Written by: Hu Tao, ChianCatcher

As the cryptocurrency industry becomes increasingly mainstream, it seems that Chinese entrepreneurs are drifting further away from the center stage.

Once upon a time, projects founded by Chinese individuals occupied a significant portion of the industry, including well-known cryptocurrency exchanges like Binance, OKX, Bybit, Bitget, Gate, HTX, and Bitmart. The same is true in the mining sector, where companies like Bitmain, Canaan Creative, and Spark Pool hold important positions in the industry. Their commonality is that most were established in 2017-2018 or even earlier.

Although figures like Zhao Changpeng, Xu Mingxing, Wu Jihan, and Sun Yuchen are still actively engaged in the industry, since the DeFi Summer boom in 2020, a general consensus has gradually formed: the visibility and voice of the new generation of Chinese entrepreneurs in the global cryptocurrency industry have declined, and so far, no leaders have emerged to stand alongside the previous generation of industry figures. In light of this gap, what has the ecosystem of Chinese entrepreneurs experienced? What opportunities lie ahead?

Regulatory and Geopolitical Restructuring: The First Shock of Ecological Disruption

The most significant factor in the past five years has been the dramatic changes in regulatory and geopolitical environments.

Starting in 2021, China significantly increased its governance over cryptocurrency-related activities, swiftly cutting off trading, mining, and other activities that were previously in gray areas. In the market hotspots of these years, almost any trending concept has faced regulatory scrutiny, from previous ICOs, NFTs, and digital collectibles to recent developments in payments and real-world assets. This undoubtedly limits the inflow and support of quality resources for the Chinese cryptocurrency ecosystem.

These blows have not only accelerated the migration of mining and exchange businesses but, more critically, they have deprived Chinese entrepreneurs of a naturally networked, talent-dense, and capital-accumulating domestic market, forcing them to develop in unfamiliar overseas environments.

In the early cryptocurrency ecosystem, many rapidly growing Chinese projects quickly accumulated users through the mobilization mechanisms of Chinese internet communities: WeChat group fission, KOL networks, media matrices, offline gatherings… These channels were once among the most efficient systems for disseminating cryptocurrency narratives. However, changes in regulatory policies rendered this system largely ineffective.

Consequently, the center of power in the industry has rapidly shifted to Europe and the United States—where compliance leadership, institutional capital influx, and increasingly mature regulatory frameworks are shaping an industry order that is starkly different from that of 2017-2018. New narratives, new regulatory landscapes, and new capital structures naturally favor English-speaking markets and compliance-oriented entrepreneurial teams. For instance, cryptocurrency projects with certain gambling characteristics, like prediction markets, find it challenging to emerge in the heavily regulated Chinese market environment.

In such an industry environment, the new generation of Chinese entrepreneurs also finds it harder to gain the "default trust" of global media, regulators, capital, and users, requiring more trial-and-error costs in marketing and compliance compared to similar projects in Europe and the United States.

Capital Preference Shift: The Second Shock of Ecological Disruption

If the institutional barriers caused by regulatory and geopolitical environments represent the first shock, then the "structural preference shift" from the capital market further exacerbates the marginalization of Chinese entrepreneurs in the new cycle.

In today's industry environment, without strong VC funding and resource support, projects are at a disadvantage in user acquisition, listing, and narrative development, placing Chinese entrepreneurs in an unfavorable position right from the funding stage.

Due to the overall poor performance of altcoins and a significant decline in investment returns, Chinese background VCs have drastically reduced their investment frequency in the past 2-3 years, with some even halting investments entirely. Chinese entrepreneurs face significant constraints in both financing and exit pathways. When competing with Europe and U.S.-dominated VCs, Chinese projects struggle to find advantages due to language and cultural differences, leading to a downward trend in the amount and number of financing received by Chinese projects in recent years.

Proportion of industry share in terms of the number of projects and financing amounts from mainland China. Source: RootData

Since the beginning of this year, the cryptocurrency industry has seen a wave of IPOs and mergers and acquisitions, with companies like Circle and Gemini successfully listing on U.S. stock markets, and Coinbase and Ripple frequently making acquisitions. This has significantly boosted the confidence of entrepreneurs and even VCs, but these developments are largely unrelated to Chinese projects. It can be said that European and American projects are enjoying the institutional dividends of the mainstreaming of the cryptocurrency industry.

From the perspective of mainstream capital, European and American projects have inherent advantages in compliance, cultural recognition, and exit strategies. Unless Chinese projects possess exceptional strengths in team configuration and technical background, they find it difficult to win the favor of European and American capital.

Discrepancy in Capability Structure and Industry Maturity: The Third Shock of Ecological Disruption

Over the past decade, the main theme of the cryptocurrency industry has been in the infrastructure and tools sector. Although there have been iterations of new concepts like DeFi, NFTs, games, and inscriptions, most have not become mainstream projects.

