Dialogue: The logic behind Trump’s new crypto policy

Author: Meng Yan's Blockchain Thinking

After Trump returned to the White House, a series of statements and actions in the field of encryption have attracted widespread attention. As relevant policies are gradually implemented, a policy outline including encrypted asset reserves, stablecoins, RWA (real world assets) and new ICOs has gradually emerged. Logically, it not only serves Trump's geopolitical goal of "revitalizing the United States", but also quietly builds a future financial infrastructure that is deeply integrated with AI technology. However, due to Trump's various unorthodox behaviors, his new encryption policy has also caused a lot of controversy and even ridicule. In order to have a clearer understanding of this topic, I invited Dr. Shao Qing, who has lived in the United States for a long time and has been tracking and researching the encrypted digital asset industry for a long time, to have a dialogue to discuss the policy logic of Trump's new encryption policy, and discussed its possible variables and the reactions of other countries under the background of the AI ​​revolution.

TL;DR: The original intention of Trump's new crypto policy is to provide billions of people around the world with a new channel to "subscribe to the United States", that is, to use the US dollar stablecoin to purchase US assets on the chain, thereby hedging the threat to the international status of the US dollar caused by the hollowing out of US industry and high debt, and buying time for the US dollar hegemony and the revival of US industry. However, the truly unpredictable variable of this policy is the fusion that may be generated by the integration of encryption technology and AI. Hundreds of billions or even trillions of intelligent entities will dispatch resources and collaborate with each other through blockchain, which will comprehensively change all aspects of human economy, military and life, and accelerate the world towards the technological singularity.

1. Buy time for the dollar

Meng: We are beginning to see some concrete signs that the Trump team is systematically promoting a new crypto policy framework. You are in the United States. How do the relevant industries in the United States react to this matter?

Shao: Indeed, since mid-2024, Trump and his team have shown an innovative image in the field of encryption. During the election period, from public speeches to accepting donations, to supporting specific projects, and even issuing meme coins in person, most people were surprised. After being elected, he immediately established a digital asset policy working group that included almost all decision-makers from important departments, and vowed to launch a new regulatory framework for the encryption industry within 180 days to make the United States the "crypto capital of the world." Then, in the past two months, we have been cautious and have been pushing forward the implementation of relevant policies. Recently, we announced the Bitcoin reserve and crypto asset storage, and held the first White House Crypto Summit. In the past, most technological innovations were led by enterprises, but in the crypto industry, the US now has a clear situation where the president himself leads the way and enterprises follow behind. In my opinion, the US high-tech industry is generally not mentally prepared for this situation, and it is only now that it has begun to seriously consider and respond to it. Recently, financing related to stablecoin payments and real-world assets (RWA) has rapidly heated up, but it is still in its early stages overall. Meng: Trump's governing style is unpredictable. He and his family have done a lot of extraordinary things around crypto assets. Coupled with some of his seemingly subversive operations in other fields, many people think that Trump is also "playing around" in the crypto industry, just to make money for his family. Your summary just now obviously refutes this superficial view. At least in the field of crypto, Trump's actions are coherent. How do you view the dominant logic behind these measures? Shao: My view is that not only in the crypto industry, but in fact, Trump's current administration is completely different from the last time. He has very clear goals and strategies. His unpredictability and subversion are actually to undermine the existing system and reduce resistance to his reform measures. You may as well download the white paper of Project 2025 from the website of the Heritage Foundation and read it. His new crypto policy is in line with his overall strategy, so this series of actions may seem out of line, but if you put them into a larger strategic framework, you will find that they are not isolated operations, but constitute a complete and inherently logical policy deployment, whose core goal is to use crypto infrastructure to reshape the global accessibility and investability of the US dollar, support the international status of the US dollar, and thus buy time for the return of US manufacturing and capital repricing.

Meng: Can you specifically disassemble the path structure of this so-called "complete policy deployment"?

Shao: I will summarize it into five consecutive steps, which are nested and linked together. The first step is the loosening of public opinion and concepts. Trump did not amend the law directly, but through words, gestures, policy signals, and even extraordinary actions by himself and his family, he broke the psychological constraints of the "flood and beast" of crypto assets established during the Biden administration, and established a new narrative framework of "crypto = innovation", which made the Republicans and traditional conservatives gradually accept the crypto industry as part of strategic resources.

