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The new Donald Trump administration could bring regulatory clarity to the crypto industry, but complex factors may hinder rapid progress.
Regulatory Clarity Requires Patience
While the new Donald Trump administration might offer some regulatory clarity for the crypto industry, according to Lingling Jiang, a partner at DWF Labs, substantial regulatory movement will take time due to “existing complex and interdependent dynamics and interests at play.” While Trump’s past promises to the crypto industry won him its support, Jiang emphasizes the need for a holistic understanding of the economic benefits of clear crypto regulations. This would allow the U.S. to embrace the crypto sector and compete with major crypto hubs like Singapore, Japan, and Hong Kong.
However, Jiang also acknowledges that a new Trump administration might, upon recognizing the economic potential and competitive advantage of the sector, push for regulatory clarity.
Concerning the growing popularity of crypto exchange-traded funds (ETFs), Jiang suggests they could ultimately suppress the high volatility that has historically attracted retail traders. This could lead to a two-tiered crypto ecosystem where “institutional investors trade established coins and retail traders focus on high-risk, high-reward opportunities.”
Jiang also addressed recent market manipulation allegations against DWF Labs which characterized as a “part of the competition and culture in Web3.” Additionally, she provided insights into memecoin investing strategies. Below are Jiang’s answers to all the questions sent.
Bitcoin.com News (BCN): In recent years, Asia has emerged as a cryptocurrency hub, with the UAE, Singapore, Hong Kong and Japan drawing builders with clear regulatory frameworks. Following Donald Trump’s U.S. election victory, will his administration make good on some of the campaign promises he made and provide similar regulatory clarity for the crypto industry?
Lingling Jiang (LJ): Asia’s emergence as a major hub for crypto activity is a clear testament to the importance of regulatory clarity in fostering innovation. Countries like the UAE, Singapore, Hong Kong, and Japan have attracted talent and investment by creating frameworks that allow the industry to grow with confidence and direction.
With Donald Trump’s victory in the recent U.S. elections, there’s a question of whether the administration might follow Asia’s example by pursuing clearer regulations for the crypto space. However, the increasing global interest in crypto and Web3 could prompt a shift in approach. If the administration recognizes the economic potential and competitive advantage of the sector, there may be a stronger push for regulatory clarity.
It seems that there would need to be a holistic understanding of the economic benefits that clear crypto regulations could bring. While the administration may look to craft policies that encourage domestic crypto innovation and address concerns around issues like security, transparency, and investor protection, it is likely that it will take time to see substantial regulatory movement, given the existing complex and interdependent dynamics and interests at play.
At DWF Labs, we remain steadfast in our commitment to supporting our portfolio companies and projects as they navigate the evolving crypto ecosystem. Our focus is on fostering sustainable growth by providing strategic guidance, liquidity support, and leveraging our global network to amplify their reach and impact. As regulatory landscapes shift, we remain dedicated to helping our partners adapt, innovate, and seize new opportunities so they can scale responsibly and sustainably in this dynamic environment.
BCN: Is it too early to conclude, as some observers have opined, that the crypto exchange traded funds (ETF) approvals are attracting too many mainstream investments into the crypto market, disrupting the normal market dynamics traditionally fueled by retail traders in a decentralized ecosystem?
LJ: It’s still too early to say that the ETFs have fundamentally shifted the market dynamics. There seems to be a growing institutional presence, which has the potential to dilute the dominance of retail investors, bringing with it a more measured and long-term approach, which contrasts with the speculative nature that retail traders often introduce. While this influx of capital is important for market growth and stability, it could suppress the high volatility that has historically attracted retail traders. But even if bitcoin does become a stablecoin, there’s plenty of action to be had in trading the long tail of crypto assets that are anything but stable. We could end up with a two-tier crypto ecosystem where suits trade the blue chips and degens stick to the trenches where 1,000x fortunes are won and lost.
BCN: Your firm, DWF Labs is said to be actively involved in supporting Web3 crypto projects, especially by providing liquidity and serving as a market maker. How many projects has DWF Labs supported so far and how would you describe the success ratio of the projects you support?
LJ: We are proud to say that we are trusted by over 800 projects to date across various stages of development with our services of market making, OTC trading, and treasury management among many other value-added initiatives. Nevertheless, we remain selective about the projects that we support, aiming to back projects with real-world utility and long-term sustainability potential in the ecosystem.
While success is a metric that’s subject to interpretation, if a project is building a more decentralized, secure, and efficient solution to anything that’s currently available in web3 – and is generating real protocol fees in the process – it definitely fits the bill.
BCN: The Web3 sector is experiencing rapid growth, overlapping with the rise of AI-enabled solutions. This period of innovation may trigger the next bull cycle for digital assets. However, history has shown that scammers often exploit such moments to target newcomers. What steps can individuals, whether retail investors, developers, or others, take to avoid falling victim to Web3 scams?
LJ: For retail investors, it is important to conduct thorough research, looking beyond hype to assess project fundamentals. Also, institutional investors should diversify and ensure that strong risk management frameworks are in place. Developers, as they have already been doing, should continue to focus on building secure, scalable, and transparent platforms. It’s also critical to rely on established industry players like market makers for liquidity and support, as well as engaging with trusted communities to avoid being swayed by malicious actors.
As with any trend, a lot of stuff riding the wave will be froth. But those willing to put in the time researching AI and identifying projects with a genuine value proposition and a genuine need for blockchain will be rewarded.
BCN: What is DWF Labs’ motivation for supporting Web3 startups despite the various challenges in the crypto industry, including issues like the recent allegation, which your team claims is blackmail from competitors?
LJ: Web3 is the next frontier of the digital economy. Despite the challenges, we believe that decentralization will fundamentally reshape industries and create new paradigms of ownership and value exchange. Unsubstantiated allegations are all part of the competition and culture in Web3: no one ever made it to the top without ruffling a few feathers along the way. However, we want to emphasize that our focus remains on fostering innovation and supporting promising projects and founders who are building projects with real world utility, value and sustainability. We remain confident that the future we build will not be dependent on the naysayers but on the value that we bring.
BCN: Memecoins have become an integral part of the industry, having caught the fancy of crypto traders and speculators. While many speculators have made a fortune betting on memecoins, in your opinion, how should the institutions and smart investors approach them?
LJ: Memecoins are a unique and special part of crypto culture. They are also one that is highly driven by community sentiment. While memecoins can offer substantial short-term gains, it’s important to remember that they are speculative and volatile by nature.
For institutions and smart investors, memecoins should be approached with caution and clear risk parameters. It’s important to allocate a proportionately smaller portion of a portfolio to such assets and use them as an opportunistic play rather than a core holding. As such, risk management, liquidity assessment, and timing are important when navigating this space. More supposedly smart players will get burned trading memecoins than will get rich.