Editor | Colin Wu on Blockchain

This issue features a roundtable discussion on Hong Kong and mainland policies at the Finternet 2025 Asia Digital Finance Summit. The participants include Colin Wu, founder of Wu Says Blockchain; Kevin Cui, Executive Director and CEO of OSL Group; Patrick Pan, Senior Advisor to the Chairman of Huaxing Capital; and Livio Weng, Executive Director and CEO of New Fire Technology.

The guests delved into the impact of policy changes in Hong Kong and the mainland on the Web3 industry, particularly the market performance of innovative financial instruments such as Bitcoin, stablecoins, and DAT (Digital Asset Treasury). They analyzed whether the current market is at a critical turning point from a bull market to a bear market, and discussed the market prospects and challenges for DAT against the backdrop of fluctuations in U.S. stocks and Bitcoin prices, as well as policy restrictions on stablecoins. The guests also shared the differing policy directions in the crypto industry between Hong Kong and the mainland, highlighting Hong Kong's proactive stance in gradually relaxing regulations and promoting financial innovation.

Is the Current Market at a Bull-Bear Turning Point?

Colin: The market has indeed reached a turning point that many believe is expected. For example, yesterday, the co-founder of AllianceDAO noted that the vast majority of traders and institutions around him have started to turn bearish. In the last couple of days, especially in the past 12 hours, there has been a certain decline in the market. People are wondering if the industry has reached a turning point from bull to bear, or if this is just a temporary drop before possibly returning to a bull market?

Kevin: First, I want to clarify that this is not financial advice. In fact, I haven't engaged in contract trading for a long time. If it involves leveraged products, everyone should be cautious about the risks. We used to say, "Cherish life, stay away from contracts." From the market trend, I personally do not see signs of a transition from a bull market to a bear market at this moment. If Bitcoin drops below $100,000, I personally see that as a buying opportunity. Because in the long run, the overall growth trend of the market has not changed, that is my personal view.

Patrick: My view of the market is that this cycle has undergone significant changes. As we know, Bitcoin is essentially the barometer of the entire market, and the market generally follows Bitcoin's cycle. Typically, there is a cycle every four years; we previously mentioned "one bull and three bears," meaning one year of bull market and three years of bear market within a four-year cycle. However, I believe the current cycle may be different. Due to the policies of the entire Trump administration, as well as policies like the "Genius Act," my overall judgment is that the market cycle will be more balanced, possibly two bulls and two bears, rather than the traditional "one bull and three bears."

So, I currently believe the market is in the middle stage of a bull market. It is neither at the highest point nor the lowest point, and people will be more cautious. The core point is not to chase highs; if the market corrects, it could actually be a very good opportunity. This is my judgment on the market.

Livio: Our views are quite consistent; the market cannot have fully entered a bear market, nor has the bull market ended. More likely, after a rapid rise, the market needs to pause and enter a phase of consolidation. From a macro perspective, the total amount of stablecoins is still growing, and other entities like sovereign wealth funds, listed companies, and mainstream institutions are also buying. At the same time, the Federal Reserve's interest rate cut policy is ongoing, and the macro environment is not that bad; other assets like U.S. stocks and gold are performing well.

However, the crypto industry still faces some issues. On one hand, the previous round of large-scale turmoil led to a rapid market rise, such as Ethereum rising from over $1,000 to nearly $5,000. Such rapid increases can lead early investors who entered at low prices to start taking profits, which is an inevitable market phenomenon; no market will rise indefinitely.

Additionally, the industry is facing significant impacts. For example, the recent crash has led to a reduction in the overall position amount in the industry and a significant decrease in liquidity. Some core institutions and key players have faced runs, which directly affects market liquidity. Subsequently, a series of issues arose within the industry, including the theft of Balancer and problems with Stream, all of which have negatively impacted the healthy development of the industry. Another important factor is that large whale investors on-chain are frequently trading, and the involvement of certain political forces has also affected market trends.

These factors have made many smart investors who originally planned to enter the market hesitant. Many are beginning to worry that they may become targets of political forces manipulating the market, with significant changes potentially leading to a market crash at any time. Such shifts in confidence have a huge impact on the entire industry. However, based on recent data, the fear and greed index has dropped to the 20s, which usually indicates that the market has been overly fearful, and many smart investors may see a healthy investment opportunity at this point. Therefore, fear and greed coexist; sometimes extreme market emotions may actually present a rebound opportunity. As Patrick just mentioned, there is still a chance for the market to recover, but it needs some time to adjust.

