Questions & Alpha with Spencer Hallarn

Questions & Alpha with Spencer Hallarn

Authored by Frank Chaparro, Head of Strategic Communications, GSR

Questions & Alpha is GSR's interview series spotlighting the leaders behind our business. Each conversation offers an inside look at how our team thinks about markets, trading, and the future of digital assets.

In this edition, Head of Strategic Communications Frank Chaparro sat down with Spencer Hallarn, Head of Markets at GSR, to discuss:

• Why the market has slowed as capital rotates into AI
• Client demand for hedging and real-world assets
• Building the bridge between TradFi and digital assets

Frank Chaparro: How would you describe today's crypto market?

Spencer Hallarn: It's a slow market right now, and that's not unusual — activity tends to track price and market cap pretty closely, so when both are subdued, so is trading volume. A big part of what's pulling attention and capital away from crypto is artificial intelligence. It's the defining technology story of this moment, and investors are treating it that way. The scale of capital being raised to fund AI infrastructure, including the equity big tech companies are issuing to pay for it, is tightening liquidity across markets more broadly, and crypto is feeling that pull.

Frank Chaparro: What are you hearing from clients in this environment?

Spencer Hallarn: In a down market, clients get disciplined. We're seeing a lot more focus on long-term budget planning and treasury hedging — projects want to make sure they have runway to cover dollar-denominated expenses regardless of where the market goes, and that's driving real demand for OTC hedging structures. The other big theme is real-world assets. Exchanges are no longer thinking of themselves as crypto-only venues. They're expanding into equities, sports gambling, and other asset classes, and that diversification is reshaping what clients need from a partner like us.

Frank Chaparro: How is GSR evolving alongside that shift at the exchange level?

Spencer Hallarn: The lines between crypto, equities, and other trading products are blurring, and we have to evolve with our exchange partners rather than stay still. We don't currently have the regulatory setup to trade securities bilaterally, but we're fielding real inquiries in that direction, and it's clear the world is converging. I'd actually frame tokenization less as a new trading product in its own right and more as a challenge to how traditional banking and settlement rails work today. The bigger opportunity is in fixing the plumbing, not just wrapping an asset in a token.

Frank Chaparro: You've been vocal about some skepticism on tokenization. Where does that come from?

Spencer Hallarn: I think there's a gap between the narrative and the actual usage data. Perpetual derivatives and leveraged products already do enormous volume — that part of the market works. But a lot of the tokenization platforms built as walled gardens, with heavy KYC requirements, just aren't seeing meaningful transaction activity. That makes me ask a genuine question: what is the product actually for, and who is it serving, if the volume isn't there? Carlos and I have talked about this too — liquidity is fragmented across these walled gardens and various alternative trading systems, and right now most participants would rather get their exposure through leveraged products or spot tokens. Zero-knowledge technology could eventually make identity verification less of a bottleneck, but that's a future state, not where the market is today.

Frank Chaparro: So how is GSR positioning its own infrastructure for what's coming?

Spencer Hallarn: We're building the piping now so we're ready regardless of how this plays out — price feeds, trading capabilities, the connective tissue between traditional finance and the crypto ecosystem. Exchanges and other providers are actively looking for market-making support as they expand into new asset classes, and we want to make sure we have the infrastructure in place to be that partner.

Frank Chaparro: How portable are GSR's market-making strategies outside of crypto?

Spencer Hallarn: Quite portable, honestly. The core discipline of market making doesn't change much when you move from crypto into commodities or securities — the nuance is really in how each instrument is designed and how the existing market structure works. Where I see the strongest opportunity is in shifting hedging venues away from crypto spot markets toward the underlying equity or futures markets. That's a real opportunity set, and it plays directly to strengths we've already built.

Frank Chaparro: What would it take to see a bull run return?

Spencer Hallarn: A lot of that comes down to macro. If AI-related investment cools off and the Fed starts cutting rates, liquidity should come back into the system, and that's the kind of environment that could support another Bitcoin move higher. I'm less certain about how smaller, lower-cap coins participate in that — at some point, the space needs to deliver on the use cases that have been promised for years in order to sustain value over the long term. But I remain constructive on where this goes. The fundamentals of the business — clients need liquidity, hedging, and execution regardless of where we are in the cycle — haven't changed, and GSR is positioning itself to serve that need across a much wider set of markets than we did a few years ago.

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