HashKey Capital CEO Deng Chao's conversation with Cathie Wood: Hong Kong regulators have played a very good leading role

Guests of the Talk:

Deng Chao, Head of HashKey Singapore, CEO of HashKey Capital

Cathie Wood, CEO and Chief Investment Officer of ARK Invest

The 2024 Hong Kong Web3 Carnival officially opened this morning. In a roundtable discussion, ARK Invest CEO and Chief Investment Officer Cathie Wood and HashKey Singapore Head HashKey Capital CEO Deng Chao (hereinafter referred to as "DC") talked about Bitcoin ETFs, crypto regulation, AI, and more. Below is the transcript.

DC: Good morning, everyone! (Regarding today's roundtable discussion) I feel a bit of pressure, but I am also very happy and excited. I come from HashKey Capital, and our company is a leading institutional investor in the Web3 industry, with assets under management (AUM) exceeding $1 billion and over 500 invested projects. We officially started operations in Singapore in 2015. Today, we have invited Cathie Wood, who has many years of experience in the investment field. I am very pleased she could join us. Before we dive into the discussion, I would like to ask Cathie if she would like to say hello to everyone.

Cathie Wood: I am very happy to participate in today's roundtable discussion. I regret that I cannot be there in person, but I am honored to be invited to today's conference. I just heard many inspiring talks from Hong Kong officials and important leaders, which has encouraged me greatly. I hope I can bring some perspectives and insights from the U.S. today.

DC: The guests we have invited today are all experts from the blockchain ecosystem and fintech fields. Cathie will provide us with predictions about mainstream trends and the latest developments. I would like to ask, what has been Ark Investment's overall direction in the past few years? How will it continue to influence individual businesses or people in the blockchain space in the future?

Cathie Wood: That’s a big question. Over the past few years, we have seen Bitcoin and blockchain technology gradually mature, which I think is a very grand concept. Why do I say it’s a grand concept? Because the internet financial system based on Bitcoin is interconnected, and the entire system was not considered during the early days of the internet in the 1990s.

Now, e-commerce and various aspects of the financial system are beginning to be influenced by Web3. The most significant impact we see now is that many developments are still in very early stages. It is a market that requires global collaboration and crosses borders, reaching everyone. As long as there is internet access, anyone can become a part of it.

What is exciting today is that Web3 is slowly taking shape, similar to the inventions of the telephone and television in the last century. Through technology, we can significantly enhance productivity and income, and there are better ways to live, allowing everyone to enjoy life and personal time more fully, greatly increasing efficiency while awake.

From a 30% to 40% share in 2010, we will make better allocations in larger quantities over the next 5-10 years. Digital assets have gradually moved into the mainstream over the past few years. Besides Bitcoin, there are other "digital assets" that can perform well not only in bull markets but also help us hedge risks. In the past, regional banks did not perform well during crises, while Bitcoin grew by 40%. This year, we have seen currencies in developing countries depreciate significantly, while Bitcoin's value has shown a continuous upward trend. More individuals around the world are understanding the true significance of Bitcoin, which has very resilient and anti-devaluation characteristics.

DC: Next, let's continue discussing AI. AI is currently a hot topic in Silicon Valley and has also attracted widespread attention in Hong Kong. How do you think AI will integrate with blockchain technology in the future, and what impact will it have in Web3?

Cathie Wood: That’s a great question. We have a Bitcoin brainstorming session every month, and we also shared a podcast discussing the integration of AI and Bitcoin. We believe that everyone will learn about the so-called internet economy, whether it’s Uber or Airbnb, which have flourished in Asia. In the future, people will gradually see its benefits, especially in developing countries like Africa, where it will bring about rapid changes.

We also see that blockchain technology and gaming will be increasingly driven and promoted by AI technology, which is a very interesting field. Recently, I saw news about Sony's investments in gaming and Polygon's investments in blockchain, indicating that more and more funds will be injected into this area.

For example, NFL's NFL Rivals and Polkadot will see more gaming projects integrating AI technology and blockchain technology, creating more interesting products. NVIDIA has been seriously developing this area since 2014, and we can see successful cases of NVIDIA's GPUs integrated with gaming. I am very confident that this will definitely be a major area of development in the future.

The core spirit of AI is to provide us with faster processing capabilities, and gaming is always at the forefront of the times. The results manifested in the gaming field are imminent.

I previously attended a well-known conference in Miami focused on Bitcoin, where I discussed how more and more people will invest in virtual markets and combine it with existing creativity, rather than just engaging in pure virtual currency trading. In "F1," we can see that more and more blockchain technology will be injected, and more users will join us.

