From Speculation to Sophistication: The Evolution of Crypto Markets - TOKEN2049 Dubai 2025

Good afternoon, good morning and uh good evening to everyone dialing in. Uh my name is Leo Marshall. I'm the uh CEO of Europe for Galaxy Digital and I also run our global distribution efforts. It's a pleasure to be here in Dubai. Um we've got a great panel in front of us today.

We're going to be talking about the evolution of crypto from you know speculation to sophistication now. So maybe taking a step back, what we'll do is um we'll ask each of our guests to do a one minute intro real quick. Um but the real question I'm going to have for them is 2022 we saw the blow up a big bust. We saw crypto adopt traditional finance risk measurements and then emerging from that we began to see the ETFs we began to see options emerge and some consolidation amongst companies in 2025. Maybe starting with yourself, Shillang.

A brief intro and then talk to me about where you see that sophistication of crypto going forward from here. Yeah, of course. So, uh, thanks for having me. My name is Shellang. I'm the founder and general partner of MNC Group.

We're a, uh, multi strategy liquid, uh, digital asset fund. And previously, uh, I co-founded a firm called Obelis Markets, which was recently acquired by Falcon X. Um, yeah, Darius, I'm Darius. I'm the founder of QCP Group. Um QCP is a Asia's leading digital asset trading uh desk.

Uh I think we also have a fund management company called Primrose that does uh quan strategies on digital assets and uh good to be here. Thanks. Hey everyone, thanks for having me. Uh my name is Armani, founder CEO of Backpack or a a wallet, a crypto exchange, a group of 10,000 mad lads all over the world. So happy to be here.

Great. So maybe starting yourself, Chileang, give us a Twitter style high level overview of how you've seen the space evolve from the last couple years. Yeah, I don't I don't tweet much, but um yeah, so I think you know post22 we saw a real like shift in power dynamics, right? think like pre22 um you know exchanges in terms of you know holding assets um there there was not a lot of buy in um and acceptance of off exchange solutions right kind of the disassociation of custody of customer assets um with exchanges and and clearing everything right I think like post22 um there's a real shift in power dynamics where it became imperative essentially uh for the exchanges to survive to recognize that um they needed to this kind of this dis thisation right and so uh a lot of exchanges started to accept like clear loop and off exchange solutions um we started to see a separation uh of like custody and um and so I think that's like one progress right uh that that we've seen and then you know separately when I speak to like LPs uh and you know other um partners OTC providers etc you know they're looking for more transparency right they're looking for triparty repo. They're looking for um like more transparent like margining and collateral um things that you know we kind of took for granted you know pre22 and so those are you know some of the things that we've seen really rapidly progress um you know post FDX.

Armani tell us about what your firm is doing and and how it's contributing towards that transparency. Yeah sure. So I mean I think this conversation around dis intermediation is on the one hand um correct you do want to segregate you know execution and custody and and and that's a concept taken from tradfi uh but on the other hand it ignores what makes crypto systems unique which basically boils down to these computational integrity guarantees. You can get this in various different forms uh whether it's zero knowledge proofs or more kind of traditional kind of state machine replication approaches that blockchains like Salana or Ethereum uh uh would apply. But I think that is maybe the part of the conversation that the Tradfi orientation misses, which is a long-winded way of saying, "Okay, I see a series of bits and bites.

How do I know they're correct?" And uh uh you know, everything from transaction ordering to liquidations um to, you know, uh uh the concept of a fair or a mark price um all kind of goes into this. And so you need to not only dis intermediate, you know, uh uh uh parts of the stack, but you also need to be able to prove uh uh computational integrity because that's just as important um as custody. Um especially when thinking about margin systems when risk, I would argue, is you know, scarier than custody. And I would take it even a step further.

