Regulatory Chess Masters Unlock Trillion-Dollar Stablecoin Future

In this Monday issue of Meridian, we're diving deep into the global regulatory chessboard that's rapidly reshaping crypto's future.

As financial authorities worldwide move from passive observation to active participation, we're witnessing a delicate balance between innovation and oversight that could determine winners and losers for years to come. Meanwhile, DeFi's infrastructure continues its quiet transformation into something that increasingly resembles—yet fundamentally reimagines—traditional finance, with stablecoins emerging as the backbone of a new financial stack. And against the backdrop of unprecedented government deficits and monetary policy shifts, we explore why Bitcoin and gold are outperforming traditional assets in what appears to be a fundamental rewiring of the global financial order.

The rules are changing—and understanding how could make all the difference to your portfolio.

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The world’s financial referees are no longer content to watch from the sidelines—crypto’s next act will be staged under a far more scrutinizing spotlight.

With the U.S. Treasury targeting $3 trillion in stablecoins by 2028 and Congress advancing bills like the Clarity Act and FIT21, the regulatory tempo has quickened. The SEC and CFTC’s recent joint guidance, allowing registered exchanges to list select digital assets, signals a grudging détente—one that could unlock new capital flows but also redraw the boundaries of innovation. “When I have the opportunity to make a choice for a super prescriptive approach or a more permissive approach, I’m going to opt for the more permissive approach,” says SEC Commissioner Hester Peirce, underscoring the tension between investor protection and market dynamism.

Yet, the path to clarity is anything but linear. U.S. dollar-based exchanges processed $279 billion in August, dwarfed by the $850 billion handled offshore by Binance and Bybit—a stark reminder that capital is mobile, and regulatory arbitrage remains alive and well. Jacob Wittman of Plasma warns, “My concern is that a lot of the stuff that’s happening in the current market… gets flipped over with a little bit more too much regulation,” highlighting the risk of overreach and the specter of centralization, as seen in token blacklisting incidents.

Meanwhile, the global stage is anything but passive. Emerging markets from Turkey to the UAE are calibrating their own frameworks, often leapfrogging legacy systems by embracing stablecoins and tokenized assets. Ondo Finance’s $ONDO.X ( ▼ 0.2% ) push to tokenize 1,000 U.S. stocks and ETFs by year-end, and Galaxy Digital’s on-chain NASDAQ equity, point to a future where regulatory clarity is not just a compliance exercise, but a competitive edge.

For investors, the message is unambiguous: regulatory outcomes are now a primary driver of both risk and opportunity. The next phase of crypto’s evolution will be shaped as much by legislative pen strokes as by code commits.

Stablecoins are no longer just a crypto convenience—they’re fast becoming the backbone of global value transfer.

With $270–280 billion in stablecoins now circulating and projections stretching to $4–10 trillion, the scale of on-chain money is outgrowing its origins. As Zach Abrams of Bridge puts it, “Stablecoins are like a scaling layer on top of the fiat ecosystem… money needs to move up into this tokenized form to take advantage of all these benefits.” The result: stablecoins are underwriting payroll, remittances, and even humanitarian aid, with Fireblocks alone processing $212 billion in stablecoin flows in July.

DeFi protocols are compounding this momentum. Ethena $ENA.X ( ▲ 0.74% ) , Pendle $PENDLE.X ( ▼ 0.04% ) , and Aave $AAVE.X ( ▲ 1.79% ) now command $10–13 billion in TVL, with Ethena assets comprising over 70% of Pendle’s $10B. The composability of these platforms is spawning new primitives—tokenized burned ETH (BETH), for instance, is opening up governance and anti-spam models, as Zak of the Ethereum Community Foundation notes: “BETH is kind of like WETH, but for burning ETH instead of wrapping it… it provides composability as a tradable asset as well.”

Meanwhile, the architecture wars are heating up. Solana’s $SOL.X ( ▲ 0.02% ) AlpenGlow upgrade promises a 100x throughput boost and 150ms finality, while Stripe’s Tempo L1 is engineered for 100,000 TPS and stablecoin-neutral gas. The rise of appchains and enterprise L1s (Robinhood, Circle, Stripe) signals a move toward specialized, high-throughput rails—tailored for payments, stablecoins, or vertical-specific use cases.