In a previous interview with ChainCatcher, Jason Kam, founder of Folios Ventures, stated that the development of Web3 over the past 5 to 10 years has been about laying the groundwork, with a focus on product categories and states. This has been a decade emphasizing ecosystems, infrastructure, tools, and building consensus—essentially a decade for B2B products.

Europe and the U.S. have three generations of exceptionally talented engineers who excel at building such B2B ecosystems. In contrast, the Asia-Pacific region mainly consists of younger engineers from the 80s and 90s, whose career paths have developed alongside the rise of China's B2C industry starting in 2005. In other words, their engineering experience is rooted in B2C and applications, which is at odds with the entire blockchain development trajectory, making it challenging for them to excel in public chains and infrastructure.

"If entrepreneurs from the Asia-Pacific region compete with their European and American counterparts at the consumer level, I believe they have no disadvantages, and may even have advantages, as they possess rich product experience and aggressive market share acquisition strategies."

Although Chinese entrepreneurs have proven this point in the more Web2-oriented exchange sector, in terms of on-chain consumer products, the fleeting success of Stepn has shown that Chinese entrepreneurs have talent in consumer products, yet the overall market explosion for consumer-level products has yet to arrive, closely tied to the maturity of industry infrastructure, as the market has not reached the "comfort zone" of Chinese entrepreneurs.

Multicultural Background Entrepreneurs are Becoming Industry Leaders

Strictly speaking, Chinese entrepreneurs have not been without new representative cases in recent years. Jeff Yan, founder of Hyperliquid, is of Chinese descent; his parents were immigrants from China, and he was born and raised in Palo Alto, California. He later attended Harvard University, majoring in mathematics and computer science. After graduating, Jeff joined the high-frequency trading giant Hudson River Trading as a quantitative trader. In 2022, after founding Hyperliquid, he built it into one of the fastest-growing giants in the cryptocurrency industry in recent years with the concept of being "small and refined," without VC backing, and driven by user growth.

However, while Hyperliquid is one of the most successful projects in this cycle with "Chinese blood," it is difficult to view it as a continuation of the influence of Chinese entrepreneurs, as Jeff is almost never active in the Chinese ecosystem and has shaped his image almost entirely around Western values, without expressing himself in Chinese. The rise of Jeff and Hyperliquid highlights a fact: in the new cycle, Chinese heritage can still exert global influence, but the prerequisite is integration into the mainstream cultural system, rather than relying on old paths of Chinese entrepreneurship. If one only relies on a single cultural system, they can only become a regional leader and cannot achieve outstanding results in the globalization process.

In fact, many well-known Chinese projects that have become leaders in their respective fields during this cycle have founders with multicultural backgrounds, many of whom studied in Europe and the U.S. during their university years, such as Sean Ren, founder of Sahara, Yu Hu, founder of Kaito, and Erick Zhang, founder of BuidlPad. Their long-term experiences in Europe and the U.S. have played a significant role in their development paths.

Indeed, entrepreneurs with multicultural backgrounds are more sought after in the cryptocurrency industry. For example, the founders of Ethereum, Solana, and Binance, including Zhao Changpeng, all immigrated to North America from China or Russia during their childhood. The collision of different political systems and cultures has allowed these entrepreneurs to recognize the value of blockchain in empowering personal sovereignty earlier and to take swift action. They consider cultural inclusivity as a core aspect in team building, resource integration, and daily operations, ultimately making it easier to gain favor from users with diverse cultural backgrounds.

The borderless nature of cryptocurrency, combined with the regulatory and interest conflicts of various countries, will dominate the development trends of the cryptocurrency industry for a long time. Chinese entrepreneurs indeed face increasing challenges against the backdrop of multiple conflicts between China and the U.S. and the mainstreaming of the cryptocurrency industry. However, as the industry encounters skepticism regarding gambling tendencies, nihilism, and the debunking of numerous project concepts, the development trajectory of Chinese entrepreneurs may no longer be a critical industry issue. What truly deserves attention is: as speculative growth and narrative bubbles gradually recede, who will continue to invest in the long-term value of decentralized technology and redefine the industry direction through real products and verifiable innovations.

The core competitiveness of the future industry landscape will depend more on whether founding teams possess cross-cultural collaboration, long-term technical investment capabilities, and institutional understanding and organizational resilience in the face of regulatory uncertainties. Regardless of cultural or national backgrounds, those who can sustain efforts in these dimensions are likely to become the true beneficiaries of the next cycle. In other words, the path to success in the cryptocurrency industry has never depended on "where they come from," but rather on "what they can achieve."

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