Cryptocurrencies themselves are a borderless industry, and when it comes to actual development, they are all independent.

Guests: Parikshit Mishra, OKX President Hong Fang, Bitget CEO Gracy Chen, Backpack Founder Armani Ferrante

Compiled by: Jinse Finance

On February 19, at the Consensus HK 2025 conference, Bitget CEO Gracy Chen, OKX President Hong Fang, Backpack Founder Armani Ferrante, and CoinDesk Breaking News Deputy Editor Parikshit Mishra engaged in a dialogue themed "Beyond Trading: How Crypto is Shaping the Market."

Jinse Finance has compiled the dialogue content as follows for readers.

The Cycle of Cryptocurrencies, Construction, and Market Sentiment

Parikshit Mishra: How do you view the current cycle of the cryptocurrency industry? Is now a good time to build products and create long-term value? Additionally, do meme coins in the industry and market volatility have any negative impacts, and how do you view these phenomena?

Hong Fang: Everyone who wants to enter the cryptocurrency space feels this way. So I think this is the real way we look at this cycle from our own perspective. At OKX, we do not view it from a price perspective because we position ourselves as infrastructure builders. So we hope to continue building our products regardless of the price. Personally, I believe that when price fluctuations are not so severe, we actually have more time to build well in the market.

Gracy Chen: Sometimes I joke with friends and refer to this period as "garbage time."

Gracy Chen: You saw Bitcoin reach $100,000 in December. In the past few weeks, there has been a surge of meme coins, including celebrity meme coins, basically a lot of meme coins have emerged. For me, because I work in the Web3 and crypto industry, I do not see them as enemies but rather feel that they are just taking liquidity from our industry and then leaving, but they will come back later.

So, I think this week, especially after the issuance of celebrity meme coins, there has been a lot of pump and dump and scams, and people are starting to think, do we really need these celebrity meme coins to get liquidity from our industry?

When can we expect real innovation and true macroeconomic catalysts, such as Bitcoin strategic reserves in the U.S. and some other countries, as well as more macro fiscal and monetary policies? It seems that many things will remain uncertain until June or May of this year.

But similar to Hong Kong, I am not a trader or a predictor, but I personally think it is a bit of "garbage time," but "garbage time" is not really garbage time; it may be the best time to focus more on your product development and truly create value for your target audience, whether they are retail users, institutional clients, or your partners, your community, etc. For us, this is what we are doing. This may also be why we survived the last bear market, which is being very focused on our own time.

Armani Ferrante: If you ask this question in the context of a single cycle, I would redefine it and ask it in the context of the entire history of cryptocurrency. Thinking this way makes it much easier to position yourself. Because prices go up and down, it is impossible to accurately predict your position in the cycle. If you try to predict, you will run into trouble.

So where are we today? I entered this industry because of the theories in the white papers. What attracted me was the concept of a global world computer, a trust-minimized computing machine that allows a new generation of developers to escape the pains of the past.

For the past three to four years, we have been chasing how to make it faster? How to scale it? How to build real applications that can change the world? Not just speculation and trading back and forth, watching prices rise and fall. In this process, we have encountered many headlines, from technical issues and seemingly impossible tasks to regulatory issues, especially in the U.S., which is very personal for me. I am in the U.S., and I am an American. I have been building our company abroad. I think with the new Trump administration, especially as an American, it has been a relief because in the U.S., there is a lot of stigma, making it difficult to attract the best talent into this field. This cannot be overstated.

All the best talent has gone to the AI field instead of the cryptocurrency field, largely due to the stigma. Meme coins have many advantages and many disadvantages, but Trump's embrace of this industry is a very positive turning point for the U.S. and U.S. capital markets, which are the most important capital markets in the world. They are the deepest, most trusted, and most liquid. The vast majority of value in the world is there. And when cryptocurrencies are thriving outside the U.S., especially in Asia, they are basically absent. So far, this is the center of cryptocurrency. I think we are definitely experiencing some turbulence, as you said, all the scams are there. Let's set aside those legitimate pump and dump schemes that no one likes.

But as a collective industry, we have achieved so much, whether it is Solana or the amazing technology built there, or inviting Evan from Swede to this stage. So much incredible engineering work has been done so far.

