After Trump returned to the White House, his series of statements and actions in the field of encryption attracted widespread attention. As relevant policies are gradually implemented, a policy outline including crypto asset reserves, stablecoins, RWA (real world assets) and new ICOs is gradually emerging. Logically, it not only serves Trump's geopolitical goal of "revitalizing America," but is also quietly building 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 gain 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 crypto digital asset industry for a long time, to have a conversation with me to discuss the policy logic of Trump's new crypto policy and explore its possible variables and the reactions of other countries in the context of the AI ​​revolution.

TL;DR:

1. Buying time for the dollar

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

Shao: Indeed, since mid-2024, Trump and his team have presented a revolutionary 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 personally, they surprised most people.

After being elected, he immediately set up 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, making the United States the "crypto capital of the world."

Then, over the past two months, we have taken cautious steps and worked hard to implement relevant policies. Recently, it announced its Bitcoin reserves and crypto asset storage and held the first White House Crypto Summit.

In the past, most technological innovations were led by businesses and the government, but in the encryption industry, the United States now has a clear situation where the president himself is leading the way and businesses are following behind. In my opinion, the US high-tech industry as a whole is not mentally prepared for this situation, and is only now beginning to seriously consider and respond to it.

Recently, financing related to stablecoin payments and real-world assets (RWA) has heated up rapidly, but it is still in its early stages overall.

Meng: Trump's governing style is unpredictable. He and his family have done many extraordinary things around crypto assets. Coupled with some of his seemingly subversive operations in other fields, many people believe that Trump is also "messing around" in the crypto industry, just to make money for his family. With your analysis, it is clear that this superficial view is self-defeating. At least in the field of encryption, Trapp's actions are consistent. What do you think of the dominant logic behind these measures?

Shao: My point of view is not only in the crypto industry, but in fact Trump’s administration this time is completely different from the last time, with very clear goals and strategies. His unpredictability and subversiveness are actually intended to undermine the existing system and reduce resistance to his reform measures.

You might as well go to the Heritage Foundation website to download the Project 2025 white paper and read it to find out. His new encryption policy is in line with his overall strategy, so this series of actions may seem out of the ordinary, but if we put them into a larger strategic framework, we will find that they are not isolated operations, but constitute a complete set of policy deployments with internal logic.

Its 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 break down the path structure of this so-called "complete policy deployment" in detail?

Shao: I summarize it into five consecutive steps, which are nested and interconnected.

The first step is to loosen up public opinion and concepts. Trump did not amend the law directly. Instead, he broke the psychological constraints on crypto assets that were established during the Biden administration through words, gestures, policy signals, and even extraordinary actions of himself and his family. He established a new narrative framework of "crypto = innovation", allowing the Republican Party and traditional conservatives to gradually accept the crypto industry as part of strategic resources.

The second step is to establish the U.S. national digital asset reserve, including the federally established Bitcoin reserve and crypto asset storage, as well as some Republican-controlled state governments openly holding Bitcoin and openly discussing the reserve role of mainstream assets such as Ethereum.

The implication of this action is that the US government, or at least part of it, is incorporating crypto assets into the preset scope of "strategic financial assets", thereby increasing the consensus level of crypto assets.

The third step is to establish a stablecoin regulatory framework. This is the policy core of the entire plan, because only under a compliant US dollar stablecoin system can the digital dollar take advantage of the decentralized and globally accessible characteristics of blockchain and become the settlement and issuance medium for global asset investment.

And this is why Coinbase and Circle frequently interact with the Republican Party at the policy level.

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

The last step is to launch a “new type of ICO that can be regulated” mechanism. This is not simply replicating the craze of 2017, but rather restoring the legitimacy of "on-chain fundraising" in some way, releasing the on-chain venture capital supply capacity, and making 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 implemented layer by layer, but does it really have a strategic logical closed loop? There has long been a tense relationship between crypto assets and US dollar hegemony. How will 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 U.S. dollar strategy has long been based on control over clearing systems, 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 "absorption rather than confrontation": instead of suppressing financial innovation on the chain, he tries to transform it into a new infrastructure that serves the dollar.