The second step is to establish a national digital asset reserve in the United States, including federally established Bitcoin reserves and crypto asset storage, as well as some Republican-controlled state governments that openly hold Bitcoin and openly talk about the reserve role of mainstream assets such as Ethereum. The implicit meaning of this behavior is that the US government, or at least part of it, is incorporating crypto assets into the preset scope of "strategic financial assets", thereby enhancing the consensus level of crypto assets.

The third step is to establish a regulatory framework for stablecoins.

This is the policy center of the whole plan, because only under a compliant US dollar stablecoin system can the digital dollar become the settlement and issuance medium for global asset investment with the help of the decentralized and globally accessible characteristics of blockchain. This is also the reason why Coinbase and Circle frequently interact with Republicans at the policy level.

The fourth step is to put real world assets (RWA) on the chain. Including US Treasury bonds, stocks of large US companies, corporate bonds, real estate mortgages and other highly liquid or securitized assets. This move can migrate the behavior of "investing in the United States" from bank accounts to blockchains, and from capital markets to the on-chain DeFi system.

The last step is to launch a "regulatable new ICO" mechanism. This is not simply to replicate the craze of 2017, but to restore the legitimacy of "on-chain fundraising" in some way, release the supply capacity of on-chain venture capital, and make it serve the financing of domestic industries in the United States, especially the reconstruction of the manufacturing chain.

Meng: It sounds like this is a policy package that is being promoted layer by layer, but does it really have a strategic logical closed loop? There has long been a tense relationship between crypto assets and the hegemony of the US dollar. How can this relationship be reconstructed in Trump's version of the new crypto policy?

Shao: Your question hits the nail on the head. The mainstream crypto narrative emphasizes decentralization, de-dollarization, and cross-border circulation, while the US dollar strategy has long been based on the control of the clearing system, bank supervision, and the degree of capital account openness. There is indeed a structural tension between them.

But Trump's way of trying to reconcile this tension is "absorbing rather than confronting": he does not suppress financial innovation on the chain, but tries to transform it into a new infrastructure that serves the dollar.

The core of this idea is: The dollar does not have to be spread through bank accounts, it can also be spread on the chain, as long as its unit is still anchored to the dollar standard. In other words, as long as global investors use the dollar stablecoin on the chain and invest in the US RWA, the United States is still collecting "coinage tax" and holding pricing power.

Furthermore, through the on-chain stablecoin + on-chain assets, the United States can even circumvent the increasingly strong compliance and geopolitical friction in the traditional financial system and achieve financial "de-friction". This is a way to extend geo-financial power.

Meng: Is this model really attractive? What do you think of its potential impact on economies outside the United States?

Shao: We must realize that the ultimate goal of this policy path is not the internal industrial reconstruction itself, but to attract overseas capital to "subscribe to the United States" in an on-chain way. Simply put, it is to allow global investors to use digital wallets to buy on-chain treasury bonds, corporate stocks, startup equity and other asset tokens denominated in US dollars, thereby completing the "re-anchoring" of the US dollar in the Web3 era.

The appeal of this model lies in that it uses a digital native approach to lower the threshold for global capital to enter the US market. And its impact lies in that it challenges the ability of other sovereign currency zones to control capital inflows and outflows. If capital from emerging markets begins to bypass the banking system and enter the U.S. on-chain asset market directly through wallets, this "financial ant moving"-style fund transfer will weaken the effectiveness of local financial policies.

In the longer term, the United States may use this to rebuild a "financial network hub" status and become the end point of issuance, settlement, and clearing on the global asset chain. Any economy that poses a potential challenge to the status of the U.S. dollar must seriously consider the competitive pressure and governance spillovers brought about by this path.

Second, ICO mechanism and the reshaping of the U.S. innovative financing structure

Shao: Among the five steps mentioned above, the one I am least sure about is the so-called "new ICO". It seems to be the most controversial and groundbreaking part of this new crypto policy. Is it really possible to land in reality? How will it support technological and industrial innovation? I know you have invested a lot of time in researching this issue. Do you have any conclusions?

