Roundtable Discussion: Has the Bull-Bear Shift Arrived? How to Solve the DAT Dilemma?

This issue features a roundtable discussion on Hong Kong and Mainland China policies at the Finternet 2025 Asia Digital Finance Summit. The panelists included Colin Wu, founder of Wu Blockchain; Kevin Cui, Executive Director and CEO of OSL Group; Patrick Pan, Senior Advisor to the Chairman of China Renaissance Capital; and Livio Weng, Executive Director and CEO of Newfire Technology. The panelists explored the impact of Hong Kong and Mainland China policy changes 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 juncture, transitioning from a bull to a bear market, and the market prospects and challenges of DAT against the backdrop of price volatility in US stocks and Bitcoin, and policy restrictions on stablecoins. The panelists also shared insights into the different policy directions of Hong Kong and Mainland China in the crypto industry, and Hong Kong's positive performance in gradually relaxing regulations and promoting financial innovation. Is the current market at a turning point between bull and bear markets? Colin: The market has indeed reached what many consider a turning point. For example, yesterday the co-founder of AllianceDAO said that most traders and institutions around him are starting to be bearish. In the last two days, especially in the past 12 hours, the market has seen a certain decline. Do you think the industry has reached a turning point from bull to bear, or is this just a temporary dip, and it may return to a bull market trajectory afterward? Kevin: First of all, let me clarify that this is not financial advice. Actually, I haven't done contract trading for a long time. If it's a leveraged product, everyone should be aware of the risks. We used to have a saying: "Cherish life, stay away from contracts." From the market trend, I personally don't see any signs of a shift from a bull market to a bear market. If Bitcoin falls below $100,000, I personally think that would be a buying opportunity. Because, in the long run, the overall growth trend of the market hasn't changed; that's my personal view. Patrick: My view of the market is that this cycle is changing dramatically. As everyone knows, Bitcoin is basically the bellwether of the entire market, and the market largely follows Bitcoin's cycle. Generally, there's a four-year cycle; we've previously discussed "one bull market and three bear markets," meaning one year of bull market and three years of bear market in four years. But I think the current cycle might be different. Because of the policies of the Trump administration, such as the Genius Act, I generally judge that the market cycle will be more balanced, perhaps two bull markets and two bear markets, rather than the traditional "one bull market and three bear markets." Therefore, I now believe the market is in the middle of a bull market. It's neither the highest point nor the lowest point, so everyone will be more cautious. The core point is not to chase highs; if the market corrects, it will be a very good opportunity. This is my judgment of the market. Livio: Our views are quite aligned. The market cannot have fully entered a bear market, nor is the bull market over. More likely, after a rapid rise, the market needs to pause and enter a consolidation phase. From a macro perspective, the total supply of stablecoins continues to grow, and other entities such as sovereign wealth funds, listed companies, and mainstream institutions are also buying them. Meanwhile, the Federal Reserve's interest rate cuts are ongoing, so the macro environment isn't as bad as it seems, and other assets like US stocks and gold are performing well. However, the crypto industry still faces some challenges. One is that the recent large-scale turmoil caused the market to rise too quickly; for example, Ethereum rose from over $1,000 to nearly $5,000. Such rapid increases will cause early investors who entered at low prices to start taking profits, which is an inevitable market phenomenon; no market can rise forever. In addition, the industry is also facing significant challenges. For example, the recent crash has reduced the total amount of open positions in the industry, leading to a substantial decrease in liquidity. Some core institutions and key players have experienced bank runs, directly impacting market liquidity. Subsequently, a series of problems have occurred within the industry, including the Balancer theft and Stream issues, all of which have negatively affected the healthy development of the industry. Simultaneously, another important factor is the frequent activity of large whales on the blockchain, and the intervention of certain political forces have also influenced market trends. These factors have made many smart money investors who originally planned to enter the market hesitant. Many are beginning to worry that they might become targets of political manipulation, with the possibility of major changes leading to a market crash at any time. Such a shift in confidence has a huge impact on the entire industry. However, according to recent data, the Fear & Greed Index has fallen to the 20s, which usually indicates that the market has been over-panicked, and many smart money investors may see a healthy investment opportunity at this point. Therefore, fear and greed coexist, and sometimes extreme market sentiment can actually create an opportunity for a rebound. As Patrick just mentioned, the market still has a chance to recover, it just needs some time to adjust. Returning to Patrick's point, this doesn't mean the bull-bear cycle has reversed, and the characteristics of future bull and bear markets may be broken. Past bull and bear markets were mainly influenced by the Bitcoin halving cycle, but now the four-year cycle's impact on the market is weakening. The intervention of traditional capital has also made the market more complex, and future cycles may not be so obvious, and the characteristics of bull and bear markets will become more blurred. Overall, I don't think the current market situation is particularly pessimistic. The Overhyped DAT and Market Cooling Colin: Next, we'll discuss DAT, which is of great interest to everyone. We see that every Monday, Tom Lee's Bitmine is still buying like crazy, but the price of Ethereum continues to fall. Can Bitmine become the next micro-strategy?

