Compliance ascension, DEX explosion, offshore squeeze—this is the endgame for crypto exchanges, with no middle ground.
Written by: Web3 Farmer Frank
Have you ever thought that crypto trading will also be taxed in the future?
Since this spring, many users from mainland China who trade U.S. stocks using platforms like Tiger Brokers and Futu Securities have been receiving back tax notices. This is no coincidence; with the implementation of the CRS global information exchange, offshore accounts and investments are being monitored from all angles, affecting everyone from high-net-worth individuals to ordinary middle-class citizens.
The reasoning is similar: the "sovereign vacuum period" in finance is often very short. Today's U.S. stock brokers are not unlike a rehearsal for tomorrow's crypto trading—once the wild era passes, Liangshan will inevitably be incorporated into the regular army:
From the invisible freedom of offshore U.S. stock accounts to the global information exchange under CRS, from the rampant growth of third-party payments to the strict control of central bank licenses, financial innovations that exist outside mainstream regulation are moving from gray areas to standardization, and this is an irreversible one-way street.
Especially this year, with the entry of Web3 and the involvement of power, crypto exchanges find themselves at a crossroads of fate. Local compliance players are firmly in control, the offshore gray space is rapidly shrinking, and on-chain DEXs are gaining momentum.
There is no middle ground, only clear directional distinctions.
Offshore CEX: The Feast is Over
Centralized exchanges (CEX) remain the top predators in the current crypto ecosystem.
It can be said that CEXs, which primarily rely on trading fees as their core revenue source, have reaped the largest dividends from the explosive growth of crypto. According to public market estimates, the annual revenue and profits of leading offshore CEXs like Binance and OKX are in the tens of billions to over a hundred billion dollars. For instance, Binance's revenue for 2023 is projected to reach $16.8 billion, with annual cryptocurrency trading volume exceeding $3.4 trillion.
This means that even in a turbulent global macroeconomic environment, offshore CEXs continue to be among the most profitable businesses.
Source: Fourchain
However, the golden age of the offshore model has clearly come to an end.
Compliance pressures and tax storms are extending from traditional finance into the crypto realm. Similar to the recent uproar over back taxes on U.S. stock trading, observant users should have noticed that over the past year, offshore CEXs like Binance and OKX have also faced various public controversies:
Including but not limited to restricting accounts by treating cryptocurrency assets as the sole source of income and requiring users to provide proof of annual income and tax payments, etc.
Objectively speaking, offshore giants like Binance and OKX are paying a high price to "come ashore." In addition to the legal accountability faced by their founders, significant funds are also being invested—Binance has publicly disclosed that it will invest hundreds of millions of dollars in compliance and security in 2024, and its internal compliance team has grown to 650 experts.
Especially since 2025, companies have been accelerating their compliance efforts and potential IPOs during the "political dividend window."
For example, Kraken first saw the U.S. SEC withdraw its securities violation charges against it, and the FBI ended its investigation into its founder, subsequently hinting at potential IPO plans. Recently, there have been reports of raising $500 million at a $15 billion valuation, fully pivoting towards compliance.
OKX is similarly active, first reaching a settlement with the U.S. Department of Justice in February, paying over $500 million in fines, and then actively pushing for an IPO in the U.S., with reports indicating that its compliance department in the U.S. has been adjusted to the highest priority across all departments.
These actions send a clear signal that the survival space for the offshore model has been compressed to historical lows, and CEXs are racing against the clock to seize the last window for compliance.
It can be said that this crypto political honeymoon period, catalyzed by Trump's policy narrative reshaping, the "balance sheet" of BTC, and the stablecoin boom, is almost the last window for offshore CEX transformation.
Once the opportunity to "come ashore" is missed, they may fall from top predators in the ecosystem to targets of regulatory cleanup.
The Predictable "Three-Way Division" Pattern
If we compare today's crypto market to the Hong Kong and U.S. stock markets that Chinese investors participated in ten years ago, then the evolution of regulation and the market is merely a few years behind.
