Bitget CEO Gracy talks about UEX's transformation, the Pre-IPO boom, and the layout for the next three years

This episode of Wu's Podcast features a conversation between Cat Brother and Bitget CEO Gracy Chen, discussing the recent security incident, UEX (Universal Exchange) strategy, stock tokenization, traditional financial asset trading, institutional business, and future development.

Regarding the security incident, Gracy stated that Bitget has maintained a good security operation record since its establishment 8 years ago, and this incident stemmed from a zero-day vulnerability in third-party software. Bitget has fixed the relevant vulnerabilities, adjusted its credential management mechanisms, and re-examined the access processes for third-party software. She emphasized that exchanges must continuously improve their security systems and cannot let their guard down due to past security records.

For the future of the industry, Gracy believes that crypto exchanges are evolving from single cryptocurrency trading platforms to comprehensive trading platforms covering stocks, Pre-IPO, commodities, and other asset types. She mentioned that the subscription demand for Bitget's Pre-IPO products exceeded expectations, while stock tokenization and perpetual contracts for stocks are still in the early stages of development. Future competition will depend on liquidity, user experience, and regulatory environment. As institutional funds become an important increment, Bitget is also increasing its investment in institutional business.

Guest statements do not represent Wu's views and do not constitute any investment advice. Please strictly adhere to local laws and regulations.

$388 Million Security Incident: What Industry Issues Were Exposed by Third-Party Zero-Day Vulnerabilities

Cat Brother: Bitget has faced such a significant security incident for the first time in its eight years. What measures did you primarily take after the incident occurred?

Gracy: This incident stemmed from a zero-day vulnerability in third-party software. First, we fixed the vulnerabilities, replaced relevant functions, tightened internal credential and permission management, and restructured our security architecture. More importantly, we re-examined all third-party software used by the company and established stricter access processes for third-party products.

In the past, we believed our security system was well-built, but this issue arose from external software, indicating that third-party risks also need to be taken seriously. In the next six months, the security team, technical team, and management will invest a lot of time in improving the security system. Security construction is a long-term project. Attacks on exchanges by hackers will always exist, and the entire team needs to remain vigilant.

UEX Transformation: From Cryptocurrency Assets to Global Financial Markets

Cat Brother: Bitget has experienced multiple bull and bear cycles over the past eight years. If you had to choose the most important strategic decision from the past year or two, what would it be?

Gracy: I would choose UEX, which stands for Universal Exchange strategy. We proposed this concept about a year ago and began laying out tokenized stocks, Pre-IPO, and other traditional financial assets. Looking back now, this direction has achieved good results. Some Pre-IPO products are scarce and have attracted users who previously did not trade on Bitget. Over the past year, the trading volume and activity of tokenized U.S. stocks have also been relatively high.

Previously, if crypto users wanted to purchase U.S. stocks, they needed to first convert their cryptocurrency into fiat currency and then transfer it to a traditional brokerage account for trading, involving multiple deposits and withdrawals, fees, and platform switches. Now users can trade cryptocurrencies, commodities, stocks, as well as perpetual contracts and options on Bitget, while continuing to use stablecoins as their main funding tool. I believe this is not a short-term narrative but a long-term transformation of crypto exchanges.

In the future, the product boundaries between crypto exchanges and traditional securities brokers and financial trading platforms will become increasingly blurred, allowing users to configure different types of assets within the same account.

Cat Brother: When you decided to transform into UEX, were you already certain that this direction would succeed?

Gracy: Actually, we were not certain. We just started from our own investment portfolio management needs and believed that trading different assets within one account was reasonable. However, there were regulatory concerns at the time, and we were unsure whether crypto users truly needed these products.

Early market solutions for tokenized stocks were quite limited, such as Ondo and xStocks. This year, we launched our own Reality product, hoping to provide a better experience in terms of liquidity, dividend handling, and make the product closer to real U.S. stock trading.

From the current user data and competitors' product layouts, it is clear that traditional financial assets are indeed becoming an important development direction for crypto exchanges.

Pre-IPO Demand Exceeds Expectations, Different Stock Products Meet Different Users

Cat Brother: After Bitget launched Pre-IPO and stock tokenization products, did market demand exceed expectations?

Gracy: Overall, it indeed exceeded expectations. The subscription scale of the first two rounds of Pre-IPO products reached three to five times the available shares. Our model is to hold the corresponding Pre-IPO stocks through an underlying SPV and then tokenize them one-to-one based on the actual holding quantity.

Therefore, the shares that can be issued depend on the underlying actual assets held and cannot be increased indefinitely. We originally thought there would be a certain demand for these products, but the actual subscription situation was significantly better than expected. If we initially expected the product to score 60, the market feedback might have reached 80.

