TradFi quietly consumes cryptocurrencies! ETFs and stablecoins stifle Satoshi Nakamoto's dream

Bitcoin is being hijacked by TradFi into a surveillance trap. The US cryptocurrency spot ETF dominates market flow, with inflows of 840.6 million on January 14. The total market cap of stablecoins is 310.674 billion USD, with USDT accounting for 60%, indicating severe centralization. With the full implementation of MiCA and DORA regulations, cryptocurrencies are shifting from alternative systems to tools for TradFi oversight.

ETF Dominates Market, TradFi Controls Pricing Power

The subscription and redemption of US spot ETFs now fluctuate daily, increasingly becoming the main factor in daily market dynamics. In fact, “price setting by ETF flow” means that ETF trading volume has become the clearest, most readable indicator of US dollar marginal demand during trading hours, often the first data traders check before discussing events on native crypto trading venues.

According to Farside Investors’ Bitcoin ETF fund flow dashboard, on January 9, 2026, the US Bitcoin market experienced a net outflow of 250 million USD, followed by a net inflow of 753.8 million USD on January 13, and a net inflow of 840.6 million USD on January 14. The sequence of these lessons places marginal demand and its description within a set of tools designed around TradFi mechanisms.

This shift is significant because the issue of “cryptocurrency independence” is moving from protocol rules to market structure. While Bitcoin issuance and validation remain network functions, market access and liquidity are being reconfigured through brokers, custodians, ETF authorized participants, and regulated derivatives. This pathway also reintroduces familiar constraints: creation and redemption, collateral schemes, and risk limits, all of which influence how quickly positions are added or removed in response to macro changes.

The practical result is a transfer of execution advantage. When new demand is expressed via ETF issuance and managed through authorized trading and prime broker workflows, then hedged via regulated derivatives, early signals are unlikely to appear as obvious spot quotes on crypto exchanges. Instead, they first manifest in inventory, basis, spreads, and hedging flows—indicators that are clear to TradFi traders but more difficult for crypto-native traders to observe in real time.

ETFs also introduce temporal mismatches, altering the dissemination of price discovery. Bitcoin trades 24/7, but ETFs do not; their subscription and redemption operations occur in bulk through authorized participants. This can cause trading flow charts to appear “lagging” behind initial market moves, but the trading flow charts of the next US trading day are increasingly becoming the confirmation factor, determining position sizes, hedging strategies, and risk adjustments.

Stablecoin Centralization Becomes Key to TradFi Control

The structure of stablecoins adds a separate constraint because most on-chain accounting units are concentrated among a few issuers, also subject to compliance restrictions from banks and payment partners. DeFiLlama’s stablecoin dashboard shows that as of January 16, 2026, the total market cap of stablecoins is 310.674 billion USD, with USDT accounting for 60.07%.

This concentration is an immediate factor affecting on-chain liquidity conditions. If a market relies on only a few types of debt settlement and collateral, then access, listing, and redemption pathways may become effective bottlenecks—even if applications run on public chains. Tokenized cash equivalents are also changing the boundary between crypto trajectories and TradFi infrastructure.

RWA.xyz’s government bond dashboard shows that as of January 6, 2026, the total value of tokenized US Treasuries is 8.86 billion USD. Activities revolve around named platforms and entities, including Securitize, Ondo, and Circle. This product category acts as a bridge linking on-chain settlement with TradFi short-term financial instruments, offering collateral that is clear and understandable for compliance and finance teams, which previously did not view crypto-native assets as cash management tools.

Citigroup’s stablecoin report forecasts that by 2030, in a baseline scenario, stablecoin issuance will reach 1.9 trillion USD, and in an optimistic scenario, 4.0 trillion USD. Even at the lower end of this range, stablecoins will shift from crypto-native payment tools to a category of money market scale, potentially pulling on-chain liquidity toward regulated distribution.

Regulatory Framework Fully Implements, Reshaping Markets with TradFi Rules

Europe’s policy timetable specifies dates by which regulatory access can practically be enforced. The EU’s Markets in Crypto-Assets Regulation (MiCA) fully comes into effect on December 30, 2024, with stablecoin provisions effective from June 30, 2024. The Digital Operational Resilience Act (DORA) takes effect on January 17, 2025.