Meng: This issue is relatively sensitive in the Chinese field, but speaking of the facts, the facts themselves are actually very clear. Including the United States, the core dilemma of the global innovation financing mechanism is becoming more and more prominent. In the past 20 years, the financing of high-tech startups in the United States has mainly relied on three channels: one is the Silicon Valley venture capital system, the second is the Nasdaq IPO, and the third is various government research grants and innovation incentive programs. But all three have their own limitations: VCs gradually focus on late-stage projects, and the bottleneck of early financing is becoming increasingly serious; the IPO threshold is too high, and many technology projects are eliminated before they are mature; and government incentives are often inefficient and have a long cycle.

ICO (Initial Coin Offering) once provided a short-term experiment of equal financing. It allows projects to raise funds directly from global investors and end users of projects by issuing tokens, without relying on traditional financial intermediaries. However, due to lack of supervision and frequent abuse, this mechanism was almost sentenced to death after 2018.

An important member of Trump's crypto team is SEC Commissioner Hester Pierce, who is the proposer of the "Crypto Safe Haven" plan. She has been committed to restoring a certain legitimacy of ICO by creating a new regulatory framework. Not returning to the original wild growth state, but a "new ICO" system based on "transparency + approval + disclosure". The core is: - Token issuance must be anchored to actual products, assets or cash flows to avoid the proliferation of virtual tokens; - Issuers must register with the SEC or CFTC, but enjoy relaxed compliance treatment; - Projects can raise funds on the chain for qualified investors or overseas users, bypassing the traditional secondary market issuance process; - Issuance revenue must be used for domestic US technology, manufacturing, and infrastructure projects to cooperate with Trump's "re-industrialization" theme.

Such a system design is actually closer to the combination of "regulatory version of Kickstarter + digital bonds + disintermediation issuance", and is an attempt to reconstruct the US venture financing technology stack.

Shao: It sounds like once this mechanism is established, not only the crypto industry will benefit, but the entire US industrial financing system may be reshaped?

Meng: You can say that. If on-chain financing and on-chain asset issuance can be institutionally included in the compliance path, the cycle of "innovation-financing-circulation" will be greatly shortened.

More importantly, this mechanism is naturally more suitable for cutting-edge industries such as Web3, AI, and energy technology, which are characterized by high early capital demand, high barriers to understanding for traditional investors, and mismatch between financing rhythm and cycle. On-chain fundraising + stablecoin settlement + global liquidity will greatly release the financing capacity of medium and long-tail projects.

Ultimately, this will also make "registered in the United States + issued with US dollar stablecoins + raise funds from global investors" a new paradigm, thereby further consolidating the United States' dominance in the trinity of technology, capital and narrative. Conversely, facing the logic of "consolidating the status of the US dollar" that you just mentioned, it seems that it can also be considered that in this way, the US high-tech industry and the US innovation system will also evolve into the support basis of the US dollar, and through the atomization and decentralization of the circulation of the US dollar, the intervention and ability of other geopolitical opponents in this process will be weakened.

Shao: What you said may not be the end. The end may be the demise of all securities markets, including today's digital asset exchanges.

Meng: Technically speaking, it does point to the situation you mentioned.

3. Challenges: Institutional Inefficiency and Compliance Rigidity

Meng: In general, I think this new policy is indeed logically self-consistent in theory, and the strategy is also highly politically calculated. But back to reality, is it really possible to succeed? Where is the resistance? You have lived in the United States for a long time, what do you think about this?

Shao: This is a key question. The implementation of any policy depends on whether the conditions in terms of system, politics and technology are mature. As far as Trump's new encryption policy is concerned, its biggest challenge lies in the multiple constraints of "institutional inertia", "regulatory infighting" and "compliance rigidity".

We can break down the risks as follows:

First, the current regulatory system in the United States is fragmented. The SEC and CFTC have long been arguing over the regulatory boundaries of digital assets, and each has its own opinion on "what is a security and what is a commodity". Without strong intervention at the presidential level, this institutional internal friction is difficult to break.