When talking about custody, it's not enough to just segregate it because you're just offloading the risk to another single party. you still have a single point of failure even if they're a fully qualified custodian. And ultimately what you want is to have a set of parties ideally that are able to uh uh custody the assets, prove uh the integrity of the estate and be able to actually facilitate deposits, withdrawals, transfers and so on and so forth. Um the challenge is that traditional finance uh and you know the whole compliance regime that runs various parts of the world doesn't have any concept of multi-node operator networks. It's all built around single kind of centralized parties that you can basically point a finger to and blame if if something happens and they have all these uh internal processes and auditing and controls that you know can solve these problems kind of at the human level.

Um uh and I think that is the evolution that we've yet to see especially when thinking about you know regulation and compliance um which is this much more cryptonnative approach to um you know asserting the integrity of the of the of the state um and so I think that's kind of the lens through which we look at it which is a combination of you know not only compliance problems but solving this kind of at the kind of core engineering level as well to be able to make you know these types of uh assertions that you and actually verify in a trust minimized way. I I love that answer. I'm going to go to you, Darius. Um, do you see traditional finance adopting execution on onchain protocols? And if you see that happening, who does traditional finance sue when it goes wrong?

It's a tricky question. Um I think traditional finance has dabbled in this and they play in it in terms of uh you know testing and trying to get some alpha but there are two reasons why they they cannot go balls in on this. One reason is of course uh capacity liquidity. Um the other reason is regulatory right. Uh and part of that regulatory reason is also your your point that you know who do they go to if if anything happens.

So I think regulators will be more and more concerned about uh uh you know D5 protocols and and onchain you know onchain uh protocols. from a Singapore standpoint, you know, the the MEES is very very stringent on this topic. I think, you know, because it's a very AML KYC kind of concern, but at the same time, you know, I think uh for for large institutional trading firms, uh it's going to be a capacity problem, right? You can you can make good returns on uh 510 million deployed there, but you know, can you make good returns on a couple hundred million? Um, and I mean like you know if you have a sovereign guy that's looking to deploy a minimum half a billion dollars, this is complete out of the question, right?

Yeah. Maybe sticking with you Daryus for a second, talk to us a bit more about what you're seeing in Singapore. You mentioned sovereigns. We've spoken about spot spot execution. What else are you seeing emerging in Singapore that folks in this room may not be aware of?

Um, well to answer your question, let me answer your first question together at the same time. I think what we see is you know while there's been a development and evolution in the way you know institutionalization of crypto we like to call it I think one line line in the sand that that saw a real tectonic shift uh was the launch of the ETFs right the moment that launched suddenly bitcoin became a wild wild west asset to become a acceptable investment asset uh and and this other thing that we saw is also a shift of liquidity from other crypto assets into Bitcoin. So from a market market maker perspective, we saw liquidity drain, you know, let's say options for example, we saw liquidity drain out of Ethereum, Solana and the rest into Bitcoin and in a very big way and I think we continue to see that as well. Um, what's the main driver behind that? I personally think part of it is you know I think ETFs seeing the response to the ETFs in the US that Bitcoin captures the American investor American institutional investors attention Ethereum doesn't as much.

Second thing I think actually is possibly staking has drawn spot liquidity out of Ethereum uh whereas Bitcoin hasn't done it. That's that's probably a very debatable thing but you know that's my own personal opinion but uh Bitcoin has become the cornerstone for institutional attention in the space and I think that's what we see specific to Singapore um we are seeing a lot of interest right uh SGX has just launched a perpetual swap contract uh on on bitcoin as well um but I would say by and large you know the Singapore regulator sees crypto as payments uh so it's stable coins and you know they sort of has this very clear definition of what crypto is and uh anything outside of that is not within their purview. So um so at least it's clarity uh but you know in terms of uh you know it sort of doesn't uh encapsulate a lot of a lot of the the other market as well. Um, I appreciate that. Shillyang, maybe go back to yourself.