Cat Brother: Bitget now offers stock direct connections, tokenized stocks, perpetual contracts for stocks, and options. Why do you need so many different products?

Gracy: Because different users have different needs. Crypto users are accustomed to using stablecoins to trade on-chain assets, so they find it relatively easy to understand tokenized stocks. They can purchase tokenized U.S. stocks like Nvidia just as they would buy Bitcoin. Reality publishes asset proofs daily, with the underlying assets held by licensed institutions, allowing users to understand the corresponding asset support situation. However, traditional brokerage users may not care about blockchain technology and do not want to study the tokenization mechanism. They are more concerned about whether they truly own the stocks, whether they have voting rights, and whether they can attend shareholder meetings.

Therefore, we added stock direct connection products to meet the needs of this segment of users. Options are mainly aimed at more professional traders. They are not satisfied with simply buying and selling spot or contracts and want to use more complex trading strategies. For example, Duan Yongping is an investor who frequently uses options. So these products are not mutually exclusive but serve different types of users.

Stock Perpetual Contracts: Concentrated Liquidity and New Price Discovery Mechanisms

Cat Brother: Currently, the trading volume of stock perpetual contracts is highly concentrated in a few popular assets. Will this situation change in the future?

Gracy: I believe the Matthew effect will always exist. For example, the top ten assets may account for half of the trading volume, and the top thirty assets may account for eighty percent. Of course, these are just examples, and the actual proportions may vary, but the trend of concentrated liquidity in leading assets will not disappear. Stock perpetual contracts themselves are still very new products, even in the U.S. market. In the past, stocks were mainly regulated by the SEC, while perpetual contracts, as derivatives, involved the CFTC. Now that the two are combined, there is still discussion about how to divide regulatory responsibilities.

However, we have already observed an interesting phenomenon: some stock perpetual contracts are beginning to exhibit price discovery functions, and may even form market prices earlier than Wall Street. Especially for some AI companies that have not yet gone public, the crypto perpetual contract market has already been able to form market expectation prices in advance. This means that crypto trading infrastructure is entering the traditional financial sector and beginning to play new roles.

How U.S. Regulation Will Affect the Development of Stock Perpetual Contracts

Cat Brother: If U.S. regulation gradually clarifies and traditional exchanges also start to offer similar products, how much time window do crypto exchanges have left?

Gracy: I believe there is an important window, but how long it lasts depends on U.S. regulation and the pace at which traditional financial institutions push forward. If traditional trading platforms like the New York Stock Exchange and Nasdaq do not quickly follow up with stock perpetual contracts, then crypto platforms have the opportunity to lead this market for a period of time, even forming price discovery advantages for certain assets.

However, if institutions like Nasdaq quickly launch similar products, crypto exchanges will need to rethink their competitiveness. At least for now, the crypto market has already provided a new pricing venue for some Pre-IPO stocks. This change has already begun to appear around the IPOs of some AI companies this year, and I believe it is worth continuing to pay attention to.

Why Institutional Business Has Become a New Growth Focus for Exchanges

Cat Brother: Bitget has primarily focused on retail business in the past. Why is it now placing more emphasis on institutional clients?

Gracy: There are two reasons. First, from the overall market perspective, institutional funds are becoming an important increment, and the proportion of institutions in trading volume and capital scale may continue to increase in the future. Second, Bitget has performed relatively well in the retail market, but there is still significant room for improvement in institutional services.

Currently, the dedicated institutional team has more than thirty people, and we have also hired a new head of institutional business. If we include management and other departments involved in institutional client services, the company may have over three hundred people participating in related work. This means we are increasing our investment in institutional business from an organizational structure perspective. However, retail clients remain very important.

There is a mutually reinforcing relationship between retail and institutional clients: without retail clients, institutions lack sufficient trading demand; without institutions providing liquidity, the trading experience of retail clients will also be affected. Therefore, we do not want to serve only institutions, but hope to create a virtuous cycle between the two types of clients.

Bitget's Outlook for the Next Three Years

Cat Brother: Looking ahead to the next three years, what kind of platform do you hope Bitget will become?

Gracy: We still hope to focus on trading, but the trading products will be richer, no longer limited to cryptocurrency assets, but covering more traditional financial markets along the UEX strategy. We have already begun to integrate different assets through UTA (Unified Trading Account), allowing users to share margin across products and improve capital utilization efficiency. But this is just the first step of the UEX strategy.

In the next three years, we hope to have more global users using these products and further improve the entire trading system. The U.S. market is also an important target. We are gradually advancing relevant licenses and hope to obtain more U.S. licenses and officially enter the U.S. market in the next three years.