Clearer rules and improved technology are accelerating the convergence of traditional finance (TradFi) and decentralized markets, pushing established institutions into areas such as crypto derivatives, according to Consensus Hong Kong panelists.
“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, crypto brokerage FalconX and investment firm ARK Invest, highlighted how developments in the United States, such as the 2024 approval of spot crypto exchange-traded funds (ETFs) and harmonization between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have moved crypto from a speculative role to an element basis of the portfolio.
The takeaway is that derivatives are expected to pave the way for billions of dollars of institutional market entries. Momentum goes far beyond bitcoin the largest cryptocurrency by market value.
ICE Futures US President Jennifer Ilkiw pointed to upcoming overnight rate futures tied to Circle Internet’s USDC (CRCL) stablecoin, launched in April, and multitoken indices as evidence that institutions are looking beyond bitcoin to gain exposure to a range of tokens.
“It makes it very easy. It’s like if you took our MSCI Emerging Markets, there were hundreds of stocks in there. You don’t need to know them all,” she said, citing demand from former crypto skeptics.
Josh Lim, Global Co-Head of Markets at FalconX, highlighted the importance of connecting traditional financial exchanges like CME with decentralized finance (DeFi) liquidity pools using prime brokerages for arbitrage and hedge fund leverage.
“Hyperliquid has obviously been a major theme this year, and last year we enabled many of our hedge fund clients to access this market through our prime brokerage offering,” Lim said, referring to the largest decentralized exchange (DEX) for derivatives.
“It’s actually critical for companies like us… to close that liquidity gap between TradFi and DeFi… It’s a big advantage,” Lim said. Crypto innovations such as 24/7 trading and perpetuals are influencing Wall Street.
ARK Invest President Tom Staudt called the launch of spot Bitcoin ETFs in the United States a milestone that integrated crypto into traditional wealth managers’ portfolios and systems.
But he urged the adoption of a true industry-wide beta benchmark – a broader market standard for measuring an asset’s risk and performance against the broader crypto market. There is a need to have a diversified index, 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 feels like “career suicide” as real-world assets emerge and demand participation, Urban said.