Um, with the changes in in the administration in the US and the rise and the rise of the perpetual stock market, how do you see um, how do you see the retail market in the institutional market expression of risk change over time? For example, do you see the per market continue to grow? Like why aren't options why isn't the option retail market bigger than it is currently? um like how do you see that space evolve? Yeah, I think you know one obviously good you know the administration itself has been good for the space uh in some ways right I think it's you know whether you call it deregulation regulatory clarity um it's uh you know lifted a lot of barriers uh with that said for us more cryptonnative firms um institutions trading firms it does open the floodgates a bit right I think it brings in a lot more competition extremely quickly, right?

You you've already seen headlines of Citadel getting back into the space. Um I think the prop trading firms, the traditional prop trading space are, you know, prop trading firms are already ramping up their activities, right? And and you know, those are the real sophisticated players with massive balance sheets that can squeeze out a lot of the alpha uh that has been in the space for, you know, firms like ours, right? Um I think another piece is you know as you said we are starting to see US exchanges uh you know although via their offshore entities start to you know dabble in the perpetual markets right and and I think at some point um there probably will be perpetuals you know listed in some capacity in the US. Uh the question I think is will retail continue to access crypto markets through cryptonnative platforms like a Coinbase or will you start to see Robin Hood and others start to list these products very aggressively very quickly and retailers are already there.

They're already trading equities, gold, FX, commodities, whatever on, you know, Robin Hood platform and so they already have, you know, most of their assets parked there and now they can trade crypto directly. um you know within you know the rest of their assets right and so that feels like a better experience almost um and so I think that's a big question for a lot of the cryptonnative platforms in the US is you know while there is regulatory clarity and deregulation all of a sudden you're competing heads on with all the traditional brokerages and platforms that in some ways you know have a head start in kind of retail distribution adoption right um Armani similar question to Shiryang Do you see the existing Chadfi retail firms eating crypto or do you see the crypto native firms eating Chadfy? Yeah, it's a great question. I think there's a couple different ways to look at this. So, I think the first lens I would look at this question through is kind of maybe through the lens of like internet companies.

Um, and basically the exact same questions were asked with respect to native internet companies versus, you know, brick-andmortar stores. like is Amazon going to compete with Barnes & Noble or is Barnes & Noble going to rip a website and take over Amazon, right? And and time and again whenever these there's these types of new kind of uh uh you know technology kind of leading kind of uh evolutions of traditional industries, it's always like the native platforms that do something a little new, a little different. They kind of intuitively understand what makes it special. And so I think that's like maybe the first lens I would look at look at it through.

I think I think the second lens uh basically boils down to a combination of geography, regions, and opportunity cost to capital. So ultimately like what crypto does really well relative to Tradfi is it opens up capital markets not just in the US, not just in developed countries, but everywhere around the world, right? Like we are I'm an American. I grew up in California. Um we have folks in Dubai, we have folks in in Tokyo, we have folks in in France and Germany, we have folks everywhere.

Um and our user base is is is is everywhere. Um uh a and I think that's really the core difference at least when thinking about this through the lens of traditional companies like in the US uh uh that is pretty kind of uh special and unique especially when thinking about you know the intersection of western and and eastern markets um and I think that's kind of one of the big things that we think about a bunch especially you know I guess we selfidentify as like a western company or whatever uh but I live in Tokyo right and and we are really focused on on on Asia retail um and bringing them into crypto But I think you know what we're seeing right now is the evolution of of of not only crypto companies but as you said companies to answer this like opportunity cost of capital question which basically boils down to if you're going to pitch somebody that you're a primary financial services provider whether it's a traditional brokerage whether it's a bank whatever you basically need to look at somebody straight in the face and be able to say well you can do more with your money here than you can anywhere else right um and so you know whether it's Coinbase or US or or Robin Hood right um you we can't just like rest on our laurels and say Well, you know, you have Bitcoin here, uh, and you see, you know, Kraken just opened up equities, right? Um, and it's because of this question, right? And and so they need to be able to offer all of these products for retention. Um, otherwise, you're just going to go elsewhere, whether it's Charles Schwab or whatever.