MiCA and DORA Regulatory Timeline

MiCA Stablecoin Provisions: Effective June 30, 2024

Full MiCA Implementation: December 30, 2024

DORA Implementation: January 17, 2025

ESMA Compliance Deadline: End of Q1 2025

For market participants, this calendar transforms “regulatory risk” into an operational plan for listing, custody, and stablecoin availability. Central banks and international standards bodies have clarified a long-term model—competing with open stablecoin settlement rather than banning it.

The Bank for International Settlements (BIS) has built a unified tokenized ledger around “central bank reserves, commercial bank money, and government bonds.” The report also notes that “stablecoins are insufficient and pose risks to financial stability and monetary sovereignty if left unregulated.” BIS previously described in 2023 a “unified ledger combining central bank money, tokenized deposits, and tokenized assets.”

This architecture implies that tokenization will be based on central bank anchoring and regulated intermediaries, indicating that stablecoin issuance and circulation are subject to regulation. The Chicago Mercantile Exchange (CME) reports that its crypto futures and options contracts set a daily trading volume record of 794,903 contracts on November 21, 2025. The report also shows that year-to-date average daily trading volume has increased by 132%, and average open interest by 82%, reaching a nominal value of 26.6 billion USD.

Five Dimensions of Decentralized Independence Are Crumbling

The road to 2030 can be seen as several competing approaches seeking a balance between decentralized execution and regulated currency. One path is through institutional control of the economy, where ETFs centralize Bitcoin access, regulated derivatives focus on hedging, and stablecoin issuance is integrated under permissioned regimes. This creates a market where protocol decentralization coexists with permissioned distribution.

The blockchain industry aims to create a decentralized, open, and fair financial system to counteract the outdated and fragmented TradFi system, but this goal seems increasingly distant. We are heading toward a financial system where all monitoring functions are identical to those of CBDCs, yet dressed in the “cryptocurrency revolution” guise.

CBDCs may be banned or discredited, but stablecoins operated by centralized companies, disguised as “DeFi” rather than truly decentralized open-source projects, are equally dangerous. “Independence” can be redefined as components that can diverge:

Five Dimensions of Decentralized Independence

Asset Rule Independence: Protocol constraints such as issuance and validation (Bitcoin still maintains)

Trading Independence: Ability to buy and hold without brokers (being lost)

Liquidity Independence: On-chain funds diversified between issuers and redemption pathways (USDT accounts for 60%)

Settlement Independence: Whether final settlement occurs on open networks (tokenized government bonds involved)

Governance and Standards Independence: Who sets operational rules for key interfaces (MiCA, DORA takeover)

The volatility of ETF fund flows, the scale of CME derivatives, stablecoin concentration, and growth of tokenized government bonds all occupy different parts of this matrix, both indicating that TradFi is more prone to toolify the economic layer of the market.

Will DeFi Be Swallowed by TradFi? Returning to Its Decentralized Roots

Among the millions of blockchains and tokens tracked by CryptoSlate, only a few may still be barely surviving. Bitcoin remains the darling of blockchain, but liquidity is increasingly controlled by institutional flows. Ethereum continues to serve as the “settlement layer” for much of blockchain- and TradFi integration. Solana mainly attracts momentum traders, while XRP’s activity depends largely on Ripple’s efforts to integrate services into institutional needs.

By early 2026, data shows that as demand, hedging, and cash management shift to regulated venues and tokenized cash equivalents, the pace of this transition could be rapid—even if protocol decentralization remains unchanged. Over the next four years, this will be measured by capital flow trajectories, open interest, stablecoin concentration, and collateral shares in tokenized government securities.

We are not trying to replace TradFi with DeFi now; we are merely empowering TradFi to track, freeze, and control funds, without granting any of the “freedom” that cryptocurrencies should bring. I believe we should refocus on decentralization and open-source code, and that institutional adoption of cryptocurrencies should decrease significantly.