The tide is definitely turning, regardless of today's prices or where we are in this market cycle. Overall, when you zoom out, if you want to say things have never been so positive, so exciting, so inspiring for anyone building in this field, the indicators I look at are very simple. I don’t care what the price is. I only care about human capital. I only care about the engineers who just graduated from college, what do they want to do for the rest of their lives? Will they dive into cryptocurrency? Will they join social networks? Will they join AI companies? I think since Trump was elected, we have never seen so many people excited about diving into the cryptocurrency space.

So I think now is a great time to enter this industry and a great time to build.

New Trends in Institutions and Retail

Parikshit Mishra: I agree with your point. About 18 months ago, everyone thought it was too late to invest here. So this is like a positive score, right? But you, no one knows traders better than exchanges. Do you think there has been any change in trader behavior? What are traders focusing on now that is different from previous cycles? Or what have traders completely missed?

Hong Fang: From our experience? Because from the perspective of customer segmentation, we serve a wide range of clients, from institutions to retail. I think on the institutional side, the scale of institutional adoption is continuously expanding, regardless of the regulatory environment. Because I think the direction is clear. Bitcoin will continue to exist, and cryptocurrencies will continue to exist. On the retail side, I think the market share of decentralized exchanges (DEX) is continuously increasing, which is a very obvious trend.

Last year, at OKX, which we have been vigorously building for the past three years, we truly emphasized providing customers with both centralized finance (CeFi) and Web3 options. We saw that the assets under management (AUM) in the Web3 space actually exceeded that in CeFi, which actually surprised us at the end of last year. But it also indicates that the Web3 side is developing more traffic, more assets, and more infrastructure. Another major trend we see is that as we continue to build CeFi infrastructure, we have launched regulated platforms in multiple jurisdictions over the past 12 months, recently in Australia and Dubai.

We do see a sustained interest in regulated environments from these markets, but clearly, these groups are not only seeking trading but also seeking additional yields, additional conveniences, and complexities and creativity within regulated, reliable infrastructure.

So I think there are many interesting dynamics happening, and we are very optimistic about the long-term direction of our industry. But likewise, I think this means we must focus on building rather than focusing on the changes in cycles.

Gracy Chen: Similar to OKX, we also have a product called Bitget Wallet. So I want to say that these two exchanges are the two strongest exchanges investing a lot of resources in building DEX services, not just focusing on centralized exchanges themselves.

In 2024, we also saw tremendous growth in our DEX product Bitget Wallet, with the number of users reaching 45 million, many of whom come from so-called "developing countries."

For example, in Africa, South Asia, and Latin America, the growth from certain ecosystems (like TON, meme coin cycles, etc.) is very significant. I think this is a trend I have observed, shifting from more centralized exchanges to decentralized exchanges, but also including integration. Another trend I see is the interest from institutions. For example, before I joined Bitget in 2022, I worked in the Web2 industry and traditional financial banking. Many of my friends from the Web2 world only came to me until the end of 2024, seeking advice on how to invest a small portion of their current total financial allocation (maybe 2%, maybe 5%) in cryptocurrencies. What should they do? What should they focus on? Of course, I shared some of my personal financial principles with them, like not using excessive leverage, and that most cryptocurrencies should still be invested in Bitcoin or Bitcoin proxies.

But some of the obstacles they face are that they feel uncomfortable directly holding tokens; they feel more comfortable holding ETFs or even buying U.S. stocks like MicroStrategy (MSTR). This is why we see Bitcoin's dominance significantly increasing in 2024, from just below 40-50% to now over 60%. Because this capital is only flowing into Bitcoin, not into other tokens, not even into Solana or XRP. If the crypto industry wants to attract more traditional financial investors or institutional clients, what they need to see is: first, changes in regulation that allow them to invest in this industry more compliantly, easily, and disciplined.

Second, more credibility crises need to be addressed because many of them feel scared after the FTX collapse or feel that investing in cryptocurrencies carries some moral risks. Third, we need to see more real innovation. We are all focused on what we will mention as real innovation, like when we say blockchain is an innovation technology as important as AI, how are people really using it? Right now, many product-market fit points may still be in exchange business, speculation, and trading, rather than an evolution that can integrate into everyone's daily life like ChatGPT.

So these three things—regulation, credibility risk, and true innovation—are some of the barriers I believe are hindering traditional financial industry investors from entering this space more. But the two trends I see are that retail users may be more interested in more DEXs, while more high-net-worth individuals, family offices, and other clients want to enter this industry.

Armani Ferrante: I think many key points have already been mentioned, but when thinking about trader habits, I believe the story of the past year has indeed been the rise of decentralized exchanges. There is no doubt about it, especially as these systems continue to expand.