Secondly, there is still a cognitive split between the two parties in the United States on crypto assets. Although the Republican Party is more friendly to crypto, the Democratic camp still retains a high degree of vigilance, especially in the Senate Financial Committee and the White House Economic Advisory Committee, where most voices advocate that "crypto equals financial instability". This means that even if Trump is re-elected, it will not be easy to promote relevant legislation at the congressional level.

Third, there is still a gap in the maturity of technology and financial infrastructure. On-chain RWA, stablecoin global clearing network, and compliant wallet system are all being promoted, but a sovereign-level platform that can carry large-scale financial activities has not yet been formed. The existing on-chain financial ecosystem (DeFi) does not have institutional stability.

But I think the most difficult link to break through is the United States' consistent strict anti-money laundering (AML) and counter-terrorism financing (CFT) regulatory principles. This principle is one of the basic beliefs of the US dollar to become a global sovereign currency, and its hardness is higher than short-term political goals. Any mechanism for the flow of funds that bypasses the banking system and goes to the chain will trigger a strong backlash from the Ministry of Finance, FinCEN, and even national security agencies once KYC, identity identification, and fund source tracking are relaxed.

In other words, if the Trump team wants to promote the legalization of stablecoins, RWAs and new ICOs, it must also build a set of "on-chain auditable and accountable" compliance infrastructure. This is not only a technical challenge, but also a governance challenge. Once the implementation is out of control, any case of "on-chain dollars involved in terrorist financing" may lead to fierce opposition to the entire new policy, or even abort.

In addition, resistance from the traditional financial industry cannot be ignored. Large banks and financial services institutions are extremely sensitive to the "disintermediation of dollar re-issuance". They will worry that their own settlement, custody, KYC and other businesses will be weakened. This kind of vested interest resistance at the industry level will form an obstacle that cannot be underestimated in the process of policy promotion.

Finally, and most fundamentally, global trust in the dollar is not infinitely sustainable. Even if the United States builds a perfect on-chain financial narrative, if it continues to polarize in political stability, debt governance, and foreign policy, external investors may still choose to wait and see.

Meng: It seems that the success or failure of this policy is highly dependent on whether Trump can "maximize his political coordination ability"? He is now in the White House for the second time and has formed a highly integrated policy implementation team. It is indeed possible to push this framework into shape within two years. But this requires the President, the Treasury Department, the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), the Federal Reserve System (Fed), the Financial Crimes Enforcement Network (FinCEN) and other key institutions to form an unconventional collaborative state, which was extremely rare in the past.

Shao: From a more realistic perspective, I think the probability of this new policy being fully implemented is no more than 50%, but the probability of its partial implementation and gradual formation of market expectations and strategic inertia is more than 70%. In other words, even if a complete legal system is not formed in the end, as long as enough capital, institutions, and developers begin to bet on this direction, the United States will have completed the reabsorption of global crypto-financial resources.

Fourth, the passive response and strategic choice of other economies

Meng: It seems that we all agree that the medium-term goal of this new policy is to reconstruct the global asset investment path with on-chain dollars. For major economies outside the United States, this is actually a challenge to financial sovereignty. How do you think they will respond?

Shao: This response is likely to be "passive start, active defense". At present, whether it is China, the European Union, or regional powers such as Japan and South Korea, the understanding of Trump's new policy is still in the early stages. There are three main reasons: First, Trump has just returned to the White House, and there is still uncertainty whether this strategy will continue; second, on-chain finance is still regarded as a "technological outlier" or "risky asset" by many countries; third, stablecoins, RWAs and on-chain financing are still gray areas in most legal currency regulatory systems.

However, if the United States uses on-chain dollars, on-chain assets and new ICOs to form an open financial platform and "attract global investors to the chain to buy US bonds, invest in US stocks, and raise US dollars", then other countries' capital control capabilities, monetary regulation capabilities, and even industrial financial dominance will be challenged.

We can look at it by country.

Let's talk about China first.

For China, Trump's new crypto policy may bring pressure on three levels.

First, the internationalization process of the RMB is under further pressure. The current cross-border use of the RMB mainly relies on the state-led trade settlement framework and offshore clearing network. Once the US on-chain dollar mechanism is formed, it will erode the marginal space of the RMB with "technology-induced convenience", especially along the "Belt and Road", the Middle East, Latin America and other regions.

