Author: Katherine Doherty; Source: Bloomberg; Translated by: BitpushNews Yanan

Just three years ago, a fierce debate attracted widespread attention at the annual event of the global derivatives market, known as the "Derivatives Market Davos". The two sides in this debate are Sam Bankman-Fried (SBF), the famous cryptocurrency billionaire and founder of FTX, and Terry Duffy, the head of the largest futures and options exchange in the United States.

At that time, the confrontation not only highlighted traditional Wall Street's deep doubts about the new forces in the crypto industry, but also revealed the crypto giant's ambition to subvert the derivatives trading model. SBF hopes to push digital assets into the mainstream market, while Duffy is a staunch defender of the traditional financial order. The two faced each other in a tit-for-tat way, making this dispute a focus of attention inside and outside the industry.

But that is already a thing of the past.

This year, just as executives of the world's largest exchange and crypto company are preparing to travel to Florida to attend the futures industry conference, U.S. President Donald Trump announced that he would build strategic Bitcoin reserves. Although this move is more symbolic, it undoubtedly further establishes the legitimate status of digital assets as mainstream financial instruments.

The next four years will be a rare opportunity for Wall Street institutions that have previously only tentatively entered the crypto market. Driven by Trump, the crypto industry is heating up rapidly. On Thursday, Bloomberg reported that World Liberty Financial Inc., a crypto company owned by the Trump family, has held business negotiations with Binance Holdings Ltd., the world's largest digital asset exchange, and may start deeper cooperation.

This change in mood and atmosphere was fully demonstrated at this week's meeting. The conference was held at the Boca Raton Hotel, where traditional financial executives and crypto industry practitioners gathered to communicate with each other. As for the most conspicuous difference, it was that almost everyone was wearing suits, or at least a collared shirt this time. The iconic shorts + T-shirt dresses in the encryption circle in previous years have almost disappeared, and the scene has been formal.Many.

Even the entertainment link exudes an "old money" atmosphere. Cheap Trick, a legendary rock band in the 1970s, took the stage to cheer the audience on the spot - you know, the one sitting in the audience was financial tycoons like Lynn Martin, president of the New York Stock Exchange and Don Wilson, founder of DRW Holdings.

"The crypto industry is back." Catherine Clay, director of derivatives at Chicago options giant Cboe Global Markets, said in an interview. "After a few years of silence, we do see the crypto theme return to the Boca Raton conference."

Donald Trump promised during his campaign to make the United States the "global crypto capital" and since taking office, he has indeed fulfilled that promise. He signed an executive order on digital assets and pushed regulators to take action. His securities regulatory team formed a working group specifically for the crypto industry, led by Hester Peirce, who has long supported the industry.

All this is strengthening Wall Street's confidence in the crypto market. Ken Griffin's Citadel Securities has been cautious in the digital asset space in the past, but is now seeking deeper participation and plans to become a liquidity provider for the cryptocurrency market. Meanwhile, CME Group Inc. is expanding further to launch Solana futures after surpassing Binance to become the world's largest Bitcoin derivatives exchange. According to people familiar with the matter, Intercontinental Exchange Inc., which has been keeping a distance from the crypto market in the past, has also begun to see opportunities and prepare to enter to compete directly with its old rival CME.

Overseas exchanges also followed suit. At this conference, Singapore Exchange Ltd. (SGX) announced plansBitcoin perpetual futures will be launched in the second half of this year. The company said its first digital asset contract will be strictly targeted to institutional customers.

"By the end of this year, more companies will make a big move into the crypto space." Jeanine Hightower-Sellitto, chief business and strategy officer at EDX MarketsLLC, a digital asset company backed by Citadel Securities, said in an interview, "There has been a huge shift in market sentiment over the past two and a half months, especially since the president's inauguration day."