As they become increasingly capable of building financial applications used by people around the world, I think Jupiter on Solana is a great example, and Uniswap launching its own Rollup on Ethereum is also a great example. Hyperliquid may be the most prominent trading platform launched this year.

But I think when many people divide DeFi and CeFi into a binary opposition, they almost frame it as an engineering problem, citing the architecture of the systems. But I don’t think that’s the correct binary opposition. I think the real binary opposition is censorship resistance and compliance. I believe this will ultimately be the end state for almost all projects in cryptocurrency. You either live in a society, right? You don’t live in an industry; you live in a rule-of-law society.

Despite creating all these new assets, you still have to comply with all the rules, just like if you were to rob a liquor store or something else, exchanges are the same. As more and more rules and regulations come into effect, this will become a hard requirement. But then there is also a set of completely decentralized, censorship-resistant products that run on a globally distributed network of machines, and trying to regulate them is an undefined problem. How do you shut down Uniswap? I don’t know; no one has any control points over it. So I think the role of exchanges will continue to evolve to fit into one of these two worlds. You see more and more people now building these centralized exchanges because they don’t want to deal with any compliance issues, or those who actually have the expertise will go and obtain all the licenses and comply with all local rules to truly integrate into the social structure.

This is ultimately how we move toward the next stage of industry maturity. I’ve said it before, and I’ll say it again. The important markets in the world are regulated. I’m not saying they are important; I’m saying they are the markets that currently hold all the value, running all the goods and services of the world, and they are all regulated markets. There are trillions of dollars of value there. Everything that exists in cryptocurrency right now is great. We all know and love engineering problems, but relatively speaking, it is more or less meaningless.

Therefore, a large part of the opportunities and challenges we all face is to bring all this value and support it with blockchain. This requires a lot of work. It’s not just engineering work. It’s legal work, compliance work, and building relationships and trust with the entire society, whether it’s regulators, legislators, or the general sentiment of voters in various places. But we ultimately have to build something that fits this model.

I think this is an important component of the industry’s maturation.

The Dual Challenge of Regulating Centralized Exchanges and Policy

Parikshit Mishra: My next question will be a two-part question. You have touched on this.

You exchanges have been talking about regulation and policy, right? With the emergence of a more crypto-friendly environment in the U.S., do you think the U.S., as a leader in cryptocurrency and other financial markets, will trigger a wave of more regulatory clarity in areas that previously lacked it? What clarity do you lack as centralized exchanges that would truly help you expand into other regions? What can regulators focus on to help you better differentiate between centralized and decentralized exchanges and help you gain more market share?

Hong Fang: I think, like other industries, cryptocurrency is a global industry, but we also realize that it is a very, extremely localized industry.

Hong Fang: I believe U.S. regulation will definitely have a huge, extraordinary impact on the regulatory landscape of other markets. Aside from the U.S. itself, we have already seen different jurisdictions taking their own measures from a regulatory perspective. I think this trend will continue regardless of where the U.S. goes. The U.S. has fallen a bit behind and is now catching up. And from the community perspective, the local retail communities in different regions—Asia, large community clusters like Asia, the Middle East and North Africa, Europe, the U.S., Latin America, and Africa—these are all very independent regional markets.

Cryptocurrency itself is a borderless industry, and when it comes to actual development, they are all independent. I believe U.S. regulation will have an extraordinary impact on other markets for only two reasons. One is the banking channels, particularly considering the importance of correspondent banks in global capital flows. I think the second point is institutional capital. One thing I closely monitor is the speed of institutional adoption. Once the U.S. has clear regulatory clarity, Wall Street will definitely flood in. They want to get in now, but they still face barriers to entry. So I do believe this actually creates opportunities for more crypto-native exchanges and builders who can leverage this opportunity to build in the right way, bridging traditional finance and Web3.

But at the same time, there is also a need to invest heavily in Web3 and continue to nurture grassroots communities before Wall Street floods in and the financial eye scrutinizes this industry.

It will be interesting to continue observing. I think changes in the U.S. won’t happen that quickly; that’s my personal view, but we all know that with the new government coming in, it will be a very tumultuous year.

So we shall see.

Gracy Chen: Similarly, I think the changes in regulatory clarity won’t happen quickly. I have actually talked to some of the so-called cryptocurrency advisors of the new Trump administration; they have over 20 cryptocurrency advisors from top venture capital firms and top Web3 groups, more related to the U.S. Unfortunately, I am not one of them, and we are not conducting any business in the U.S. at all.

