According to Consensus Hong Kong panelists, clearer rules and improved technology are accelerating the convergence of traditional finance (TradFi) and decentralized markets, driving established institutions into areas such as crypto derivatives.
“Regulation is really important. It gives you the rails you need to operate,” said Jason Urban, global co-head of digital assets at Galaxy Digital (GLXY), who participated in the “Ultimate Deriving Machine” panel.
Other speakers, including executives from exchange operator ICE Futures US, cryptocurrency brokerage FalconX, and investment company ARK Invest, highlighted how developments in the US, such as the 2024 approval of spot cryptocurrency exchange-traded funds (ETFs) and harmonization between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have turned cryptocurrencies from a sideline. speculative to a basic element of the portfolio.
The key takeaway is that derivatives will pave the way for trillions of dollars in institutional inflows into the market. The momentum goes far beyond bitcoin the largest cryptocurrency by market value.
ICE Futures US President Jennifer Ilkiw highlighted upcoming overnight rate futures linked to Circle Internet’s (CRCL) USDC stablecoin, launching in April, and multi-token indices as evidence that institutions are looking beyond bitcoin to gain exposure to a variety of tokens.
“It makes it very easy. It’s like, if we take our MSCI Emerging Markets, there are hundreds of stocks in there. You don’t need to know every single one of them,” he said, citing demand from former crypto skeptics.
Josh Lim, global co-head of markets at FalconX, emphasized bridging traditional financial exchanges like the CME with liquidity pools in decentralized finance (DeFi) using top-tier brokers for hedge fund arbitrage and leverage.
“Hyperliquid has obviously been a big theme for this year, and last year we enabled many of our hedge fund clients to access that market through our prime brokerage offering,” Lim said, referring to the largest decentralized derivatives exchange (DEX).
“It’s actually essential for companies like us… to close this liquidity gap between TradFi and DeFi… That’s a big advantage,” Lim said. Crypto innovations such as 24/7 and perpetual trading are influencing Wall Street.
ARK Invest President Tom Staudt called the debut of spot bitcoin ETFs in the US a milestone that put cryptocurrencies in the portfolios and systems of leading wealth managers.
But he urged the adoption of a true industry-wide beta benchmark: a broader market standard for measuring the risk and return of an asset relative to the broader crypto market. A diversified index is needed, rather than relying solely on a single benchmark like bitcoin, he said.
“Bitcoin is a specific asset, but it’s not an asset class… You can’t have alpha without beta,” he said, pointing to futures as the gateway to structured products and active strategies.
Inaction now is akin to “career suicide” as real-world assets come on-chain and demand participation, Urban said.