Returning to what Patrick said, this does not mean that a bull-bear turning point has occurred; the characteristics of future bull and bear markets may break the mold. Past bull and bear markets were mainly influenced by Bitcoin's halving cycle, and now the four-year cycle's impact on the market is diminishing. The involvement of traditional capital has also made the market more complex, and future cycles may not be as clear-cut, with the characteristics of bull and bear markets becoming more blurred.

Overall, I believe the current market state is not particularly pessimistic.

Overhype of DAT and Market Cooling

Colin: Next, let's discuss DAT, which everyone is quite concerned about. We see that every Monday, Tom Lee's Bitmine is still buying aggressively, but the price of Ethereum continues to decline. Can Bitmine become the next MicroStrategy?

To the three guests present, your companies are also deeply involved in DAT-related businesses. There is a lot of discussion about DAT in the market, and regulatory feedback varies. Even Tom Lee himself has said that DAT may have reached a point of collapse. Of course, he has always been quite aggressive in his statements. So, how do you view the current stage of DAT? After experiencing a fervent development, does it still have abundant opportunities, or has it entered a phase of survival of the fittest?

Livio: Regarding DAT, I think it needs to be viewed from two aspects. First, DAT was indeed an overhyped novelty in the previous stage, and after the market cooled down, we saw a lot of past hot money being liquidated, leading to doubts in the market. However, in essence, DAT remains an important Pareto improvement in the industry.

In the early days, from 2013 to 2017-2018, people could only purchase cryptocurrencies through exchanges, which had high barriers to entry. Many had to trust these platforms and even needed to circumvent firewalls to access them, making it difficult for funds to enter.

Then, in the past two years, the emergence of ETFs has made it easier for traditional capital to enter this market. Although many funds believe ETFs are not within their tradable scope, a large number of funds and traditional capital have already entered the stock market by purchasing stocks as a substitute for buying coins, or acting as a lightweight channel for buying coins. This provides a better avenue for traditional investors.

As Xiaofeng (Chairman of Wanxiang Blockchain) once said, ETFs are good, but DAT is better; it can play a more important role, especially as companies like MicroStrategy have proven. Now, I believe we are in a verification phase. The upward potential of DAT, during particularly good market conditions, can see many DATs' mNAV (market net asset value) reach several times, showing its premium. However, during market downturns, we need to pay attention to where the downward risks of DAT lie. We need to verify whether DAT will collapse. If it can withstand this correction, it will still maintain a good premium as the market recovers, which will prove its business model.

From the situation in recent days, we can observe whether the mNAV of leading DATs will significantly fall below 1; if not, then the business model of DAT can hold its ground in the industry, and there will be better opportunities in the future. In contrast, those smaller, less liquid DATs may struggle to survive in the market. Therefore, if everyone wants to participate in DAT, it is advisable to choose leading DATs.

Patrick: I will also briefly share my views on DAT. I believe DAT is a very important innovative financial tool. Compared to directly holding coins or purchasing ETFs, DAT offers more active management flexibility. Although the overall development of DAT faces some challenges, especially regarding its operational and management complexities.

The biggest challenge is the question Livio just mentioned: whether the mNAV of DAT will fall below 1, which is very worth considering. When a company's market value is lower than its net value, where does the value of DAT lie? However, I believe that after analysis, the mNAV of DAT cannot remain excessively high for a long time. For example, if it remains at levels of 2 or 3 for an extended period, I think that situation is unlikely to occur. In the long run, as time goes on, the mNAV of DAT will return to a reasonable premium level, around 30%-50%.

The reasonable premium for DAT is 30% to 50%, and I personally believe this range is acceptable. If MicroStrategy can maintain this premium, it proves that this market has potential. We can also see that the development of DAT has gone through several stages.

The first stage can be seen as the 1.0 version of DAT, represented by MicroStrategy. In the 1.0 stage, DAT essentially functioned like a simple fund, with not many participants, primarily focused on purchasing Bitcoin, especially when others were not buying, which made it extremely bullish.

For many funds and institutional investors, they do not require the management to bear the risks of market downturns; as long as they maintain a super bullish attitude, it can serve as a very good hedging tool. However, when the market changes, the losses from such strategies often far exceed the market's decline. If Bitcoin drops by 20%, it may drop by 40% or more. Next, DAT entered the 2.0 era.