Second, the technical bypass channels for capital controls will increase. Once stablecoins and on-chain US bonds obtain clear compliance identities, it will become a reality for individuals and companies to access US dollar assets through unofficial wallets and protocols. This will pose a structural challenge to China's existing cross-border financial regulatory system.

Third, the sovereignty of industrial chain financing may be passively transferred. If high-tech enterprises begin to "raise funds on the chain", whether by registering shell companies in the United States or issuing RWAs, it will be difficult for the Chinese government to grasp the rhythm and direction of these financing behaviors.

Of course, China's response will not be absent. I expect China to respond in two ways in the future:

First, strengthen the central bank's digital currency (e-CNY) and cross-border payment connectivity, and build a "compliant RMB on-chain financial system" to form a regulatory and controllable alternative;

Second, institutionally block the path of on-chain dollar transmission in the local market, including restricting wallets and on-chain assets from accessing the domestic market, and strengthening anti-money laundering and source of funds requirements.

Meng: How will the EU react? Their policies in the field of encryption seem to be more open?

Shao: The EU's thinking is indeed more technology-neutral, but it also faces structural passivity. MICA (Markets in Crypto-Assets Act) is trying to establish a unified regulatory framework, which provides a compliance path for on-chain assets and stablecoins. But the problem is that the euro does not have the appeal of a global financial dominant currency. It lacks anchor assets, a global clearing network and risk tolerance. Therefore, even if Europe encourages on-chain finance, it is likely to become a circulation channel for US dollar stablecoins rather than an ecological center for euro stablecoins. If Trump's new policy goes smoothly, the EU will face only two strategic choices: one is to participate in and rely on the US-led on-chain dollar system to preserve the role of local technology and institutions in on-chain finance; the second is to strengthen the European Central Bank's regulatory dominance over crypto assets and create a policy combination of "controlled compliance + local currency priority" to try to give the euro independent sovereignty on the chain.

No matter which path is chosen, the EU's passivity is doomed. The real variable is "how to lose less", not "whether to dominate".

Meng: I think the first thing that countries around the world may have to overcome is a kind of policy numbness. In the past decade, many countries have promoted several rounds of attempts around encryption technology, and the results are generally not ideal. Therefore, most countries seem to be waiting and watching Trump's new policy this time, and perhaps they are still lucky, that is, to see whether Trump is bluffing or just trying it out. But from the policy logic you described, Trump's new encryption policy is an important part of his overall strategic goal, so we should give up doubts about his determination and start to consider his policy consequences and response strategies.

5. AI + Crypto may produce unexpected results

Shao: We have discussed the logic and impact of Trump's new crypto policy from multiple dimensions such as finance, regulation, and international structure. But I always feel that there is a larger technical background that has not been fully mentioned, that is AI.

Meng: You are right. Trump's new crypto policy did not take place during the slow period of technological evolution, but was proposed against the backdrop of accelerated breakthroughs in AI, structural reconstruction of the technology stack, and the rapid advancement of the global technological economy.

We must recognize that the interaction between AI and encryption is releasing a new systemic possibility: on-chain identity, on-chain assets, and on-chain payments, combined with large-scale self-driven AI agents, are rewriting the "boundaries of organizations" and "structures of transactions."

I remember that a few years ago, after carefully studying the characteristics of blockchain technology, Mr. Zhu Jiaming once proposed a conjecture that historically, blockchain and encryption technology may not be used by humans, but by AI. But we couldn't visualize this conjecture at the time. Now with the rapid development of AI, this picture has become clearer and clearer.

The most intuitive example is that many AI agents can have encrypted wallets, execute contract logic, and complete cross-platform, cross-language, and cross-business system task collaboration through on-chain protocols without human intervention. They may represent individuals, enterprises, or even autonomous organizations to carry out asset allocation, resource coordination, and information governance on a global scale.

From this perspective, Trump's new crypto policy, in its original intention, may be just a strategic attempt to re-anchor the US dollar globally, but in practice, unexpected chemical reactions are likely to occur, paving the way for the "on-chain infrastructure map" in the AI ​​era in advance. Stablecoins, RWAs, and new ICOs are essentially transforming US dollars, US assets, and US innovation capabilities into digital resource units that can be called by AI. The clearing and settlement mechanism on the chain builds a permissionless value collaboration layer for these AI systems.

