Integration and Rise: How Cryptos Reshape Global Financial Landscape

In recent years, the fields of Cryptos and Decentralized Finance (DeFi) have witnessed unprecedented development. Traditional Financial Institutions (TradFi) and governments have gradually shifted from cautious to actively embracing these changes. This shift not only reflects how technology-driven financial innovations are reshaping the global financial landscape, but also highlights the trend of integration between Cryptos and traditional finance, driven by regulatory clarity, growing market demand, and policy support.

Traditional Banks have long held a cautious stance towards Cryptos. However, with the evolution of market structures and the increasing customer demand for high returns and diversified investments, banks have started to realize that Cryptos are not just a new asset class, but a crucial opportunity to retain customers and attract new investors. Especially during times of market volatility, regulated financial institutions serve as a 'safe haven' for investors due to their stability and security. For instance, the collapse of FTX in 2022 led many investors to swiftly shift towards regulated entities, underscoring the importance of trust.

At the same time, the flexibility and innovation of DeFi have inspired traditional financial institutions. Although some people believe that the DeFi model may replace traditional models, in reality, the market infrastructure and regulatory safeguards of traditional financial institutions are still the core of institutional liquidity and customer protection. In the future, the most likely trend is the integration of both, forming a 'CeDeFi' (a financial model combining centralization and decentralization). This model will fully leverage DeFi's technological advantages, while combining traditional financial institutions' compliance requirements in KYC (Know Your Customer) and AML (Anti-Money Laundering), laying a solid foundation for future financial infrastructure.

Banks need to seize this trend, collaborate with suitable partners, and actively develop the next generation of financial infrastructure. While providing flexibility, more efficient systems, and innovative financial products, they also need to ensure the security of customers' funds and data. Banks that can connect both worlds will undoubtedly play a crucial role in the future financial landscape, but this requires taking action early.

In addition to market dynamics, policy support has also provided strong impetus for the development of Cryptos and blockchain technology. As the first global president personally involved in cryptocurrency positioning, Trump's policy support for Cryptos further drives the normalization and legitimization of this field.

Several key officials nominated during Trump's term, such as SEC Chairman Paul Atkins and the "Cryptocurrency Tsar" David Sax, are staunch supporters of cryptocurrencies and blockchain technology. This team not only has a wealth of financial and technological background, but also systematically endorses cryptocurrencies at the policy level. For example, almost all key members of Trump's cabinet are supporters of digital currencies, including the Vice President, Secretary of the Treasury, National Intelligence Director, and many other high-ranking officials who have openly expressed their support for Bitcoin and blockchain technology.

More importantly, in response to Trump's proposed "Bitcoin Strategic Reserve" concept, Senator Cynthia Lummis introduced the "2024 Bitcoin Act", planning to purchase 1 million bitcoins through the Federal Reserve System and the Department of the Treasury within the next five years to establish the national Bitcoin reserves. This not only demonstrates the forward-thinking of the U.S. government towards crypto assets, but also provides policy references for other countries worldwide.

With the gradual improvement of regulations and the dual promotion of governments and institutions, the integration of DeFi and CeFi will become an important direction in the financial industry. The technical components of DeFi can bring more efficient, lower-cost financial services, while the compliance and risk control capabilities of CeFi provide necessary security guarantees for institutional investors and ordinary customers. This "CeDeFi" model will become the underlying infrastructure of future finance, and traditional financial institutions such as banks that can leverage this trend will gain greater development opportunities.

The policy support for cryptocurrencies by the Trump administration further strengthens this trend. For example, the coordination between the SEC and CFTC in policies, and legislation regarding Bitcoin reserves, provide policy safeguards for the development of CeDeFi. Over 300 members of Congress supporting cryptocurrencies lay a stable political foundation for the long-term development of this field.

Both traditional banks and policymakers need to recognize the long-term potential of cryptocurrencies and blockchain technology. For banks, merely "accepting" cryptocurrencies is not enough; they must actively integrate into this emerging field, develop the next generation of financial infrastructure through cooperation with DeFi and blockchain industries. Government policy support accelerates this process.

The future of cryptocurrencies is not simply about DeFi replacing CeFi, but a deep integration of both. Financial institutions and governments that can seize the opportunity in this process will occupy a central position in the future financial landscape. Combining centuries of experience in traditional finance with the innovative force of DeFi will collectively build a more efficient, secure, and inclusive global financial system.