The core of this idea is that the US dollar does not have to be circulated through bank accounts, it can also be circulated on the chain, as long as its unit is still anchored to the US dollar standard.

In other words, as long as global investors use US dollar stablecoins on the chain and invest in US RWA, the United States will still collect "seigniorage" and control pricing power.

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

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

Shao: We must realize that the ultimate goal of this policy path is not internal industrial reconstruction itself, but to attract overseas capital to "subscribe to the United States" in an on-chain manner. Simply put, it allows global investors to use digital wallets to buy on-chain government bonds, corporate stocks, startup company 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 the fact that it lowers the threshold for global capital to enter the US market in a digitally native way.

Its impact lies in the fact that it challenges the ability of other sovereign currency areas 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 of capital transfer will weaken the effectiveness of local financial policies.

In the longer term, the United States may use this opportunity to rebuild its position as a "financial network hub" and become the end point for issuance, settlement, and liquidation in the global asset chain. Any economy that poses a potential challenge to the status of the US dollar must seriously consider the competitive pressures and governance spillovers brought about by such a path.

2. ICO Mechanism and the Reshaping of the US Innovation 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 encryption policy. Is it really possible for it to be implemented in reality? How will it support technological and industrial innovation? I know you have spent a lot of time researching this issue. What are your conclusions?

Meng: This issue is quite sensitive in the Chinese field, but speaking objectively, the matter itself is actually very clear. The core dilemma of the current global innovation financing mechanism, including the United States, is becoming increasingly prominent.

Over the past two decades, U.S. high-tech startup financing has relied primarily on three channels:

• The first is the Silicon Valley venture capital system.
• The second is the Nasdaq IPO.
• The third is various government scientific research grants and innovation incentive programs.

But all three have their own limitations: VCs are gradually concentrating on late-stage projects, and the bottleneck of early-stage financing is becoming increasingly serious; the IPO threshold is too high, and many technical projects are eliminated before they are mature; and government incentives are often inefficient and lengthy.

ICO (Initial Coin Offering) once provided a short-lived experiment in equal financing rights. It allows projects to raise funds directly from global investors and end users 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 proposed the "Crypto Safe Harbor" proposal. She has been working to restore some legitimacy to ICOs by creating a new regulatory framework.

It is not about returning to the original wild growth state, but about building 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 empty tokens;
• Issuers need to register with the SEC or CFTC, but enjoy relaxed compliance treatment;
• Projects can conduct on-chain fundraising for qualified investors or overseas users, bypassing the traditional secondary market issuance process;
• The issuance revenue must be used for domestic technology, manufacturing, and infrastructure projects in the United States to cooperate with Trump’s "re-industrialization" theme.

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

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

Meng: You can say that. If on-chain financing and on-chain asset issuance can be institutionally incorporated into 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 financing rhythms that do not match cycles.

On-chain fundraising + stablecoin settlement + global liquidity will greatly release the financing capabilities of mid- and long-tail projects.

Ultimately, this will also make "registered in the United States + issued in US dollar stablecoins + raising funds from global investors" a new paradigm, further consolidating the United States' dominance in the trinity of technology, capital, and narrative.

On the other hand, regarding the logic of "consolidating the status of the US dollar" that you just mentioned, it seems that it can also be considered that through this method, the US high-tech industry and the US innovation system can also evolve into the support basis of the US dollar, and through the atomization and decentralization of the circulation of US dollars, the intervention and ability of other geopolitical rivals in this process can 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 Internal Constraints and Compliance Rigidity

Meng: Overall, I think this new policy is indeed logically self-consistent in theory and has a high degree of political calculation in strategy. 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 issue. The implementation of any policy depends on whether the institutional, political and technological conditions 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 itself fragmented. The SEC and CFTC have long been arguing over the regulatory boundaries of digital assets, with each side holding different views on "what is a security and what is a commodity." Without strong intervention at the presidential level, this institutional infighting will be difficult to break.

