Last weekend, I had the great opportunity to interview OG Frank @qinbafrank in his office.

This low-key senior investor and trader has clear logic and comprehensive insights when talking about stablecoins and the macro market. He took me through the ten-year consensus of Bitcoin, the US ambitions behind stablecoins, and the future of the combination of cryptocurrencies and stocks.

Frank believes that the Crypto market is becoming more efficient, and stablecoins and the combination of coins and stocks will force the entire crypto industry to "self-revolutionize", from bubbles to fundamentals, from narratives to implementation. He also pointed out the essential differences between ETH and BTC, as well as the fierce competition of stablecoins in the future.

This is an in-depth interview with extremely high information density. If you still have questions about stablecoins, RWA and the recent hot narratives, or are looking for a thinking model to understand the new order of the crypto world - I recommend you to read it carefully.

Chapter 1: The “ overt conspiracy ” of stablecoins and the strengthening of the status of the US dollar

Mercy : You mentioned that stablecoin is an " open conspiracy " , what do you mean specifically?

Frank: I think stablecoin is a conspiracy of the United States. There are three underlying reasons behind this:

First, the United States hopes to strengthen the status of the dollar by putting the dollar on the chain. Nowadays, many countries and regions are de-dollarizing, and the proportion of U.S. debt held overseas is also declining. The United States needs to find more application scenarios for the dollar.

Stablecoins, especially those pegged to the US dollar, are essentially the tokenization of the US dollar, that is, "on-chain dollars". In this way, the United States can bypass central banks and directly distribute US dollars to the global crypto population, realizing a B2C retail model.

If the number of crypto people increases, the issuance of stablecoins increases, and the proportion of stablecoins anchored by the US dollar increases, then the United States will be able to directly "intercept" the crypto people in non-US regions and force them to use US dollar stablecoins for transactions and payments.

Second, by issuing stablecoins, new purchasing power can be found for U.S. Treasuries. Why would stablecoin companies buy a large number of short-term U.S. Treasuries? I think the acceleration of this trend began with the collapse of Luna and FTX in 2022, and the collapse of Silicon Valley Bank in 2023.

These events made stablecoin issuers such as Tether and Circle realize that holding only Bitcoin or placing large amounts of US dollar reserves in banks are risky. Therefore, they began to increase their holdings of US Treasuries, especially short-term US Treasuries, because short-term US Treasuries have good liquidity, high yields, and relatively low risks.

Third, the United States’ ambitions do not stop there, they want more. The vigorous promotion of stablecoins is to compete in advance for the United States’ future pricing power for on-chain assets.

Therefore, the introduction of the Stablecoin Act is to expand the influence of the US dollar through on-chain dollars, find new buyers for US debt, and ultimately master the pricing power of on-chain assets. This is a natural evolutionary process, driven by events such as the Luna explosion, Evergrande Commercial Bills, Silicon Valley Bank explosion, and the Fed's interest rate hike.

Mercy : We launched OKX PAY this year , and just announced our strategic cooperation with Circle two days ago . Stablecoins have become the new theme. What do you think of the status of Tether and Circle in the stablecoin market?

Frank: Circle currently has the first-mover advantage. It was the first to obtain a compliance license and has a complete custody and compliance system.

At the same time, it is deeply tied to giants such as Coinbase and BlackRock, and is actively expanding payment scenarios. However, the competition for stablecoins will definitely be more intense in the future. Circle now feels the competitive pressure, so it runs faster.

But Tether also has its unique advantages. It is widely used in some cross-border payments, and a large part of its usage scenarios are trade scenarios outside the crypto world.

The US government also hopes that Tether can continue to "expand its territory". As long as it is under control, does not do evil, and continues to increase its holdings of US debt, the United States is willing to allow it to conquer the city in this way. In the future, USDT may still dominate the US dollar-anchored stablecoin market in non-US regions.

Chapter 2: Cyclical Fluctuations in the U.S. Stock and Crypto Markets

Mercy : What do you think about the recent volatility in the U.S. stock and crypto markets?

Frank: The U.S. stock market has always had its own operating rules. For example, in non-recessionary periods, the U.S. stock market usually shows a V-shaped rebound.

I had inferred in March that, except for the 2008 financial crisis, the other major adjustments in the history of the U.S. stock market were relatively short. For example, it only fell for three months in 2018, and in March 2020 it rebounded V-shaped in just one month.

This is due to the high consistency of institutional quantitative funds and CTA strategies, which makes the market adjust very quickly and will not experience a bear market for one or two years like some currencies. The adjustment of the US stock market this year was also very fast. Although individual stocks fell sharply, the market deleveraged quickly. Once the panic subsides, funds will quickly flow back.