Regulatory clarity is finally catching up. The first major US stablecoin legislation and joint SEC/CFTC guidance are catalyzing institutional flows, with entities from Deutsche Bank to OpenAI now building on-chain. As Brandon Potts of Framework Ventures observes, “Imagine the amount of economic activity that will be able to be underwritten by way of having $10 trillion in stablecoins on chain. That’s really powerful to think about.”

The next phase of DeFi will be defined by protocols and rails that capture not just liquidity, but real-world utility and institutional trust.

Asset prices are soaring, deficits are ballooning, and the world’s financial order is quietly being redrawn—crypto is no longer a sideshow, but a central character.

The U.S. is running annual deficits north of $2 trillion, while the Federal Reserve faces mounting political pressure to cut rates—Polymarket odds now price an 88% chance of a 25bp cut. “Prolonged bear markets are not allowed,” says Jordy Visser of 22V Research, pointing to the post-GFC era’s relentless financialization. The result: Bitcoin up 300% and gold up 70% year-to-date, both outpacing equities and cementing their status as macro hedges.

Geopolitics is amplifying the trend. China’s gold accumulation and the BRICS’ search for dollar alternatives signal a world less tethered to U.S. hegemony. “As long as you have that structural tailwind—$2–3 trillion deficits a year—it’s pretty hard to have a wide-based or prolonged market pullback,” notes Duncan of Delphi Digital. The global appetite for non-sovereign assets is no longer theoretical; it’s visible in flows and price action.

Meanwhile, TradFi is embracing crypto with a pragmatism that would have been unthinkable five years ago. The Fed’s upcoming stablecoin conference, the rise of digital asset treasury companies like American Bitcoin Company (now holding $270 million in BTC), and the mainstreaming of tokenized stocks are blurring the lines between public markets and digital assets. Yet, as Mel Mattison observes, “The merging of the Treasury and the Fed is bullish for everything: stocks, bonds, gold, and Bitcoin”—but it also raises the stakes for regulatory risk and market structure volatility.

The old four-year crypto cycle is fading, replaced by a macro-driven regime where capital formation, policy, and geopolitics set the tempo. For investors, macro literacy is no longer optional—it’s the new alpha.

Prediction markets have quietly become crypto’s most compelling on-ramp—now, with regulatory tailwinds, they’re poised to redraw the lines between speculation, information, and entertainment.

Polymarket’s recent “no action” letter from the CFTC marks a watershed: after years in regulatory limbo (and a $1.4 million settlement in 2022), the platform is now cleared for U.S. users, catalyzing a sector already surging on the back of sports and political volume. Kalshi, a rival, clocked $150 million in college football bets in a single week, while AI-powered upstarts like BillyBets.ai are automating strategies and sharpening odds. “If your long-term ROI is minus 6% and that goes down to minus 1%, you’ve extended the length of your bankroll by a long time,” notes Bunchu, founder of BillyBets.ai, underscoring the user-centric edge over traditional sportsbooks.

Yet, the regulatory landscape remains patchy. While the CFTC’s stance signals progress, state-level ambiguity and the specter of federal intervention linger—especially as incumbents eye the space. “The script is completely flipped here,” observes Tyler D of Degen Spaces, as legacy sportsbooks now look to acquire prediction market upstarts rather than dismiss them.

Liquidity is the next battleground. Mainstream events draw deep pools—$28 million in single-day volume on Kalshi during major sports—but long-tail markets still struggle for depth and pricing. Here, AI and DeFi infrastructure promise to bridge the gap, offering near-fair odds (often 1¢ spreads) and permissionless access.

Prediction markets are no longer a sideshow. They’re a testbed for DeFi, a bridge to mainstream adoption, and—crucially—a signal that crypto’s next growth phase may be driven as much by information markets as by financial engineering.

Disclaimer: The information provided in this newsletter is for informational purposes only and should not be considered investment advice. Cryptocurrency investments are speculative and involve significant risk. Please conduct your own research and consult with a financial professional before making any investment decisions.