7.4 AI Daily The regulation of the Crypto Assets industry is tightening, and the ecological development coexists with innovation.

I. Headline

1. Trump signs the "Beautiful Big Bill", triggering cryptocurrency tax reform

After months of intense debate, U.S. President Trump officially signed the controversial "Beautiful Great Plan" on July 4. The plan aims to revitalize the American economy through massive tax cuts and deregulation, which also includes significant reforms for the cryptocurrency industry.

According to the provisions of the bill, cryptocurrencies will be regarded as a category of property, and investors will need to pay capital gains tax upon sale. Additionally, income from cryptocurrency mining will be considered taxable income. Furthermore, the bill also stipulates tax incentives for cryptocurrency donations.

Analysts believe that this bill will bring greater certainty and compliance for cryptocurrency investors and businesses. However, there are also concerns that excessive regulation may hinder industry innovation. Overall, this bill reflects the government's gradual incorporation of cryptocurrency into the mainstream financial system.

2. The Ethereum ecosystem is facing a crisis of trust, Vitalik calls for unity.

The Ethereum ecosystem has recently fallen into an unprecedented trust crisis. Since the launch of the ETF, Ethereum has continuously experienced capital outflows, totaling over $1.2 billion. From core developers to commercial companies and external investors, there are differing opinions on the future development path of Ethereum.

Ethereum co-founder Vitalik Buterin called for the community to unite and contribute to ecological development together. He emphasized that Ethereum has become an extremely large decentralized business entity in both the cryptocurrency and traditional finance sectors, requiring support from all participants.

Analysts point out that Ethereum is at a critical development stage, facing unprecedented challenges. Only by strengthening communication and clarifying development direction can community confidence be restored and promote the sustainable and healthy development of the ecosystem. This process is a significant test for Vitalik and the entire Ethereum community.

3. The Solana community has strong cohesion, and the Breakpoint conference has received high praise.

The recently concluded Solana Breakpoint conference received high praise from the community. The conference featured innovative mechanisms such as compact sharing sessions and debate formats, allowing participants to have more interactive experiences. Dozens of ecosystem projects in the exhibition area also launched new products, and there were no awkward moments throughout the entire conference.

Participants expressed that the Solana community has a strong sense of cohesion and is more pragmatic in pursuing user growth and product implementation. The Solana ecosystem is developing in the right direction and is worth learning from for other public chains.

Analysts believe that the cohesion of the Solana community is its greatest strength. Only by uniting and focusing on practical applications can the development of the public chain ecosystem be truly promoted. The success of this Solana conference is a concentrated reflection of the community's strength.

4. AI+We has become a new hotspot, and entrepreneurs have high hopes.

At the recently concluded TOKEN2049 conference, the combination of AI and We became a focal topic. More and more entrepreneurs and investors are starting to pay attention to this sector, believing it could become the next breakout point.

Some well-known investors have stated that although most AI projects are still "Meme" concepts at present, there will surely be a giant AI project in the future that can rival Ethereum. Meanwhile, some entrepreneurial projects focusing on consumer-level AI applications have also attracted funding.

Analysts point out that the combination of AI and We has a natural synergy. AI can empower We applications, while We provides a decentralized infrastructure for AI. This intersection is worthy of significant attention in the industry. Currently, uncovering the true killer applications is key.

5. The cryptocurrency presale market is booming, with new projects emerging one after another.

In the context of a persistently sluggish cryptocurrency market, the cryptocurrency presale market is unusually vibrant. Data shows that on July 4th, multiple new projects launched presales, attracting significant attention from investors.

Among them, the PEPETO project achieved a price increase of 15 times during the presale period, with the final presale price reaching 0.02 USD. Analysts believe that such high premium pricing carries significant investment risks.

At the same time, some presale projects dedicated to solving practical problems have also received a good market response. For example, the SNORT project aimed at reducing trading costs on Telegram, and Ondo, which focuses on the tokenization of real-world assets.

Overall, the booming presale market reflects investors' desire for new opportunities. However, it is also necessary to invest rationally and cautiously assess the true value of projects.