Secondly, there is still a cognitive divide between the two parties in the United States regarding crypto assets. Although the Republican Party is more friendly to cryptocurrencies, the Democratic camp remains extremely vigilant, especially in the Senate Banking Committee and the White House Council of Economic Advisers, where many people argue that "cryptocurrency equals financial instability." This means that even if Trump is re-elected, it will not be easy to advance 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 concepts that are being promoted, but a sovereign-level platform that can support 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' consistently strict anti-money laundering (AML) and counter-terrorist financing (CFT) regulatory principles. This principle is one of the fundamental beliefs of the US dollar as the world's sovereign currency, and its hardness is higher than short-term political goals.

Any fund flow mechanism that bypasses the banking system and moves to the chain will trigger a strong backlash from the Treasury Department, FinCEN, and even national security agencies once KYC, identity identification, and tracking of sources of funds 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 gets 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 its failure.

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

Finally, and most fundamentally, global trust in the U.S. dollar is not sustainable indefinitely. 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 that he can push this framework into shape within two years. But this requires extraordinary collaboration among key agencies such as the President, the Treasury Department, the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), the Federal Reserve System (Fed), and the Financial Crimes Enforcement Network (FinCEN), which was extremely rare in the past.

Shao: From a more realistic perspective, I think the possibility of this new policy being fully implemented is no more than 50%, but the possibility 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 in this direction, the United States will have completed its re-absorption of global crypto-financial resources.

IV. Passive Responses and Strategic Choices 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 other than 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, their understanding of Trump’s new policies 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 as to whether this strategy will continue;
• Second, on-chain finance is still considered a “technological outlier” or “risky asset” by many countries;
• Third, stablecoins, RWAs, and on-chain financing are still gray areas in most fiat 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 U.S. bonds, invest in U.S. stocks, and raise funds in U.S. 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 encryption policy may bring pressure on three levels.

• First, the process of RMB internationalization is under further pressure. Currently, the cross-border use of 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 RMB with "technology-induced convenience", especially along the "Belt and Road", the Middle East, Latin America and other regions.
• Second, the number of technical circumvention channels for capital controls will increase. Once stablecoins and on-chain U.S. Treasuries obtain a clear compliance identity, it will become a reality for individuals and businesses to deposit and access U.S. 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 companies 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 activities.

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

• First, strengthen the connection between the central bank’s digital currency (e-CNY) and cross-border payments, and build a “compliant RMB on-chain financial system” to form a regulatory and controllable alternative;
• The second is to institutionally block the spread of on-chain US dollars in the local area, including restricting the access of wallets and on-chain assets to the domestic market, and strengthening anti-money laundering and source of funds requirements.

Meng: How will the EU react? Their policies in the crypto space seem more open?

Shao: The EU’s approach is indeed more technologically neutral, but it also faces structural passivity.

MICA (European Markets in Crypto-Assets Act) is attempting to establish a unified regulatory framework that provides a compliance path for on-chain assets and stablecoins.

But the problem is that the euro does not have the appeal of a dominant global financial 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 the ecological center of euro stablecoins.

If Trump's new policy goes smoothly, the EU will face only two strategic choices:

• First, 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 ECB's regulatory dominance over crypto assets and create a policy combination of "controlled compliance + local currency priority" in an attempt to allow the euro to gain independent sovereignty on the chain.

No matter which path it chooses, the EU's passivity is doomed. The only real variable is “how to lose less” rather than “whether to dominate”.

Meng: I think what countries around the world may need to overcome first is a kind of policy numbness. Over the past decade, various countries have launched several rounds of attempts around encryption technology, and the results have generally been less than ideal.

Therefore, most countries seem to be still waiting and watching Trump's new policy, perhaps even hoping for luck, to see whether Trump is bluffing or just trying it out. But from the policy logic you described, Trump's new crypto policy is an important part of his overall strategic goal, so we should abandon our doubts about his determination and start considering its policy consequences and response strategies.

5. AI + Crypto May Produce Unexpected Results

Shao: We have discussed the logic and impact of Trump’s new encryption policy from multiple dimensions including finance, regulation, and international landscape. But I always feel that there is a larger technological background that has not been fully mentioned, and that is AI.

