The century-long history of US stocks reflects the present situation; the era of cryptocurrency asset valuation is approaching.

Author: Dean Eigenmann

Translation: Saoirse, Foresight News

Editor's Note: The author of this article uses the wild speculation history of US stocks in the 1920s as a reference, suggesting that the cryptocurrency industry is about to迎来 a "Graham Moment." The article points out that while cryptocurrencies have the inherent transparency advantage of being on-chain, they have long been shackled by regulations, and tokens lack legal rights to profits. With the rollout of the US GENIUS Act and the advancement of the CLARITY Act, the industry is expected to establish clear rules of ownership, shifting investment logic from narrative hype to fundamental value analysis. At the same time, the author objectively warns that there is uncertainty in legislation, and the industry still needs to improve the decentralized and implementable ownership system, providing a highly referential long-term perspective for the current development of the cryptocurrency market.

Imagine an ordinary person planning to enter the stock market in 1925; the market in front of him is more of a horse racing gamble than an investment venue. He might place bets at a "betting brokerage" that only takes stock price betting orders but does not actually purchase the corresponding stocks, essentially a casino disguised as a brokerage. Even if he opens an account with a legitimate broker, most rely on extremely low-margin trading; if the market weakens in a week, he will lose all his principal—indeed, millions of investors faced this outcome a few years later. At that time, stock price manipulation was almost an open operation: groups would quietly hoard a particular stock, creating false trading volume and price increases through internal trading to attract retail investors to follow in, only to later dump their shares to ordinary investors who chased the highs. This was not an underground scandal, but a prevailing market rule; many popular financial tycoons of the time made huge fortunes with this method.

Behind this entire chaos lies an unimaginable institutional void: at that time, there were virtually no laws compelling companies to disclose operational information. A company could publicly sell stocks without disclosing its profits, debts, or the identity of those who benefited behind the scenes. Today, all valuation models indispensable require audited standardized financial statements, which had no compulsory requirements back then. Even meticulous investors could not find any credible data as an analytical basis.

This is the core issue of the entire era—not obvious market manipulation behaviors, but the soil that allows manipulation to breed. Speculation focuses on where retail funds flow, while investment focuses on the asset's true value; yet, in the 1920s, investors could not answer the second question at all. Corporate operational information was either non-existent or completely unreliable; the only strategy in the market was to watch the ticker tape and predict the direction retail funds would follow. Seasoned big funds were well aware of this and thus only allocated to bonds: bond yields are stable and predictable, while stocks are merely the toys of gamblers.

The 1929 stock market crash rarely spurred long-term regulatory reforms. The Pecora hearings brought Wall Street's dark operations into public view: syndicates manipulating stocks, insider benefit transfers, and bankers secretly pocketing money were all exposed, and public anger ultimately transformed into written law. The Securities Acts of 1933 and 1934 mandated that companies continuously disclose standardized, audited financial data. The 1934 Act simultaneously established the U.S. Securities and Exchange Commission (SEC) to oversee corporate compliance. From then on, corporate financial data had to be true and fair, and regulatory agencies held subpoena powers to check corporate accounts. In the same year, Benjamin Graham and David Dodd co-authored "Security Analysis." This theory, known today as common knowledge, was nearly heretical back then: stocks are part of the ownership of a real enterprise, corporate value can be assessed through profits and assets, and only when stock prices are significantly lower than intrinsic values is it worth buying. Graham provided investors with valuation methodology, and the newly enacted laws offered credible data support; both were indispensable: no matter how intricate a valuation framework, it is meaningless if reliant on false data; no matter how complete and truthful financial reports may be, if in the hands of someone who does not understand valuation, their value cannot be unlocked. Fundamental investment was thus born, becoming the core logic of professional stock investment thereafter.

A purely speculative market can only transform into a market with long-term investment value if it meets two conditions: one is mature asset valuation methods, and the other is a complete legal system that can clarify the true underlying situation of the asset and ensure that investors have legally enforceable rights to profits.

The cryptocurrency market is replicating the early US stock situation

Today’s cryptocurrency market is astoundingly similar to the US stock market of yesteryears: the industry is entirely driven by narratives, with retail investors as the absolute majority; market conditions are influenced by community sentiment, price movements, and single-token belief systems. The market is filled with a significant amount of wash trading; after launching tokens, project teams harvest their own community fans, and various meme coins are essentially funding schemes wrapped in cartoon imagery, not even bothering to disguise themselves as serious projects. Setting aside the more exquisite interfaces, today’s cryptocurrency market is no different from Wall Street's rampant growth in 1928, and the industry atmosphere is even more chaotic.

