Crypto Industry Meets in HK

Feb Update 3

Good Morning & Happy Friday! US stocks fell on Thursday as investors reacted to Walmart's cautious 2026 fiscal outlook and assessed the potential impact of President Trump's tariffs and policy changes. All major indexes were down at the close. Concerns about Trump's tariffs and the effect on corporate America added to market unease. Additionally, Trump's planned 8% Pentagon spending cut negatively impacted Palantir's stock. Geopolitical tensions, particularly following a clash with Ukraine's president, further fueled investor caution, driving gold prices to a record high.

On the crypto front, a major conference was held this week in Hong Kong where thousands of industry professionals gathered to talk business, including major institutions. These traditional financial institutions have been steadily expanding their crypto practices overseas, and amid changing US regulations, they have been doing the same domestically. Read more below. Lastly, check out the BIR portfolio.

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Asia’s Key Web3 Conference Highlights Growing Momentum for DeFi

The highly anticipated Consensus Hong Kong 2025 conference has kicked off with a clear and resounding message: decentralized finance (DeFi) is no longer a niche corner of the crypto world but a key pillar in the future of global finance. As blockchain technology matures and regulatory frameworks begin to solidify, the event has underscored the growing institutional and retail interest in DeFi projects, setting the stage for what many speakers are calling a “new era” for decentralized finance.

Held over three days, the conference brings together some of the most influential voices in the blockchain space. While topics have ranged from tokenization to stablecoins, the conversations around DeFi have taken center stage. The renewed focus on decentralized solutions stems from the broader industry trend of moving away from centralized exchanges and financial intermediaries, which have faced regulatory pressures and waning user trust in recent years.

One of the key themes emerging from the panels and discussions is the transition of DeFi from speculative trading platforms to practical financial solutions with real-world utility. This shift is being driven by a combination of improved user interfaces, increased liquidity, and, perhaps most importantly, enhanced regulatory clarity.

Charles d’Haussy, CEO of the dYdX Foundation and former head of Hong Kong’s fintech initiative, emphasized this evolution during his keynote address. “DeFi is moving beyond yield farming and speculative assets. We’re seeing real products that address financial inclusion, cross-border payments, and institutional-grade liquidity solutions,” d’Haussy noted. His remarks highlight the sector’s maturation, with established protocols now focusing on long-term sustainability rather than short-term gains.

Several DeFi projects showcased their efforts to improve onboarding experiences for users and institutions alike. Streamlined wallet solutions, improved interoperability between blockchains, and more transparent governance mechanisms were among the innovations being discussed. These developments aim to lower entry barriers, a crucial step toward achieving widespread adoption.

A noticeable change from past conferences is the level of institutional engagement. While traditional finance (TradFi) players were once cautious about DeFi, many are now actively exploring partnerships or launching their own decentralized solutions. This shift was particularly evident in discussions surrounding liquidity provision and decentralized derivatives platforms, which are increasingly attracting institutional liquidity.

Panelists noted that this growing institutional presence is not merely about diversifying portfolios but stems from a recognition of DeFi’s potential to reshape existing financial infrastructure. DeFi’s ability to operate 24/7 without intermediaries, combined with near-instant settlement and transparency, offers efficiencies that traditional markets are keen to explore.

Notably, projects focused on institutional-grade DeFi solutions reported significant upticks in interest and onboarding. The introduction of tools tailored for compliance, such as Know Your Customer (KYC) and anti-money laundering (AML) protocols within decentralized systems, has played a pivotal role in easing regulatory concerns. As these compliance layers integrate seamlessly with DeFi platforms, the divide between centralized and decentralized finance continues to blur.

Another key takeaway from Consensus Hong Kong is the region’s growing influence in shaping the future of DeFi. Asia’s crypto adoption rate far outpaces global averages, and Hong Kong’s positioning as a financial hub makes it an ideal bridge between Eastern and Western markets. With a robust capital market infrastructure and a growing appetite for digital asset innovation, the city is rapidly becoming a focal point for DeFi development.

Macroeconomic conditions also featured prominently in discussions. Despite lingering volatility in global markets, many attendees expressed optimism that DeFi could serve as a hedge against traditional financial instability. With rising concerns over inflation and currency devaluation in certain regions, decentralized solutions offer an alternative for both retail and institutional investors seeking financial sovereignty.

Consensus Hong Kong has made it clear that DeFi’s future is not about short-term gains but long-term transformation. The industry’s focus has shifted toward creating robust, scalable systems capable of supporting a global user base. Innovations in decentralized identity solutions, decentralized autonomous organizations (DAOs), and asset tokenization are paving the way for broader DeFi adoption beyond crypto-native users.

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Institutional Interest in DeFi Surges as Regulatory Barriers Begin to Erode

The decentralized finance (DeFi) landscape is undergoing a significant transformation as institutional players increasingly venture into the space. Traditionally, DeFi was the playground of retail investors and crypto-native firms, but recent developments signal a notable shift. Leading asset managers, such as Brevan Howard Digital, are now actively engaging with DeFi protocols, driven by advancements in compliance measures and the growing maturity of decentralized platforms.

Brevan Howard Digital’s recent $20 million investment in Kinto, an Ethereum-based financial network, exemplifies this trend. Kinto’s platform is designed with institutional adoption in mind, integrating Know Your Customer (KYC) and anti-money laundering (AML) protocols directly into its blockchain infrastructure. These features address one of the most significant hurdles for institutional involvement: regulatory compliance. By embedding compliance at the protocol level, Kinto and similar projects are removing long-standing roadblocks that previously deterred traditional financial institutions from exploring DeFi opportunities.

Institutional interest isn’t limited to Brevan Howard. SkyBridge Capital founder Anthony Scaramucci has also invested in Kinto, underscoring the growing recognition of DeFi’s potential within mainstream financial circles. Scaramucci highlighted Kinto’s ability to enable institutions to deploy capital on-chain and tokenize financial products without counterparty risk—a critical consideration for risk-averse investors seeking exposure to digital assets.

The growing comfort of institutional investors with DeFi stems from multiple factors. First, the tokenization of real-world assets has become a significant driver, offering traditional financial products with the benefits of blockchain technology, such as enhanced transparency, reduced settlement times, and improved liquidity. Platforms like Kinto cater to this demand by providing robust infrastructure that ensures both compliance and usability.

Second, DeFi projects are increasingly adopting technologies that enhance user experience and operational efficiency. Kinto’s Chain Abstraction technology, for example, enables seamless on-chain and off-chain asset transfers without relying on centralized exchanges. Such innovations are crucial in making DeFi more accessible to large financial institutions accustomed to user-friendly platforms in traditional markets.