Author: Web3 Farmer Frank
Have you thought about whether future Crypto trading will also be taxed?
Since this spring, many users from mainland China who used Tiger Brokers, Futu Securities, etc. for U.S. stock trading have started receiving tax backdating notifications, which is no coincidence. Along with the implementation of the CRS global information exchange, offshore accounts and investments are being subjected to comprehensive monitoring from high-net-worth individuals to ordinary middle-class citizens.
The principle is similar; the 'sovereign vacuum period' in finance is often very short. Today's U.S. stock brokers may well be a preview of tomorrow's Crypto trading—once the rough era passes, Liangshan will eventually be incorporated into the regular army.
From the invisible freedom of offshore U.S. stock accounts to CRS global information interoperability, and from the wild growth of third-party payments to the strict control of central bank licenses, financial innovation that drifts outside mainstream regulation is irreversibly transitioning from gray to normalization.
Especially this year, with the entry of Web3 and authority, crypto exchanges are at a crossroads of fate, with compliant local players firmly in place, offshore gray areas rapidly narrowing, and on-chain DEXs gaining momentum.
There is no middle ground, only clear directional divides.
The offshore CEX feast is over.
Centralized exchanges (CEX) remain the top predators in the current Crypto ecosystem.
It can be said that CEXs, which rely on trading fees as their core source of income, have reaped the largest dividends from the explosion of the Crypto scale. According to public market estimates, the annual revenue and profits of leading offshore CEXs like Binance and OKX are at the level of several billion to even over a hundred billion dollars. For instance, Binance's revenue for 2023 reached as high as $16.8 billion, with annual cryptocurrency trading volume surpassing $3.4 trillion.
This means that even in globally turbulent macroeconomic environments, offshore CEXs remain one of the most profitable businesses.
Source: Fourchain
However, the golden age of the offshore model has clearly come to an end.
Compliance pressure and tax storms are extending from traditional finance to the Crypto field. Similar to the recent heated discussions about additional taxes on U.S. stock trading, observant users should note that in the past year, offshore CEXs like Binance and OKX have also been embroiled in various public controversies.
Including but not limited to restricting accounts to only use cryptocurrency assets as the sole source of income and requiring the user to provide proof of annual income and tax payment, etc.
Objectively speaking, offshore giants like Binance and OKX have paid a hefty price to 'come ashore', not only facing legal accountability for their founders but also investing significant funds—Binance publicly disclosed that it invested hundreds of millions of dollars in compliance and security alone in 2024, and its internal compliance team has grown to 650 experts.
Especially since 2025, various players have been accelerating compliance and potential listings during the 'political dividend window'.
For example, Kraken first had the U.S. SEC withdraw its securities violation allegations against it, and the FBI ended its investigation into its founder. It then hinted at potential IPO plans and recently reported a fundraising of $500 million at a valuation of $15 billion, making a complete turn toward compliance.
OKX is the same; first, it reached a settlement with the U.S. Department of Justice in February this year, paying over $500 million in fines, and then actively promoted its IPO in the U.S., with news that its compliance department in the U.S. has been adjusted to the top priority of all departments.
These actions release a clear signal that the survival space of the offshore model has been compressed to historical lows, and CEXs are racing to sprint for the last compliance window.
It can be said that this crypto political honeymoon period, catalyzed by Trump’s reshaping of policy narratives, the 'balance sheetization' of BTC, and the stablecoin boom, is almost the last window for offshore CEX transformation.
Once the opportunity to 'come ashore' is missed, one may go from being a top predator in the ecosystem to becoming an object to be cleared by the times.
The foreseeable pattern of 'three divides'.
If we compare today's Crypto market to the Hong Kong and US stock markets that Chinese investors participated in a decade ago, the evolution of regulation and markets is merely a few years behind schedule.
