Fu Peng’s Latest Speech: “My Journey with Crypto Began in 2022—We Are Now at a Historic Turning Point for the Industry”
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Fu Peng’s Latest Speech: “My Journey with Crypto Began in 2022—We Are Now at a Historic Turning Point for the Industry”
As a traditional finance professional with 25 years of experience, why do you believe the time has come to include crypto assets?
Navigating Web3 tides with focused insightsCompiled by: Yuliya, PANews
Over the past few days, many people have been frantically asking me one question: Why am I so closely engaged with the crypto industry?
In fact, this connection began around 2022—nearly four years ago. As a practitioner in traditional finance, we have consistently monitored and tracked developments across the entire crypto asset market.
Today, my purpose in delivering this speech is quite simple: I want to share a historical story. For me personally, I was one of the primary beneficiaries of the previous era’s structural opportunities. You may see my title listed as “economist,” but I am not a pure academic.
Over the past 25 years, my core professional experience—and indeed our firm’s core business—has been what you understand as traditional hedge funds. You’re likely wondering: Why are traditional capital and traditional financial professionals beginning to pay attention to crypto assets?
Over the past year and more, I’ve repeatedly emphasized one view: The future will undoubtedly be “FICC + C”—that is, traditional broad-based asset allocation (FICC) will integrate crypto assets into its framework. Many people want to know why. I’m happy to take this opportunity to share some brief insights. Once you grasp this logic, you’ll likely already have your own answers about where markets are headed and how asset prices will evolve.
Today, I’ll help lift the veil on this issue. We need to rewind time to the origin of FICC asset classes—roughly the late 1970s to early 1980s. Over the past decade, everyone here has clearly perceived that the fundamental structure and landscape of our world are undergoing massive transformations. The historical period most comparable to today’s shifts—since the end of World War II—is precisely the 1970s–1980s. For instance, Mr. Xiao Feng just mentioned artificial intelligence; other speakers also highlighted AI integration. As a major technological advancement and productive force, every leap forward in technology and productivity reshapes all industries.
“All industries” naturally includes finance. Finance is not static. It certainly isn’t what you see in TV dramas like The Greed of Man or The Wolf of Wall Street—traders in vests shouting orders on the trading floor. Or perhaps, when visiting the NYSE, you still imagine finance as people quoting prices and executing trades face-to-face on the floor. Indeed, many journalists still use such floor-trading imagery as background visuals for news reports. If you go to Chicago—the birthplace of interest-rate derivatives—or to the London Metal Exchange (LME), you’ll still see vestiges of that history. Yes—that was the most traditional form of finance before the 1960s and 1970s: traders in vests quoting prices, using typewriters and punch-card machines to process transfers, trades, and payments.
For most Chinese-speaking audiences, the image of trading may still be confined to stock exchange halls—watching price boards flip, filling out order slips, handing them over the counter, and having staff dial dedicated phone lines to execute trades at exchanges. But not all finance or trading remains stuck in that era. The greatest transformation in finance must inevitably accompany technological progress.
During the last wave of technological advancement—centered on semiconductors, computers, personal computers, DOS, Windows, and related productivity tools—the financial sector was fundamentally restructured from the late 1970s through the early 1980s. Today’s widely recognized FICC asset-class trading—essentially integrating interest rates, commodities, foreign exchange, and equities—emerged precisely in the early 1980s. In the 1970s, pricing models for financial derivatives—such as the Black-Scholes model for options—were already taught in universities. But imagine: Without the widespread adoption and deployment of computers, manually calculating the price or quote for even a single financial derivative or asset could take ten, twenty, or even thirty minutes. Under those conditions, how could we possibly achieve efficient quotation and trade execution?
It wasn’t until 1985 that professional investors and institutions began broadly adopting Bloomberg Terminals. I myself started using Reuters 3000 during the Asian Financial Crisis of 1997–1998, followed later by Reuters Eikon and Extra.
In other words, it was the arrival of computers, semiconductors, information technology, and the data age that gave rise to FICC. This enabled us to develop richer asset classes, foster cross-asset integration, enable multi-asset trading, and spawn hedge funds, algorithmic trading, and well-known funds like Renaissance Technologies’ Medallion Fund. Without this leap in productive capacity, finance might still remain stuck in the public imagination—as an era of floor traders in vests shouting orders.
During that era, J.P. Morgan became the undisputed leader in financial derivatives. J.P. Morgan hired Blythe Masters—a Cambridge graduate—who laid the foundation for both the financial derivatives market and the FICC market, transforming FICC into the most profitable revenue segment for mainstream Wall Street institutions.
Of course, all this unfolded against the backdrop of global turbulence in the 1970s–1980s. Remember this: Technological breakthroughs often originate precisely where global instability begins. At certain historical junctures, leaps in technology coexist with upheavals in global systems and order.
The 1970s–1980s witnessed the Cold War, Middle East wars, the oil crisis tied to the U.S. dollar, surging gold prices, and systemic decoupling. Yet human civilization always advances amid parallel risks and opportunities.