As global tax compliance, capital controls, and the entry of financial institutions converge, the future landscape of exchanges can almost be predicted as a "three-way division":
Localized licensed compliant CEXs: Represented by Coinbase, Kraken, HashKey, OSL, etc., characterized by having banking connections and compliance clearing capabilities, primarily serving local users and institutions/high-net-worth individuals, building long-term brand value through compliance moats;
Offshore gray CEXs: Represented by Binance, Bitget, Bybit, etc., serving global retail and some high-risk users, will inevitably be compressed, eroded, and marginalized under the current global compliance trend and the approaching on-chain experience;
Pure on-chain decentralized exchanges (DEX/DeFi native): No KYC required, permissionless access, natively supporting on-chain asset settlement and multi-chain composite trading, which may become a new global liquidity hub in the future;
Among these, compliant exchanges are undoubtedly the "upward curve players" benefiting from policy dividends. In markets like the U.S. and Hong Kong, compliant exchanges can not only engage in institutional and banking collaborations but also be incorporated into local tax systems. The strategic goal of such platforms is clear—to become the next generation of digital asset exchanges and clearinghouses.
For instance, an easily overlooked signal is that compliant exchanges like Coinbase are entering their golden moment—projected revenue for Coinbase in 2024 is $6.564 billion, more than doubling year-on-year, with a net profit of $2.6 billion, nearly approaching 50% of offshore leader Binance (according to market estimates).
More critically, Coinbase has little to worry about enforcement actions or bank freezing risks from major global jurisdictions, making it a natural "safe harbor" for institutions and high-net-worth users.
On-chain DEXs represent the most potential and highest ceiling among "global market players." They do not rely on national licenses and serve as a 24/7 global liquidity hub, especially with native support for on-chain asset settlement and cross-asset composite strategies, offering strong programmability.
Although their current market size is still less than 10% of CEXs, the growth elasticity is enormous. Once the on-chain derivatives market matures, the market depth and strategic space of DEXs will attract a large influx of high-frequency funds, arbitrageurs, and institutional liquidity.
For example, Hyperliquid saw its capital grow rapidly in July, increasing from just below $4 billion at the beginning of the month to $5.5 billion, and at one point approaching $6 billion in mid to late July.
Moreover, the DEX model is not only a carrier for DeFi innovation but may also become the cornerstone for decentralized pricing of global commodities and crypto assets, just like Fufuture's newly launched TSLA.M/BTC index trading pair based on "coin-based perpetual options":
Allowing users to use TSLA.M as collateral to participate in BTC/ETH perpetual options trading not only explores new liquidity paths for tokenized U.S. stocks but can also be used to help build pricing pools for tokenized gold/oil products or other small-cap meme assets.
Overall, the strategic significance of Fufuture's DEX derivatives mechanism, which integrates options and perpetual contracts, lies in transforming long-tail assets (like SHIB, TSLA.M, etc.) that could only sit in wallets into usable collateral, activating cross-asset liquidity, forming a natural positive cycle of "holding positions equals participating in liquidity building," and making the on-chain market closer to the capital efficiency and depth of traditional derivatives markets.
In contrast, offshore CEXs have already reached their peak, and their survival space is being rapidly compressed. On one hand, they are caught between compliance and on-chain realities, lacking long-term survival space; on the other hand, the tightening of global regulations, CRS tax exchanges, and the bank KYC system make it difficult for gray traffic to sustain.
It can be said that the feast of the offshore model has come to an end. In the past, it served as a "gray buffer zone" to accommodate regulatory arbitrage, but in the future, it may linger on the edge of policy, being eroded by both compliant exchanges and on-chain markets: either integrate into tax and compliance systems to become localized licensed institutions; or completely transition to on-chain, becoming a borderless global market.
The middle ground is destined to be cleared.
New Proposition for DEX: Decentralized Pricing of Global Assets
From a longer-term perspective, the future competition among exchanges is not merely about traffic and fees, but rather a battle over the rewritten rules of the global market.
