Written by: Hu Tao, ChianCatcher
As the cryptocurrency industry becomes increasingly mainstream, Chinese entrepreneurs seem to be drifting further away from the center stage.
Once upon a time, projects founded by Chinese people had already occupied half of the industry, including well-known cryptocurrency exchanges such as Binance, OKX, Bybit, Bitget, Gate, HTX, and Bitmart. The same is true in mining, with projects like Bitmain, Canaan Creative, and Spark Pool occupying important positions in the industry. Their commonality is that they were basically founded in 2017-2018 or even earlier.
Although Zhao Changpeng, Xu Mingxing, Wu Jihan, and Sun Yuchen are still actively engaged in the industry, a general consensus has gradually formed since the DeFi Summer of 2020: 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 to stand alongside the previous generation of industry figures. Given this disparity, what exactly has the Chinese entrepreneurial ecosystem experienced? What opportunities lie ahead?
Regulatory and geopolitical environments reshaping: The first shock of ecological fracture
The most significant factor in the past five years has been the drastic changes in regulatory and geopolitical environments.
Since 2021, China's governance of cryptocurrency-related activities has significantly intensified, rapidly severing scenarios like trading and mining that were previously scattered in gray areas. In the market hotspots of these years, virtually any trending concept would be named and matched by regulators, from previous ICOs, NFTs, and digital collectibles to recent payment and real-world assets. This will undoubtedly limit the inflow and support of quality resources to the Chinese cryptocurrency ecosystem to some extent.
These blows not only accelerated the migration of mining and exchange businesses but, more critically, made Chinese entrepreneurs lose a local market that naturally had network effects, talent density, and capital aggregation advantages, forcing them to move to unfamiliar overseas environments for development.
In the early cryptocurrency ecosystem, many explosive Chinese projects rapidly accumulated users under the mobilization mechanism of Chinese internet communities: WeChat group fission, KOL networks, media matrices, and offline gatherings... These channels were once one of the most efficient systems for spreading cryptocurrency narratives. However, changes in regulatory policies have rendered this system largely ineffective.
Consequently, the power center of the industry is rapidly shifting to Europe and America—American compliance dominance, influx of institutional capital, and the increasingly mature regulatory framework are beginning to shape an industry order that is drastically different from that of 2017-2018. New narratives, new regulatory landscapes, and new capital structures naturally lean towards English-speaking markets and teams with strong compliance orientation. Projects with certain gambling characteristics like prediction markets are unlikely to emerge in the Chinese market environment, where gambling is strictly regulated.
In such an industry environment, the new generation of Chinese entrepreneurs finds it harder to gain 'default trust' from global media, regulators, capital, and users. Compared to similar Western projects, they need to invest more in trial-and-error costs in marketing, compliance, and other aspects.
Shift in capital preference: The second shock of ecological fracture
If the institutional barriers caused by regulatory and geopolitical environments are the first shock, then the 'structural preference shift' from the capital market further exacerbates the marginalization trend of Chinese entrepreneurs in the new cycle.
In today's industry environment, if there is a lack of strong VC funding and resource support, projects will be at a disadvantage in user acquisition, listing, narrative, and other aspects. Chinese entrepreneurs are already at a disadvantage on the funding side.
Due to the overall poor performance of altcoins and a significant decrease in investment returns, Chinese background VCs have drastically reduced their investment frequency in recent 2-3 years, even completely stopping. Chinese entrepreneurs, whether in financing or exit paths, have very limited choices. Faced with Western VCs, Chinese projects struggle to find advantages due to language and cultural differences, resulting in a downward trend in both the amount and number of financing received by Chinese projects in recent years.
The number of projects and the proportion of financing amounts from mainland China: Source: RootData
Since the beginning of this year, the cryptocurrency industry has seen a wave of IPOs and mergers and acquisitions, with companies like Circle and Gemini successfully listed on the US stock market, and Coinbase and Ripple frequently making acquisitions. This has significantly boosted the confidence of entrepreneurs and VCs, but these developments are largely unrelated to Chinese projects. It can be said that Western projects are enjoying the institutional dividends of the mainstreaming of the cryptocurrency industry.
In the eyes of mainstream capital, Western projects have natural advantages in compliance, cultural recognition, and exit strategies. Chinese projects, unless they have a strong advantage in team configuration and technical background, find it hard to win favor from Western capital.
