As markets continue to navigate 2023, inflation is cooling off, while a recession seems more likely. In that context, crypto trades higher again, fueling hopes for mass adoption. However, the industry also faces challenges, including a major regulatory crackdown in the US. In light of these facts, DailyCoin asked Bitget Managing Director Gracy Chen to share her insights on the future of crypto adoption.
Chen explained how she believes that crypto can reach a mass audience. Some necessary factors include clear regulations, enhanced security, and better user experience. In addition, she discussed how features such as copy trading help bridge the knowledge gap for new crypto traders.
She also revealed why Bitget and other exchanges focus on strategic growth in regions like Asia, Latin America, and Europe and shared her views on the U.S. crypto market.
“Regulation Is a Stepping Stone”
To start, we asked Chen about the latest push to regulate crypto in various jurisdictions, including Europe. Chen explained that she believes this is a positive development in the long run, as regulation will lead to mass adoption of cryptocurrencies. However, she also acknowledged that there could be short-term negative effects, particularly in countries that introduce higher taxes on crypto.
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I’d like to start by asking you some questions about how you see the latest push to regulate crypto in multiple jurisdictions. Do you see this as a positive or negative development?
We are indeed seeing a significant push for regulation, especially in Europe. We know that Markets in Crypto-assets (MiCA) is an important framework, not just in Europe but also around the world. I think personally, I would say MiCA is the most comprehensive regulatory framework for crypto assets, even from a global scale.
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I would say, in the long run, more comprehensive regulation is positive. In the short term, it might be positive or negative, depending on each country.
There might be short-term negative effects, for instance, in countries that introduce high taxes on crypto. But that’s understandable and is not happening just in the crypto space. People tend to want to live in a continent or a country with a lower [rate of] taxation. That’s why Dubai is such a popular place among crypto investors.
But above all, it will positively affect the industry in the long term. That’s because mass adoption depends on strong regulation. Only when that is in place will the mainstream audience be interested in looking into this asset class.
That’s personally how I view the regulation issue, and I think that most Web3 projects and founders agree. We want crypto to go mainstream; regulation is a stepping stone for that.
There may be some details that need clarification. For instance, in the US, the SEC and CFTC both regulate the crypto space. They have different definitions of, for example, whether Ethereum is a commodity or security.
But again, I think it’s good, and it’s important to have a strong emphasis on combating crypto-related crimes, and stronger regulation should help achieve mass adoption in the long run.
From Derivatives to Spot Trading: Bitget’s Strategy
Following the collapse of FTX in November 2022, Bitget’s share in the crypto derivatives market rose from 3% to 11%. This market, usually aimed at sophisticated users, has been a significant factor in Bitget’s growth since 2018.
Now, Bitget is seeing significant growth in the spot market, which is much more retail-focused. With this new focus on retail users, Bitget has become increasingly interested in onboarding new users to crypto.
How important is the derivatives market for Bitget right now?
We are pretty strong in derivatives because that’s where we started off. We started in 2018, and for the first 2-3 years, we grew tremendously, mainly in derivatives. And right now, we are in the top five crypto exchanges in the derivatives market.
But actually, the increase recently, within the past half a year, is not from derivatives; it’s mainly from the spot market. And that’s quite surprising, given the whole industry is in a bear market. Lots of companies or exchanges just did job cuts, and we are hiring more people and onboarding new users. The spot market is safer, it’s just buy low and sell high activity.
On the derivative market, there are more options. There, users can either speculate or hedge against risks, or trends they see. They also have leverage, and there are more options. Users can adjust their risk level and also take on much more risk.
And again, we provide certain products and services to both the target audiences. Especially recently, we actually grew much more on the spot market.
Where do you see your strategy going forward?
Strategy-wise, we think the spot market is core in the sense that the majority of crypto users are actually spot market traders. What they care about is security, whether the user experience of the platform is good, and compliance.
Of course, compliance varies a lot region to region. That’s why we have a big compliance team to deal with this for each region and each case.
Retail Users Want Security – and Options
Acknowledging the growing spot market, Chen shared her views on what retail users want from a crypto exchange. She stressed the importance of robust security measures and user experience. For that reason, Chen underlined that Bitget is working on boosting the security of users’ assets, offering diverse token listings, and developing innovative features.
Crypto exchanges have taken a huge hit to their reputation after the FTX collapse. What steps does Bitget take to ensure the safety of users’ assets?
As a platform, we play a crucial role in driving industry growth, user acquisition, and promoting compliance.
So first of all, security. That’s very important for us to be able to play our role properly. We want to make sure that the safety of our users’ funds is the number one priority. And then we want to employ different security measures.
At Bitget, we have multi-factor authentication, cold and hot wallet storage, and separation of user funds.
