Author: Hu Tao, ChianCatcher
As the cryptocurrency industry becomes increasingly mainstream, it seems that Chinese entrepreneurs are moving further away from the center stage.
Once upon a time, projects founded by Chinese individuals occupied a significant share of the industry, including well-known cryptocurrency exchanges like Binance, OKX, Bybit, Bitget, Gate, HTX, and Bitmart, all founded by Chinese. The same is true in mining, where projects like Bitmain, Canaan Creative, and Spark Pool hold important positions in the industry. Their commonality is that most were established in 2017-2018 or even earlier.
Although Zhao Changpeng, Xu Mingxing, Wu Jihan, and Sun Yuchen are still actively engaged in the industry, since the DeFi Summer boom in 2020, a general consensus has emerged: the visibility and voice of the new generation of Chinese entrepreneurs in the global cryptocurrency industry have declined, and so far, no leaders have emerged who can stand alongside the previous generation of industry figures. In this context, what has the ecosystem of Chinese entrepreneurs experienced? What future opportunities lie ahead?
Restructuring of regulatory and geopolitical environments: the first impact of ecological fracture.
The most significant factor in the past five years has been the dramatic changes in regulatory and geopolitical environments.
Since the beginning of 2021, China has significantly increased its governance efforts regarding cryptocurrency-related activities, rapidly cutting off trading, mining, and other activities originally dispersed in gray areas. In the market hotspots of these years, almost any trending concept is subject to regulatory scrutiny, from previous ICOs, NFTs, and digital collectibles to recent payments and real-world assets, which undoubtedly limits the inflow and support of quality resources to the Chinese crypto ecosystem.
These setbacks not only lead to the accelerated migration of mining and exchange businesses but more critically, they cause Chinese entrepreneurs to lose a naturally networked, talent-dense, and capital-aggregating local market, forcing them to develop in unfamiliar overseas environments.
In the early crypto ecosystem, many explosive growth Chinese projects rapidly accumulated users under the mobilization mechanism of Chinese internet communities: WeChat group fission, KOL networks, media matrices, offline gatherings... These channels were once one of the most efficient systems for spreading crypto narratives. However, changes in regulatory policies rendered this system largely ineffective.
Consequently, the industry's power center is rapidly shifting to the West—US compliance leadership, influx of institutional capital, and increasingly mature regulatory frameworks are beginning to shape an industry order completely different from that of 2017-2018. The new narrative, new regulatory landscape, and new capital structure naturally favor English-speaking markets and compliance-oriented entrepreneurial teams. Projects like prediction markets, which have certain gambling characteristics, find it challenging to emerge in the heavily regulated Chinese market environment.
In such an industry environment, the new generation of Chinese entrepreneurs finds it even more difficult to gain 'default trust' from global media, regulators, capital, and users. Compared to similar Western projects, they need to invest more trial-and-error costs in marketing, compliance, and other aspects.
Shift in capital preferences: the second impact of ecological fracture.
If the institutional barriers caused by regulatory and geopolitical environments represent the first impact, then the 'structural shift in capital market preferences' from the capital market side further exacerbates the marginalization trend of Chinese entrepreneurs in the new cycle.
In today's industry environment, lacking the support of strong VC funding and resources puts projects in a disadvantaged position regarding user acquisition, token listing, narratives, etc. Chinese entrepreneurs are already at a disadvantage in terms of funding.
Affected by the overall poor performance of altcoins and the significant decline in investment returns, in the past 2-3 years, Chinese background VCs have drastically reduced their investment frequency, even completely stopping. Chinese entrepreneurs face significant constraints in both financing and exit paths. When facing Western-dominated VCs, Chinese projects struggle to find advantages due to language and cultural differences, leading to a declining trend in the amount and number of financing obtained by Chinese projects in recent years.
Since the beginning of this year, the crypto industry has seen a wave of IPOs and mergers. Companies like Circle and Gemini have successfully listed on US stock exchanges, while Coinbase and Ripple have been actively acquiring, significantly boosting confidence for entrepreneurs and even VCs, but these are mostly unrelated to Chinese projects. It can be said that Western projects are enjoying the institutional dividends of the mainstreaming of the crypto industry.
From the perspective of mainstream capital, Western projects have natural advantages in compliance, cultural recognition, and exits. Chinese projects, unless they have super strong advantages in team configuration and technical background, find it difficult to win the favor of Western capital.
Mismatch between capability structure and industry maturity: the third impact of ecological fracture.
Over the past decade, the main theme of the crypto industry has been in the infrastructure and tools sector. Although there have been iterations of new concepts such as DeFi, NFTs, games, and inscriptions, most have failed to become mainstream projects.