Mismatch in capability structures and industry maturity: The third shock of ecological fracture
In the past decade, the main theme of the cryptocurrency industry has been in the infrastructure and tools track. Although there have been iterations of new concepts such as DeFi, NFT, games, and inscriptions during this period, most have failed to become mainstream projects.
In a previous interview with ChainCatcher, Folius Ventures founder Jason Kam stated that the development of Web3 in the past 5 to 10 years has been about laying the groundwork. The more important aspects are product categories and states, which have focused on ecosystems, infrastructure, tools, and building consensus. In other words, it has been a decade for B2B products.
The old, middle-aged, and young generations of extremely talented engineers in Europe and America are very good at building this B2B ecosystem. The Asia-Pacific region mainly consists of young engineers born in the 80s and 90s, whose career paths have developed alongside the surge of China's B2C industry that began in 2005. In other words, their engineering experience is rooted in B2C and application aspects, which is at odds with the entire blockchain development process, making them potentially less effective in public chains and infrastructure.
"If entrepreneurs in the Asia-Pacific region compete on the C-end level with those in Europe and America, 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 proving this in the more Web2-oriented exchange track, Chinese entrepreneurs have shown their talent in C-end products. However, the brief success of Stepn serves as evidence that the overall market explosion for consumer-level products has yet to arrive, closely related to the maturity of industry infrastructure, as the market has not yet reached the 'comfort zone' of Chinese entrepreneurs.
Entrepreneurs with multicultural backgrounds are becoming the industry leaders.
Strictly speaking, Chinese entrepreneurs have not been new representative cases in recent years. Hyperliquid founder Jeff Yan 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 the high-frequency trading giant Hudson River Trading as a quantitative trader. In 2022, Jeff founded Hyperliquid and turned it into one of the fastest-growing giants in the cryptocurrency industry in recent years, driven by the concept of being 'small yet refined', without VC support, and user-driven growth.
However, while Hyperliquid is one of the most successful projects in this cycle with 'Chinese bloodline' participation, it is hard to regard it as a continuation of the influence of Chinese entrepreneurs because it is hardly active in the Chinese ecosystem and has shaped a worldview predominantly based on Western values, and has never expressed itself in Chinese. The rise of Jeff and Hyperliquid highlights a fact: in the new cycle, Chinese lineage can still have global influence, but the premise is that it must integrate into the mainstream cultural system rather than rely on old paths of Chinese entrepreneurship. If one only relies on a single cultural system, then one can only become a regional leader and cannot achieve outstanding results in the globalization process.
In fact, many well-known Chinese projects that have become industry leaders in this cycle have founders with multicultural backgrounds, having at least studied in Europe and America during their university years. For example, Sahara founder Sean Ren, Kaito founder Yu Hu, and BuidlPad founder Erick Zhang, whose long-term experiences in Europe and America play an important role in their development paths.
In fact, entrepreneurs with multicultural backgrounds are indeed more valued in the cryptocurrency industry. For example, the founders of Ethereum, Solana, and Binance, Zhao Changpeng, all immigrated from China to North America during their childhood. The collision of different political systems and cultures allowed these entrepreneurs to recognize the value of blockchain in empowering personal sovereignty earlier and take action quickly, considering cultural inclusivity in team building, resource connection, and daily operations, ultimately making it easier to gain favor from users with diverse cultural backgrounds.
The borderless nature of cryptocurrency and the regulatory and interest demands of various countries will dominate the development trend of the cryptocurrency industry for a long time. Chinese entrepreneurs indeed face increasing challenges against the backdrop of multiple conflicts between China and the US and the mainstreaming of the cryptocurrency industry. However, in light of recent doubts about the gambling tendencies and nihilism in the cryptocurrency industry, as well as the increasing number of project concepts being debunked, the development trend of Chinese entrepreneurs may no longer be a crucial issue in the industry. What deserves real 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 the 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 capability, and institutional understanding and organizational resilience in the face of regulatory uncertainties. Regardless of cultural or national background, those who can persist in these dimensions may become the true beneficiaries of the next cycle. In other words, the path to success in the cryptocurrency industry has never depended on where they come from, but on what they can achieve.
