Original Title: "An Experiment with No Turning Back: Huaxing Capital's Bold Bet on Web3"
Original Author: Ada, Deep Tide TechFlow
In the summer of 2025, Huaxing Capital once again became the focus of market attention as it signed a memorandum of cooperation with YZi Labs (formerly Binance Labs), planning to invest $100 million heavily in Binance's platform token BNB.
Just two months prior, the board had approved a similar scale of funding to enter the Web3 and cryptocurrency sectors. Such intensive actions have led outsiders to speculate that Huaxing is planning a deep transformation, or even a self-revolution.
In the landscape of investment banks in China, Huaxing has always been a unique presence.
It lacks the state-owned background of Zhongjin and Zhongxin, and it does not have the century-long accumulation of Goldman Sachs or Morgan Stanley. Its growth path has almost entirely coincided with the explosive rhythm of China's internet. Since its establishment in 2005, Huaxing has witnessed and orchestrated the merger of Didi and Kuaidi, the marriage of Meituan and Dianping, the integration of 58 Tongcheng and Ganji… Almost every major merger that has shaped the industry landscape has Huaxing's involvement behind it. Without that decade of wild internet growth, Huaxing might have found it difficult to ascend to the throne of "King of Mergers."
However, as the tide recedes, and the internet economy transitions from an era of growth to one of competition for existing resources, with the antitrust hammer raised high, the soil on which Huaxing relies for survival is undergoing fundamental changes.
This once-glorious boutique investment bank is facing unprecedented survival challenges.
Is the move into Web3 Huaxing's self-redemption, or is it the collective fate of traditional investment banks in the digital age?
The Dilemma of the King of Mergers
In 2021, Huaxing Capital delivered an almost perfect report card: total revenue reached 2.504 billion yuan. The net profit for the year also achieved a year-on-year growth of 56.5%, reaching 1.624 billion yuan. That year, it completed landmark projects such as the Hong Kong IPO of Ideal Automotive and the listing of Kuaishou Technology. In the annual report, Bao Fan excitedly wrote, "We are standing at the starting point of the next decade of the new economy."
But peaks often mark the beginning of a turning point.
In 2022, Huaxing Capital's revenue and net profit both declined, with total operating revenue of 1.533 billion yuan, a year-on-year decrease of 8.36%; the annual loss was 564 million yuan, a year-on-year decline of 134.71%.
Behind all this is the sharp cooling of the macro environment.
According to the "2022 Review and Outlook of China's M&A Market," the total value of nationwide M&A transactions fell by 23.5% year-on-year, with the TMT sector experiencing a staggering decline of 41%. For Huaxing, which relies on TMT mergers and acquisitions, this was almost equivalent to removing the soil necessary for survival.
However, the deeper crisis lies not in the data, but in the model.
Huaxing's rise coincided with the golden age of China's internet from 0 to 1 and then to 100. It was a wild era: startups needed to grow rapidly, giants were eager to acquire market share, and capital was keen on storytelling. Huaxing played the role of a "super matchmaker" in this capital frenzy. Bao Fan's personal charm, network resources, and keen intuition about industry trends formed Huaxing's moat.
As long as the market is in a growth cycle, and mergers and acquisitions remain the preferred script in the capital market, Huaxing thrives. Almost every major transaction that changes the landscape has their involvement behind it.
But once the environment reverses, the story takes a different turn. The market enters a phase of competition for existing resources, and "strong alliances" gradually become a regulatory warning line, leaving the previously successful model without a stage.
This is Huaxing's true dilemma: it is not a decline in business, but rather that the model it relied on for success has been abandoned by the times.
Centralized networks, closed information channels, and relationship-driven value creation seem out of place in a new world that emphasizes transparency, openness, and disintermediation.
Especially in a culture centered around Bao Fan, this becomes particularly challenging. A Reuters source familiar with Bao Fan commented that Huaxing remains a one-man business, a key-person-focused model, which is difficult to sustain in the new era.
The Secret Web3 Layout
Huaxing Capital's exploration of Web3 is not a spur-of-the-moment decision.
In May 2018, Circle announced the completion of a $110 million Series E funding round. The list of investors was filled with names of top-tier institutions like IDG, Breyer Capital, and Bitmain. Almost no one noticed that Huaxing Capital was also among them.
If it weren't for Huaxing's proactive congratulatory letter in June 2025, the outside world might not have known that it had already "boarded" the stablecoin track. A closer look at Circle's prospectus reveals that Huaxing was not listed as a major shareholder, indicating that its shareholding ratio was limited or had been cleared before the IPO.
Nevertheless, Huaxing's investment in Circle still excited investors after a long time.
After successfully entering the "Circle concept stock" category, Huaxing Capital's stock price soared from 3 HKD to over 6 HKD, an increase of over 100%. For a company that had long been in a downward trend after going public, this was undoubtedly a shot in the arm.
