Dialogue with Xiao Feng: The Cold Reflection Behind the Hong Kong Stablecoin Craze, Compliance Will Become the Key to Industry Development

2025-08-01 14:12:06

Collection

Although stablecoins in Hong Kong are popular, regulatory authorities are very cautious about this topic, which is a huge gap.

Organized & Compiled by: Deep Tide TechFlow

Guests:

Xiao Feng, Chairman and CEO of HashKey Group

Hosts:

Liu Feng, @Web3101cast Host, Partner at BODL Ventures, former Editor-in-Chief of ChainNews

Hongjun Jane, Founder of Silicon Valley 101, Podcast Host

Podcast Source: Silicon Valley 101 Podcast

Original Title: E202｜Dialogue with Xiao Feng: In the Boiling Moment of Hong Kong Stablecoins, Some Cool Reflections Returning to Common Sense

Broadcast Date: July 31, 2025

Key Points Summary

At the moment of Hong Kong's stablecoin licensing, stablecoins and RWA have become super popular terms in the Chinese-speaking world. Dr. Xiao Feng, Chairman and CEO of HashKey Group, known as the "Godfather of Blockchain in China," shared with us some cool reflections returning to common sense regarding this trend.

Highlights of Insights

Hong Kong's regulation of stablecoins is surprisingly strict.
Stablecoins were not created for payment.
The mainland will start by accepting stablecoins and then the entire Crypto. The mainland discusses stablecoins from the perspective of major currency competition; Hong Kong is more concerned about anti-money laundering loopholes.
Crypto performs better than traditional finance in anti-money laundering.
Consortium chains are not feasible; stablecoins on consortium chains will not succeed.
Most successful applications arise in an unpermissioned state.
Hong Kong may once again become the world's center for digital asset trading.
Singapore positions itself as the Switzerland of Asia, while Hong Kong positions itself as the Wall Street of Asia.
Next year will be a period of rapid growth in traditional financial markets embracing cryptocurrencies.
The underlying protocol of blockchain is decentralized, but the application layer must be centralized.
Although Hong Kong's stablecoins are hot, regulatory authorities are very cautious about this topic, which is a huge gap.
In Beijing, two points of consensus are gradually forming. The first consensus is that in the face of the global wave of legislation and compliance regarding Crypto, stablecoins, and blockchain led by the U.S., China cannot continue to turn a blind eye; the second consensus is how to respond. If China forever turns a blind eye and does not accept these new things, it may fall behind in the competition of national currencies.
By this time next year, we may be discussing RWA, and the mainland may begin to accept asset tokenization. After RWA, the next step may be to accept Bitcoin.
Once you start accepting stablecoins, you must accept public chains; otherwise, your stablecoins will lack global competitiveness, and issuing them will be pointless.
RWA has three stages: the easiest is the tokenization of fiat currency; the second stage is financial assets; the final stage is the tokenization of physical assets.
Currently, the market interprets stablecoins from a monetary perspective, lacking reflection on the underlying logical changes.
All tokens will not exist without technology, accounting methods, and financial infrastructure.
Hong Kong's stablecoin legislation for licensed issuers is fundamentally related to anti-money laundering.
In the future, stablecoins will become a measure of value in the virtual and digital worlds and will serve as a medium of exchange for all virtual and crypto assets.
Exchanges are striving to build very good liquidity for any trading pair; constructing any liquidity pool incurs costs that need to be amortized.
Hong Kong has become the darling of capital markets for two reasons. The first factor is the emergence of DeepSeek, and the second is that due to Trump's policies, traditional alliances have weakened, and everything has turned into business.

Calm Reflections Amid the Frenzy of Stablecoins and RWA

Liu Feng:

I can now see that in all Chinese-speaking areas, whether in Hong Kong or the mainland, stablecoins have become a hot topic. Could you please briefly explain to our audience why everyone is so concerned about Hong Kong's stablecoin regulations? Additionally, if possible, could you highlight the key points that are particularly noteworthy in Hong Kong's regulation of cryptocurrency and digital assets?

