Clearer regulations and advanced technology are rapidly accelerating the convergence of traditional finance (TradFi) and decentralized markets, driving established institutions into crypto, particularly through derivatives. This was the central theme among panelists at Consensus Hong Kong 2026.
Jason Urban, global co-head of digital assets at Galaxy Digital, emphasized the foundational role of regulation: "Regulation is really important. It gives you the rails that you need to operate in." Other executives from ICE Futures U.S., crypto prime brokerage FalconX, and ARK Invest highlighted how U.S. developments—such as the 2024 approval of spot crypto ETFs and regulatory harmonization between the SEC and CFTC—have transformed crypto from a speculative sideline into a portfolio staple.
The panelists agreed that derivatives are poised to facilitate trillions of dollars in institutional inflows. Jennifer Ilkiw, President of ICE Futures U.S., pointed to forthcoming products as evidence of institutions looking beyond Bitcoin. These include overnight rate futures tied to Circle's USDC stablecoin, launching in April, and multi-token indexes. "It makes it very easy... You don't need to know every single one," she said, comparing it to traditional equity indexes like MSCI Emerging Markets.
Josh Lim, global co-head of markets at FalconX, stressed the importance of bridging TradFi exchanges like the CME with DeFi liquidity pools. He noted that prime brokerages are enabling hedge fund clients to access decentralized derivatives markets like Hyperliquid for arbitrage and leverage. "It's actually essential for firms like us … to bridge this liquidity gap between TradFi and DeFi … That's a big edge," Lim stated.
ARK Invest President Tom Staudt called the U.S. spot Bitcoin ETF debut a milestone but urged the adoption of a true industry-wide beta benchmark. "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 for structured products.
Separately, panelists analyzed the recent market sell-off, framing it as a macro-driven TradFi event rather than a crypto-specific crisis. Fabio Frontini of Abraxas Capital Management noted, "This is just a spillover from TradFi entirely… it’s all interconnected now." Thomas Restout, CEO of B2C2, identified the unwinding of yen carry trades as a key catalyst. As the yen strengthened and borrowing costs rose, margin requirements surged—for example, in metals from 11% to 16%—forcing a broad unwind of risk positions across assets including Bitcoin and Ether.
Restout provided context on ETF flows: Bitcoin ETFs peaked at roughly $150 billion in assets and now hold around $100 billion, with net outflows since October totaling about $12 billion. "If anything, it means that the money is changing hands," he suggested, indicating rotation rather than a full exit.
Looking forward, Emma Lovett, credit lead for Market DLT at J.P. Morgan, said 2025 marked a regulatory inflection point, leading to increased experimentation with public blockchains and stablecoins for settling traditional securities, signaling deeper convergence in 2026.