Huaxing's ability to invest in Circle stemmed from Bao Fan's foresight years ago.
In 2015, at the peak of Huaxing Capital, as the hottest investment bank in China's new economy sector, Huaxing was involved in almost all significant mergers and financing of internet companies. However, at the height of its glory, Bao Fan made a surprising judgment: "In three years, we might not have food to eat."
That statement became the starting point for Huaxing's transformation. Bao Fan understood that relying solely on advisory fees and commissions was too thin; new growth engines had to be sought. Thus, he chose to shift from "service provider" to "participant," from advisor to shareholder.
In Huaxing's investment landscape, Circle is not particularly eye-catching. During the same period, it invested in Meituan, JD Technology, Kuaishou, Ideal, NIO, and Pop Mart… In comparison, an American company focused on crypto payments seemed somewhat "non-mainstream." Moreover, Lei Ming, who led this investment, later admitted that luck played a role in being able to invest in Circle. Huaxing entered the game late and held a small share, making it hard to say they truly made a lot of money.
In addition to Circle, Huaxing has left multiple footprints in the crypto space: directly investing in Amber Group and Matrixport; serving as a financing advisor for Canaan Creative, Bitdeer, and HashKey. It even appointed Frank Fu Kan, who has years of blockchain experience, as an independent non-executive director.
However, these efforts did not immediately translate into impressive performance. According to reports from 36Kr, Huaxing earned more from financing services in the crypto market rather than from excess returns on capital operations. The value of Circle for Huaxing exists more in the realm of imagination and market capitalization recovery.
The Bold Bet in the Post-Bao Fan Era
In 2024, Huaxing Capital welcomed a new helmsman.
After Bao Fan's disappearance, his wife Xu Yanqing gradually stepped into the spotlight, taking the wheel of this boutique investment bank. Following the exit of former CEO Xie Yijing, Huaxing Capital formed a core leadership team consisting of Chairman Xu Yanqing, CEO Wang Lihang, and Executive Director Du Yongbo.
Xu Yanqing proposed the "Huaxing 2.0" strategy: to reduce reliance on traditional internet businesses and place bets on hard technology, Web3, and digital finance.
This shift is not a whim but is precisely timed with policy developments.
In May 2025, the Hong Kong Legislative Council had just passed the "Stablecoin Bill"; a month later, the government released the "Digital Asset Development Policy Declaration 2.0." Almost simultaneously, Huaxing announced that the board had approved a budget of $100 million to officially enter the Web3 and crypto asset sectors.
This decision made outsiders sense a familiar scent. In the past, Huaxing was adept at hitting the right timing, helping Chinese internet companies outpace the decade of wild growth; now, it seems to want to replicate that success in a new arena. However, this time, Bao Fan's presence is missing.
In August, Huaxing Capital signed a memorandum with YZi Labs, planning to invest $100 million in BNB assets, becoming the first Hong Kong-listed company to include BNB in its digital asset allocation, leading the market to quickly draw a simple analogy: the "BNB Micro Strategy" in Hong Kong stocks.
Buying tokens is just the first step; Huaxing Capital also plans to continuously empower the BNB ecosystem in two areas.
First, it will develop fund products in collaboration with Huaxia Fund (Hong Kong) and other partners, promoting the listing of BNB on compliant virtual asset exchanges in Hong Kong. Coincidentally, on September 3, the compliant trading platform OSL opened BNB trading services to professional investors, becoming the first exchange in Hong Kong to support BNB trading.
Second, with the assistance of YZi Labs, Huaxing Capital will establish a RWA fund worth several hundred million dollars, promoting the application of BNB public chain in stablecoins and RWA scenarios for Hong Kong-listed companies.
Behind these actions, Huaxing is attempting to leverage the momentum of the largest trading platform, Binance, to position itself among the core players in Web3.
On August 29, during the fifth anniversary celebration of BNB Chain, Xu Yanqing stated in a dialogue with YZi Labs head Ella Zhang, "Since Huaxing established a strategic partnership with YZi Labs, we have received numerous inquiries from traditional financial institutions. They are no longer asking 'why they need to allocate digital assets,' but are focusing on 'how to correctly allocate core assets like BNB that represent the future financial ecosystem.'"
She further emphasized, "Huaxing not only wants to be a bridge connecting the Web2 and Web3 worlds but also aims to leverage our expertise in investment banking services, asset management, and wealth management to continue leading Huaxing to become the most iconic investment bank in the Web3 era."
In summary, Huaxing's logic is clear:
· External Logic: When traditional institutions want to enter the crypto market, direct investment often faces higher risks, while investing in Huaxing's stock can indirectly gain exposure to crypto assets.
· Internal Logic: The integration of Web3 and Web2 will inevitably generate new financing and M&A demands, allowing for a replication of the "decade of internet mergers."
In other words, Huaxing wants to continue playing the role of the "first investment bank" that can influence the market landscape in the crypto world.