Dr. Xiao Feng:

I personally feel that the hype is a bit excessive. A few days ago, I was having coffee with friends in a hotel café and noticed that several tables around me were discussing stablecoins. Recently, we also had a discussion with officials from the Hong Kong Monetary Authority about stablecoins, and the officials repeatedly reminded us that the stablecoin sector is too hot, and Hong Kong will not issue many licenses.

The issuance of stablecoins in Hong Kong will be very strict in the initial stage; not only will the licensing be strict, but the regulation will also be very strict, especially regarding the use of stablecoins for anti-money laundering. August 1 is merely the date the Hong Kong stablecoin bill takes effect, but it does not mean that everyone can start applying for stablecoin licenses in Hong Kong from that date. Although there are rumors in the market that dozens or even hundreds of companies are applying, I believe that very few applications will actually be accepted by the Monetary Authority. The main concern is the background of each applicant, especially their financial risk management background and experience and capability in anti-money laundering.

Hong Kong is an international financial center with decades of experience, so its regulatory authorities, whether the SFC or HKMA, are very sensitive to trends in the international financial market, which is a significant contrast to the mainland. The mainland interprets stablecoins, especially offshore RMB stablecoins, more from a monetary perspective, from the angle of major currency competition, and from the perspective of U.S. dollar hegemony. However, Hong Kong is different. I initially thought that if so many institutions, people, and money from the mainland were willing to come to Hong Kong to build, issue, or use stablecoins, it would be a huge benefit for Hong Kong as an international financial center. The impression I got from Hong Kong's regulatory authorities is that their primary concern is whether the issuance of stablecoins will lead to regulatory gaps due to leaving the banking account system. In fact, currently, financial regulatory authorities lack regulatory means for the circulation of stablecoins after minting.

Thus, Hong Kong is more concerned about whether there will be loopholes in anti-money laundering. As an international financial center, if Hong Kong is criticized by other major international financial centers for its anti-money laundering efforts, it will have a significant impact on Hong Kong's reputation as an international financial center. Conversely, this may be completely different from everyone's perception; Hong Kong is hot, but the regulatory authorities are very cautious about this topic, which is a huge gap.

Reflecting on the Journey: Cold Reception from Hong Kong Regulators

Liu Feng:

You have been advocating for transparent and standardized legislation for digital assets in Hong Kong for many years. Could you share your thoughts on why, despite Hong Kong being a global financial center fully embracing digital assets and cryptocurrencies, there are still many concerns and a very cautious attitude? How do you view this contrast, and the different attitudes over the years, from past criticism and rejection to what seems like an open embrace now?

Dr. Xiao Feng:

I can share a story from my own experience that illustrates the issue you just mentioned. HashKey was established in Hong Kong at the end of 2018 because stricter regulatory measures were implemented in the mainland in 2017, so we moved this business to Hong Kong, which is legal and compliant. In early 2019, I visited the Hong Kong Securities and Futures Commission to apply for a license for a crypto exchange. The official who received me said, "Mr. Xiao, you don't need a license to open a virtual currency exchange in Hong Kong; it's not illegal. You can just turn left when you go out and open one."

I heard the same thing again in 2022 when I visited the Deputy Director of the Hong Kong Monetary Authority. I said we wanted to apply for a stablecoin license in Hong Kong. The Deputy Director replied, "Mr. Xiao, it's not illegal to issue stablecoins in Hong Kong, and we have no authority to regulate you." I told him that we had already invested in a stablecoin company in Hong Kong, but it couldn't continue because no bank in Hong Kong dared to provide us with services related to stablecoins, and customers could not have normal fiat currency inflows and outflows.

Why did these two officials say the same thing? Because Hong Kong follows the Anglo-American legal system, where the first principle is "what is not prohibited by law is allowed." Therefore, in 2019, there was no law regarding crypto in Hong Kong, and you could do anything; setting up an exchange was not prohibited by law. At the same time, both institutions (the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority) said they had no authority to issue licenses or regulate you because the second principle in the Anglo-American legal system is "what is not authorized by law is not allowed." If you open an exchange on the street, they have no authority to investigate you.

I jokingly said, "So does that mean no one is watching me in Hong Kong?" He replied, "Not that no one is watching; the Commercial Crime Investigation Department will monitor you. Although what you are operating is not a security, it is at least considered a commodity, and consumer protection is monitored."

