Q2 2025 Review: The crypto market welcomes a structural turning point of "Compliance Narrative + Real Returns"

In the second quarter of 2025, the crypto market is showing signs of overall recovery, with multiple positive factors accelerating industry development. The global macro environment is stabilizing, and tariff policies are easing, creating favorable conditions for capital flow and asset allocation. Several countries are introducing friendly policies, and traditional financial markets are beginning to actively embrace cryptocurrencies, linking tokens with traditional financial assets to realize the "financialization" of capital structures.

The stablecoin sector is particularly active, from the expansion of USDT/USDC scale to the implementation of regulatory frameworks in multiple countries, and the successful listing of Circle, all of which push the crypto narrative closer to mainstream capital markets, releasing strong positive signals. At the same time, the popularity of on-chain derivatives continues to rise, with Hyperliquid becoming a phenomenon-level leader, with daily trading volumes repeatedly approaching or surpassing certain centralized exchanges, and its native token performing strongly. As on-chain trading systems and user experiences continue to optimize, the derivatives market is accelerating its leap from "off-chain replication" to "on-chain native," further promoting the development of DeFi.

Global Stablecoin Regulation Implementation and Potential Opportunities

The "Genius Act" promotes the accelerated implementation of global stablecoin regulation.

In the second quarter of 2025, the global stablecoin market is characterized by continuous growth and the accelerated implementation of regulatory frameworks. As of June 24, the total market value of global stablecoins reached $240 billion, an increase of approximately 20% since the beginning of the year. Dollar-pegged stablecoins dominate the market, with a market share exceeding 95%. USDT and USDC together account for 89.4% of the market share, further intensifying market concentration. Over the past three months, the on-chain trading volume of stablecoins exceeded $10 trillion, with an adjusted effective trading volume of $2.2 trillion and a total of 2.6 billion transactions, adjusted to 519 million transactions. Stablecoins are gradually evolving from crypto trading tools to mainstream payment mediums, with the potential to expand the dollar-pegged stablecoin market size to $2 trillion within the next three years, further reinforcing the dollar's dominant position in the global digital economy.

Against this backdrop, the U.S. Congress passed the "U.S. Stablecoin Innovation and Regulation Act" (GENIUS Act), establishing a comprehensive federal regulatory framework for fiat-backed payment stablecoins. This act, along with the "2025 Digital Asset Market Clarity Act," collectively shapes a new landscape for digital asset regulation in the United States.

The "Genius Act" carries the grand strategy of the United States to promote the modernization of the payment and financial system and to consolidate the global dominance of the dollar. The act stipulates that compliant stablecoins must achieve a 1:1 full reserve in dollars, strictly stored in regulated qualified custodians in the form of cash, demand bank deposits, or short-term U.S. Treasury securities, and implement a high-frequency audit and information disclosure system. This not only alleviates market concerns about the transparency of stablecoin assets but also establishes a "U.S. Treasury absorption pool" that is deeply tied to on-chain payment systems, which is expected to drive the demand for new U.S. Treasury securities worth trillions of dollars in the coming years.

More importantly, the "Genius Act" clearly positions compliance stablecoins as payment tools, excluding them from being classified as securities, fundamentally addressing the long-standing issues in the United States regarding the unclear regulatory jurisdiction of crypto assets, regulatory overlaps, and legal uncertainties. The act adopts a "federal + state" dual-track regulatory authorization model, achieving a seamless connection between traditional financial regulation and the emerging stablecoin ecosystem.

Against the backdrop of intensifying competition in the global digital currency arena, the United States is actively building a global "token payment network" centered around the dollar by promoting a compliance-centric stablecoin system led by the private sector. This open, standardized, and auditable stablecoin architecture not only enhances the digital liquidity of dollar assets but also provides an efficient and low-cost solution for cross-border payments and settlements.

For the crypto industry, the significance of the "Genius Act" is equally profound. The act enforces a 1:1 full reserve system, combined with strict custody, auditing, and high-frequency information disclosure mechanisms, which effectively blocks "black box operations" and the risk of reserve misappropriation at the institutional level, greatly enhancing market trust and acceptance of stablecoins. In addition, the act has established a multi-level compliance authorization system, providing a clear and actionable legal framework for the issuance and application of stablecoins, significantly lowering the compliance threshold for financial institutions, payment service providers, and cross-border trade platforms to access the stablecoin system.

Apart from the United States, South Korea, Hong Kong, and other regions are also actively promoting a regulatory framework for stablecoins. South Korea has proposed the "Basic Law on Digital Assets," allowing qualified local companies to issue stablecoins and strengthening reserve and capital requirements. Hong Kong will officially implement the "Stablecoin Ordinance," becoming one of the first jurisdictions in the world to establish a stablecoin licensing system. Against this backdrop, several Chinese-funded enterprises and financial institutions have begun to attempt to enter the stablecoin industry.

The compliance of stablecoins brings huge opportunities to the crypto market.

The passage of the "Genius Act" has opened up unprecedented development opportunities for the cryptocurrency industry, mainly reflected in the following three key areas:

1. Compliance stablecoins are deeply integrated with the DeFi ecosystem, releasing enormous capital potential. The legislation clarifies the legal status and regulatory framework for stablecoins, opening a green channel for institutional funds to enter the DeFi ecosystem. More and more teams are dedicated to building transparent and secure liquidity pools and credit protocols that comply with regulations.

