Is Pure Crypto Trading Pointless? Why Speculation Is the Engine of Innovation

Opinion | September 21, 2026

Author: David Tang, Managing Director, Standard Kepler

Originally published in STHeadline (星島頭條)

Executive Summary

SFC Executive Director Dr. Ip Chi Hang recently stated that Hong Kong must connect licensed stablecoins, tokenized money market funds (MMF), and licensed virtual asset trading platforms to be meaningful — adding that “focusing solely on crypto trading has no future.” Dr. Ip is a seasoned regulator with deep traditional finance experience, and his framework is directionally sound. But as a programmer-turned-crypto practitioner, the author believes several critical points deserve amplification. “Pure speculation has no future” sounds pragmatic, but it does not hold up under scrutiny of trading volume data and regulatory logic.

There Has Never Been “Pure” Crypto Trading

Dr. Ip used Bitcoin’s market cap — “not even half of NVIDIA’s” — to argue that crypto’s scale is limited. But this comparison misses critical context.

Binance, the exchange most focused on “pure trading,” processes over $80 billion in spot plus derivatives volume daily — approximately HK$600 billion, more than double the Hong Kong Stock Exchange’s daily turnover. Bitcoin’s market cap may be only half of NVIDIA’s, but it is more than triple Tencent’s and exceeds one-third of the entire Hong Kong stock market’s total capitalization — and that does not even include Ethereum, BNB, or Solana.

The concept of “pure trading” itself is flawed. Binance’s ecosystem encompasses custody, payments, wealth management, Layer 2 public chains, and stablecoins — all built to serve trading demand. Trading is not an isolated activity; it is the gravitational center around which the entire crypto economy orbits.

Hyperliquid: The Anti-HKEX

Consider Hyperliquid — a decentralized exchange born in 2023 with a team of roughly 15 people, no licenses, no offices, no public listing. It now processes nearly $10 billion in daily trading volume.

Fifteen people — 1/200th of HKEX’s headcount — built in three years a 7x24 global open settlement layer accessible to anyone, for any asset. This is not “pure trading.” This is infrastructure that traditional finance cannot replicate.

When retail investors trade warrants, options, and bull/bear certificates to record volumes, does the HKEX also need to “get serious” and pivot away from trading?

AI Stocks: Speculation Dressed as Innovation?

AI is undeniably real technology. But most participants in AI stock trading are speculators: chasing momentum, trading on rumors, leveraging derivatives. Is a 2x leveraged SK Hynix ETF innovation, while a 10x leveraged perpetual contract is not?

The double standard is evident. What is celebrated in traditional markets is stigmatized in crypto — even when the underlying activity is structurally identical.

Innovation Always Outpaces Regulation

Of course, Binance and Hyperliquid are not without problems:

• Binance has faced serious compliance issues and paid astronomical fines
• Hyperliquid had the Jelly incident, has no KYC, offers no investor protection — users bear all risk

But the author wants to make a broader point: innovation always outpaces regulation. This is a historical law. Securities, futures, online banking, P2P lending — no exception.

The correct regulatory posture is to catch up with innovation to protect users, not to demand innovation stand still and wait for regulation. And certainly not to confine innovation within the regulatory comfort zone.

Tokenization: Incremental or Transformative?

Dr. Ip argued that stablecoins, tokenized MMFs, and licensed platforms must be “connected” to have meaning. The author agrees — but asks: connected to what?

The Incumbent Fallacy

Connecting three things that were already connected achieves nothing revolutionary. Before tokenization and stablecoins, Hong Kong dollars, MMFs, and trading platforms were already integrated. Retail investors bought and sold funds in HKD; banks, brokers, and fund companies each played their role. This ecosystem functioned for decades.

Moving the same three things on-chain and “connecting” them again — among the same participants, with a few extra licenses — is fundamentally rearranging deck chairs. It is a存量 (stock) play, not an增量 (flow) play.

The Real Innovation: Global Public Chain Liquidity

To create增量 (new value), tokenized fund units must connect to global public chain liquidity — enabling instant collateralization, instant settlement, and 7x24 global circulation across billions of addresses.

Blocking global public chain liquidity is one form of regulation. Providing compliant channels for global liquidity is another. The two lead to entirely different futures.

Blockchain Is Not Deep Tech — It Is an Open Financial Interface

The author, a programmer by training, has written about blockchain since 2017. The consistent message: blockchain is not new technology, nor a panacea.

The underlying components — public-private key cryptography, hash functions, Merkle trees — have existed for decades. Satoshi Nakamoto’s genius was not inventing new technology, but combining existing technologies into something unprecedented: an open, unified, 7x24 financial settlement interface.

The greatness of this interface lies in its access cost:

Hong Kong stocks trade for a few hours daily. Public chains operate year-round without pause. CoinGlass and CoinMarketCap data show global crypto markets process over $280 billion in daily volume — 7x Hong Kong’s turnover — powered by this open interface.

The Regulator’s True Role

A regulator’s duty is not to decide which transactions are “promising,” but to enable the market to innovate safely. Whether licensed institutions make money is not the regulator’s responsibility. But if every licensed institution loses money while unlicensed operators thrive, a review mechanism is warranted.

The “super value-added” approach is clear:

1. Use regulation to combat JPEX-style fraud
2. Close loopholes for platform asset misappropriation
3. Open compliant on/off-ramp channels
4. Make Hong Kong the preferred destination for crypto capital — whether for trading or investment

Water must fill the pool before the tokenization boat can float.

Postscript: The U.S. Shows the Way

Three days after Dr. Ip’s remarks, on September 17, 2026, the U.S. SEC issued an “Innovation Exemption” — allowing Tokenized Securities Venues (TSVs) to trade tokenized U.S. stocks via AMM liquidity pools, temporarily exempting liquidity providers from “dealer” classification for five years, with public consultation on next steps.

AMM liquidity pools are the very mechanism DeFi popularized. They rely on arbitrageurs for price maintenance and can be extremely volatile. But the SEC did not treat them as a scourge. The regulatory conditions merely require auditable, public smart contracts deployed on public chains.

America’s direction is clear: rather than guarding its own pond, it is connecting the ocean to its rules.

Standard Kepler Research | standardkepler.com