When regulation becomes a trampoline: why crypto has stopped being interesting

If you observe the cryptocurrency sector, you might have noticed a recent surge in industry activity. But this impulse is not the result of a series of bull market speculations or a breakthrough in blockchain technology — it’s something much more fundamental: finally clear legal guidelines.

With the crystallization of stablecoin regulations, the long-held handbrake of the industry has finally been released. Projects are now transforming from serving a narrow circle of crypto enthusiasts to building products for the general public. When you no longer have to constantly worry about legal sanctions, you can more freely design real business models.

The game rule is finally being played seriously

It turns out that when the basic infrastructure stabilizes — when stablecoins cease to be an existential threat to the industry and become regulated activities — the definition of industry ambitions also changes.

Instead of reinventing money, projects are now focusing on creating truly useful products. The obstacles that have hampered blockchain evolution for years are gradually disappearing. Decentralized networks are beginning to do what might seem trivial: connecting to a Visa card.

This apparent dullness is a sign of maturity. A truly useful blockchain feature — at this stage of its development — is not a revolutionary paradigm shift, but a practical integration of distributed technology with existing financial infrastructure.

System gap: identity instead of anonymity

Payments have always been a fundamental layer that the crypto ecosystem had to break through first. Satoshi Nakamoto cleverly solved the double-spending problem, ensuring digital resources cannot be copied. But he left unresolved a key challenge: identity verification.

In today’s financial system, every transaction carries metadata: initiator, recipient, sanctions status of the payer. Bitcoin solved the settlement issue but ignored the information problem. Without this data, even if the blockchain moves value in seconds, the recipient bank may reject the transaction for legal reasons.

Many see anonymity as a feature. In reality — for mass adoption — it is a serious flaw of the system.

The stablecoin paradox: sophisticated irony

Today’s cryptocurrency reality is a vivid example of “infrastructural inversion." Theoretically, the future will bring zero-knowledge proofs and on-chain attestations that perfectly balance privacy with regulatory compliance.

However, we currently observe a combination of new technologies with old ones in the most uninteresting ways.

Take the so-called “stablecoin sandwich” — an industry term describing converting fiat currency into a stablecoin, transmitting it via blockchain, and then exchanging back into national currency. The mechanics work, but full scaling is full of irony.

Companies do not connect directly to permissionless networks — that requires too much effort. Instead, they hire a service coordinator who performs compliance checks and interacts with the chain on their behalf. This solution reintroduces intermediaries into the center stage, ironically negating the fundamental vision of blockchain.

Moment of truth: when Proof of Personhood becomes un-dull

A recent event, World ( formerly Worldcoin) in San Francisco, proposed a potential answer to these dilemmas — and that answer involves what once seemed like science fiction.

Alex Blania and Sam Altman pointed out a fundamental fact: in the age of artificial intelligence, the ability to distinguish humans from machines will become the most valuable resource in the world.

This deep understanding prompted Blania to build specialized hardware infrastructure. After six years of experimentation, which once seemed like an awkward futuristic capstone — “scanning everyone’s iris” — is slowly revealing its real usefulness.

Sam Altman cited Paul Buchheit’s insight: “The future may require two currencies: a currency for machines and a currency for humans.”

Proof of Personhood is essentially a compliance feature in the AI era. To scale payments, you need this technology to differentiate good actors from bad ones. In a world flooded with synthetic content, you need it to confirm the one thing truly rare: that something was created by human intelligence.

The new handbrake: a layered model

For years, cryptocurrencies dreamed of building a global alternative to Venmo, relying on blockchain technology. During the World presentation, a wallet was showcased that essentially achieves this goal.

The infrastructure it relies on is almost identical to traditional fintech architecture — virtual bank accounts in 18 countries, Visa cards, local payment systems. They managed to bridge the gap between cryptocurrencies and the real world.

What turns out to be the actual need for global transfer of funds? Not a new token, but a simple solution: deposit your salary, pay with a card. The attraction for users? The classic growth model of technology: World does not charge fees for most services.

Why? Banks need to charge fees to sustain operations. World does not. But the deeper logic is that the flow of funds should be low-cost. For banks, international transfers are a “diplomatic mission” between correspondents. For blockchain, it’s an update to the ledger record.

World claims that the actual cost of transfer will approach zero.

The previous strategy of World was more absolute: “scan your eye or leave.” That was too dogmatic. Now, World implements a layered approach: verified human identity is a premium feature. Market mechanics are much more pragmatic. Users may hesitate to scan biometric data for abstract future benefits. But if they can achieve higher returns or better experiences — they will engage gladly.

Arbitrage outside walled gardens

Mini apps could be the “killer app” of cryptocurrency. Initially, they may seem clumsy and niche. It sounds insignificant, almost dull, but the structural impact is profound.

The point of mini apps is not to put a calculator into an X feed, but to enable developers to distribute without App Store approval and without a 30% commission.

Escaping the “walled garden” is simply a way for developers to maintain their own revenue.

The most valuable feature the new ecosystem offers creators is the ability to handle payments without a “tenant” taking a commission. Combining mini apps with strong identity verification opens new possibilities for developers and marks a strategic transformation for World.

An example from Japan: Tinder users utilize World ID for identity verification. The killer app for sovereign identity is the ability to prove potential dating status — that you are not a robot.

Beyond digital record

Blania understands the paradox of the platform: you want the largest online markets, social networks, chatbots, and financial services to treat World ID as a standard, but until you have a large user base, they won’t adopt it easily. And without a product, you won’t attract users.

You need to build the product yourself and attract users.

This explains World’s expansion into communication. World integrates a decentralized XMTP protocol with an app. Compared to centralized alternatives — Signal, WhatsApp, Telegram — this offers significant privacy benefits.

If you want to be an invisible layer of internet identity, you first need to prove your value by building a better communication product.

Shane Mac demonstrated the Convos experiment — an XMTP-based app showing that the interoperability of crypto technology extends beyond financial services into everyday communication tools.

Convos uses cryptography for unregistered use: no phone number, no history, no tracking. All without centralized servers.

Main advantage: truly trace-free conversations. In a world where every Slack and email is stored forever, truly disappearing conversations become a luxury.

The first users will be investigative journalists. But the broader vision is to restore private conversations as the default mode of human interaction, not a suspicious exception.

End of the handbrake: infrastructure finally matures

Although experiments are still in early stages, the trajectory is clear. Cryptocurrency infrastructure is finally catching up with its original promises. Everything that crypto elites dreamed of a decade ago is slowly becoming “boring” — useful enough to actually work.

And it’s happening at a critical moment. With AI development accelerating, the ability to cryptographically verify truth ceases to be a philosophical passion of cypherpunks and becomes an essential infrastructure for the entire digital economy.

When we finally release the handbrake, things will change forever.