To the three guests here, your companies are also deeply involved in DAT-related businesses. There is currently a lot of discussion about DAT in the market, and the feedback from regulatory agencies is also different. Even Tom Lee himself said that DAT may have reached the point of collapse. Of course, his words are always quite radical. So what do you think of DAT at this stage? After a period of frenzied development, does it still have plenty of opportunities, or has it entered a stage of survival of the fittest?

Livio: Regarding DAT, I think we need to look at it from two aspects. First, DAT was indeed an overhyped new thing in the previous stage. After the market cooled down, everyone saw a lot of hot money from the past being liquidated, and the market therefore had doubts. However, in essence, DAT remains an important Pareto improvement for the industry. Initially, from 2013 to 2017 and 2018, the only way to buy cryptocurrencies was through exchanges, which had high barriers to entry. Many people needed to trust these platforms, and some even needed to bypass internet restrictions to access them, plus it was difficult to get funds into the market. Then, in the last two years, the emergence of ETFs has made it easier for traditional capital to enter this market. Although many funds consider ETFs outside their trading scope, a large number of funds and traditional capital have already been buying stocks in the stock market as a substitute for buying cryptocurrencies, or acting as a lightweight channel for buying cryptocurrencies. This is a better channel for traditional investors. As Xiao Feng (Chairman of Wanxiang Blockchain) once said, ETFs are good, but DAT is even better; it can play a more important role, especially as companies like MicroStrategy have proven. Currently, I believe we are in the validation phase. The upside potential for DAT is significant; in exceptionally strong market conditions, many DATs can see their mNAV (market net asset value) reach several times, two, or even three times their initial value, demonstrating their premium. However, during market downturns, we need to pay attention to the downside risks of DAT. We need to verify whether DAT will collapse. If it can weather this correction, it will maintain a good premium as the market recovers, proving its business model. Looking at the past few days, we can observe whether the mNAV of leading DATs will significantly fall below 1. If not, then DAT's business model will be able to establish itself in the industry, and it will have better opportunities in the future. In contrast, those smaller, less liquid DATs may struggle to survive in the market. Therefore, if you want to participate in DAT, I suggest choosing leading DATs. Patrick: I'd also like to briefly share my thoughts on DAT. I believe DAT is a very important innovative financial instrument, offering more flexibility in active management compared to directly holding cash or buying ETFs. Although DAT's overall development faces some challenges, especially the complexity of its operation and management, the biggest challenge, as Livio just mentioned, is whether DAT's mNAV will fall below 1. This is a very thought-provoking question. When a company's market capitalization is lower than its net asset value, where exactly does DAT's value lie? However, after analysis, I believe that DAT's mNAV cannot remain excessively high in the long term. For example, if it were to remain at a level of 2 or 3 for an extended period, I think this is unlikely. In the long run, over time, DAT's mNAV will return to a reasonable premium level, approximately 30%-50%. A reasonable premium for DAT is 30% to 50%, which I personally believe is acceptable. If micro-strategies can maintain this premium, it proves the market has potential. We can also see that DAT's development has gone through several stages. The first stage, micro-strategies, can be seen as version 1.0 of DAT. In stage 1.0, DAT was essentially like a simple fund with few participants; its main business was buying Bitcoin, especially when others weren't buying, it persisted in buying, making it extremely bullish. For many funds and institutional investors, they don't require managers to bear the risk of market downturns; as long as they maintain an extremely bullish attitude, it can become a very good hedging tool. However, when the market changes, the losses of this type of strategy often far exceed the market decline. If Bitcoin drops 20%, it might drop 40% or more. Next, DAT entered the 2.0 era. From my perspective, DAT 2.0, at least, can be considered a 2.0 version, similar to Solana (backed by Tom Lee) and Ethereum-based DAT. Unlike 1.0, version 2.0 adds features like staking, yield, and passive income, making its operating model more attractive. This approach differs significantly from Bitcoin's investment strategy; the passive income it generates is usually sufficient to cover its operating expenses, including legal and auditing costs. Therefore, DAT doesn't need to sell additional shares to maintain operations. We've seen companies like Tom Lee achieve great