HTX Ventures: Challenges and Opportunities for Exchanges in Balancing Compliance and Innovation under a Clear Regulatory Framework

Global leading cryptocurrency exchange Huobi HTX has ranked among the top three in EUR-stablecoin trading volume, according to a recent report by CoinDesk titled "MiCAR: The Institutional Playbook for Europe's Digital Asset Market". The report analyzes the Markets in Crypto-Assets Regulation (MiCAR) and explores key trends shaping Europe’s digital asset market. Data from the report shows that HTX averages EUR 48 million in monthly EUR-stablecoin trading volume, reaching EUR 33 million in November 2024—ranking third behind Binance and Coinbase.

As trading volumes dominated by the euro surge, the regulatory landscape continues to evolve, with regulatory clarity emerging as a key driver of institutional participation and market confidence. The full implementation of MiCAR marks a significant milestone for the crypto industry, providing a unified regulatory framework across the 27 EU member states. While streamlining compliance and fostering innovation, MiCAR also presents complex challenges that exchanges must navigate. HTX Ventures further examines the unprecedented opportunities and challenges brought by this landmark regulation.

Alec Goh, Head of Business at HTX Ventures, said: "The implementation of MiCAR is an important step forward for the crypto industry. It not only provides much-needed regulatory clarity but also creates an environment conducive to institutional participation. As countries worldwide adopt increasingly favorable crypto policies and regulations, unified frameworks like MiCAR will accelerate innovation while ensuring robust compliance. HTX Ventures sees this as an opportunity to drive the development of on-chain compliance tools, support compliant DeFi solutions, and bridge the gap between traditional finance and digital assets."

Opportunities

● Unified Regulation Reduces Costs and Boosts Market Confidence

MiCAR enables a “single license” covering all 27 EU member states, significantly reducing cross-border compliance costs for exchanges. This harmonized regulatory framework offers a clear and stable rulebook, enhancing institutional investor confidence and participation, and positioning Europe as the world’s largest compliant digital asset market.

● Technological Innovation Drives Deployment of On-Chain Compliance Tools

To meet MiCAR’s strict anti-money laundering (AML) and reserve monitoring requirements, exchanges can actively explore innovative compliance tools:

➔ Utilize oracles to modularize AML rules and reserve monitoring, executing them on-chain to ensure real-time transparency;

➔ Employ zk-SNARKs to build an on-chain regulatory data platform, enabling anonymized transaction data reporting that satisfies regulatory transparency while protecting user privacy;

➔ Apply account abstraction technology (ERC-4337) to integrate KYC processes into non-custodial wallets, lowering the barrier for traditional financial institutions to access DeFi.

● New Opportunities in Real-World and Crypto Asset Convergence

With platforms like Coinbase launching tokenized securities, exchanges can introduce real-world asset (RWA) trading—such as yield-bearing stablecoins backed by U.S. equities or Treasuries—enabling users to leverage assets like USDT for multi-asset allocation and global liquidity integration.

Challenges

● Cost and Technical Complexity from Stringent Compliance Requirements

MiCAR imposes strict requirements on stablecoin issuers and crypto-asset service providers (CASPs), including sufficient reserves, regular audits, and AML compliance. Exchanges must invest heavily in R&D and operations to integrate oracles, data anonymization, and on-chain regulatory data platforms—ensuring systems meet regulatory standards without compromising market efficiency.

● Uncertainty in a Dynamic Policy Environment

With regulations rapidly evolving, exchanges need to proactively establish multi-chain dynamic testing environments and collaborate with regulator-friendly jurisdictions (e.g., Lithuania, Malta) to conduct cross-border stress tests and regulatory scenario simulations. Such forward-looking deployments require continuous investment and carry risks related to policy interpretation and execution.

● Security Risks and Stringent Custody Requirements

Influenced by incidents such as the FTX collapse and Bybit security breaches, market scrutiny on security and compliance has intensified. MiCAR clearly defines custodial responsibilities for digital assets, requiring custodians to implement bank-grade security measures to prevent hacking and asset loss. As exchanges integrate DeFi with traditional regulatory frameworks, they must simultaneously address technical vulnerabilities and security threats.

HTX Ventures believes that under clearer regulatory frameworks like MiCAR, cryptocurrency exchanges can strike a balance between compliance and market innovation through technological advancement and global asset deployment, creating a win-win scenario. Looking ahead, HTX Ventures will leverage its deep industry insights to actively explore on-chain compliance tools, expand real-world asset trading, and build dynamic testing environments to tackle complex regulatory challenges—ensuring crypto innovation fosters long-term institutional engagement and sustainable market growth.

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About HTX Ventures

HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the most talented and visionary teams worldwide. As an industry pioneer with over 11 years of blockchain-building experience, HTX Ventures excels at identifying cutting-edge technologies and emerging business models. To drive ecosystem growth, we provide comprehensive support—including funding, resources, and strategic guidance—to projects within the blockchain space.

HTX Ventures currently supports over 300 projects across multiple blockchain sectors, with select high-quality projects already listed on Huobi HTX. Additionally, as one of the most active fund-of-funds (FOF), HTX Ventures invests in 30 top-tier global funds and partners with leading blockchain investors such as Polychain, Dragonfly, Bankless, Gitcoin, Figment, Nomad, Animoca, and Hack VC to co-build the blockchain ecosystem. Visit us.

For investment and partnership inquiries, please contact [email protected].

About Huobi HTX

Founded in 2013, Huobi HTX has evolved over 11 years from a cryptocurrency exchange into a comprehensive blockchain business ecosystem encompassing digital asset trading, financial derivatives, research, investment, incubation, and more. As a globally leading Web3 gateway, HTX adheres to a strategic vision of global expansion, ecosystem prosperity, wealth creation, and secure compliance, delivering comprehensive, secure, and reliable value and services to cryptocurrency enthusiasts worldwide.

To learn more about HTX, visit HTX Square or https://www.htx.com/, and follow us on X, Telegram, and Discord. For further inquiries, please contact [email protected].