While global order appeared chaotic, computers, semiconductors, and information technologies surged ahead. I once joked that there existed a strangely paradoxical investment portfolio back then—one holding both “assets representing humanity’s future” and “assets hedging against humanity’s potential demise.”
Just think back—not even ten years ago, but starting roughly around 2019. Look at your own investment portfolio: haven’t you also held both “humanity’s future” and “humanity’s potential demise” assets simultaneously, right up to today?
Today, as we collectively realize that AI, data, and computing power will become the most critical productive forces of this era—and the next—our “game” is already halfway complete. And this entire first half is precisely what you recognize as the traditional “crypto industry.”
Why am I sharing all this?
Remember: Nothing remains static; everything evolves, reconstructs, and is reborn through development.
So, when we discuss entering this space—i.e., the moment of “FICC + C”—I don’t know whether this will leave a significant mark in history, akin to Blythe Masters’ legacy in FICC history at J.P. Morgan. Will this become a pivotal milestone marking the end of the early developmental phase spanning the past 10–15 years—and the dawn of an entirely new phase?
Amid this transition between phases, investors, participants, market institutions, and rules of engagement will all undergo profound change—or rather, such changes are already underway. That’s why, when speaking with reporters earlier, I said: The paradigms and mindsets you’ve grown thoroughly familiar with over the past 10–15 years may soon undergo disruptive transformation.
If you’ve worked long enough in traditional finance, you can fully anticipate what’s coming. Just as in China’s past, provincial financial regulatory offices established numerous large-scale exchanges holding substantial financial assets. Yet as compliance oversight gradually strengthened, in essence, it boiled down to natural selection—high-quality assets survived and were progressively integrated into institutional portfolios. Our entire crypto asset market is undergoing exactly the same process.
For example, today commodity trading feels routine—but before the 1980s, financial derivatives for commodities were far from widespread, and most people couldn’t meaningfully trade them at all.
- Trading copper, aluminum, lead, zinc, or palm oil feels ordinary now—but didn’t exist back then;
- Forex trading feels convenient today—but didn’t exist back then;
- Trading government bonds and interest-rate futures feels easy now—but didn’t exist back then.
Does this feel reminiscent of 2009, when China first introduced index futures and options?
If it does, you’ll understand: We’re at the same historical inflection point. Back then, technological progress drove the evolution and convergence of traditional finance into FICC; today, the same principle applies—with data and computing power as the new drivers.
Artificial intelligence—underpinned by encryption or blockchain technology—is reconstructing finance around technology as its core. Our financial industry is undergoing profound transformation, which is why we’ve closely monitored this space for years. Honestly, though, we previously did not participate—absolutely not.
I often joke that, in its early stage, this industry truly required a degree of “faith” and even a kind of “fundamentalism.” But real capital never overcommits to such “faith-based trading” in early stages. Capital only incorporates assets into its asset management framework once markets mature sufficiently to offer predictability.
Take, for example, red beans or mung beans traded in earlier markets—would major financial institutions ever include these in their asset allocations? Impossible. Yet today, copper can be structured as futures and options, packaged into ETFs, and incorporated into diversified portfolios. This process of formalization and financialization is precisely what the entire crypto ecosystem is undergoing—and the parallels are striking.
2022 marked the first year I genuinely interacted with leading figures in this space—an unexpected convergence. It began with remarks I made during a 2021 interview, when Bitcoin hovered near $70,000.
When asked for my views, I answered candidly: Within our traditional finance framework, we simply cannot yet categorize or comprehend this asset class. Because the “faith-based” narratives you describe aren’t ones we accept—we interpret things through our own lens. For instance, regarding its value-preservation function, we analyze and explain it using traditional financial frameworks and language. At that time, I believed the timing wasn’t yet ripe for our involvement.
I stated clearly: We were observing—but remained uncertain about your logic, and hadn’t yet finalized our valuation models. Still, I sensed something emerging. When the reporter asked what that “sense” was, it stemmed from the fact that financial regulators—including the U.S. Commodity Futures Trading Commission (CFTC)—had already officially classified Bitcoin as a commodity, a tradable financial asset. To me, that simplified everything—I could directly leverage this official classification to understand its asset characteristics.
I also offered a tentative prediction: If macro liquidity tightened significantly in 2022, we’d easily observe high-valuation assets across traditional markets undergoing massive “de-rating” moves. If my understanding of crypto assets was correct, they too would mirror traditional assets’ de-rating and liquidity contraction. I guessed Bitcoin would fall by half. That’s why, when it actually dropped to ~$20,000 by year-end 2022, many in the crypto community approached me—they suddenly realized: Has the era changed?
After several years of dialogue, I’ve found that many true crypto leaders resemble traditional finance leaders from decades past. In early industry phases, growth patterns tend to be rough-and-tumble.