Meng: You are absolutely right. Trump's new encryption policy did not take place during a 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 development of the global technological economy.

We must recognize that the interaction between AI and encryption is unleashing 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 put forward a conjecture that historically, blockchain and encryption technology may not be used by humans, but by AI. But at that time we were unable to materialize this conjecture.

Now with the rapid development of AI, this picture has become increasingly clear. 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, businesses, or even autonomous organizations, allocating assets, coordinating resources, and governing information on a global scale.

From this perspective, Trump’s new crypto policy may, in its original intention, be just a strategic attempt to re-anchor the US dollar globally. However, in practice, unexpected chemical reactions are likely to occur, paving the way for the “on-chain infrastructure map” in the AI ​​era.

Stablecoins, RWAs, and new ICOs are essentially about converting U.S. dollars, U.S. assets, and U.S. innovation capabilities into digital resource units that can be used by AI. The on-chain clearing and settlement mechanism builds a permissionless value collaboration layer for these AI systems.

Shao: I want to go one step further. From the perspective of practical applications, the combination of AI and encryption technology is not as easy to find a closed testing scenario as autonomous driving. Autonomous driving can be tested on closed roads and in limited cities, but the nature of encryption systems as value transfer and collaboration protocols dictates that they require a real open network environment to verify their effectiveness, so it has been difficult to "rehearse" on a large scale so far.

This is one of the main reasons why the vast majority of token economy experiments have failed over the past decade.

But perhaps, we can approach it from another angle: the "simulated market mechanism" within the enterprise.

That is to say, in the internal management systems of large organizations or factories, especially the "internal settlement mechanism" in the ERP system, it may become a "testing field" for the encryption system.

Imagine a highly intelligent, unmanned manufacturing factory, where production processes, 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, allowing machines to price and pay resources through stablecoins, an "in-machine economy" can be simulated.

This is not only a natural fit for encryption, but also provides a mechanism for AI to operate without relying on a human account system. In other words, the "digital factory" will become an ideal testing ground 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-like way, and algorithms constrain resource allocation in a contractual way.

This will not only reconstruct the boundaries of "human-machine collaboration", but will also likely give birth to a new paradigm of corporate governance based on on-chain identity and circulation.

From this perspective, the “revitalizing American manufacturing” that we talked about earlier in the article is actually worth redefining.

The traditional “repatriation of manufacturing” focuses on factory locations, industrial chain layout and employment opportunities, but the future of “manufacturing” may be a combination of “computing-power-driven automated production capacity” and “digital intelligent systems”.

The manufacturing advantage that the United States pursues will not only be the reconstruction of the physical industry, but also the leading position in 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 smart manufacturing; but with the integration of AI, it has gradually evolved into the clearing and settlement core of the full-link autonomous system.

This is a more ambitious proposition than smart manufacturing, and it is an issue of rebuilding the digital order at the national level.

Meng: Once this trend starts, it will greatly reduce the friction of collaboration across the entire network, making innovation no longer dependent on organizational structure or legal entity, but based on the instant combination logic of "Agent + Contract + Data".

What is more worthy of deep imagination is the new economic order constructed after the deep integration of AI and encryption technology.

Today, collaboration, knowledge sharing, and resource allocation among AIs are still highly dependent on human preset paths and traditional payment infrastructure, such as credit card settlement, API authorization, account systems, etc. These approaches naturally have organizational boundaries, flow frictions, and settlement delays.

But in the future, when AI Agents have their own wallets, can execute smart contracts on the chain, and make instant 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 entities to spontaneously form an orderly economic cooperation network without central scheduling. This kind of automated collaboration that transcends all organizational boundaries and where code is the rule will not only greatly unleash the productivity potential between intelligent entities, but will also give rise to new forms 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 on the verge of an emergence of systems-level innovation—a critical structure that could lead to a technological singularity is taking shape. Trump may not fully understand the deep logic behind the evolution of this technology, but his policies may be the first to promote an experiment in rewriting the underlying rules on a global scale. These policies may not be fully implemented, but they will trigger a reassessment of global financial technology and policy architecture. Over the next few years we will see more economies being forced to respond of their own.