$TRUMP triggers bullish expectations, which assets may usher in the "American Compliance spring"?

Since Trump won the presidential election, BTC has crossed the $100,000 milestone. And Trump's official issuance's $Trump hit a total market value of $82 billion in just two days, shaking the world. This article is derived from the Meteorite Labs article and compiled by PANews. (Synopsis: The goal behind Trump's meme coin: the global asset on-chain movement to achieve dollar hegemony? (Background added: Trump supports the concept coin? WLFI went crazy last night to increase the position, BTC, Ethereum, AAVE, ONDO. With Trump on the verge of returning to the White House as U.S. president, investors are excited about the future of the encryption market. Since Trump won the presidential election, BTC has crossed the $100,000 milestone. Trump's officially announced $Trump touched a total market value of $82 billion in just two days, which not only shocked global encryption investors, but also the influx of more liquidity into Solana will further intensify the rise of the Solana ecosystem. During last year's election campaign, Trump promised to include all the BTC currently held by the US government and the BTC purchased in the future into the "national strategic BTC reserve". He will stop the government's crackdown on cryptocurrency within an hour of taking office and propose policies that will promote the full development of cryptocurrency. If Trump does deliver on these promises of support, the U.S. could dramatically accelerate the adoption of cryptocurrency and become a "global cryptocurrency hub." We expect that Trump will prioritize the promotion of FIT21 (the 21st Century Fintech Innovation Act), which allows tens of thousands of cryptocurrencies to be divided into "commodities" and "securities" with a near-definite distinction, driving a new round of entrepreneurship and innovation under the reasonable supervision of the SEC and CFTC. Traditional VCs and funds can enter the market under the protection of Compliance, pulling the market value of the entire encryption market to a new height. For us investors, different types of cryptocurrency have different risk characteristics. The price fluctuation of "commodity" cryptocurrency may be related to market demand, supply and other factors, while securities cryptocurrency may be affected by factors such as the operation of the project party and market expectations. With a clear classification, we can also more accurately assess the risk of investing in the cryptocurrency and make more reasonable investment decisions. First, FIT21: clarify the attributes of "commodities" and "securities" From the perspective of US regulation, since 2015, whether cryptocurrency is a "commodity" or a "security" has been contested by the SEC and the CFTC. The SEC's decision is based on: OmniVision Test – Is it involved in the investment of funds? – Do you have a profit expectation? – Is there a common subject? CFTC's judgment basis: – Is it fungible? – Is there market tradability? – Is there a certain scarcity? The 21st Century Fintech Innovation Act (FIT21), passed by the U.S. House of Representatives in May, establishes a broad regulatory framework for digital assets by clarifying the regulatory responsibilities of the two regulators, as well as updating existing securities and commodity laws. The framework characterizes cryptocurrencies other than Stable Coin into two categories: - "Digital goods", which are exclusively regulated by the CFTC - "Restricted digital assets", which are actually similar to securities, but are not explicitly regulated by the SEC Hereinafter directly referred to as "commodities" and "securities". FIT21 proposes five key elements to distinguish whether a cryptocurrency is a security or a commodity howey test: Consistent with the SEC's long-standing judgment, if a purchase of a cryptocurrency is considered an investment and investors expect profits from the efforts of an entrepreneur or a third party, it is generally considered a security. Use and consumption: If a cryptocurrency is primarily used as a medium for consumer goods or services, for example a token can be used to purchase a particular service or product, it may not be classified as a security, but as a commodity. Degree of Decentralization: The bill specifically emphasizes the degree of decentralization of the Block chain network. If the network behind a certain cryptocurrency is highly decentralized and there is no "back door" for a central authority to control the network or asset, that asset will be considered a commodity. Functionality and technical features: If a cryptocurrency primarily provides financial returns or allows votes to participate in governance primarily through the automated procedures of the Block chain, it is likely that they will be considered securities. Marketing: How Cryptocurrency is promoted and sold in the market is also an important factor. If a token is marketed primarily through the expected return of the investment, it may be considered a security. From the perspective of use and consumption, public chains and PoW tokens are more in line with commodity standards. Their common feature is that they are primarily used as Medium of Exchange or payment methods, rather than as investments in anticipation of capital appreciation. While these assets may also be speculatively bought and held in the real market, they tend to be treated as commodities from a design and primary use perspective. The bill mentions that "if no relevant person alone owns or controls more than 20% of the voting rights through the relevant person in the past 12 months, this indicates that the digital asset has a high degree of decentralization". This usually means that no single entity or small group can control the operation or decision-making of the asset. From this perspective, a high degree of decentralization is an important factor in driving assets to be considered commodities, as it drops individual entities' control over the value and operation of assets, consistent with the characteristics of commodities, i.e., primarily for exchange or use, rather than for return on investment. From the perspective of functional and technical characteristics, the utility token through DAO governance is more in line with the standards of securities. "If a cryptocurrency primarily provides financial returns through the automated process of the Block chain or allows voting to participate in governance, they will be considered securities" because this indicates that investors are expecting benefits through the efforts of third-party businesses. There is a contradiction, what if a utility token also has a high degree of decentralization in terms of governance? Shouldn't it be defined as a commodity? The point that should be considered here is whether the main purpose of holding an asset is to obtain a financial return (e.g., through asset appreciation or dividend), or is it to use the asset for trading and other activities on the platform or network? In the context of the approval of the ETH Spot ETF application (Form 19b-4), the definition of ETH is more inclined to functional use, and its existence of stake and governance nature is more to maintain network execution than economic returns, so L1 digital assets similar to ETH in the future can theoretically be regarded as commodities if they meet preconditions such as the degree of decentralization. From this point of view, protocols governed by DAO, including Decentralized Finance and L2, are more likely to be defined as securities if they are closer to obtaining economic returns or dividends in the direction of governance. Therefore, in summary, only from the FIT21 bill, we temporarily treat L1 tokens as commodities, and protocol tokens and L2 tokens with DAO governance as securities. At the same time, we find that this result is basically consistent with the results of the Type1 (digital goods) and Type2 (equity governance token) methods proposed by Frax Finance. This will be explained in detail in Part III. Although it was passed by the House of Representatives back in May, FIT21 is still not voting in the Senate...