DAT 2.0, at least from my perspective, can be seen as DAT based on Solana and Ethereum supported by Tom Lee. It differs from 1.0; the 2.0 version incorporates features like staking, yield, and passive income, making its operational model more attractive.

This approach is quite different from the investment method for Bitcoin; the passive income it generates is usually sufficient to cover its operational costs, including legal and auditing expenses, so DAT does not need to sell additional stocks to maintain operations. We see that companies like Tom Lee's have been very successful in raising funds in the U.S. stock market, especially when listed on NASDAQ, performing exceptionally well.

However, we also see that the mNAV of DAT has been continuously declining, even falling below 1. This is more of a strategic consideration to prevent later investors from entering the 2.0 stage. I believe that for DAT to continue moving forward, it needs more innovation to overcome the current challenges. Simple staking and yield are not enough; it needs more business model innovation; otherwise, it will just be a fund. As the staking function of ETH is gradually realized, DAT will face more competition.

I believe DAT still needs to enter version 3.0 or the 2.0 Plus stage. After passive income and staking, new revenue models are needed to maintain competitiveness. Overall, I think DAT is currently entering an adjustment phase, and I strongly agree with Livio's view that only leading companies can survive.

If leading companies are to survive, they also need new business models. Relying solely on buying coins and staking may not be accepted by the market, and the premium could return to between 10% and 30%, far below the net value of directly holding coins.

Kevin: Yes, I believe DAT is an innovative financial tool. Compared to ETFs that are based on cryptocurrencies as underlying assets, DAT offers more active management flexibility, including flexibility in financing and operations. This flexibility creates special demand for it in the stock market, especially for companies that are restricted by policies and cannot directly hold cryptocurrencies or hold them more securely.

Therefore, I believe DAT will definitely have its demand in the market. As a financial tool, it has its dual nature. First, it is crucial whether the operation is good; second, if you invest in DAT, you need to be clear about what aspects you value. Different DATs have different backgrounds in crypto assets and operational models, which is very important for investors.

Similarly, I agree with the second point mentioned by Patrick and Livio: the final outcome may be the "80/20 effect." The companies that can grow significantly will definitely be those that operate well and have quality assets, and the number of such companies is limited. In the future, we may see more issues, such as the emergence of some fraudsters. We may see DAT companies becoming more transparent, especially in terms of custody and operational models, and increased transparency could be an important direction for industry development.

Discussion on the Impact of Hong Kong and Mainland Policies on the Web3 Industry

Colin: Next, let's discuss the recent policy-related discussions. In the past six months, there have been significant changes in the policies of Hong Kong and mainland China. It can be said that Hong Kong's policies are relatively stable and are understood to be gradual, with new regulations being introduced each year based on planning, including new explanations or regulations released yesterday, which made some relaxing adjustments.

However, the policy performance in mainland China over the past six months has been somewhat "polarized," and this extreme change has also affected the overall environment in Hong Kong to some extent. My personal feeling is that almost all state-owned enterprises in the mainland and banks in Hong Kong have begun to establish teams related to stablecoins to conduct research, apply, recruit personnel, and the enthusiasm for cooperation is unprecedented. But overnight, regulatory agencies may issue instructions to each company, and these activities suddenly stop, even now the entire atmosphere has become somewhat "overreactive," and people are even hesitant to discuss stablecoin-related matters.

On the other hand, the overall policy direction in Hong Kong, including the introduction of laws and regulations, is still relatively robust and solid. Although some people believe the pace may not be fast enough, we see that positive progress is gradually being made each year. This is something to be optimistic about. The next question is, please share your views on the policy changes during this period, especially your predictions for the policy direction that may emerge in Hong Kong and mainland China in the next six months to a year. Let's start with Kevin.

Kevin: Regarding the policies in mainland China, I am not in a position to comment much, but from the overall policy perspective of Hong Kong, although Hong Kong's policies may not be as aggressive, we do see that Hong Kong's policies are becoming increasingly open and are gradually able to proactively accept positive changes and trends internationally.

This is very welcome for us as a company in Hong Kong, especially for the services we provide based in Hong Kong and overseas. With the release of the liquidity-sharing order policy yesterday, I believe it will provide better liquidity for all clients in Hong Kong, which is undoubtedly a very positive thing for Hong Kong's financial market. From an overall perspective, as the third-largest financial market in the world, the gradual opening of its policies is beneficial to the entire industry. Although Hong Kong's regulatory policies may not be very aggressive, we can see some positive changes every year, which is something we should be happy about.

