Panelists at the Hong Kong Consensus Conference said clearer rules and improved technology are accelerating the integration of traditional finance (TradFi) and decentralized markets, pushing established institutions into areas such as cryptocurrency derivatives.
Jason Urban, global co-head of digital assets at Galaxy Digital (GLXY), who participated in the “Ultimate Derivative Machine” panel, said: “Regulation is really important. It gives you the trajectory you need to operate.”
Other speakers, including executives from exchange operator ICE Futures US, cryptocurrency prime brokerage FalconX and investment firm ARK Invest, highlighted how U.S. developments such as the approval of a spot cryptocurrency exchange-traded fund (ETF) in 2024 and coordination between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) could transform cryptocurrencies from a speculative sideline to a portfolio workhorse.
The key point is that derivatives will pave the way for trillions of dollars of institutional money to flow into the market. This momentum extends well beyond Bitcoin the largest cryptocurrency by market cap.
ICE Futures U.S. President Jennifer Ilkiw highlighted the upcoming launch in April of overnight interest rate futures tied to the Circle Internet (CRCL) USDC stablecoin, as well as a multi-token index, as evidence that institutions are looking at a range of tokens beyond Bitcoin.
“It makes it really easy. Like, if you take our MSCI Emerging Markets, there are hundreds of stocks in there. You don’t need to know about every stock,” she said, citing the needs of former crypto skeptics.
Josh Lim, co-head of global markets at FalconX, emphasized the use of prime brokerage for hedge fund arbitrage and leverage to connect traditional financial exchanges such as CME with the liquidity pools of decentralized finance (DeFi).
“Hyperliquidity is obviously a big theme this year, and last year we had a lot of hedge fund clients accessing the market through our prime brokerage services,” Lin said, referring to the largest decentralized exchange for derivatives (DEX).
“It’s actually critical for a company like us to… bridge the liquidity gap between TradFi and DeFi… that’s a big advantage,” Lim said. Cryptocurrency innovations like 24/7 trading and perpetual contracts are impacting Wall Street.
Tom Staudt, president of ARK Invest, called the debut of the spot Bitcoin ETF in the United States a milestone that will bring cryptocurrencies into the portfolios and systems of mainstream wealth managers.
But he urged the adoption of a true industry-wide beta benchmark — a broader market standard that measures an asset’s risk and performance relative to the entire crypto market. He said a diversified index is needed rather than relying solely on a single reference point like Bitcoin.
“Bitcoin is a specific asset, but it is not an asset class… You can’t have alpha without beta,” he said, noting that futures are a gateway to structured products and active strategies.
Urban said not taking action now would be akin to “career suicide” as real-world assets come on-chain and require participation.