And I think the big step that I think we're really passionate about and that I wholeheartedly believe is like the onchain economy, right? Uh, things like self-custodial wallets and how that's going to evolve. uh and really kind of this long tale of whether it's user generated assets or financial pro protocols or primitives that are being developed on chain not just from one kind of traditional financial firm but from you know thousands or or of developers all around the world um and getting access to that I think is really the thing that is not on Tradfi's roadmap whatsoever um and so I think there's a bunch of ways to tackle this problem but I'm generally very I mean it's I guess it's my job to be bullish crypto native companies but I think that's kind uh uh the way I would frame the conversation and do you think retail would prefer accessing that via their wallet versus a web 2 UI? I think there's a question of user experience. You know, you can talk about things like the DeFi mullet or whatever where it looks and feels like, you know, Robin Hood or Erade or whatever, but you're actually hitting DeFi in the back end.

I think, you know, there's nothing from first principles that says you can't have an amazing user experience on DeFi. Um, but I think it's going to be all about executing on that at a very high level, which basically boils down to, you know, product people working really hard that actually care about this stuff and and and so I think that's kind of uh uh the end state that I see. Can can I answer this as well? Yeah, go for So two things like you know from a prop trader prop traders perspective on you know trapfy or native we were shellang and I were talking to one of the old school option market makers yesterday and he said that the um with all the trapy guys coming in the the candy store has turned into a dog meat store it's a it's a lot less attractive and a lot less easy you know no longer candy to pick but to answer the second question is um I think in five or maybe 10 years time 5 10 years time we won't be able to tell the difference because I think the very subtle disruption that that crypto trading brings might not even be a technological disruption right it's it's very simply being able to trade 24/7 live margining auto liquidation collateral in kind which lowers the cost so I think the two worlds will start to merge you know because again it's not really a technological thing right it's it's NASDAQ or or CME is going to trade a bit like derbit or binance right and then you know and then they are going to have clearing ing a bit like NASDAQ. So I mean it's going to not going to be able to tell the difference and then the products will start to merge as well.

So so I guess the the the answer is that you know uh the divide will break and I would just quickly add that you know don't underestimate kind of like generational shifts. I think there is a whole generation of young individuals that perhaps you know their first experience or foray is crypto first or DeFi first or onchain right and so they've grown up with the user experience of actually you know not necessarily like a charge swab account but actually you know spinning up a meta mass wallet and engaging like curve or unis swap or whatever right and so that in itself could be a generational behavior or shift that does favor you know cryptonative platform forms over time. Super interesting answer. Let's take a step back from retail to sovereigns maybe with yourself Darius in your conversations in Asia. How are sovereigns thinking about the space?

How does how has it differed in the past? I think the use the use case of crypto in Asia and particular some of the frontier markets in Asia is extremely important. um guys in in US Europe where they have open economies or open currencies won't really feel this but you know if you have frontier Asian markets that don't have proper access to global capital markets you know they crypto becomes a very very existential thing for them you know they end a lot of them have closed economies and uh dependent on their neighbors and you know they they end up in with you know revenues in one currency liabilities in another bitcoin bitcoin or even stable coins become a solution to this to this problem for them on a national level, right? Not only does it give them uh more revenue, it's a funible it's a funible crossber fungeible asset. Um and thirdly, it gives them access to global markets or global capital markets where they previously had not.

So, Central Asia, you know, uh, uh, Southeast Asia, some of these economies, I think, you know, that a lot of them are buying Bitcoin, mining Bitcoin, and then looking at looking at how Bitcoin impacts their their countries. So, I think something to look out for in the next couple of years, you will see a lot of these guys emerge and and and become Bitcoin powerhouses, especially with the geopolitical situation, the big powers fighting with each other. I think having an asset that is finite uh having an asset that's uh globally acceptable is something really quite powerful. Do you see I mean it's fine buying Bitcoin but talk to me a bit about maybe yourself Shillyang here. Talk to me a bit about the opportunities in yield and lending because it's great having bought Bitcoin but then how do you avoid it simply being a dead asset on the balance sheet?