As global tax compliance, capital controls, and the entry of financial institutions overlap, the future landscape of exchanges can almost be predicted as 'three divides':
Localized licensed compliant CEXs: represented by Coinbase, Kraken, HashKey, OSL, etc., their core feature is the ability to connect with banks and provide compliant clearing, mainly serving local users and institutions/high-net-worth users, building long-term brand value through compliance moats.
Offshore gray CEXs: represented by Binance, Bitget, Bybit, etc., serving global retail investors and some high-risk users, are inevitably being compressed, marginalized due to the current global compliance trends and the near on-chain experience.
Pure on-chain decentralized exchanges (DEX/DeFi native): no KYC, permissionless access, natively support on-chain asset settlement and multi-chain combination trading, may become new global liquidity hubs in the future.
Among them, compliant exchanges are undoubtedly the 'upward curve players' benefiting from policy dividends. In markets like the U.S. and Hong Kong, compliant exchanges can not only engage in institutional and bank collaborations but can also be integrated into the local tax system. The strategic goal of such platforms is very clear—to become a new generation of digital asset exchanges and clearinghouses.
For instance, an easily overlooked signal is that compliant exchanges represented by Coinbase are now ushering in their golden moment—throughout 2024, Coinbase's revenue reached $6.564 billion, more than doubling year-on-year, with a net profit of $2.6 billion, nearly approaching 50% of offshore leader Binance (according to market estimate data).
More crucially, Coinbase hardly has to worry about enforcement actions or bank freezing risks from major global jurisdictions, making it a natural 'safe haven' for institutions and high-net-worth users.
On-chain DEXs belong to the most potential and high-limit 'global market players'. They do not rely on national licenses and serve as 7×24 hour global liquidity hubs, especially with native support for on-chain asset settlement and cross-asset combination strategies, with strong programmability.
Although its current market size is still less than 10% of CEXs, the growth elasticity is enormous. Once the on-chain derivatives market matures, the market depth and strategic space of DEX will attract a large amount of high-frequency funds, arbitrageurs, and institutional liquidity.
For example, Hyperliquid saw its assets surge in July, growing from just below $4 billion at the beginning of the month to $5.5 billion, and at one point approaching $6 billion in mid to late July.
Moreover, the gameplay of DEX is not only a vehicle for DeFi innovation but may also become the decentralized pricing cornerstone for global commodities and crypto assets, just like Fufuture's newly launched TSLA.M/BTC index trading pairs based on 'coin-based perpetual options':
Allowing users to use TSLA.M as collateral to participate in BTC/ETH perpetual option trading not only explores new liquidity paths for tokenized U.S. stocks, but can also be applied to help build pricing pools for tokenized gold/oil products or other small market cap meme assets.
Overall, the strategic significance of Fufuture's integration of options + perpetual contracts in its DEX derivative mechanism lies in turning long-tail assets (like SHIB, TSLA.M, etc.) that could only sit in wallets into usable collateral, activating cross-asset liquidity, forming a natural positive cycle of 'holding positions equals participating in liquidity construction', making the on-chain market closer to the funding efficiency and depth of traditional derivatives markets.
In contrast, offshore CEXs have already peaked, and their survival space is being rapidly compressed. On one hand, they are caught between compliance and on-chain, lacking long-term survival space; on the other hand, tightening global regulation, CRS tax interoperability, and bank KYC systems make it difficult for gray traffic to continue.
It can be said that the feast of the offshore model has reached its conclusion. In the past, it served as a 'gray buffer zone' to accommodate regulatory arbitrage space; in the future, it may linger on the policy edge for a long time, being eaten away by compliance and on-chain markets: either being incorporated into the tax and compliance system to become localized licensed institutions or fully transitioning to on-chain, becoming a borderless global market.
The middle ground is destined to be cleared.
New Proposition for DEX: Decentralized Pricing of Global Assets
From a longer-term perspective, the future competition among exchanges is no longer just about traffic and fees but a dispute over the routes after the rewriting of global market rules.