Mercy : Tom Lee @fundstrat has been bullish on ETH recently , and the recent trend of ETH is indeed very strong. What do you think is the difference between the performance of Bitcoin and Ethereum in the market?

Frank: I think Bitcoin and Ethereum are no longer on the same level.

In the past decade, Bitcoin has eliminated all competitors and established its position in the field of value storage. In the early days, there were competitors such as Litecoin and Bitcoin Gold. There were even large block disputes in 2016 and 2017. In 2018, Bitcoin also split into BCH.

But in the end, Bitcoin became digital gold by virtue of its simplicity, long history, and strong consensus. Now, many people enter the industry without feeling that Bitcoin has competitors, and this consensus will continue to grow.

Ethereum needs more proof. Although it has taken the lead in new narratives such as stablecoins and U.S. stocks on the blockchain due to its higher degree of decentralization and better security, its competitive advantage has not yet been fully established.

It has growth potential and may occupy a large share in the future of currency-stock integration, but it does not have monopoly or exclusivity at present and competition remains fierce.

Moreover, ETH is more affected by macro factors. For example, from February to April this year, Bitcoin fell by more than 30%, but Ethereum fell even more. However, in the long run, if Ethereum can continue to work hard and constantly correct its development direction, its fundamentals will continue to improve.

Chapter 3: U.S. Stocks on the Blockchain and the Future of the Crypto Industry

Mercy : Putting U.S. stocks on the blockchain is actually not a new topic. Why has it become popular again now?

Frank: In the past, putting U.S. stocks on the blockchain was done covertly, but now it can be done openly under the guidance of clear laws and regulations.

Atkins, chairman of the U.S. SEC, also mentioned that the integration of securities assets and chains is a trend, and the SEC is exploring the formulation of new laws and regulations, and considering allowing the New York Stock Exchange and Nasdaq to list crypto tokens. This shows that the U.S. regulators have also seen the advantages of crypto assets in clearing and settlement efficiency, and hope to promote this process through the Stablecoin Act.

In addition, the promotion of Silicon Valley technology giants is also an important factor. They believe that AI represents future productivity and encryption represents future production relations, and the two can naturally merge.

They passed these ideas to politicians, prompting the government to push U.S. stocks onto the blockchain. There are also votes behind this. Crypto people have a large voting group in the United States. The Republican Party and Trump actively embraced encryption in order to win the support of these voters.

Mercy : What new opportunities will the integration of cryptocurrency and stocks bring?

Frank: The integration of cryptocurrencies and stocks will bring new asset types and wealth effects.

First of all, for quantitative funds and big investors in the crypto market, perpetual contracts for large U.S. stocks will become new trading targets, expanding their range of choices.

Secondly, if the pink sheet market of U.S. stocks and some small-cap stocks in Hong Kong stocks are tokenized and put on the chain, it may bring huge wealth effect.

Finally, equity transactions of unlisted companies (exclusive beasts) and even direct issuance of tokens by startups in the future will become possible. This will allow ordinary people to have the opportunity to participate in these investments that were previously only accessible to high-net-worth individuals.

Mercy : How do you think the crypto industry will evolve?

Frank: I think the crypto market is undergoing a process of "squeezing out water" and "forcing back".

The massive expansion of crypto VCs caused by the flood of money in 2020 and 2021 has pushed up the valuation of the primary market, and too many projects are overvalued; they are now entering the "liquidation period". At the same time, the core teams of crypto projects have the moral risk of "only rights but no obligations", and the cost of doing evil is low. These problems have caused the market to become unhealthy.

Now, with the introduction of ETFs and the maturity of the investor structure, the market will become more efficient, and investors will pursue certainty rather than blindly pursue high returns.

This will lead to market differentiation, with funds flowing to high-quality projects with fundamentals, innovative narratives, and growth potential, while those copycat projects with unequal rights and obligations and no improvements will be eliminated. This "squeeze" will force crypto practitioners to pay more attention to project quality and compliance, and make the rights and obligations of the team equal.

In the future, we may see more projects with real business progress and revenue highly linked to the value of tokens, and even companies issuing tokens directly on the chain instead of pure cryptocurrencies. This will make the entire crypto market healthier and more mature.

Here is the dialogue of "Friends of OKX" ~ This issue's interviewer is @Mercy_okx. I am very happy to have such an in-depth dialogue with Mr. Frank @qinbafrank about the industry. I hope it will be inspiring to everyone!

We will continue to interview influential and recognized teachers in and outside the circle and make a series of content. If you are interested, please follow us~

This article is for reference only. This article only represents the author's views and does not represent the position of OKX. This article is not intended to provide (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. We do not guarantee the accuracy, completeness or usefulness of such information. Holding digital assets (including stablecoins and NFTs) involves high risks and may fluctuate significantly. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals for your specific situation. Please be responsible for understanding and complying with local applicable laws and regulations.