In a previous interview with ChainCatcher, Folius Ventures founder Jason Kam stated that the development of Web3 over the past 5 to 10 years has been about laying the groundwork. What is more important is the product categories and states, which is a decade focused on ecosystems, infrastructure, tools, and building consensus. In other words, it has also been a decade for B2B products.
Western countries have three generations of exceptionally talented engineers who excel at building such B2B ecosystems. In contrast, the Asia-Pacific region mainly has young engineers born in the 80s and 90s, whose career paths have developed alongside the rise of China's B2C industry that started in 2005. In other words, their engineering experience is in B2C and applications, which is completely at odds with the entire development process of blockchain, so they may struggle in public chains and infrastructure.
"If entrepreneurs in the Asia-Pacific region compete with their Western counterparts at the consumer level, I believe they have no disadvantages, and may even have advantages, as they possess rich product experience and aggressive strategies for capturing market share."
Despite the stronger attributes of Web2 exchanges, Chinese entrepreneurs have proven this point. In terms of on-chain consumer-facing products, Stepn's brief success, although it demonstrated the talent of Chinese entrepreneurs in consumer-facing products, the overall market explosion for consumer-grade products has yet to arrive, closely related to the maturity of industry infrastructure. The market has not yet reached the 'comfort zone' of Chinese entrepreneurs.
Entrepreneurs with multicultural backgrounds are becoming industry leaders.
Strictly speaking, Chinese entrepreneurs in recent years are not new representative cases. Jeff Yan, the founder of Hyperliquid, is of Chinese descent; his parents were immigrants from China, and he was born and raised in Palo Alto, California, USA. He later attended Harvard University, majoring in Mathematics and Computer Science. After graduation, Jeff joined high-frequency trading giant Hudson River Trading as a quantitative trader. In 2022, after founding Hyperliquid, he positioned it as one of the fastest-growing giants in the crypto industry in recent years with the concept of being 'small yet refined', without VC, and driven by user growth.
However, although Hyperliquid is one of the most successful projects in this cycle with 'Chinese heritage' involvement, it is difficult to see it as a continuation of the influence of Chinese entrepreneurs, as it is almost never active in the Chinese ecosystem. The values and concepts it has shaped in the outside world are almost entirely aligned with Western ideals and have never been expressed in Chinese. The rise of Jeff and Hyperliquid highlights a fact: in the new cycle, Chinese heritage may still exert global influence, but the prerequisite must be integration into the mainstream cultural system, rather than relying on old paths of Chinese entrepreneurship. If one only relies on a single cultural system, then one can only become a regional leader rather than achieving outstanding results in the globalization process.
In fact, many well-known Chinese projects that have become leaders in their tracks during this cycle often have founders with multicultural backgrounds, who have studied in the West at least during their university years, such as Sahara founder Sean Ren, Kaito founder Yu Hu, and BuidlPad founder Erick Zhang. Their long-term experiences in the West have played an important role in their development paths.
In fact, entrepreneurs with multicultural backgrounds are indeed more sought after in the crypto industry. For example, Ethereum founder, Solana founder, and Binance founder Zhao Changpeng all immigrated from China and Russia to North American countries during their childhood. The collision of different political systems and cultures allows these entrepreneurs to realize the value of blockchain in empowering individual sovereignty earlier and act quickly. They consider cultural inclusivity as a core aspect in team building, resource integration, and daily operations, ultimately making it easier to gain favor from users with diverse cultural backgrounds.
The essential feature of crypto being borderless, along with the conflicts and negotiations between various countries regarding crypto regulation and interests, will dominate the development trend of the crypto industry for a long time. Chinese entrepreneurs indeed face more and more challenges against the backdrop of multiple conflicts between China and the US, and the mainstreaming of the crypto industry. However, in light of recent skepticism towards the crypto industry due to tendencies of gambling and nihilism, as well as the increasing number of project concepts being debunked, how Chinese entrepreneurs develop might no longer be a significant industry issue. What truly deserves attention is: as speculative growth and narrative bubbles gradually recede, who can continue to invest in the long-term value of decentralized technology and redefine industry direction through real products and verifiable innovations.
The core competitiveness of the future industry landscape will depend more on whether the founding team possesses the ability for cross-cultural collaboration, long-term technical investment, and understanding of systems and organizational resilience in the face of regulatory uncertainty. Regardless of cultural or national background, those who can maintain sustained efforts in these dimensions may become the true beneficiaries of the next cycle. In other words, the secret to success in the crypto industry has never depended on where they 'come from,' but on what they 'can achieve.'