success in fundraising in the US stock market, especially performing exceptionally well when listing on NASDAQ. However, we've also seen DAT's mNAV continue to decline, even falling below 1. This is more of a strategic consideration, to prevent later investors from entering the 2.0 phase. I believe that for DAT to move forward, it needs more innovation to overcome the current challenges. Simple staking and yield are not enough; it needs more innovative business models, otherwise it's just a fund. As ETH's staking functionality is gradually implemented, DAT will face more competition. I think DAT needs to enter version 3.0, or even 2.0 Plus. After passive income and staking, other 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 want to survive, they need new business models. If they only rely on buying coins and staking, the market may not accept it, and the premium will return to between 10% and 30%, far lower than the net value of directly holding coins. Kevin: Yes, I think DAT is an innovative financial instrument. Compared to ETFs with cryptocurrencies as their underlying assets, DAT offers more flexibility in active management, including financing and operations. This flexibility makes it particularly in demand in the stock market, especially for some companies restricted by policies that cannot directly hold cryptocurrencies or hold them more securely. Therefore, I think there will definitely be demand for DAT in the market. As a financial instrument, it has two sides. First, its operation is very important; second, if you invest in DAT, you need to be clear about what aspects you value. Different DATs have different crypto asset backgrounds and operating models, which is very important for investors. Similarly, I agree with the second point mentioned by Patrik and Livio: the final result may be the "Pareto principle" (80/20 rule). Companies that can grow very large are those that are well-operated and have high-quality assets, and the number of such companies is limited. In the future, we may see more problems, such as the emergence of some fraudulent companies. We may see DAT companies become more transparent, especially in terms of hosting and operating models; increased transparency may be an important direction for industry development.

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

Colin: Next, we will discuss recent policy-related discussions. In the past six months, there have been significant changes in policies in Hong Kong and Mainland China. It can be said that Hong Kong's policies have been relatively stable, with a gradual approach, and new regulations are introduced annually according to plans, including new interpretations or regulations released yesterday, with some relaxations and adjustments.

However, the policy performance in Mainland China over the past six months has been quite contrasting, and this extreme change has, to some extent, affected the overall environment in Hong Kong. My personal observation is that almost all mainland state-owned enterprises and Hong Kong banks began setting up stablecoin-related teams to conduct research, apply for licenses, and recruit personnel, with unprecedented enthusiasm for cooperation. However, overnight, regulatory agencies may have issued instructions to every company, and these activities instantly ceased. The atmosphere has even become somewhat "overreacted," with people hesitant to discuss stablecoins anymore. On the other hand, Hong Kong's overall policy direction, including the enactment of laws and regulations, remains relatively stable and solid. Although some believe the pace may not be fast enough, we see positive progress being made gradually each year. This is something to be optimistic about. The next question is for everyone to share their views on the policy changes during this period, especially their predictions for the possible policy directions in Hong Kong and mainland China in the next six months to a year. Let's start with Kevin. Kevin: Regarding policies in mainland China, I cannot comment extensively. However, looking at Hong Kong's overall policies, while they may not be as radical, we are indeed seeing them becoming increasingly open and proactively embracing positive international changes and trends. This is very welcome for our company in Hong Kong, especially for the services we provide based in Hong Kong and overseas. With the release of the Liquidity Sharing Orders Department policy yesterday, I believe it will provide better liquidity for all our clients in Hong Kong, which is undoubtedly a very positive development for the Hong Kong financial market. From an overall perspective, as the world's third-largest financial market, Hong Kong's gradual opening of its policies is beneficial to the entire industry. Although Hong Kong's regulatory policies may not be very radical, we see positive changes every year, which is something to be pleased about. Patrick's assessment of future policies is that the central government has clearly positioned Hong Kong as a key policy hub for the crypto industry. Firstly, Hong Kong has already obtained