Except if you go for decentralized exchanges, that sidesteps regulation and KYC/AML entirely. If countries keep fragmenting their crypto regulations, then so will liquidity. The decentralized exchanges will be the only venues left that pool liquidity at a global scale.
You still need a centralized exchange to be an on-ramp to go from regular money to the blockchain. But that's way less lucrative. You convert your dollars to USDT/WBTC/Ethereum at Coinbase, transfer to your wallet, then do 99% of trading/gambling on Uniswap. That's not a future where Coinbase is very valuable.
If countries keep fragmenting their crypto regulations, then so will liquidity.
Not necessarily. The regulatory landscape in traditional finance is somewhat fragmented as well, which simply means people/institutions/corporations shop around for the regulatory venue they prefer.
Or the US can impose its own de-facto global regulations, similar to what it already does on a global scale because a huge % of finance goes through US banks at some point. For example: Want to go against the Iran sanctions? Well, you can, legally, if your country hasn't signed on to them. You just won't ever be able to do business that touches anything US related. Which means you won't be able to do business with any other major western or global bank either under threat of the US cutting ties with them.
Without large institutions, and a few of the largest playing the part of "market makers" that provide liquidity, you won't get significant liquidity for large moves, not unlike the current crypto situation. And large institutions will always be subject to the sort of regulatory situations above.
It's a bit of a paradox: Part of crypto's appeal is its freedom from regulation. But in order for crypto to really go mainstream, global financial systems & their regulations. Nations have a strong interest in keeping monetary policy within their control. They will use every tool at their disposal to make sure crypto can't do an end-run around that control.
> You convert your dollars to USDT/WBTC/Ethereum at Coinbase, transfer to your wallet, then do 99% of trading/gambling on Uniswap. That's not a future where Coinbase is very valuable.
But then Coinbase would just charge high fees for doing so and draw those down over time if/when competitors enter the market.
Most "regular people" are going to use trusted and established brands and companies. They don't want to see their money go poof.
Decentralized exchanges still have lots of issues that would prevent a serious investor from using it. And sidestepping KYC/AML regulations is not an option for any institutional investor.
You still need a centralized exchange to be an on-ramp to go from regular money to the blockchain. But that's way less lucrative. You convert your dollars to USDT/WBTC/Ethereum at Coinbase, transfer to your wallet, then do 99% of trading/gambling on Uniswap. That's not a future where Coinbase is very valuable.