But I have been keeping an eye on the current progress. I know David Sacks is pushing many initiatives. He is a good friend of Donald Trump, and he has many connections in this field, and he has made many positive changes there. But still, how they determine whether Ethereum is a commodity or a security, such simple things, or whether it is regulated by the U.S. Commodity Futures Trading Commission (CFTC) or the U.S. Securities and Exchange Commission (SEC)? These are not clear. It seems that all these entities, both federal and state governments, have a say.

So the political system in the U.S. is very, very complex right now. When it comes to regulating cryptocurrency exchanges or even defining certain tokens as commodities or securities, these things are very, very unclear. The same goes for ETF approvals. We have been waiting for many things to become concrete regarding whether Dogecoin, Solana, or XRP will have ETFs because I cannot speculate on speculation. I cannot decide to enter a market just because of rumors surrounding whether there is regulation and how it is regulated.

So we need to wait for these things to unfold and then decide whether to enter that market. In 2025, I don’t think we will do that. When we have more concrete plans, we may reassess the decision to enter the U.S. market. But we may also want to collaborate with some third-party partners to expedite this process.

Armani Ferrante: I would break this question down into two different parts.

The first part is all the questions about the assets themselves. I think it’s hard to generalize because the rules and laws vary around the world. But taking the U.S. as an example, the new government has provided a lot of clarity. David Sacks has publicly stated that NFTs are collectibles, and meme coins are collectibles, which has driven everyone a bit crazy; for anyone building decentralized applications under strict scrutiny, this is a huge release. Is that on-chain?

There is the issue of the assets themselves, which particularly affects our listings. This is an important conversation. The other part of this question I would break down is, as a small player, which regulations apply to me? For me, there is a very clear decision function to answer this question. It’s simple. Do I have control? Or do I not have control? That’s the censorship resistance. There are so many people distributed globally operating this thing. I cannot do anything unilaterally. You can basically ask this question: does it involve multi-signature? It doesn’t matter whether you are a centralized exchange. It doesn’t matter whether you are on Solana or Ethereum. If there is a single control point, then it should be very clear and obvious that regulation does indeed apply to you, just as it applies to any type of financial institution you operate in any region, whether it’s the U.S., Japan, Europe, or elsewhere.

This is a singular question.

I think for me, there is definitely a lot of clarity in this area. The challenge and the area that needs help is lowering the barriers to entry. The barriers to entry are very high. If you want to be regulated in the U.S., here’s a silly example. I’m from the U.S., and I’ve spent my life there, growing up in California. For me, this is the most important market; my family is all there. I want to do things by the book in the U.S., right? The vibrancy of the U.S. or whatever, right? Trump was elected, and he unleashed all the creativity of decentralized applications and anyone building in a decentralized way, but he tried to establish a regulated business. There are still a lot of barriers. If you don’t have unlimited funds, you still have to go through the money transmission license (MTL) process in all 50 states. For example, maybe this is the best example, a state like New York, which is the cryptocurrency capital of the U.S.

All the talent is there, Wall Street is there, it’s an amazing place. Everyone loves New York, but if you want to get licensed, you can’t operate an exchange in New York.

So we want to get licensed; we want to get licensed in all 50 states, but we can’t hire any engineers who have access in New York. This will reduce the infrastructure. This is very unfortunate; I want to support my country, but you tell me I can’t hire anyone there. So I think there are these barriers. I think this friction slows down our collective speed, but I do think it is clear. It’s just very difficult. You see, Coinbase just launched a Solana futures market in the U.S., so there is definitely a pathway to offer these products in the U.S.; it’s just really hard. And there are a lot of barriers.

Only those who pass the strictest due diligence processes of regulators can get approval to launch in the U.S., and what I would like to see is perhaps a new, easier pathway for young startups that don’t have all the resources, right? If you are just Mark Zuckerberg, freshly graduated or dropped out of college, how do you build an exchange? You can’t; good luck. It’s actually impossible, at least in a regulated way. So I think this is the conversation I’m focused on, and it’s something I hope to see progress on.

Parikshit Mishra: Your dialogue has been very insightful and engaging, but unfortunately, our time is up. We have to make way for others, and it has been great talking with you. I hope this has been enlightening for the audience. We’ll see you later.

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