Shao: I want to go one step further. From the perspective of real-world applications, the combination of AI and cryptography is not as easy to find a closed test scenario as autonomous driving. Autonomous driving can be tested on closed roads and limited cities, but the nature of the cryptographic system as a value transfer and collaboration protocol determines that it requires a real open network environment to verify its effectiveness, so it has been difficult to "rehearse" on a large scale so far. This is one of the main reasons why most token economy experiments have failed in the past decade.

But perhaps, we can approach it from another angle: the "simulated market mechanism" within the enterprise. In other words, in the internal management system of large organizations or factories, especially the "internal settlement mechanism" in the ERP system, it may become a "test field" for cryptographic systems.

Imagine a highly intelligent and unmanned manufacturing factory, whose production links, equipment scheduling, raw material procurement, energy distribution, etc. are increasingly executed by AI decisions. At this time, if programmable payment and settlement logic is introduced, and resources are priced and paid between machines through stablecoins, an "in-machine economy" can be simulated. This is not only the natural landing point of encryption, but also brings an operating mechanism for AI that does not rely on the human account system.

In other words, the "digital factory" will become an ideal experimental field for the combination of encryption technology and AI. This is a typical machine world, with closed structure, highly automated participants, and highly auditable behavior. It is expected to be the first to realize an "endogenous financial order": machines exchange value in a machine way, and algorithms constrain resource allocation in a contract way. This will not only reconstruct the boundaries of "human-machine collaboration", but may also give birth to a new paradigm of corporate governance based on on-chain identity and circulation.

From this perspective, the "revitalization of American manufacturing" we talked about earlier in the article is actually worth redefining. The traditional sense of "manufacturing repatriation" focuses on factory locations, industrial chain layout and employment opportunities, but the future "manufacturing" may be a combination of "computing-power-driven automated production capacity" and "digital intelligent systems". The manufacturing advantage pursued by the United States will not only be the reconstruction of the physical industry, but also the leading right of the governance model based on the digital twin system.

And encryption technology is the underlying protocol choice for the financial order part of the "digital twin strategy". In the initial stage, it does serve the data verification, process traceability, and transaction clearing of intelligent manufacturing; but with the integration of AI, it gradually evolved into the core of clearing and settlement in the full-link autonomous system. This is a more ambitious proposition than intelligent manufacturing, and it is a problem of digital order reconstruction at the national level.

Meng: Once this trend is launched, it will greatly reduce the friction of collaboration across the entire network, so that innovation will no longer rely on organizational structure or legal entities, but will be based on the instant combination logic of "Agent + Contract + Data".

What is more worthy of in-depth imagination is the new economic order constructed after the deep integration of AI and encryption technology. Today, collaboration, knowledge sharing and resource allocation between AIs are still highly dependent on human preset paths and traditional payment infrastructure, such as credit card settlement, API authorization, account system, etc. These methods naturally have organizational boundaries, flow friction and settlement delays.

But in the future, when AI Agents have their own wallets, can execute smart contracts on the chain, and make real-time payments through digital assets, they will be able to coordinate tasks and allocate resources with each other without human intervention, forming a true "machine market". This mechanism will enable billions or even trillions of intelligent agents to spontaneously form an orderly economic collaboration network without central scheduling. This automated collaboration that transcends all organizational boundaries and codes as rules will not only greatly release the productivity potential between intelligent agents, but will also give rise to a new form of industrial division of labor, on-chain governance and social structure. In a sense, it indicates that we are entering a new economic stage dominated by machines, whose complexity, creativity and even risk of loss of control far exceed any existing system today.

In other words, we may be standing on the edge of a system-level innovation—a critical structure that may lead to a technological singularity is taking shape. Trump may not fully understand the underlying logic of this technological evolution, but his policies may have pioneered an experiment in rewriting the underlying rules on a global scale. These policies may not be fully implemented, but they have already triggered a reassessment of the global financial technology and policy architecture. In the next few years, we will see more economies forced to respond.