If the first phase of DEX was more of a DeFi innovation testing ground, then with licensed localized exchanges in places like the United States and Hong Kong meeting compliance demands, being incorporated into the tax system, and fully aligning with the banking system, the mission of DEX may be completely reshaped.
It may assume the role of 'price discovery and pricing power' in the global unlicensed market.
Why does the pricing power of global assets belong to on-chain DEX?
Because, unlike stocks and bonds which have obvious regional attributes (except for U.S. stocks and bonds), commodities like gold, oil, copper, and crypto assets like BTC and ETH are inherently global trading targets.
At the same time, traditional commodity futures are concentrated in places like Chicago, London, and Shanghai, which have time zone and trading hour limitations, while on-chain operates 7×24 without interruption, providing liquidity without time differences or licenses.
Moreover, stablecoins can serve as globally accepted settlement tools—users open positions using stablecoins as collateral, with all gains and losses settled in stablecoins, meaning price discovery will no longer be constrained by regions or banking systems.
With these three characteristics, DEX is naturally expected to become the decentralized pricing cornerstone for crypto assets and commodities.
Source: CoinGecko
Of course, for DEXs, what truly supports price discovery is never just spot trading but the trading depth and price discovery mechanisms constructed by futures, options, and other derivative systems.
This is also why derivatives DEX is experiencing explosive growth in 2024, with total trading volume reaching $1.5 trillion, more than doubling from $647.6 billion in 2023.
Among them, futures contracts mainly center around Hyperliquid, with annual trading volume skyrocketing from $21 billion in 2023 to $570 billion in 2024, achieving a growth of 25.3 times. Recently, Hyperliquid has even entered the top five derivative platforms by daily trading volume, peaking at over $10 billion, on par with some mid-tier CEXs.
Source: Hyperliquid
At a more complex level of cross-asset strategies and on-chain derivatives pricing logic, Fufuture also provides a concrete example. Its 'coin-based perpetual option mechanism' has no fixed expiration date and dynamically charges premiums based on holding time, balancing the non-linear returns of options with the trading rhythm of perpetual contracts.
If one has truly experienced Fufuture's perpetual option products, one can clearly feel its innovations compared to traditional on-chain option products. For example, users holding SHIB find that this type of meme asset can hardly be used as any form of trading collateral in traditional on-chain derivative protocols, but on Fufuture, they only need to deposit SHIB into the platform to use it as collateral for trading.
In practical terms, as long as SHIB is deposited as 'usable collateral', the entire trading process is almost identical to contract trading—no need for stablecoins as collateral, no need to weigh options for expiration dates, exercise prices, or profit and loss curves; just like regular contract trading, choose the asset, direction (long/short), and position size to start trading.
At the same time, it theoretically allows any on-chain asset, including the latest tokenized U.S. stocks, to be activated as usable collateral—users can use TSLA.M and NVDA.M as collateral to participate in BTC and ETH perpetual option strategies (extended reading: (Liquidity Considerations for Tokenized U.S. Stocks: How Should On-Chain Trading Logic Be Reconstructed?)), forming a true cross-market speculation and hedging network that traditional CEXs find difficult to provide such freedom of combination.
From an industry perspective, on-chain derivative DEXs like Hyperliquid and Fufuture not only help avoid compliance restrictions but also provide a 7×24 hour, borderless trading and settlement network for global commodities.
Especially with new trading mechanisms like Fufuture that allow for opening positions directly by choosing a direction without needing to exchange stablecoins in advance, it maximizes the liquidity and strategic space of on-chain assets, not only approaching CEX in trading experience but also objectively only on-chain derivative DEXs can achieve this, with great potential to become the on-chain 'entry point for pricing power' of global assets.
Final Note
The future exchanges will not just be a war for immediate gains but a division among the rule rewriters of global markets.
One has localized compliance, one has offshore gray area, and one will become the decentralized pricing cornerstone for the next round of global commodities and crypto assets.
There is no middle ground.
The direction of the future fork has been set; it is only a matter of time.