2. Stablecoins bring revolutionary opportunities to the payment sector. With the rapid growth of digital payment demand, many exchanges are accelerating their layout of stablecoin payment card services, promoting the transformation of payment infrastructure towards stablecoins. The low cost and high efficiency of stablecoin settlements make them particularly suitable for cross-border payments, instant settlements, and micropayments in emerging markets.

3. RWA combines stablecoin anchoring with blockchain technology, fostering asset digitization and liquidity innovation. With the help of compliance contracts and on-chain issuance, it transforms physical assets such as real estate and bonds into tradable digital assets, expanding the liquidity of traditional assets and providing investors with diversified allocation options.

Of course, the "Genius Act" also brings challenges. It expands the definition of digital asset service providers, requiring developers, validators, and others to comply with anti-money laundering regulations. Decentralized projects may face greater compliance pressure, leading to market differentiation.

Circle's Listing Leads a New Paradigm: Corporate Balance Sheets Transition to On-Chain

In early Q2 2025, the crypto market entered a phase of consolidation, with Bitcoin Dominance reaching its highest level in four years. Nevertheless, institutional participation remains strong, especially through compliance channels such as spot ETFs and stablecoins, further enhancing the position of crypto assets in the global asset allocation system.

Circle, as the issuer of USDC, successfully went public on the New York Stock Exchange with an issuance price of $31 per share, raising a total of $1.1 billion. The IPO pricing market value reached $6.9 billion, and within less than a month, the market value surged to $68 billion. Circle's strong performance represents that Compliance encryption companies have officially entered the mainstream capital market, opening a listing window for other encryption companies.

Apart from Circle, several listed companies have taken substantial steps in their digital asset allocation strategies:

• SharpLink Gaming has accumulated a total of 188,478 ETH and deployed it to a staking protocol, with an annualized yield generating 120 ETH in staking rewards.
• DeFi Development Corp has restructured its business with Solana as its core asset, acquiring a total of 251,842 SOL and obtaining a $500 million equity credit line for further accumulation.
• By June 2025, Strategy will hold 592,345 Bitcoins, with a market value exceeding 63 billion USD, firmly maintaining its position as the world's largest public BTC holder.
• Metaplanet is rapidly advancing its Bitcoin reserve strategy in the Japanese market, increasing its holdings by 1,111 BTC in the second quarter of 2025, bringing the total holdings to 11,111 BTC.

From a geographical distribution perspective, corporate encryption asset strategies are no longer limited to the US market; there is active exploration in the Asian, Canadian, and Middle Eastern markets, showcasing characteristics of globalization and multichain. Companies are no longer just passively holding coins but are constructing balance sheets and revenue models centered around encryption assets, pushing financial models from "reserves" to "yield generation", and from "hedging" to "production".

At the regulatory level, the regulatory Compliance represented by Circle's IPO, as well as the SEC's repeal of SAB 121 and the establishment of the "crypto task force," signify that the U.S. policy stance is evolving in a clearer direction. Meanwhile, although Kraken still faces an SEC lawsuit, its proactive advancement of early-stage IPO financing also demonstrates that leading platforms still have expectations for the capital market.

The market trends and corporate behaviors in this quarter indicate that the crypto industry is entering a new stage of "institutional structural reallocation" and "on-chain asset liability management". Native crypto VCs should seize the opportunity and focus on the following directions: first, projects with stablecoin, staking, and DeFi yield capabilities; second, service providers that can assist enterprises in executing complex asset allocations; third, leading enterprises that embrace Compliance and are willing to enter the public capital market. In the future, the depth and innovative models of enterprises' allocations to specific altcoin ecosystems will become core variables in the new round of industry valuation reconstruction.

Hyperliquid, On-Chain Derivatives and the Rise of Real Yield DeFi

In the second quarter of 2025, the decentralized derivatives protocol Hyperliquid achieved a key breakthrough, further solidifying its dominant position in the on-chain derivatives market. Hyperliquid not only continues to attract top traders and liquidity but also effectively drives the growth of the entire derivatives track and user migration trends. Its native token HYPE performed exceptionally well during the quarter, with an increase of over 400% since the low point in April, and reached a new all-time high of around $45 in mid-June.

The core driving force behind the rise of HYPE tokens comes from the explosive growth in the platform's trading volume. In April 2025, Hyperliquid's monthly trading volume was approximately $187.5 billion. In May, this figure soared by 51.5% to a record $248 billion. As of June 25, Hyperliquid's monthly trading volume still reached $186 billion, with a cumulative trading volume of up to $621.5 billion in the second quarter. Hyperliquid's market share in the decentralized perpetual contract market reached 80%, far exceeding 30% in November 2024; its monthly perpetual contract trading volume in May accounted for 10.54% of the total derivatives volume from centralized exchanges during the same period, setting a new record.

Hyperliquid's core profit source relies entirely on the trading volume generated by its platform. The protocol accumulates revenue by charging fees on each transaction, building a highly sustainable profit model. 97% of this revenue is directed towards repurchasing HYPE tokens through an assistance fund, creating a strong value return mechanism. In the past seven months, Hyperliquid's total fees have reached $450 million, with the assistance fund holding over 25.5 million HYPE tokens. Based on the current market price of approximately $39.5, the market value of the holdings exceeds $1 billion.

Hyperliquid has designed a fee structure that is centered around user incentives and community orientation. The platform sets tiered fee rates based on users' weighted trading volume over the past 14 days, allowing high-frequency users to enjoy lower transaction fees, while market makers in