The crypto market has risen by 20%, with AI sector financing exceeding 100 billion. Regulatory challenges coexist with innovation.

This week, the crypto market experienced a significant pump, with the Ethereum ecosystem and AI-related projects rising over 20%. Meanwhile, some turmoil has also emerged in the market. A certain project collapsed in coin price due to issues with its market-making protocol, prompting reflections on industry ethics and regulation. On the other hand, the development of AI and payment finance sectors has accelerated, with a certain public chain launching new standards, multiple exchanges laying out their payment ecosystems, and along with policy trends, indicating that the crypto market is facing a new round of reshuffling and opportunities.

The core of the project collapse incident lies in alleged manipulation. According to reports, the agreement signed with the market makers included clauses that incentivized price manipulation. The agreement allowed market makers to control about half of the circulating tokens and incentivized them to inflate the token valuation to $5 billion before selling for profit. As a result, 66 million tokens ( worth $38 million ) were sold on the day after the launch, causing the coin price to plummet.

This incident exposed the issues of inadequate regulation of the market-making mechanism and the lack of transparency in the legal framework. Theoretically, market makers should provide liquidity for new tokens and maintain price stability. However, without regulation, market makers could be abused as tools to manipulate the market, harming investors' rights.

In the field of AI, a certain public chain has launched a new protocol standard aimed at providing developers with a standardized and secure AI integration framework. This public chain has also introduced a series of AI support programs, including hackathons, solutions, and incubator projects, to promote AI innovation in the Web3 ecosystem.

2024 is a breakthrough year for AI company financing, with nearly one-third of global venture capital flowing into AI-related fields. According to statistics, the financing amount for AI-related companies in 2024 exceeds 100 billion USD, with a year-on-year growth of more than 80%, surpassing every year in the past decade. The United States dominates AI financing, accounting for 46.4% of the value of US VC transactions in 2024, totaling about 97 billion USD.

In the payment finance sector, multiple exchanges have launched new payment products. One exchange introduced a product focused on stablecoin payments, initially supporting USDT and USDC. Another exchange collaborated with a certain country to launch the world's first national-level crypto travel payment system. These trends confirm the potential of the payment finance sector, especially in the context of stablecoin regulatory compliance.

In terms of policy regulation, a certain state has passed a strategic Bitcoin reserve bill that authorizes state financial officials to purchase Bitcoin. The bill allows for up to 5% of state funds ( approximately 280 million to 770 million USD ) to be invested in precious metals and cryptocurrencies with a market capitalization of over 500 billion USD. This marks the entry of the United States into the compliant investment field of cryptocurrencies, indicating that more states may follow suit.

On the other hand, the U.S. Senate rejected the "Stablecoin Innovation and Security Act." The bill was originally intended to create a clear federal regulatory framework for stablecoins in the U.S., but it failed to pass due to partisan disagreements. This has resulted in the U.S. stablecoin market maintaining its existing state-level regulation, lacking a unified federal framework, which may limit market growth and weaken the U.S. competitiveness in global digital finance.

Overall, the crypto market has shown a complex situation this week. On one hand, there has been a significant rise in the market and rapid development of new technologies; on the other hand, there are regulatory challenges and risks of market manipulation. This reflects that the crypto industry is at a critical turning point, and future development will depend on how to balance innovation with regulation, as well as how to establish a healthier and more transparent market environment.