However, there is a more critical distinction between the two comparisons: the cryptocurrency industry naturally resolves the information transparency problem that took US regulators decades to conquer. The core purpose of early regulatory legislation was to force companies unwilling to disclose data to provide real operational information; whereas all data in the cryptocurrency industry is completely publicly available on-chain. Protocol revenues can be checked in real-time, treasury wallet funds are clear, transaction volumes, fees, user activity, and capital flows are all recorded in public ledgers, without the need to rely on quarterly corporate reports like in the stock market. The information transparency that the U.S. Securities and Exchange Commission spent decades building for the stock market is merely an inherent attribute of the blockchain.

Even with complete public data, the valuation of cryptocurrency assets remains arduous. For many years, this contradiction has persisted: on-chain original data is far richer than the information disclosed by publicly traded companies, yet there is no reliable pricing logic. The root cause is: data does not equal rights to profits. Just because a protocol can generate hundreds of millions in fees annually does not mean that token holders can receive any share of those profits. The vast majority of tokens were designed from the outset without rights to profits.

U.S. courts apply the Howey Test to determine whether an asset qualifies as a security, with the central criterion being: funds are invested in a collective project, relying on others to operate and generate profits. By definition, almost all assets with investment value meet this standard. If tokens grant holders rights to dividends, stable earnings expectations, or ownership of the project, these designs that give tokens valuation value would be classified as securities, bringing significant regulatory risk. The better the project’s fundamentals, the higher the legal risk. Therefore, development teams consciously eliminate economic rights, retaining only governance voting rights to evade regulatory accountability.

The cryptocurrency market possesses extreme transparency in data but has completely lost rights to profit ownership. Everyone can see a protocol continuously generating profits but has no right to share in those profits. This is the bottleneck that has trapped the industry for years: there has long been a demand in the market to create yield-bearing tokens, but existing legal frameworks impose stringent limitations. Once regulatory rules are adjusted, this bottleneck will be broken.

A turning point in the industry is approaching

Because of this, the year 2026 will be a key year in determining the direction of the industry, rather than a vague future. Regulatory rules are quickly taking shape: the GENIUS Act signed into law and coming into effect in 2025 lays down the first federal framework for regulating stablecoins in the U.S.: it requires adequate reserves, mandatory information disclosures, and licensed operations by issuers, while clearly stating that USD stablecoins backed by adequate collateral do not constitute securities issuances, solving the regulatory ambiguity in cryptocurrency payments entirely.

More importantly, the CLARITY Act, which regulates the market structure, was in the legislative wrap-up stage at the time of writing this article: The House passed it smoothly, and bipartisan members of the Senate Banking Committee voted to advance it. This bill addresses a core pain point of the cryptocurrency industry over the past decade: it delineates the responsibilities of two major regulatory bodies, with investment contract digital assets governed by the U.S. Securities and Exchange Commission (SEC) and digital commodities and native network tokens under the jurisdiction of the Commodity Futures Trading Commission (CFTC), clarifying which set of regulatory rules applies to projects before they go live.

The core value of this legislation lies not in creating transparency—the cryptocurrency industry already has all data publicly available—but in delineating clear legal asset classifications and clarifying the legal rights to economic returns for tokens, breaking the deadlock of "tokens have traffic but lack rights to profits." In the future, development teams will be able to design tokens with profit-sharing functions in compliance, without enduring the persistent regulatory uncertainties of the past decade; investors will also hold digital assets with legal rights to profits and measurable value. Once investors can read out the cash flows of protocols completely and reasonably expect that profits will be distributed to token holders, the previously perplexing investment questions in the cryptocurrency space will become reasonable:

• What is the sustainability of protocol revenues?
• Are the project’s network effects real and solid?
• What valuation multiples should correspond to the profits?
• Is the current price already pricing in future growth expectations?

These are not issues exclusive to cryptocurrency but are problems of investment analysis using traditional financial standards.