Sorry. Yeah. Um well there a couple of ways to get Bitcoin yield right you know I think uh one of the ways is collateral for financing that's a very important one because that that solves some of their problems I mean uh you know you've seen El Salvador try this bitcoin back bonds I think you see more sovereigns try this where you know their country's bit their country's uh credit rating might be or might be low and their their borrowing cost might be 8 9%. But you put Bitcoin as collateral you know and and that low that drops the the rating. So financing is one use case.

Um I mean Shilang myself we both run strategies that you active man active management of Bitcoin allows you to monetize either volatility or forwards in order to to get return on your Bitcoin. That's another way. Um and you know structured structured strategies that that we provide as well you know allows you to monetize the same thing in a in a more set way and allows you to to do you take some risk. There's always some risk when it comes to bitcoin but you know uh allows you to structure the riskreward such that you can earn a yield in bitcoin without without uh losing without much downside. I think you know as crypto bitcoin gets more institutional um you know we don't have to reinvent the wheel right I think like uh products like accumulators um you know yield based products uh they've existed in traditional markets um especially in Asia right uh you know for a long time in other assets and bitcoin I think you know will be no different right it's it's already come out and existed in you know 2122 you know with like babel and all these products back in the day Um and so as this becomes more institutional I think and regulatory clarity then these products will also emerge um front and center in the US as well.

Um and yeah I think the digital nature of it uh the kind of fungeability transportability of it makes it a lot easier to engage as a form of collateral than let's say you know potentially like gold bars or anything. Um so that has an advantage as well u versus some other assets. Do you see your peers and competitors operating more in the ETF space versus the underlying Bitcoin asset? And if so, why? Yeah, I think crypto native firms are still obviously touching more of the physical like Bitcoin, right?

Um whereas I think traditional firms are accessing more from the ETF perspective. I think one is they already have the traditional rails and access to traditional prime brokers that um have kind of set up already, you know, IBID and ETFs and whatnot and not necessarily support, you know, physical Bitcoin. And so what you see like when you look at like a 13F and you see like Millennium, you know, owns a billion dollars of Bitcoin, uh they're not necessarily just buying and holding it, right? I think they're using it for like a cash carry trade, a funding trade. Um, and they can basically, you know, subscribe to IBIT, uh, bring that to their traditional PB, get access to like five, six, 7x leverage, and basically loop it.

And I mean, in some ways, it's kind of like leverage looping like a morpho strategy except you're doing it through like a traditional like prime broker, right? Do you think that's a source of additional liquidity in the space that we didn't have previously? Yeah. Yeah. Absolutely.

Right. I think like eventually, you know, for options, for example, it was always Darra that dominated the options market. I think now you know the question is is at some point I bid options going to flip derbit options for bitcoin options right uh maybe maybe not but I do think that's a you know valid question because there is so much more capital and balance sheet and money on the other side of the fence than you know within crypto um money um what is the one belief you have about where the space goes that you think is underappreciated And by the way, the two of you are going to have the same question. So you you get to think about it a second. I think it depends on who you ask this question to.

I think fundamentally I mean so like what's what let's think about like maybe what's happening right now. So there's the traditional finance folks that view the world one way and there's the cryptonative folks that view the world another way. And there's a bunch of people experimenting with many different crypto products with many different properties uh whether it's different, you know, financial primitives, different L1 or L2 networks, um or building kind of uh integrations into their existing uh consumer base. I think it's fair to say right now crypto is very small relative to Trafi. It's kind of a drop of the bucket.

It's relevant. And I think most of us are here because we think it's going to eat finance in the same way that software ate everything. It's going to be ubiquitous. It'll become invisible. It won't be DeFi or CFI.