Recall China’s early commodity futures pioneers—weren’t they all similarly rugged and self-made? Didn’t each rely on bold risk-taking—“go all-in, turn a bicycle into a motorcycle”? Yet those who truly shape the future are those who rapidly absorb new ideas and pivot decisively at the critical juncture—note: not “transformation,” but “pivot.” Those clinging rigidly to early-stage experience will inevitably fade away, one by one. As the saying goes: “The era creates you—and the era discards you.”
My personal observation is that 2025–2026 may mark the historic pivot point for the crypto asset sector. Initially, our interactions were simple: mutual learning. You explain your understanding of crypto assets; I absorb and integrate it from a traditional finance perspective, reinterpreting the concept. Simultaneously, I explain how traditional finance interprets such assets using existing frameworks and logic.
Through years of mutual tolerance and integration, we’ve already forged a new system. From our perspective—including last year’s year-end outlook—macro liquidity tightening triggered valuation compression, and the crypto space repeated the exact same story unfolding simultaneously in traditional financial markets. What does this signify? It confirms we’re on the right path. Tolerance and integration ultimately erase distinctions. Just as the traditional equity traders depicted in The Wolf of Wall Street in the 1970s–1980s eventually merged seamlessly with later FICC asset allocators, the future will undeniably be the “FICC + C” era—where clear boundaries between traditional finance and crypto assets vanish entirely.
Naturally, for traditional financial institutions, compliance is paramount. By 2025, we enter a pivotal inaugural year. Whether it’s stablecoin legislation or definitive regulatory frameworks for digital and crypto assets, the advancement of these key laws signals the market’s ultimate resolution. At this juncture, the logic becomes straightforward: In the future, you’ll witness Wall Street institutions—and legacy financial giants—rapidly entering this market. Like diversifying foreign exchange reserves, institutions will incorporate crypto assets as part of diversified reserve holdings—from singular reserve or trading assets toward diversified trading assets. Just as we added commodities, forex, and interest-rate instruments in the past, today we can likewise add crypto assets. Remember this: When such integration truly occurs, the market’s foundational logic will herald a new era—and old habits will definitively belong to the past.
Looking back historically, after the 1980s, retail investor participation in U.S. equity markets gradually declined, while institutional participation steadily rose. This institutionalization trend is an inevitable stage in any market’s evolution from infancy to maturity.
Has the crypto market reached this stage? My answer is yes. Stablecoins have already carved out the payment functionality of encryption technology (or blockchain technology) as a distinct layer. So consider this: What exactly is Bitcoin?
A reporter just asked me whether Bitcoin qualifies as “digital gold.” My following remarks may prove controversial—why? Because the answer depends on the listener’s level of understanding. If you tell me “digital gold,” I immediately grasp your intended meaning. But if you say it to a retail investor, their first mental association is physical gold. So—what is gold, really? We can only define it comprehensively: It is a tradable commodity asset possessing value-preservation functionality.
Some assets possess value-preservation attributes but lack scalability for financialization or tradability. Consider a simple example: My younger son’s Air Jordan sneakers—do they hold value? Many harbor huge misconceptions about “value.” Likewise, do collectible figurines hold value? Or Richard Mille watches?
First, if “value” refers to broad societal value, there’s no issue—emotional value and companionship value are valid forms of value. But do these items possess scalable financialization and tradability attributes? Not necessarily. Ask veteran collectors (“old-timers”) who obsess over prayer beads: Do wooden beads hold value? Walnuts? Orchids? Saying they hold no value is inaccurate—within broad definitions, they clearly do. Yet claiming they hold value in terms of financialization and tradability is equally inaccurate—because they lack those properties.
Thus, providing a complete, precise definition for any asset is crucial. Regulatory bodies have now delivered a clear, standardized definition for crypto assets. The core developmental pathway of Western financial society is unambiguous: “What is not prohibited by law is permitted.” It encourages innovation and exploration—you act first, just as we did with financial derivatives decades ago. When clients demanded options and swaps but no market or regulation existed, we simply launched anyway. Once operational, compliance evolved step-by-step, layer upon layer, maturing the market gradually. Thus, the entire history of Western finance follows the sequence: “financial innovation → regulatory alignment → maturity.” Crypto assets follow precisely the same logic.
Now you must ask yourself: By 2025, has regulatory certainty arrived? My answer is yes. In the future, you’ll see stablecoins emerge as blockchain technology’s application in transaction and payment infrastructure.
And what will Bitcoin become?
It will become “a value-preserving, financially tradable asset”—this constitutes its most comprehensive definition. Naturally, I know this definition will upset many “fundamentalists” from the prior era. But let me emphasize: This is the era’s inevitability—a full evolutionary process aligned with modern financial logic. At this stage, traditional Wall Street capital can fully engage.
A new chapter is about to begin. Will today’s speech enter the history books? Of course, I hope it does—or at least provokes thoughtful reflection. I believe this answers many people’s core question: “Mr. Fu, why has a seasoned FICC veteran like you crossed over into such a nascent industry?” My response is: Because your industry has matured to the point where it belongs in traditional investment portfolios.
That’s all I’d like to share with you today. Thank you!
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