The vision is grand, but the constraints during implementation are exceptionally realistic.
The Dilemma of Transformation
As a boutique investment bank that started with TMT mergers and acquisitions, Huaxing's core advantage has always been its deep understanding of the Chinese internet industry and its founder resources.
In the world of traditional investment banks, the incentive mechanisms are clear: commission sharing, short-term performance, and quick results. Investment bank employees are typical "professional service providers," completing transactions and extracting fees.
For Huaxing Capital, fully entering the crypto market means facing a harsh reality: many traditional top-tier capital players have failed in this emerging field.
First, the failure of the FA model is almost predetermined.
In the golden age of internet mergers and acquisitions, Huaxing was able to become a "super matchmaker" relying on its network and information asymmetry: who is raising funds, who is selling, and how valuations are determined were often known only to a few investment banks. However, in the on-chain world, the flow of funds, governance voting, and protocol data are almost completely transparent, allowing anyone to track them in real-time. Aside from a few large exchanges or asset management institutions in Asia that genuinely require FA assistance for financing, most projects' capital movements are closer to "crowdfunding-style investments," and even derivative platforms like Hyperliquid do not require external financing at all, diminishing the bargaining and matchmaking advantages of investment banks.
Thus, to truly achieve excess returns, Huaxing Capital can only invest directly.
"Doing FA is mainly about making friends and earning money through investments," a former FA practitioner once explored the crypto world with this mindset, successfully making friends and starting investments, only to end up losing money.
The primary market in the crypto world is extremely perilous; to make good investments, one must have a profound understanding of the underlying logic of the crypto market and be able to connect with the best entrepreneurs to provide continuous support.
However, the crypto space is often filled with short-term narrative traps: once a project hits a trend, its valuation may skyrocket within months; but when the narrative fades, the market cap can be halved in an instant, and if the team lacks a business model, they can only rely on selling tokens to survive, leading to a continuous decline in market cap. Moreover, the current market has lost faith in altcoins, with funds primarily concentrated in top assets like BTC, ETH, and SOL. Even the currently popular coin-stock linkage model may one day be proven false.
For Huaxing, this means two layers of risk:
First, whether its investment vision is penetrating enough to see through narrative traps; second, reputation risk.
The speed of crypto cycles far exceeds that of traditional markets; a protocol being hacked or a project running away can destroy market value within 48 hours. If Huaxing steps on a landmine, not only will its funds be damaged, but it may also lose the hard-earned reputation of being a "boutique investment bank."
Singapore's sovereign wealth fund Temasek not only lost about $275 million in FTX but, more seriously, as a state-backed investor, Temasek faced inquiries from Parliament and was forced to admit that "there were significant lapses in due diligence," which severely impacted its reputation.
From this perspective, Huaxing Capital's best path may not be to recreate a crypto version of the "King of Mergers," but rather to pivot towards being a major player in the secondary market. By strategically allocating core assets like BTC, ETH, and BNB, combined with quantitative strategies and risk hedging, it can pursue stable returns.
However, this path is equally perilous.
Trading means competing with countless professional quantitative funds, crypto-native trading teams, and multinational market makers. Without deep technical capabilities, risk control systems, and on-chain data insights, relying solely on the brand and connections of a traditional investment bank makes it nearly impossible to establish a real advantage.
Huaxing Capital finds itself in an awkward position:
Doing FA, the information advantage is gone; doing VC, narrative traps abound; doing secondary, it lacks native genes.
This is also the dilemma faced by many traditional FA/VCs in the crypto world. To establish a foothold in Web3, not only is capital investment needed, but a complete cognitive reconstruction is also essential.
It must answer one question: in this transparent, disintermediated world, what is Huaxing's value?
Looking back from 2025, Huaxing's transformation into Web3 resembles an experiment pushed onto the table. It is not a result of proactive choice but rather a gradual cornering by the environment.
Twenty years ago, Huaxing rose by hitting the launch window of China's internet. At that time, Bao Fan, with a challenger's spirit, used "an investment bank that understands the internet" to tear open the seams of old finance.
Today's situation is different: Web3 does not merely bring offline business online but fundamentally rewrites financial logic: decentralization, permissionless access, community governance—these concepts directly shake the intermediary position that investment banks rely on for survival.
The shift in roles sharpens the questions. Huaxing of yesteryear was a pioneer, able to enter the fray lightly; today's Huaxing is an established beneficiary, and wanting to "go all in" on a new track means severing ties and betrayal. For an institution already written into the history of Chinese mergers and acquisitions, such a choice is more brutal than it was twenty years ago.
Globally, traditional financial institutions have rarely achieved real breakthroughs in the transformation to digital assets. Goldman Sachs was one of the earliest investment banks to test the waters, but to this day, its digital asset business remains negligible in its revenue. The common challenge in this industry is: can it undergo self-revolution, or is it destined to be replaced by new species?
But for Huaxing, there is no turning back.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
