Original Title: "How Crypto Concept Stocks are Reshaping the Global Financial Landscape - Space Review"

Original Source: WaterdripCapital Colorful Waterdrop

On July 3rd, Waterdrip Capital, together with BlockBeats, Victory Securities, Huobi Research Institute, data mover Phyrex Ni, and other guests, held a high-quality X Space discussion around the rise of "crypto concept stocks." Here is a recap of the key points from the event.

01 What are "Crypto Concept Stocks," and Why are They Worth Paying Attention to Now?

"Crypto Concept Stocks" is not a new concept, but with companies like Circle accelerating their IPOs, market attention has significantly increased.

Da Shan, a partner at Waterdrip Capital, mentioned that as early as 2023, he came into contact with the concept of "Coin Stocks" through research on Hong Kong-listed Boya Interaction and US-listed MicroStrategy. Da Shan pointed out, "The premium offered by the stock market is much higher than that of the crypto circle itself, making crypto concept stocks a 'liquidity new highland outside the crypto circle.'" Currently, Waterdrip Capital has invested in five publicly listed crypto concept stock companies, with a year-end target of expanding to 15.

Paolo, an ecological partner at Victory Securities, categorizes crypto concept stocks into the three major sectors of "Coin-Chain-Exchange," corresponding to stablecoins (such as Circle), public chains (such as ETH, SOL), and exchanges (such as Coinbase, Robinhood). He believes that Coinbase is a typical strong cycle exchange platform with a "Davis double-click" effect, where trading activity and valuation multiples rise in tandem during a bull market. He added, "Robinhood is a bridge for Web2 users to enter Crypto and is also promoting the tokenization of US stocks."

Data mover Phyrex Ni recalled that in 2023, after BlackRock applied for a spot BTC ETF, COIN and MSTR became indicators of whether the ETF would be approved. Despite the limited fluctuation in BTC's price, the market's buying intensity for both significantly increased, prompting him to start increasing his positions. "ETFs are the traditional institutional entry point for crypto allocation, and crypto concept stocks are their preferred channel." Phyrex also continues to monitor Circle and Robinhood, believing that with a valuation pullback, there is an opportunity to re-enter.

Huobi Research Institute head Chloe, on the other hand, pointed out from her own research and trading experience that the early optimism for Coinbase stemmed from its high B2B compliance business stickiness, which maintained stable growth even in bear markets. Its listing led to a significant return for USD VCs, creating a paradigm effect.

02. What is the Driving Force Behind the "Hot Cryptocurrency Concept Stock"?

From an external perspective, three forces constitute the main driving force:

Firstly, there is a clear turning point in the policy aspect. SEC Chairman Gensler's departure is seen as a key turning point in the loosening of regulations for cryptocurrency stocks. Dashan mentioned that the SEC had long accumulated IPO applications from over 100 cryptocurrency companies. After Gensler stepped down, companies like Circle, Kraken, Fireblocks, following Coinbase's lead, have restarted their listing processes, creating a "honed accumulation for a sudden release" effect.

Secondly, there is incremental funding entering the market. It is estimated that the combined pre-IPO valuation of these companies has exceeded a trillion dollars. If calculated based on a 10% financing ratio, there will be at least tens of billions of dollars of actual money flowing into the cryptocurrency concept stock market. Institutional investors often enter first, followed by retail investors, creating a dual-drive of "funds + liquidity."

Thirdly, there is a comparative advantage in the listing path. In the view of Paolo and Chloe, compared to the chaotic valuation, difficult exits, and lack of retail investor protection mechanisms in the coin issuance path of the currency circle, the IPO mechanism of the U.S. stock market is clear, with transparent valuation and comprehensive regulation. It has become the preferred exit method for many leading projects and has also attracted the attention of traditional VCs and hedge funds.

From within the cryptocurrency industry, the industry's own evolution has also become an important internal factor:

Firstly, there is an intensification of internal strife and the Gresham's Law effect. Dashan and Paolo both pointed out that in the past few years, VCs and trading platforms tended to bet on token projects with inflated FDV valuations and extremely long realization cycles, leading to a scarcity of high-quality assets, a decrease in retail investor returns, and the market gradually leaning towards irrational speculation such as meme coins. In contrast, cryptocurrency concept stocks, due to their scarcity and clear regulation, are more easily able to attract funds and create wealth effects.

Secondly, there is a structural shift in influence. Dashan mentioned what Kraken Co-CEO Arjun Sethi stated, the "Trojan Horse moment of the cryptocurrency industry"—an increasing number of traditional financial liquidity and assets are beginning to migrate to the blockchain. The Web3 camp is influencing stock prices through on-chain assets, gradually gaining influence in a heavily regulated onshore market. This means that the fusion of "on-chain assets + traditional valuation system" is shaping a new investment paradigm.

Finally, Chloe also pointed out that the US stock market has a lower participation threshold and diverse exit paths, which are more friendly to both primary funds and retail investors. The wealth effect brought by Coinbase's listing is still a reference for the industry, while the OTC premium rise of projects like Circle further confirms the continuity of this trend.

03 From Token Issuance to Listing, Will Crypto Projects Move Towards a "Dual-track System"?

With more and more crypto projects facing the "token issuance or listing" path choice in the primary market, coupled with securities firms and state-owned enterprises rushing into the crypto concept stock field, the market is beginning to focus on: Are crypto companies moving towards a "dual-track system" of token issuance and listing in parallel? How will the mainstream exit methods evolve in the future? Several guests provided in-depth analysis from the perspectives of regulation, cost, valuation, market structure, and other dimensions.