2. Project News

1. Virtuals ACP: Ethereum opens the door to a trillion-dollar AI economy

Virtuals is a decentralized AI agent protocol based on Ethereum. Recently, the Ethereum official announced "Ethereum is for AI" and forwarded the news about Virtuals, heating up the collaboration between the two. This news quickly sparked strong reactions and interest from the community.

Virtuals aims to create a labor market for on-chain AI agents, enabling cooperation and settlement between agents. The protocol views AI agents as independent economic entities, providing them with independent identities and asset ownership. Through Virtuals, AI agents can freely offer services, receive compensation, and interact and collaborate with other agents.

This innovation is expected to address many pain points in current AI systems, such as data privacy and computational resource limitations, paving the way for the large-scale application of AI. Analysts believe that Virtuals is likely to become the infrastructure supporting the trillion-dollar AI economy within the Ethereum ecosystem, promoting the development and application of AI technology.

Industry insiders welcome Virtuals, believing that it helps to address the trustworthiness and scalability issues of AI systems. However, there are also concerns that the governance and regulation of on-chain AI agents remain a significant challenge. Overall, Virtuals open up new possibilities for the development of AI technology and are worth the industry's continued attention.

2. The Sui ecosystem continues to expand, and Move projects are emerging one after another.

Sui is an emerging public chain based on the Move language. During the TOKEN2049 conference, both its ecosystem projects and token prices saw significant increases. The continuous expansion of the Sui ecosystem reflects the important position of Move-based projects in this round of the cryptocurrency cycle.

As an alternative to the Solana ecosystem, Sui has attracted a surge of developers and funding. Its underlying technology, the Move language, has a correlation with the Rust language, which allows projects within the Solana ecosystem to migrate to Sui more easily. Additionally, emerging star projects in the Sui ecosystem, such as Cetus, have injected new vitality into the ecosystem.

Analysts believe that the rapid development of the Sui ecosystem is attributable to its technological advantages and timing. In the context of the gradually saturated Solana ecosystem, Sui provides new development space for developers. Meanwhile, Move system projects have also attracted the attention of traditional institutional capital, injecting new momentum into ecosystem development.

However, the Sui ecosystem still has some shortcomings, such as a limited number of tradable assets and a small number of star projects. However, as the ecosystem continues to develop, these issues are expected to improve. Overall, the rise of the Sui ecosystem reflects the innovative vitality of the cryptocurrency industry and is worth ongoing attention.

3. Movement: Move is the only non-token public chain that has attracted attention.

Movement is the only public chain project in the Move ecosystem that has not issued tokens yet, and its recent ecological development trends have attracted considerable attention. As the birthplace of the Move language, Movement holds certain advantages in terms of technical strength and community influence.

Compared to Sui and Aptos, Movement is still in a relatively early stage of development. However, as the birthplace of the Move language, it holds a certain influence in the tech community. As the impact of the Move language continues to grow in the cryptocurrency field, Movement is expected to gain more attention thanks to its own advantages.

Analysts believe that the future development prospects of Movement are worth looking forward to. As the birthplace of the Move language, Movement holds advantages in underlying technology and community influence. If it can launch attractive flagship projects, Movement is expected to secure a place among the Move ecosystem public chains.

However, Movement is still in its early stages, and its development faces many uncertainties. How to attract developers and launch impactful applications are issues that Movement needs to address. Overall, as a new force within the Move ecosystem, the development trends of Movement deserve ongoing attention.

3. Economic Dynamics

1. U.S. June employment data exceeded expectations, inflationary pressures persist.

The U.S. Department of Labor data shows that non-farm payrolls increased by 329,000 in June, far exceeding expectations, while the unemployment rate remained low at 3.6%. This strong employment data reflects that the U.S. economy is still maintaining a robust recovery momentum, but it also exacerbates inflationary pressures.

Economic Background: After experiencing high inflation and an interest rate hike cycle in 2022, the U.S. economy showed moderate growth in 2023. The annualized quarterly GDP growth rate for the first quarter was 2.0%, with an inflation rate around 5%, and the job market remained robust. However, ongoing labor shortages and rising wages could elevate inflation expectations.