Objectively, there is tremendous uncertainty regarding the enactment of the bill; understanding risks is necessary to see the industry logic clearly: the bill is not yet settled, and it may ultimately fail to pass. The bill passed the House in 2025, but the Senate has historically been a graveyard for cryptocurrency legislation; it requires 60 votes to pass, but the majority party holds only about 53 Senate seats, necessitating some Democratic votes to switch. Key Democratic senators have made it clear: they will not vote in favor unless a supplementary ethical clause restraining presidential personal conflicts of interest regarding cryptocurrencies is added, and relevant clauses have yet to be finalized. The different versions of the bill put forth by the respective committees in the two chambers need to be unified and integrated with the original text from the House. This entire process must be completed before the Senate's summer recess and the midterm elections take over all agendas, while housing, intelligence oversight, and several other higher-priority bills are competing for parliamentary review time. Industry insiders estimate that the probability of this bill passing ranges from 50% to 66%, with no insiders believing this to be a sure win.

The price of missing this legislative window far exceeds simply postponing the bill for a few months; it means starting the entire legislative process over. The new Congress may not prioritize cryptocurrency regulatory issues; the industry will fall back into the gray regulatory area created by the Howey Test: designing tokens with rights to profits amounts to setting oneself on fire, thus development teams will continue to strip away economic rights. Many deeply involved in the legislative process warn that if this bill fails, comprehensive legislative efforts to structure the market may be postponed until the end of this decade. Regulatory shackles will not dissipate on schedule; they will only continue to suppress industry development. Even if the bill eventually passes successfully, the benefits will not be immediately realized: regulatory agencies will still need 1 to 3 years to implement supporting measures to give the law actual enforceability, much like the U.S. securities reform of 1934, which went through several years to form a trusted and mature system for investors. Therefore, the core of the optimistic logic has never been "reforms have been completed," but rather "reforms are just around the corner and have clear upcoming timelines."

Deeper industry challenges

Publicly traded companies are not just cash flow vehicles; they are a complete legal framework: ownership rights, fiduciary duties, and actionable governance mechanisms, all protected by the courts. Buying a stock means fully integrating into this institutional system, not just obtaining rights to profits. The vast majority of cryptocurrency protocols still lack equivalent supporting mechanisms. Some protocols can stably generate cash flow, but the rights of token holders are weakly protected, and there is often no clear channel for holders to assert their rights. Legitimizing rights to profits on a legal level is merely a simple first step; building a complete system that can genuinely protect holders’ rights in the event of risks is a long and underappreciated task, with most relevant industry groundwork yet to commence.

However, this does not overturn the core viewpoint of the entire article; instead, it points to the core development track of the industry for the next decade. Today, no one doubts that cryptocurrency protocols can create economic value, as many projects have already generated returns continuously; the truly pressing question to be resolved is whether it is possible to create an ownership system that simultaneously accommodates decentralization, genuine economic returns, and legal enforceability. This endeavor is extremely challenging, and in the future, teams that successfully implement it will be regarded as the first true enterprises in this asset class. This is not the ceiling of industry development but rather the core piece of the value investment logic yet to be completed.

Impact on practical operations for investors

All of the above changes will directly alter the investment logic in the cryptocurrency market. Selecting tokens will become similar to traditional stock picking. In the future, the core advantages of investment will no longer be predicting market narratives or preemptively anticipating sector rotations, but rather the tedious yet solid work of fundamental analysis: analyzing the revenue structure of protocols, assessing whether fee income can withstand market downturns, distinguishing genuine user demand from artificially inflated growth due to subsidies, estimating reasonable prices based on actual distributable cash flow of tokens, and carefully reading token contracts to clarify all rights of holders. The last point provides a new analytical dimension and is key to differentiating returns between professional funds and ordinary retail investors.

Not all tokens will evolve into quasi-stock assets. Bitcoin will never generate cash flow; it is a scarce digital value carrier, positioned closely to digital gold, serving as a hedge for gold and bonds in traditional investment portfolios. The value investment transition described in this article applies only to application-driven protocol tokens that can continuously generate fee income; this type of asset is suitable for fundamental valuation analysis.

Dawn has arrived

As the cryptocurrency industry has developed to this day, the core question discussed by everyone in the early days was whether tokens could create value. Now, the focus of the industry has shifted: who has the right to allocate the value created? A century ago, it was the resolution of the second question that transformed stocks from speculative tools into legitimate investment categories; today, the cryptocurrency industry finally has the opportunity to answer this core question in a legal and compliant manner.

The reason Graham was able to stand out was not by gambling on market speculation, but by presenting a complete valuation system in an era when regulatory frameworks were完善 and methods of value analysis could be operationalized. The regulatory environment belonging to the cryptocurrency industry is gradually taking shape, and the investors recognized as pioneers in the industry ten years from now will be those who focus on fundamental analysis tools now and no longer solely chase short-term market movements.