First, token issuance and listing are no longer a "one-or-the-other" choice; more projects will take a "two-pronged approach."

Phyrex Ni, when reviewing the Coinbase listing case, pointed out that as early as then, the proposal submitted to the SEC included the "dual-path" choice: either just an IPO or an IPO + token issuance simultaneously, with no regulatory objection to this, indicating that "issuing tokens after listing" or "token issuance after listing" is not a rigid regulatory constraint. Coinbase has recently hinted that it may issue a native token on the Base chain in the future, further signaling this. Phryex emphasized that while coins and stocks cannot be directly equated, their underlying value can be reflected in incentives, trading liquidity, and company fundamentals, forming a complementary relationship for project teams.

Chloe also mentioned that many projects are trying to return tokens to their community incentive tool essence, while viewing the stock market as a financing exit with higher liquidity and valuation. For example, a company can distribute points through tokens, provide trading incentives, and simultaneously achieve equity financing exit; VC can also cash out financing commitments through platforms with stronger liquidity.

Second, the inversion of cost and valuation has led more projects to lean towards "abandoning token issuance and transitioning to listing."

Currently, the listing cost on top-tier trading platforms remains high, with leading projects often needing to allocate a large number of tokens as a Launchpad cost. Once these tokens enter the market, the project team needs to buy them back, creating significant financial pressure. Under the US stock registration system, the cost of going public through mergers or reverse mergers is more manageable, with completion possible for just a few million dollars. This is more cost-effective for projects valued at 100-200 million dollars. Dasan frankly stated, "After comparing valuation and cost, some projects are more inclined to follow the traditional capital market path." In the trend of increasing market-oriented financing efficiency and exit paths, which path a project chooses fundamentally depends on the cost of capital and liquidity performance.

Thirdly, Brokerages and Traditional Institutions Significantly Enter the Field, Boosting the Implementation of the "Dual Track" Infrastructure.

Paolo used Robinhood as an example to point out that the platform accurately identified various Crypto market trends, significantly increasing revenue through supporting assets like Dogecoin—this year, Crypto trading revenue has even surpassed the stock sector. Robinhood's future three-step strategy (supporting crypto deposits → 24/7 stock trading via RWA → full blockchain integration) is driving the convergence of crypto and traditional asset trading infrastructure.

On the other hand, Chinese brokerage firms like Guotai Junan International have obtained relevant licenses, while other brokerages are actively applying for licenses or strategically collaborating to establish compliant trading and new asset allocation services. Paolo noted that "the AUM of a mid-sized brokerage may be over a hundred times that of a top crypto asset manager," and these institutions will bring massive funds and user conversion channels to BTC, RWA structured products, and other Web3 assets, accelerating the maturity of the dual-track ecosystem.

Fourthly, Evolution of Project Roles: Shifting from Exchange-Oriented to Diversified Exploration Paths.

In the past, projects were willing to allocate a large number of tokens to list on exchanges, even compressing development budgets to meet liquidity providers' requirements. Nowadays, Chloe mentioned that the token issuance process often requires reserving millions of dollars in chips, covering user airdrops, exchange listings, liquidity arrangements, etc., and the funding threshold continues to rise. Opting for a US stock market listing enables financing and exits through equity systems and clear regulatory frameworks. For projects with strong financial reserves and clear strategic planning, simultaneously planning token incentives and equity exits may become the mainstream model.

04 Full Entry of Traditional Brokerages and SOEs

Paolo, a partner at Victory Securities Ecosystem, pointed out that in the past month, including Guotai Junan International and Futu, Chinese brokerage firms have successively obtained licenses related to virtual assets. He stated, "It is not an exaggeration to say that in a single week, we have received visits from over a dozen brokerages to discuss cooperation." Hong Kong brokerage firms are accelerating their entry and intensifying their layout:

· Seizing Entry Qualifications: From applying for VASP licenses, seeking compliance pathways to deploying RWAs and stablecoins, the pace is rapid;

· Connecting Underlying Systems: Many brokerages are using a B2B model to connect to trading platforms like VDX, constructing an integrated asset allocation channel for "crypto concept stocks";

· Upgrading User Experience: Brokerages with a large number of Web2 users and AUM are starting to explore the feasibility of combining traditional structured strategies (like snowball, shark fin) with assets such as BTC, as a way to expand into crypto asset allocation strategies.

· Paolo's Emphasis: "While senior executives at traditional brokerage firms are still quickly catching up, the business teams have fully sensed the direction and are starting to substantially enter the field."

Chapter 05 Summary: This Is the Beginning of a New Narrative

If the core narrative of the previous bull market was Bitcoin, Ethereum, and the "Tokenomics" trend, then in this current cycle, "Cryptocurrency Concept Stocks" are emerging as a new paradigm connecting the crypto world with traditional finance. It has not only overcome the three major barriers of regulatory trust, liquidity, and exit mechanisms but has also opened up a compliant and innovative growth path for project teams, investors, and institutions. The crypto world is no longer an isolated island on the edge of the financial system but is gradually integrating into, and even reshaping, the underlying architecture of the global financial system—this is not just a cycle shift but also a narrative reconstruction and paradigm evolution.

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