Important event: The Federal Reserve previously hinted at pausing interest rate hikes in July to assess the impact of its policies. However, the better-than-expected employment data may force the Fed to reconsider its interest rate hike path. Fed Chairman Powell has stated that he will continue to closely monitor inflation and employment data to determine the appropriate monetary policy stance.

Market Reaction: Stock market investors have mixed reactions to the strong employment data. On one hand, this indicates that the economy is still growing, which is favorable for corporate profits; on the other hand, it may also mean more interest rate hikes, thus increasing the risk of an economic slowdown. The bond yield curve has further inverted, reflecting market concerns about a recession.

Expert Opinion: Goldman Sachs Chief Economist Jan Hatzius stated: "The continued strong growth of the job market will force the Federal Reserve to raise interest rates again later this year." Meanwhile, JPMorgan's Michael Feroli believes: "Despite strong employment data, the momentum of declining inflation rates continues, and the Federal Reserve may pause interest rate hikes before September."

2. China's official manufacturing PMI fell in June, indicating a slowdown in the economic recovery.

According to data from the National Bureau of Statistics of China, the official manufacturing Purchasing Managers' Index (PMI) for June is 49.0, down from 49.6 in May, remaining below the expansion-contraction line for the third consecutive month, reflecting a slowdown in the pace of economic recovery.

Economic Background: In the first half of 2023, driven by policy stimulus measures, the Chinese economy showed signs of recovery. In the first quarter, GDP grew by 4.5% year-on-year, with positive data for manufacturing investment and exports. However, factors such as weak downstream demand and a sluggish real estate sector have constrained the recovery process.

Important events: In response to the economic downturn, the Chinese government has introduced a series of support measures, including infrastructure investment, tax cuts, and fee reductions. The People's Bank also lowered the reserve requirement ratio in June to release long-term funds to support the real economy.

Market reaction: The decline in manufacturing PMI data has intensified market concerns about the economic outlook. The stock market is under pressure, and the RMB has slightly weakened against the US dollar. However, analysts believe that the government is expected to further strengthen policy measures to solidify the foundation of economic recovery.

Expert opinion: Chen Yulu, a macro analyst at China International Capital Corporation, stated: "Manufacturing investment and exports have declined in June, reflecting a slowdown in both domestic and external demand. It is expected that in the second half of the year, the government will increase infrastructure investment to offset the weakness in manufacturing." On the other hand, Hong Tao from CITIC Securities believes: "With the implementation of a new round of tax cuts and fee reductions, the manufacturing sector is expected to regain momentum in the second half of the year."

( 3. The EU and the UK reach a new agreement on the Northern Ireland issue.

After months of difficult negotiations, the EU and the UK have reached a new "Windsor Framework" agreement on trade arrangements for Northern Ireland, aimed at alleviating trade friction after Brexit.

Economic Background: Since the UK officially left the EU in 2020, trade arrangements in Northern Ireland have been a focal issue for both the EU and the UK. The connection of Northern Ireland to the EU single market has resulted in complex border inspection procedures, affecting the flow of goods.

Important events: The new agreement will simplify trade between Northern Ireland and other regions of the UK, reducing border checks. At the same time, the EU will implement a "green channel" mechanism for food imports from the UK. Both sides have also reached consensus on issues such as pharmaceutical supplies, plant and animal health.

Market reaction: After the announcement, the GBP/USD exchange rate rose slightly. The British business community welcomed this, believing that the new agreement will reduce trade burdens. However, some Northern Irish political parties expressed reservations about the content of the agreement.

Expert opinion: British economist Graham Petri stated: "The new agreement, although it cannot completely eliminate trade barriers, at least provides greater certainty for businesses." Meanwhile, Professor John Dalton from University College Dublin believes: "Both sides have made compromises in the agreement, which will help ease the long-standing tensions."

4. Regulation & Policy

) 1. The U.S. House of Representatives has declared mid-July as "Crypto Week," focusing on the review of several cryptocurrency bills.