the authority to issue VATP licenses, began piloting stablecoins last year, and may announce the first batch of stablecoins this year, with more licenses similar to VAOTC potentially available next year. Therefore, the central government recognizes Hong Kong as a policy center for the Greater China region and even the global crypto market, and Hong Kong's positioning remains unchanged. Furthermore, regarding policies on stablecoins and RWA (Real-World Assets), many central state-owned enterprises, banks, and internet companies have participated in stablecoin and RWA applications and projects, demonstrating the positive impact of these policies. I believe that Hong Kong's policies may become more focused and tightened in the short term, particularly in helping local companies rapidly develop stablecoin pilot programs and providing liquidity; this direction is unlikely to change. Overall, Hong Kong's positioning and policy initiatives, especially its promotion within the crypto ecosystem, are unlikely to change. As for mainland China, I don't think it will adopt an open attitude towards the crypto industry in the short term. However, Hong Kong remains the best place for companies in this industry, providing a favorable environment for development through RWA and various tokenization methods. Livio: Yes, I think this year has indeed seen a rare reversal, from extremely open policies to current controls. This situation actually happened in 2017 as well, when there were rumors about issuing licenses. Colin: Back then, the rumors were about issuing licenses to companies like Huobi, right? Livio: Yes. Later, it was discovered that as a series of events unfolded, people's understanding of this new phenomenon became more complex, and the associated risks increased. Especially given the complex situation in mainland China, for example, when stablecoins were first discussed in the middle of this year, the discussion was very heated, and many financial institutions were eager to try. However, one group became particularly active at this time, launching various tokens under the guise of "state support," claiming they could double like Bitcoin, or even increase hundreds or thousands of times. As a result, many people were deceived. In fact, what the government saw was these illegal financial activities using the concept of cryptocurrency to deceive a new wave of investors, which led to the policy halt. Looking back at 2017, the policy control at that time was not actually due to denying the value of Bitcoin and Ethereum, but rather a reaction to these chaotic phenomena. At the time, there were thousands of IEO and ICO projects, with many teams able to defraud large sums of money with just a simple PowerPoint presentation. This financial chaos was similar to the P2P lending crisis of yesteryear. This was due to the complex national situation and the different educational backgrounds and comprehension abilities of many people, leading to a series of financial scams. Therefore, the country decided to use Hong Kong as a testing ground, a decision based on many considerations. Returning to Hong Kong, over the past three years, especially from 2022 to 2025, Hong Kong has been exploring the right policy path. From an industry perspective, the Hong Kong government's policies were relatively exploratory over the past three years, but since the beginning of this year, policies have gradually found their direction. In particular, recent major measures, such as opening up Type 7 exchanges, removing the 12-month restriction, and enabling global liquidity connectivity, all indicate that Hong Kong's regulatory policies are accelerating their opening to the industry. Hong Kong's regulation has done a relatively good job in addressing the challenges faced by the Web3 industry. While regulating emerging industries is inherently challenging, especially rapidly developing sectors like Web3, which have seen numerous risk events in recent years, Hong Kong's policies have been gradually implemented and steadily progressing, leaving the industry's future promising. We've encountered regulators in Japan, Singapore, and the US, all facing the same dilemma—how to effectively regulate without excessive intervention. Despite criticisms of Hong Kong's slower pace, these policies have ultimately been implemented, and we see Hong Kong transitioning from a trial-and-error approach to gradually building regulatory confidence. The government is now able to ensure the healthy development of the industry while maintaining appropriate openness. Over the next three years, Hong Kong's policies will become more mature, particularly in terms of regulation and industry development. Like a child transitioning from toddlerhood to school, Hong Kong's crypto ecosystem will enter a more mature stage, and the entire industry will develop more rapidly. Colin: Okay, thank you everyone. Thank you so much for attending today's event. I hope we can all work together to promote the development of the Web3 industry in Hong Kong and the Chinese-speaking world, and help this industry and community continue to grow.