DC: Now let's turn our focus back to virtual assets. Once again, congratulations on the successful launch of Ark Invest's Bitcoin spot ETF. What do you think is the most important milestone for the digital asset ETF industry? Is it when the ETF exceeds $5 billion? Or are there any clear growth indicators that can serve as milestones?

Cathie Wood: Many people are surprised that Europe has been able to trade for the past five years, but they have never experienced the sudden surge like in the U.S. In the U.S., there are always many dramatic events happening. As everyone knows, there have been recent lawsuits in the U.S. From a regulatory perspective, U.S. regulatory agencies like the SEC are very resistant to anything related to crypto or virtual assets. However, these lawsuits have taken us a significant step forward, gradually helping U.S. regulators understand that virtual currencies and Bitcoin can be traded safely and can be regulated to some extent. They approved a total of 11 ETF projects, which has never happened before and is a historical first. Therefore, we are doing our utmost to market and educate investors, providing them with more training to help them better understand how to operate within this space.

In the U.S., many clients are beginning to realize that even completely different asset categories can be invested in, and more institutions and investors are willing to put real money into this space because this asset class can hedge against other areas and is not correlated. Of course, Bitcoin also carries risks and experiences bull and bear markets, but unlike other currencies (like gold), it can be decoupled from many factors. How can Bitcoin stand alone with its own trajectory? Because it has asset independence, if you include it in your asset portfolio, it can increase asset returns and spread more risk due to its lack of correlation with other assets. For low-correlation products, there is great interest among certain U.S. investors who are willing to try.

DC: Yes, it is very encouraging to see an open and transparent government leading industry development in Hong Kong, along with many good policies. I would like to hear your advice on the Asian Web3 community. What recommendations do you have for regulators, investment institutions, and the Asian and Hong Kong markets?

Cathie Wood: I think you are doing an amazing job. The Hong Kong regulatory agency, such as the SFC, has done very well in providing a comprehensive management framework that allows virtual asset products to be traded, along with many methods and mechanisms for institutional regulation. Regulatory transparency is crucial for industry development and technology advancement, giving technology development more confidence.

Hong Kong is very different from the U.S.; it is much faster in its development. I often mention this in global financial conferences. In terms of policy, Hong Kong is a "leader," very encouraging of innovative technology development and entrepreneurial investment, and the collaborative system with the government provides a great model for institutions.

Even though there are many uncertainties in the U.S., we see how Hong Kong has tokenized many asset currencies and how quickly it responds to market demands. For us, it serves as a very good reference. The Hong Kong regulatory agency has played a very good leading and exemplary role, allowing businesses to develop globally with such confidence. I am very happy and congratulate Hong Kong on its development.

Before we started, I mentioned my admiration and heard other Hong Kong officials propose very good policies. For us, it is a very good learning opportunity, which is important, and it is my sincere opinion because a healthy and stable environment is crucial for the development of innovative technology industries, for investors, and for consumer protection.

I also encourage the U.S. to emulate this. The U.S. is currently facing regulatory uncertainty and talent outflow in the blockchain field. If regulators can treat practitioners better, providing them with more clarity and freedom, we will see better results.

My suggestion is to leverage your regulatory experience to provide entrepreneurs with better opportunities for global expansion.

DC: Thank you, Cathie. I have one last question worth "a million dollars," which is also a concern for everyone present: how will the price of Bitcoin develop? After hearing many numerical predictions, I would like to hear your opinion. Some say $1.5 million, others say $2.3 million, and some say $3.8 million for one Bitcoin. Cathie, what is your current prediction? What will the timeline be?

Cathie Wood: I have been asked this question from different angles. Our analysis from multiple perspectives indicates that Bitcoin will reach $1.5 million by 2030. This price prediction comes from a survey about institutions, using a downward adjustment rate and volatility analysis. Previously, the price prediction for Bitcoin in 2030 was $600,000, but the approval of the Bitcoin spot ETF will drive the price of Bitcoin to $1.5 million by 2030.

If I had given you this number last year, it might have been closer to $600,000. Why did I raise the number from $600,000 to $1.5 million? Because the SEC has given the "green light" for mainstream institutions to approve the issuance of the Bitcoin spot ETF. If you allocate assets based on modern portfolio theory, a 5% allocation to Bitcoin would yield an estimated figure of $1.5 million because we believe investment institutions will move in that direction.

DC: Thank you, Cathie, for sharing the $1.5 million price estimate for each Bitcoin. That concludes our roundtable discussion. Thank you, Cathie, for providing us with insightful and interesting live discussions. Goodbye, everyone, and let's give another round of applause for Cathie.