We also have the second-largest user protection fund among all the crypto exchanges, pledged at 300 million. It’s valued at 380 million USD, and we don’t include our platform token in that, only BTC, USDT, and USDC.
These are very liquid assets. We place everything on open wallets on our website, so users can check that the funds are there.
In addition to security, you mentioned that retail users are demanding better user experiences, including more token listings.
Recently, we had lots of interesting offerings in token listings, which users find very valuable.
For example, even before Arbitrium started their token and airdrop, we saw lots of on-chain growth in the Arbitrium ecosystem. So our listing team actually approached those projects and had them listed on our exchange.
And at that time, we were probably the only larger centralized exchange that had those tokens. Previously, they were only available on decentralized exchanges (DEX) which is much harder for people to trade on because of the user interface. You need to be a professional in order to do it properly on DEX.
But this is an example of when we see the needs of our users, and we want to tailor them to their needs by offering what they want. This is another way that we want to position ourselves well.
The Role of Copy Trading in Onboarding New Crypto Users
In the groove of speaking about the role of centralized exchanges in aiding the user experience, Chen spoke about the crucial part copy trading plays in onboarding new users. By allowing new entrants in the crypto space to replicate the trades of experienced traders, Bitget is bridging the knowledge gap and making crypto trading more accessible. This feature not only enhances the user experience but also plays a significant role in onboarding new users, thus driving the mass adoption of cryptocurrencies.
Copy trading is something you put forward as your flagship product. What is Bitget’s strategy when it comes to copy trading?
Since we started offering copy trading in May 2022, we disrupted the so-called established trading platforms in the crypto market. Right now, we are the largest crypto copy trading platform.
We started offering this feature mainly because we’ve noticed some gaps among traders around the world, especially for new entrants to the space.
The main issue here is that there is so much information around them. People new to the game want to know where they should start. They are asking: which cryptocurrency should I start looking into? How should I start day trading? How can I earn money out of it?
So we came up with copy trading. We think that’s an important step to allow beginners to start trading. This enables both new investors and less experienced traders to participate in the crypto market, even if they don’t have that much time and knowledge to start.
Users can take advantage of the knowledge and experience of elite traders.
There is also a sense of community there because they [newer traders] can look at their [experienced traders] strategy, look at their macroeconomic estimations. This facilitates knowledge exchange between our users.
Where Crypto Will See Mass Adoption
As crypto approaches mass adoption, not all regions will grow at the same pace. Chen revealed that, currently, Bitget is focusing its efforts in Asia, Latin America, and Europe. She highlighted Latin America as a particularly promising region, due to their specific and growing needs for crypto.
At the same time, while the U.S. market remains tricky due to its distinct regulatory requirements, Chen hinted that the company might consider launching a fully compliant exchange to cater to U.S. customers in the future.
In terms of geography, what regions show promising opportunities for exchanges right now?
Right now, we serve users from around the world. However, the places we are looking at right now are Asia, Latin America, and Europe.
There are regions that are tricky because of compliance issues. For instance, we might come out with a fully compliant exchange to serve U.S. customers. Until we do though, we just don’t serve U.S. customers. So there are certain regions like that.
But back to your question, we think: Asia, East Asia, Southeast Asia, South Asia, and Oceania. Then there are many countries in Europe that we think are very important strategically.
Latin America is also a growing market for crypto for various reasons. For instance, they need crypto for remittances. Moreover, the inflation rate in Argentina is shocking. That drives a lot of people to adopt crypto rather than their national currency. These are some of the regions where we see lots of growth and opportunities.
How about Asia, Hong Kong in particular? Are you in the process of applying for a license there?
We do have a big compliance team based in Hong Kong, working internally and externally with lawyers and compliance experts in the space.
We are also working on an entity with a Hong Kong-regulated exchange license. But that’s not just us; it’s all the exchanges. It’s still mainly a very market-driven thing.
There are probably only two or three crypto hubs in Asia, which I think would be Singapore, Hong Kong, and Dubai. Hong Kong is a new one. So there are lots of Hong Kong-related projects that are of interest to the market.
On The Flipside
- Regulatory clarity is essential for mainstream adoption. However, some industry leaders, including Coinbase CEO Brian Armstrong, argue that regulation can also stifle innovation.
- Despite substantial growth in other regions, the U.S. is still the largest crypto market globally.
Why This Matters
Mass adoption by regular users will be the primary driver for crypto markets in the long run. Crypto exchanges are currently the main facilitators of that adoption.
Read more about copy trading and see whether it’s right for you:
The Ultimate Guide to Crypto Copy Trading in 2023
Read about European Union’s latest crypto regulatory framework:
