Binance VIP head says hedge funds are actively exploring arbitrage opportunities on crypto venues

Traditional hedge funds are inquiring more actively about trading on crypto platforms, drawn by arbitrage opportunities and around-the-clock liquidity, according to Catherine Chen, head of VIP and institutional at Binance.

During an interview with The Block at Token2049, Chen said funds that had previously been only curious are now "actively" showing greater interest because of arbitrage tied to traditional finance instruments on crypto venues, such as cash equities and perpetual futures. 

She pointed to improved depth, along with 24/7 trading and weekend price discovery, as practical reasons why the opportunities have become more relevant. Chen noted that liquidity was often insufficient for hedge funds when the same instruments were offered on second- or third-tier or DeFi venues.

Still, the Binance executive described the engagement as still in the early stages and said she does not expect the flow to surge overnight. "Oftentimes, once we start seeing these clues, this is when I would really watch the movement in the next 12 to 18 months. I think that's pretty exciting," she said.

Hybrid portfolio

The same kind of movement is happening on the other side of the market, Chens aid, explaining that her crypto-native clients are incorporating more instruments tied to TradFi products to build hybrid portfolios.

"Despite the fact that they're probably less active in TradFi, they still feel that it's something that they can cross, and start becoming more active," said Chen.

Volume figures Chen cited in the interview show rapid growth in TradFi instruments on Binance, though still modest relative to established traditional markets. According to Chen, cash-equity assets under management increased from roughly $800-900 million to $1.4 billion, while TradFi perpetual futures volume has risen from about $20-30 billion per month at launch at the beginning of this year to roughly $400 billion every 30 days.

Chen noted that tokenization and cross-asset trading are still at an early stage, with no single standard for traders and institutions. Regulatory clarity, she suggested, will matter more than any individual venue's product set in determining how traditional and crypto-native trading ultimately converge.

"Once a regulator comes out with a golden framework, then things just fall into place," Chen added.