On March 21, 2025, the first crypto roundtable of the U.S. Securities and Exchange Commission (SEC) was full of gunpowder. When former SEC enforcement official John Reed Stark said that "crypto investors have received death threats", this debate on "securities attributes" was not only a dispute over the legal framework, but also the ultimate game for the survival of the crypto industry.
At the same time, the Bitcoin ETF ended its five-week bleeding cycle with a single-week capital inflow of US$744 million, while Ethereum chain activities fell to a historical low - this dual change in regulation and the market is reshaping the power map of the crypto world.
SEC’s “Definition War”: Regulatory rifts behind death threats
On March 21, 2025, at the first crypto roundtable of the U.S. Securities and Exchange Commission (SEC), former law enforcement official John Reed Stark’s speech was like a depth bomb, detonating the decade-long regulatory war in the crypto world - "Whenever I advocate for tighter regulation in public, I receive death threats from crypto investors." This naked accusation not only reveals the bloody confrontation between regulators and the crypto community, but also pushes the ultimate game about the "attributes of securities" to a critical point.
The fuse of this war has been laid long ago. Since the SEC launched a series of lawsuits against Coinbase and Binance in 2022, the confrontation between regulators and crypto companies has spread from the courts to the streets. SEC Chairman Gary Gensler's office records show that he personally received more than 200 death threat emails from around the world between 2023 and 2024. One anonymous letter from Australia even attached a photo of a bullet and wrote, "Crypto freedom cannot be tarnished."
Behind these extreme behaviors is the desperate resistance of crypto fundamentalists to the SEC’s “full securitization” strategy - if 90% of tokens are included in the securities regulatory framework, the living space of decentralized finance (DeFi) will be completely strangled.
But the SEC's iron-fisted supervision is not an isolated action. The new Republican-led SEC committee is trying to reconstruct the power map of the crypto world: the resignation of former chairman Gary Gensler and the establishment of the Crypto Task Force indicate that the Trump administration is dismantling the policy legacy of the Democratic era through "redistribution of regulatory power."
The new acting chairman Mark Uyeda revealed in a closed-door meeting that the SEC may open an exemption channel for NFTs and utility tokens through a "non-securitization statement." This policy shift may subvert the compliance cost structure of trading platforms such as Coinbase and Kraken.
The essence of this battle for definitional rights is a head-on collision between the Howey Test of the 1930s and the Fourth Industrial Revolution. Teresa Goody Guillen, partner of BakerHostetler, pointed out sharply at the roundtable: "When distributed ledger technology (DLT) reconstructs the global business model, the SEC is trying to use the rusty key of "investment contracts" to open the regulatory chain of the digital age." This contradiction is particularly prominent in the field of NFTs - on the one hand, the SEC acquiesces to the non-securities attributes of leading projects such as BAYC and CryptoPunks, but on the other hand, it has launched a series of lawsuits against social tokens and fan economy NFTs, exposing the fragmentation and opportunism of regulatory logic.
Bitcoin ETF's "Ice and Fire Reversal": $744 million in weekly inflows hides a mystery
While regulators are mired in the quagmire of definitional power, capital is rewriting the market narrative with real money.
From March 17 to 21, the US Bitcoin ETF ended its five-week losing streak with a weekly net inflow of US$744 million. BlackRock IBIT attracted US$105 million in a single day, and the cumulative total net inflow exceeded US$36 billion.
But behind this round of "institutional buy the dips", a secret arbitrage game is being played: the premium rate of Bitcoin futures on the Chicago Mercantile Exchange (CME) continues to narrow to below 2%, causing the arbitrage space between spot ETFs and futures contracts to disappear, and nearly 40% of the capital inflows have been confirmed to have nothing to do with "real demand."
What is more worthy of attention is the divergence of market consensus. Although the price of Bitcoin has been trading sideways in the range of $83,000-85,500, the on-chain data shows a completely different story: Glassnode has detected that long-term holders (LTH) have increased their holdings of 250,000 BTC in the past 45 days, worth about $21 billion, while the Bitcoin reserves of centralized trading platforms have fallen to the lowest level since 2021. This divergence between "institutional hoarding" and "retail investors leaving the market" suggests that the market is accumulating momentum for a new round of volatility.
