework, an overall regulatory framework for Crypto Assets, and a bill prohibiting the creation of a central bank digital currency in the United States. Although these bills have not yet been officially implemented, they have entered the formal process, indicating that the Crypto industry is gradually moving out of the regulatory gray area and developing in a more defined direction.

Traditional financial institutions have always understood the value of Crypto Assets, but previously lacked stable policy expectations. Once this uncertainty diminishes, their entry into the market is much faster than anticipated. For example, several well-known internet brokerage firms have begun to test the waters of Crypto Assets trading services. A large bank announced in July the launch of a digital asset platform for institutional clients, offering physical delivery Bitcoin and Ethereum trading, becoming the first large bank in the world to provide such services. This is not just an isolated action by individual institutions, but a trend across the entire industry. In addition, the CEO of a large bank confirmed during the second quarter earnings call that they are studying the launch of "stablecoins" for internal settlements and client transactions; another large bank launched internal digital currency for inter-institutional payments as early as 2020, and this year collaborated with a Crypto Assets exchange to develop a "quasi-stablecoin" token, facilitating large institutions to hold deposits of the bank directly on-chain.

What is even more striking is that listed companies are beginning to allocate crypto assets on a large scale. The most typical example is the world's largest independent BI company, which has been continuously purchasing Bitcoin since 2020, currently holding over 600,000 coins, equivalent to approximately $73 billion at current prices, with astonishing profitability. The CEO of the company actively promotes Bitcoin on various occasions, viewing it as the best tool for combating inflation and storing value. Driven by this, more and more listed companies are beginning to follow suit. For example, a U.S. gaming company announced that it would use Ethereum as its primary reserve asset, planning to purchase about 74,600 ETH in bulk between June and July 2025. As of July 17, 2025, its total holdings had reached approximately 321,000 ETH, making it the publicly listed company with the most Ethereum in the world. The company even raised $413 million through a stock issuance, almost all of which was invested in Ethereum, and used 99.7% of its holdings for staking to earn returns.

Traditional funds have begun to publicly enter the encryption market. For many traditional investors, there are still thresholds and concerns when it comes to directly purchasing and holding crypto assets, and ETFs have addressed this issue, allowing traditional funds to enter the encryption market in compliance. At the beginning of 2024, regulators approved the first batch of Bitcoin spot ETFs, and several large Wall Street institutions subsequently launched their own Bitcoin ETFs. These ETFs allow investors to buy and sell Bitcoin and other crypto assets in their securities accounts just like trading stocks. In July 2025, the U.S. welcomed the listing of the first batch of Ethereum spot ETFs, effectively opening the door for traditional finance to enter the encryption market.

2. The Crypto Industry Actively Breaks Boundaries

In contrast to the active entry of TradFi into the encryption field, the crypto industry is also striving to break out of its own circle, attempting to extend its influence from the Crypto Assets sphere to a broader mainstream domain. This is mainly reflected in two aspects: first, cross-industry collaborations of brands and ecosystems that bring encryption elements into traditional sports, entertainment, and other scenarios; second, global compliance layout, obtaining licenses and qualifications in various regions, and integrating into the mainstream financial system.

Crypto companies are trying to find ways to step out of their small circles, and the most direct way is to leverage mainstream entertainment and sports events to appear on the international stage. High-traffic occasions such as F1, the Premier League, Hollywood movies, and NBA home games have all become targets for crypto brands. For instance, a certain exchange sponsors an F1 team while also printing its logo on the jerseys of a football club's players; they even had their logo appear on racing suits and cars in an F1-themed movie starring a Hollywood celebrity. Another exchange once spent a high price on advertising during the Super Bowl, and there are exchanges that have directly obtained naming rights for NBA team home arenas. The intention behind these crossover marketing efforts is very clear: to help crypto brands break free from being self-absorbed in their own circles and enter the mainstream recognition system.

To truly break out of the circle, relying solely on brand exposure is not enough; what is more important is gaining mainstream trust and regulatory recognition. Therefore, major crypto giants have invested resources in recent years to apply for compliance licenses in key global markets and build a legal operating framework. In this regard, a certain exchange is a leader on the compliance path. It went public on NASDAQ in 2021, becoming the first publicly listed crypto exchange, backed by years of solid compliance investment—MSB licenses in multiple U.S. states, New York's BitLicense, MiCA licenses in Europe, and FCA registration in the UK, creating a fairly comprehensive compliance network. Another exchange is also actively promoting its compliance process. In early 2025, it first reached a settlement with the U.S. Department of Justice, laying the foundation for its subsequent return to the U.S. market, and subsequently obtained important licenses in Dubai, Singapore, and the EU, essentially covering the compliance entry points for mainstream markets in the Asia-Pacific region and Europe and the U.S.