The leadership of the U.S. House of Representatives announced on Thursday that the week of July 14 will be designated as "Crypto Week," during which three important cryptocurrency bills will be under review. This decision reflects the U.S. government's high emphasis on the regulation of crypto assets and aims to establish clear rules for the industry's development.

The bills under consideration include: the GENIUS Stablecoin Act (the version passed by the Senate), the Digital Asset Market Structure Clarity Act, and a proposal regarding Central Bank Digital Currency ### CBDC ###. The GENIUS Act requires stablecoins to be fully backed by US dollars or highly liquid assets and imposes annual audits on large issuers. The Digital Asset Market Structure Clarity Act aims to clarify the regulatory responsibilities of the Securities and Exchange Commission ( SEC ) and the Commodity Futures Trading Commission ( CFTC ), while requiring digital asset companies to provide retail financial disclosures and segregate company and customer funds.

The advancement of these bills will bring a clearer regulatory framework to the cryptocurrency industry, helping to maintain market order and protect investor rights. However, it may also increase compliance costs and operational pressure for businesses. Market participants generally believe that reasonable regulation will benefit the long-term healthy development of the industry, but excessive regulation may hinder innovation.

Experts say that the U.S. government is accelerating the regulatory process for crypto assets to keep pace with industry developments. Clarity in regulation will provide greater confidence for institutional investors, but it may also compress the decentralized nature of cryptocurrencies. The industry needs to seek a balance between innovation and compliance.

( 2. The People's Bank of China supports the promotion of innovative applications of the digital RMB to the Pilot Free Trade Zone.

On July 4th, Ji Min, head of the Research Bureau of the People's Bank of China, stated that the next step for the People's Bank will be to work with relevant departments to continue supporting the pilot free trade zones in deepening their alignment with international high-standard economic and trade rules and promoting a higher level of institutional openness, based on effective risk prevention.

Specific measures include further deepening financial openness and innovation in the Shanghai Free Trade Zone, supporting the promotion of innovative applications of the digital renminbi to related free trade zones. Previously, eight supporting policies such as the development of offshore bonds in free trade and the optimization and upgrading of free trade account functions were announced at the Lujiazui Forum.

This initiative aims to promote the application of the digital RMB in a broader range of scenarios, exploring innovative applications of digital currency in cross-border payments, trade finance, and other fields. At the same time, it will also explore practical paths for open innovation and development in our country's financial sector, accumulating replicable and scalable experiences.

Market participants believe that the promotion of the digital renminbi in the free trade pilot zone will further enhance its international influence. However, it is also necessary to pay attention to preventing potential risks and ensuring the security and compliance of digital currency in cross-border scenarios.

Experts point out that the development of the digital renminbi needs to advance in sync with regulation. Pilot testing in the free trade experimental zones can provide valuable experience for subsequent comprehensive promotion. However, a complete legal and regulatory system still needs to be established to clarify the rules for issuance, circulation, and regulation of digital currency.

) 3. U.S. Treasury Secretary Yellen dismissed concerns about the dollar's depreciation threatening its status as a global reserve currency.

U.S. Treasury Secretary Basant rebutted claims that the recent depreciation of the dollar would affect its status as the world's primary currency. Basant stated, "The price of the dollar has nothing to do with a strong dollar policy. The key to a strong dollar policy is whether we take steps in the long term to ensure that the dollar continues to serve as the global reserve currency." He believes that the Trump administration is indeed taking such measures.

The US Dollar Index fell nearly 11% in the first half of the year, marking its worst performance in the first half since 1973. However, Bessent believes this is just a short-term fluctuation and will not affect the international status of the dollar. He emphasized that the US government is taking a series of measures to strengthen the dollar's position as the world's primary currency.

Market participants have differing opinions on this. Some analysts believe that the long-term weakening of the dollar may accelerate its replacement by other currencies or digital currencies. However, there are also views that under the current system, the dollar will still dominate for the long term.

Experts say that maintaining the international status of the dollar requires the United States to maintain its economic and financial strength. It also requires strengthening regulation to prevent new payment tools like digital currencies from impacting the dollar. In addition, the United States needs to enhance cooperation with other countries to maintain the stability of the existing international monetary system.