For Wall Street, this year's meeting also brought a new consensus: blockchain technology that supports cryptocurrencies will be the key to promoting 24/7 trading in the U.S. stock market. Don Wilson, one of the founders of DRW Holdings and co-founder of crypto company Digital Asset, said, “The crypto industry has been full of hype and exaggeration in the past few years.” But in his opinion, “the difference this year is that the market is really beginning to realize that blockchain technology will play a central role in driving the transformation of the 24/7 transaction model.”

The cryptocurrency industry has lost its glory after SBF’s company went bankrupt and was convicted of fraud in 2022. That year, the FTX exchange he founded held a late-night cocktail party in Boca Raton Beach, distributed branded merchandise at the giant booth in the showroom, and hosted a fireside conversation with Alex Rodriguez, who transformed from baseball star into businessman. Because he spent money like money, from U.S. regulators to politicians and even Tom Brady, he was willing to listen to his ideas.

But Duffy didn't buy it. The longtime industry veteran who heads the Chicago Mercantile Exchange (CME) started his career in the Chicago trading hall in the 1980s. He is skeptical of SBF's ambitious plan. FTX wants to independently handle all customers’ needs in cryptocurrency derivatives, using algorithms rather than brokers to help clear transactions.

“I introduced cryptocurrency to the Chicago Mercantile Exchange (CME) in 2017, and I didn’t even know who SBF was,” Duffy said in an interview this year. He said bluntly that SBF's plan is "very dangerous from a risk management perspective."

Duffy is not shy about their confrontation at the Boca Raton Hotel Bar in 2022, calling it "a small friction." In an interview with Bloomberg, he recalled that he told SBF directly that he was a liar and said that the money in his right pocket was more than the cryptocurrency executive's assets. This statement was confirmed when FTX filed for bankruptcy at the end of 2022. The bankruptcy case revealed a scam that lasted for years, with prosecutors claiming SBF cheating about $10 billion from clients, investors and lenders.

After the FTX crash, regulators under U.S. President Joe Biden launched a massive crackdown on the cryptocurrency industry. The Commodity Futures Trading Commission (CFTC), the top U.S. derivatives regulator, recovered a record $17.1 billion in law enforcement actions last year, mostly from digital asset cases against FTX and Binance.

Affected by this, some companies have actively shrunk their business and turned their attention to overseas financial centers such as Dubai, Singapore and Hong Kong. Trading giants Jump and Jane Street have scaled back their cryptocurrency market-making operations in the United States. Cboe closed its cryptocurrency spot business due to a lack of a clear regulatory framework in Washington.

Since Trump took office, the shackles of regulation have begun to loosen. Last month, the U.S. Securities and Exchange Commission concluded its investigation into Robinhood Markets Inc.'s cryptocurrency business and said it would not take any enforcement action. Meanwhile, the SEC also dropped a lawsuit against CoinbaseGlobal Inc., the largest digital asset trading platform in the United States, which previously accused it of operating an illegal exchange.

In the past month alone, the SEC has rejected or suspended at least 10 cases against cryptocurrency companies.

Elisabeth, head of Market Structure of TradewebKirby said the rapidly changing regulatory environment is paving the way for institutional investors to participate more deeply in crypto markets. Tradeweb is a company that operates over-the-counter trading markets, covering areas such as interest rates, credit, currency markets, stocks and cryptocurrency ETFs.

Banks are also actively making arrangements to try to seize more cryptocurrency businesses. Morgan Stanley, which was previously not active in the crypto space, is now paving the way for potential IPO customers. Bank of America Corp. executives are discussing whether to further push for transaction support for digital asset companies, while Royal Bank of Canada is seeking to expand more after completing its first crypto deal late last year.

At this week's meeting, cooperation became the main theme. The core of the discussion focuses on how traditional finance and crypto industries work together. Even Duffy said he now supports the success of the crypto industry—after all, the average daily trading volume of digital assets on the Chicago Mercantile Exchange (CME) soared by more than 200% last year, reaching $6.8 billion.

"We went online with Bitcoin, followed by Ethereum, and now we just announced that we will go online with Solana," Duffy said. "I want to see crypto assets become more mainstream."