Many exchanges that have emerged from the Web3 wave are now starting to address compliance shortcomings. Although they are not pioneers in compliance, their attitude and direction are already clear. This is not only for legal operations but also a new watershed in the industry: platforms that can truly develop in the long term will compete not on marketing strategies, but on whether they can survive and develop within the regulatory framework. Platforms with licenses can participate in the competition of TradFi; those without licenses can only be limited to small circles.

In addition to enhancing influence through branding and licensing, the crypto industry itself is continuously innovating. A certain exchange's wallet product aims to bridge the Web3 gateway, enabling ordinary users to easily access blockchain services, moving beyond mere concepts. More notably, an increasing number of crypto protocols are promoting the development of real-world asset tokenization (RWA), allowing users to buy and sell Tesla, Nvidia stocks, or bonds and other traditional financial assets on the blockchain. This is not just an innovation in gameplay, but also opens the door for more global users to participate fairly in TradFi. In the past, purchasing US stocks required cumbersome procedures; now, with on-chain tokens, many crypto users can easily enter the market.

The crypto industry is actively making moves to break boundaries: enhancing brand influence through cross-sector collaboration, gaining mainstream trust through compliant operations, and bridging the connection between reality and the virtual world through product innovation. These efforts have already begun to yield results — now when you walk in Times Square in New York or on the streets of London, you can see advertisements for crypto companies; ordinary people can also easily access decentralized financial services through mobile wallets.

3. The Interplay between Encryption and TradFi

When Crypto Assets meet TradFi, a question quietly becomes important: is the crypto industry trying to integrate its ideas into the mainstream, or is the traditional industry beginning to re-understand Web3?

The crypto industry emphasizes the on-chain native trading logic, asset liquidity, and the potential of open finance, aiming to reshape financial infrastructure. For example, the rise of decentralized finance (DeFi) allows anyone to lend, trade, and manage wealth without the need for banks, presenting a direct challenge to traditional banking. Furthermore, stablecoins, as the "digital cash" of the crypto world, have already emerged in cross-border payments and trade settlements. These demonstrate the breakthroughs of crypto technology on traditional financial infrastructure: transactions can occur 24/7 without interruption, settlements can be completed in seconds, and anyone with internet access can participate, no longer restricted by the operating hours and entry barriers of traditional institutions. It is foreseeable that the underlying architecture of the future financial system may gradually become blockchain-based.

As encryption technology attempts to change TradFi, traditional forces are also profoundly influencing the crypto industry. The most obvious is the intervention of regulation: governments and financial regulatory bodies around the world are intensifying the formulation of regulations targeting Crypto Assets, incorporating them into existing regulatory frameworks. Additionally, the large-scale entry of traditional capital could change the power dynamics in the crypto space. When Wall Street giants become the largest holders of Bitcoin, and when the boards of publicly traded companies decide to include Ethereum on their balance sheets, the pricing power and voice in the crypto market have, to some extent, shifted to traditional institutions. This is somewhat ironic for the original advocates of decentralization and anti-authoritarianism in the crypto idealism, but it is a process that the industry must go through to move towards the mainstream.

For the crypto industry, gaining traditional recognition means a larger user base and funding pool; for TradFi, absorbing crypto innovation can improve efficiency and expand business boundaries. Therefore, rather than saying one side breaks through the other, it is better to say this is a new stage of bilateral integration. Throughout this integration process, there are two keywords that run through it—innovation and compliance. Only by adhering to innovation can new values and growth points be continuously created, attracting attention from outside the circle; only by embracing compliance can mainstream trust and support be obtained, integrating into the existing system. These two are complementary and indispensable.

On one hand, innovation is the fundamental driving force for breaking the deadlock. The crypto industry has relied on continuous technological and model innovation for its development since its inception. From Bitcoin's decentralized ledger to Ethereum's smart contracts, and the emergence of new concepts like DeFi, NFT, and DAO, each innovation has expanded the industry's boundaries and attracted new participants. At this stage, what the industry needs is a truly disruptive killer application. This could be a brand new financial service model that dwarfs traditional finance; or it could be a platform connecting the real world, making everyday life more convenient for ordinary people through blockchain. For example, if ordinary people can easily complete cross-border payments of digital assets using stablecoins through crypto applications, with transactions settling in seconds at almost zero cost, then traditional remittance services would need to innovate, and a large number of off-chain users would naturally flock to the crypto ecosystem.