Indeed, the industry often talks about the high compliance costs in Hong Kong, and that it is not profitable to do this there. Compliance does have costs, but there is a certain rationale behind those costs. After all, we are engaged in an emerging financial industry, and the new finance brought by financial technology has strong externalities. Over the past few hundred years, a set of rules has gradually accumulated to protect investors and consumers, and these rules will inevitably bring operational costs.

If our industry is unwilling to bear these costs, it may never grow. If you envision this as a market worth $10 trillion, $50 trillion, or even $100 trillion, there will inevitably be constraints on external effects that you must bear.

New Hope: "The Mainland Will Start by Accepting Stablecoins and Then the Entire Crypto"

Dr. Xiao Feng:

So up to now, my view is that since 2017, when the mainland began to restrict, regulate, and even prohibit certain crypto-related businesses, I have been pondering a question: When and where will the mainland start to re-accept these? For the past few years, there has been no answer. Recently, I feel I have found the answer because I attended many internal seminars in Beijing, which were influenced by the stablecoin legislation in Hong Kong and the U.S.

Most discussions in the mainland occurred after the stablecoin regulations were passed in Hong Kong on May 21, and subsequently, the U.S. has been vigorously promoting related legislation, which has sparked much discussion in Beijing. In these discussions, I suddenly had a realization: The mainland will start by accepting stablecoins and then move on to accept the entire Crypto.

During this time, I participated in many discussions that lasted for a month and a half. Although as of Sunday, there are still differing opinions in Beijing, two points of consensus are gradually forming. The first consensus is that in the face of the global wave of legislation and compliance regarding Crypto, stablecoins, and blockchain led by the U.S., China cannot continue to turn a blind eye, nor can it fail to take countermeasures. The second consensus is how to respond. As my friends in Beijing put it, "Should we engage in the Huaihai Campaign?" This question has been settled; we must engage. How to engage? Is it a small engagement or a large one? Which corps should we eliminate first? The current discussions revolve around this issue. I felt that the mainland would start accepting from here because if China forever turns a blind eye and does not accept these new things, it may fall behind in the competition of national currencies. I believe that the higher-ups in China have recognized this issue, which is why there was a recent speech by former central bank governor Zhou Xiaochuan at the Lujiazui Forum, warning about the impact of U.S. dollar stablecoins on the dollarization of the international monetary system.

This is clearly viewed from the perspective of national currency competition regarding U.S. dollar stablecoins, and China clearly cannot ignore it. At the same time, I predict that this is akin to the saying "where there is the first day of the month, there will be the fifteenth." Once you start accepting stablecoins, you must also accept public chains; otherwise, your stablecoins will lack global competitiveness, and issuing them will be pointless.

What might come after accepting RWA? I believe that by this time next year, we may be discussing RWA, and the mainland may begin to accept asset tokenization. After all, RWA shares the same attribute as stablecoins: it can support the real economy. Things that can support the real economy are relatively easier for mainland officials, regulatory authorities, and the government to accept. Once you accept RWA next year, you will inevitably have to consider the possibility of accepting Bitcoin in the future.

Challenges to China's Embrace of Digital Assets: Increase in Fraud

Liu Feng:

You have outlined a potential route for how we might truly embrace blockchain and digital assets in China in the future. It sounds like it starts with stablecoins to understand this technology, driven by the necessity of major currency competition, leading everyone to first embrace stablecoins, which do not seem particularly crypto, and then gradually embrace trends like RWA that utilize blockchain technology for tokenization but can support the real economy. Further down the line, we may find ourselves compelled to embrace broader technology centered around blockchain, or some product forms, business models, and financial innovations.

I want to ask, what challenges do you think might arise in this process that could affect this promising outlook?

Dr. Xiao Feng:

I believe the challenges come from two aspects.

On one hand, indeed, whether it is the EU, the U.S., or some economically developed countries, or international anti-money laundering organizations, the Financial Stability Board of the Bank for International Settlements has expressed concerns to Hong Kong about the vigorous promotion of stablecoins, especially RMB stablecoins. Stablecoins may facilitate oil trade between China and countries like Russia, Iran, and Venezuela, as these countries are under UN sanctions.