Patrick: My judgment on future policies is that the central government has clearly positioned Hong Kong as an important policy high ground for the crypto industry. First, Hong Kong has obtained the authority to issue VATP licenses, and it began piloting stablecoins last year, with the first batch of stablecoins likely to be announced this year, and more licenses similar to VAOTC may be obtained next year. Therefore, the central government recognizes Hong Kong as the policy center for the Greater China region and even the global crypto market, and Hong Kong's positioning has not changed.

In addition, regarding the policies on stablecoins and RWA (real-world assets), many central enterprises, state-owned enterprises, banks, and internet companies have participated in the application and projects for stablecoins and RWA, showing the positive promotion of these policies. I believe that Hong Kong's policies may become more concentrated and tightened in the short term, especially in helping local enterprises rapidly develop stablecoin pilots and provide liquidity; this direction is unlikely to change. Overall, Hong Kong's positioning and policy advancement, especially in promoting the crypto ecosystem, should not change.

As for mainland China, I believe it may not adopt an open attitude towards the crypto industry in the short term. However, for companies engaged in this industry, Hong Kong remains the best place. Whether through RWA or various tokenization methods, Hong Kong can provide a good development environment for the crypto industry.

Livio: Yes, I believe this year has indeed experienced a rare reversal, from previously extremely open policies to now starting to control. This situation actually occurred in 2017 as well, when there were also rumors about licensing.

Colin: At that time, the rumor was that licenses would be issued to companies like Huobi, right?

Livio: Yes. Later, as a series of events unfolded, people's understanding of this novelty became complex, and the accompanying risks increased. Especially since the national conditions in mainland China are very complex; for example, when discussions about stablecoins began in the middle of this year, the discussions were very heated, and many financial institutions were eager to try. However, a certain group became particularly active at this time, claiming to be "state-supported" and launching various tokens, asserting that they could double like Bitcoin, or even claiming to increase by hundreds or thousands of times. As a result, many people were deceived.

In fact, the government saw that these financial illegal activities were using the concept of cryptocurrencies to deceive a new wave of investors, which led to the halt of policies. Looking back at 2017, the policy control at that time was not because of a denial of the value of Bitcoin and Ethereum, but rather a response to these chaotic phenomena. At that time, there were thousands of IEO and ICO projects, and many teams could defraud large amounts of money with just a simple PPT; this financial chaos was similar to the situation with P2P back then. This was due to the complex national conditions, where many people's educational backgrounds and understanding abilities varied, leading to a series of financial scams.

Thus, the government decided to let Hong Kong be the experimental field, which involved many comprehensive considerations. Returning to Hong Kong, over the past three years, especially from 2022 to 2025, Hong Kong has been exploring the correct path for policies. From the industry's observation, the Hong Kong government has been relatively exploratory in its policies over the past three years, but since this year, the policies have gradually found direction. Particularly with some recent significant measures, such as opening the 7th license exchange, no longer subject to the 12-month restriction, and being able to connect to global liquidity, all indicate that Hong Kong's regulatory policies are accelerating towards opening up to the industry.

Hong Kong's regulation has done quite well in facing the challenges in the Web3 industry. Although regulating emerging industries is inherently fraught with difficulties, especially in rapidly developing industries like Web3, where many risk events have occurred in recent years, Hong Kong's policies are gradually being implemented and steadily advanced, and the future of the industry remains full of hope.

We have encountered regulations in places like Japan, Singapore, and the United States, all facing the same dilemma—how to effectively regulate without excessive intervention. Although some people criticize Hong Kong for being slow, these policies are ultimately being implemented, and we see that Hong Kong has transitioned from the past "crossing the river by feeling the stones" to gradually building regulatory confidence, allowing the government to maintain moderate openness while ensuring the healthy development of the industry.

In the next three years, Hong Kong's policies will become more mature, especially in terms of regulation and industry development. Just like a child progressing from learning to walk to going to school, Hong Kong's crypto ecosystem will enter a more mature stage, and the entire industry will experience faster development.

Colin: Alright, thank you all. I greatly appreciate everyone participating in today's event, and I hope we can work together to promote the development of the Web3 industry in Hong Kong and the Chinese-speaking region, allowing this industry and community to continue to grow.

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