Ethereum’s “Darkest Hour”: The Ecosystem Collapse Behind the Layer2 Boom
As Bitcoin ETF regains capital favor, the Ethereum ecosystem is experiencing an unprecedented cold winter.
Data from The Block shows that on March 22, Ethereum's daily destruction volume fell to 53.07 ETH (about US$106,000), a 99% decrease from the peak in 2024. The three major indicators of on-chain transaction volume, number of active addresses, and gas fees all fell to historical lows.
At the same time, the total locked value (TVL) of Layer2 fell to US$37.8 billion, but leading networks such as Base and Arbitrum accounted for 80% of DEX trading volume. This paradox of "hollowing out of the mainnet" and "Layer2 hegemony" exposes the fundamental flaws of Ethereum's economic model.
Standard Chartered Bank’s forecast has heightened market concerns. The bank halved Ethereum’s 2025 target price from $10,000 to $4,000, pointing directly to the “siphon effect” of Layer2 on the value of the mainnet: “Layer2 such as Base captures 80% of the ecosystem value-added, but only feeds back less than 20% of the fee income to the mainnet.” This unsustainable profit-sharing mechanism has caused the ETH/BTC exchange rate to fall to a historic low of 0.023, even lower than the performance of tokens of competing public chains such as Solana.
The more far-reaching impact comes from regulatory pressure. In the Memecoin Statement, the SEC defined a safe zone for POW assets such as Dogecoin, but remained silent on Ethereum and Layer2 tokens.
This uncertainty forced funds such as Grayscale ETHE to experience outflows of $102 million in a single week, with cumulative outflows of over $730 million over four weeks, which is shaking the foundation of Ethereum as an "institutional asset."
The way out: regulatory arbitrage, technological revolution and sovereignty game
In this multi-crisis, three variables will determine the ultimate direction of the crypto market:
1. The End and Reconstruction of Regulatory Arbitrage
The SEC's crackdown on "securitized tokens" has extended from trading platforms to Layer2 protocols. In March 2025, Coinbase announced the acquisition of the Deribit trading platform and took over the Dubai license, indicating that American companies are evading regulatory risks through offshore structures. However, the "Stablecoin Act" promoted by the Trump administration shows that sovereign states will not allow a regulatory vacuum - the bill requires stablecoin issuers to hold 1:1 cash reserves and prohibits technology companies from getting involved in this field. This "precision sniping" may reshape the $120 billion stablecoin market.
2. Paradox and breakthrough of technological revolution
Ethereum developers postponed the Prague upgrade for the 153rd time, exposing the weakness of technology iteration. In contrast, the Bitcoin ecosystem has exploded: the Ordinals protocol has pushed the on-chain NFT transaction volume to over $1 billion, and the Rune protocol has increased BTCFi's locked position by 300% in a single month. When "Bitcoin programmability" moves from concept to implementation, this self-revolution of the "ancient blockchain" may subvert the survival logic of "Ethereum killers."
3. The rise and game of sovereign digital assets
Putin's declaration that "no one can ban Bitcoin" resonates with Trump's crypto-friendly policies. Russia plans to build a compliant Bitcoin trading system based on the Moscow Exchange (MOEX), and India's digital rupee pilot has attracted 15% of crypto offshore funds to return - this "sovereign digital competition" is undermining the hegemony of the US dollar stablecoin and may give birth to a new geo-financial order.
Conclusion: Finding Certainty in the Reconstruction of Order
The crypto world in 2025 is standing on the fault line where traditional finance and the ideal of decentralization collide. The regulatory game of the SEC, the institutional narrative of Bitcoin ETF, and the ecological dilemma of Ethereum together outline an industry picture full of tension. When death threats and trillions of capital pour into the same battlefield, when the Howey test 89 years ago encounters the fourth industrial revolution, this change has long surpassed the scope of technology and has become an epic experiment for humans to reshape the value exchange system.
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