Previously, if fiat currency channels were relatively cumbersome, they could still be monitored, but if stablecoins are used outside the banking system and SWIFT, they become completely disconnected from the entire financial regulatory framework established by the West. This pressure is something they have already begun to pay attention to, and I believe they will continue to exert pressure. However, there is indeed a demand for issuing offshore RMB and stablecoins.

The second aspect is that we have already seen some signs. Recently, stablecoins have become hot in the mainland due to the situation in Hong Kong, and sometimes Beijing is even hotter than Hong Kong, leading to an increase in fraud and scams. In fact, there is now a trend of pyramid schemes and scams under the guise of stablecoins, which is not just happening in one province but in many economically developed regions. Therefore, we see news reports of financial regulatory authorities in different provinces in the mainland continuously issuing warnings; this trend is indeed something to be wary of. I often remind myself not to add fuel to the fire. We all clearly remember the ongoing rectification of internet finance; we must not fall into the state of continuous rectification of internet finance, as this would severely delay the mainland's acceptance of these stablecoins or RWA. The current trend is indeed quite severe, which brings pressure to the mainland because for regulatory authorities, if they have not seen positive situations, the first thing they see is the rampant fraud cases in the mainland, which will clearly slow down their pace.

Rethinking the Three Stages of RWA (Real World Assets): Tokenization of Fiat Currency; Tokenization of Financial Assets and Tokenization of Physical Assets

Liu Feng:

For innovative applications like RWA that utilize new blockchain technology to promote the development of financial innovation, you also mentioned that it might lead to some fraudulent activities. Could you share what you think are the correct, promising, and truly valuable scenarios or directions for utilizing blockchain technology to do applications like RWA?

Dr. Xiao Feng:

I refer to RWA as asset tokenization, and I divide it into three stages. The first stage can be traced back to 2014, which is the tokenization of fiat currency represented by USDT. The second stage should start from 2024, with the tokenization of financial assets as companies like BlackRock, Fidelity, and Franklin Templeton turn their dollar bond funds and dollar money market funds into tokens on-chain.

However, most people in the market are interested in discussing the tokenization of physical assets. I believe that the tokenization of physical assets still has a core issue that has not been resolved, which is the oracle problem. How can you ensure that an off-chain physical asset corresponds one-to-one with its digital twin on-chain and remains anchored to ensure the existence of the off-chain asset?

Currently, there is no good solution for this technology. DePin is considered a potential solution. DePin has been a premature baby; it has been around for 20 years without finding an independent business model. DePin may be a solution for the tokenization of physical assets in the future, but the technology is not yet mature, so the tokenization of physical assets will require a longer path. If it is to be widely promoted or accepted, the oracle problem must be solved.

The three stages flow like water, from easy to difficult. The easiest is fiat currencies like the U.S. dollar, euro, and RMB, which have a very simple trust backing that everyone recognizes.

The second step, from the perspective of trust backing, is financial assets, which are easier to digitize and tokenize. Their issuers and custodians are licensed financial institutions that are subject to strict regulation, making the process easier.

Tokenization of physical assets is a very difficult task. I do not believe that a good solution has been found yet; I think it still needs time.

Therefore, I now advise those interested in RWA to first turn physical assets into financial products, and then tokenize them based on those financial products. For example, if a gold miner tells me he produces 8 tons of gold each year, I would not believe it. But if you produce this gold according to financial standards, specifying what kind of gold bars can serve as collateral or anchor assets for currency, that has standards.

Once that is done, a licensed financial institution can issue a gold fund or gold ETF, with these gold bars stored in a vault by a reputable bank, which acts as the custodian of these gold assets. The custodian issues instructions to us, indicating that it has received gold that meets the standards, and then helps mint a token that circulates on-chain; this may be the best solution so far.

Liu Feng:

This makes it very easy to understand and deliver when issuing tokens. What you mentioned suggests to us that although RWA refers to so-called real-world assets, not all real-world assets can simply be mapped onto the chain. Instead, there should be a very standardized process in the early stages, first being verifiable and auditable, and secondly, as structured as possible. This will make it easier to circulate in future transactions, and both parties will find it easier to reach agreements, which is an effective process for doing RWA.