It'll just be finance. And if you go into that version of the future where the entire world is using crypto, you know, it's not just, you know, billions of dollars, it's trillions of dollars and everybody's using it. And you ask yourself the question, well, what are the companies and protocols that are going to be built in that future? I think there's two properties that I think you need to have and if you don't have either of these properties, you're kind of on a road to nowhere. I think first thing is at the protocol level is censorship resistance.

Um so if you're building an L1, if you're building a D5 protocol, if you're building like a unis swap, an a um a Jupiter, a Salana, an Ethereum, whatever, you need to be censorship resistant. And anything that is not censorship resistant will eventually be censored. It'll want to be controlled in whatever country or region that it's being operated in. This is super obvious to to to to Trafi folks. It's super obvious to anybody that's run a centralized exchange.

Um it's not so obvious to I think you know uh maybe some some cryptonative folks on how important the censorship resistant property is. Um uh and so a lot of people like to frame the conversation in the concept of like decentralization which is a spectrum but really the conversation needs to be framed in the context of censorship resistance which is binary. you're either censorship resistant or you're not. Um, and if you're not, then you have another option, which is you can be compliant. Uh, also a very obvious thing to folks in Tradfi, not a very obvious thing to cryptonative folks.

And I think you're seeing this with all the large centralized exchanges. Eventually, you get so large to where the governments around the world start paying attention to you and compliance actually matters. And if you want to become part of the fabric of society, you don't want to be just some type of like, you know, offshore unregulated uh thing that's like, you know, maybe it's, you know, some gambling casino or whatever, but if you actually want to like underpin the world's economy, then these two things really matter. Um, and I think that's kind of uh one of the things that I think a lot about. Daryus.

Yeah, this might be a bit controversial, but I think that one of the things that underappreciated, especially by crypton natives, is is what the Bitcoin treasury list list are doing. uh the micro strategies, the meta planets to some extent you guys as well uh you know um because and I and I say this why you know Sam Bengreed am I allowed to say his name you know he his vision was to bring the entire world and tokenize it in FDX tokenize equities tokenize everything tokeniz so you bring the world and tokenize it into crypto I think the value for us as digital asset guys is actually the other way around right taking our product and bring it to the world in through their distribution channels giving them access. So you go from a $3 trillion market to a thousand trillion market that's the value for us. So you know a lot of native guys think that you know this is so trapfy but we are delivering our product to them through their in their worlds right so I I think that that is a bit underappreciated super interesting um yeah I guess I would just add you know completely agree with you know Darius um and Armani but uh I I think you know the past few years historically there's been a lot of from the crypto native I would say crowd push back against like regulators uh for you know some for right reasons Um, but I I do think like it's not actually so bad if major parts of the crypto industry actually, you know, are actually deemed securities for example, right? Maybe that's controversial, but like I think like if it was securities and deemed securities, that actually creates a lot of regulatory clarity.

Uh it's a path to actually bring a lot of the sideline capital that historically has not been able to engage with these securities. Um it's capital that can actually pump our bags and you know actually support the market cuz there's just endless supply of like token supply, right? Like where is that additional supply going to come from? Where's that capital going to come from? Like it's you need the actual like real capital behind it, right?

And so I think regulatory clarity via actually securities and securities laws could actually be a boon that brings additional capital to you know crypto markets and what looks differently because you could argue in the past they said there was regul regulatory clarity. So what what specifically would you be looking for now that we didn't have in the past? Um, I mean I think everything around like and I know we're out of time but like everything around like the crypto listing and like the it seems like the we're kind of reinventing the wheel in terms like crypto listing on exchanges and like it's basically converging into like the IPO markets in some ways, right? Um, and so if there was more like clarity about like how a crypto token TGES and gets listed on exchanges and how investors and team members and venture funds etc like behave around it. I think that you know also can be you know very supportive of the markets.

Appreciate it. Well look thank you very much everyone and um yeah thank you all. Thank you Leon.