If the first phase of DEXs was more of a testing ground for DeFi innovation, then with licensed localized exchanges in the U.S., Hong Kong, and elsewhere accommodating compliance needs, integrating into tax systems, and fully aligning with the banking system, the mission of DEXs may be completely reshaped:
They may take on the role of "price discovery and pricing power" for the global unlicensed market.
Why should the pricing power of global assets belong to on-chain DEXs?
Because unlike stocks and bonds, which have obvious regional attributes (except for U.S. stocks and bonds), commodities like gold, oil, copper, and crypto assets like BTC and ETH are inherently global trading targets;
At the same time, traditional commodity futures are concentrated in places like Chicago, London, and Shanghai, which have time zone and trading hour limitations, while on-chain operates 24/7, providing time-zone-free, permissionless liquidity;
Even better, stablecoins can serve as globally accepted settlement tools—if users open positions using stablecoins as collateral, all profits and losses are settled in stablecoins, meaning price discovery will no longer be limited by geography or banking systems;
With these three characteristics, DEXs are naturally poised to become the decentralized pricing cornerstone for crypto assets and commodities.
Source: CoinGecko
Of course, for DEXs, the true support for price discovery has never been purely spot trading, but rather the trading depth and price discovery mechanisms constructed by futures, options, and other derivatives systems.
This is also why the derivatives DEX is experiencing explosive growth in 2024, with total trading volume for Perp DEX reaching $1.5 trillion, more than doubling from $647.6 billion in 2023.
Among them, futures contracts are primarily led by Hyperliquid, with annual trading volume skyrocketing from $21 billion in 2023 to $570 billion in 2024, achieving a growth of 25.3 times. Recently, Hyperliquid has also entered the top five derivative platforms by daily trading volume, peaking at over $10 billion in daily trading volume, comparable to some mid-tier CEXs.
Source: Hyperliquid
On a more complex level of cross-asset strategies and on-chain derivative pricing logic, Fufuture also provides a concrete example. Its "coin-based perpetual options mechanism" has no fixed expiration date and dynamically charges premiums based on holding time, balancing the non-linear returns of options with the trading rhythm of perpetual contracts.
If you have truly experienced Fufuture's perpetual options products, you can clearly feel the innovations compared to traditional on-chain options products. For example, for users holding SHIB, this type of meme asset is almost unusable as any form of trading collateral in traditional on-chain derivative protocols. However, on Fufuture, simply depositing SHIB into the platform allows it to be used as collateral for trading.
In practical terms, as long as SHIB is deposited as "available collateral," the entire trading process is almost indistinguishable from contract trading—there is no need for stablecoins as collateral, no need to weigh options for expiration dates, strike prices, or profit and loss curves. Just like regular contract trading, you can select the underlying asset, direction (long/short), and opening quantity to start trading.
At the same time, it theoretically allows any on-chain asset, including the latest tokenized U.S. stocks, to be activated as available collateral—users can use TSLA.M and NVDA.M as collateral to participate in BTC and ETH perpetual options strategies (further reading: "Liquidity Considerations for Tokenized U.S. Stocks: How Should On-Chain Trading Logic Be Rebuilt?"), forming a true cross-market speculation and hedging network that traditional CEXs find difficult to provide.
From an industry perspective, on-chain derivative DEXs like Hyperliquid and Fufuture not only avoid compliance restrictions but also provide a 24/7, borderless trading and settlement network for global commodities.
Especially for Fufuture, this new trading mechanism that does not require prior conversion to stablecoins and allows users to open positions by simply choosing a direction maximizes the liquidity and strategic space of on-chain assets. Not only does it approach the trading experience of CEXs, but objectively, only on-chain derivative DEXs can achieve this, with the potential to become the on-chain "pricing power gateway" for global assets.
In Conclusion
The future of exchanges is not just a race against time, but a division among the rewrite of global market rules.
One will be localized and compliant, one will be offshore and gray, and one will become the cornerstone for decentralized pricing of the next round of global commodities and crypto assets.
There is no middle ground.
The direction at the future crossroads is set; it is only a matter of time.
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