However, I feel that in this process, the so-called RWA is not creating a new asset; it is merely transitioning from physical to the original financial ledger and then to the chain. This sounds more like a very simple use case of using blockchain to complete the settlement and transaction process, which in itself utilizes the real-time settlement and consensus of blockchain or crypto.

Returning to Common Sense: What Problems Does Blockchain Really Solve?

Three Transformations of Human Accounting Methods

Liu Feng:

So the core of RWA is not issuing tokens or assets, which brings us back to what you have been advocating for over the past decade: why you believe that blockchain and the crypto digital assets attached to it represent a true financial innovation for the future.

Could you take a moment to tell everyone the fundamental reasons why we need blockchain over the past decade or even longer?

Dr. Xiao Feng:

In fact, including the recent discussions about stablecoins, people are looking at it from a macro perspective, interpreting stablecoins from a monetary angle, lacking an understanding of the underlying logic or technological foundation. Whether it is stablecoins or all tokens, they are based on a new technology. This new technology is primarily based on blockchain's distributed ledger, which itself is an update to human accounting methods.

Human accounting methods have undergone three transformations. The earliest counting method can be traced back to 3500 BC, in the Sumer region, now Iraq. A clay tablet dating back 3500 years was unearthed, and later research found it to be a ledger recording income and expenditures. That was the earliest form of simple or single-entry bookkeeping, only recording income and expenditures without accounting for anything else.

Later, around 1300 AD, new accounting methods emerged in the northern Italian city-states, particularly Florence and Venice, which recorded not only income and expenditures but also assets and liabilities. So why did such a new calculation method appear in Italy around 1300 AD? It is related to technological developments, such as the invention of paper, especially mathematics. Around 1200 AD, an Italian mathematician wrote a book called "The Principles of Abacus," which was very important. Without certain mathematical inventions and innovations, new calculation methods would not have emerged.

The third significant change was the replacement of Roman numerals by Arabic numerals. The introduction of Arabic numerals is related to the Renaissance, during which much knowledge from ancient Greece and Rome was preserved in Arabic and later translated. Technological advancements made it possible to reinvent new accounting methods, especially with the introduction of Arabic numerals; on the other hand, the complexity of economic activities also led to new demands. Shakespeare's "The Merchant of Venice" depicts the complex maritime trade of that time, which required partnerships, borrowing money, and renting ships, leading city-states to begin taxing, making accounting more complex.

This demand prompted the birth of double-entry bookkeeping, where cash flows began to be separated, and cash flows from operations, investments, and bank loans needed to be distinguished. The complexity of human economic and commercial activities necessitated changes in accounting methods. More than 730 years later, in 2009, the launch of Bitcoin's blockchain distributed ledger brought forth a new accounting method, which we call distributed ledger technology.

From a technical perspective, this is related to asymmetric encryption algorithms from the 1970s, the development of the internet, and distributed databases. The development of computer programming languages and smart contracts as computer programs are all results of technological advancements. On the other hand, demands are also changing; human society is increasingly virtualized and digitized, with more activities occurring in the digital world. A basic characteristic of the digital world is that it transcends time, space, organizations, subjects, and legal jurisdictions.

When these crossings occur, accounting methods must also keep pace because you cannot use Chinese accounting standards or U.S. accounting standards. Human society has created a parallel universe for itself; in this parallel universe, what accounting method do you use? Which currency do you use for accounting? Which country's accounting standards do you adopt, and which country's laws do you implement? If errors occur, do you use Chinese law or U.S. law to constrain? All of these become unfeasible or very costly, to the point where the parallel universe cannot operate. Therefore, a new accounting method—distributed ledger and double-entry bookkeeping—emerges. The biggest difference is that the accounting methods before double-entry bookkeeping were all private ledgers, where individuals kept their own accounts, hoping to convince others of their accuracy.

To ensure the authenticity of these ledgers, society needs to establish a massive system to deter and punish fraudsters.

To implement these laws, you need lawyers, accountants, police, prosecutors, courts, and even prisons. Otherwise, how can I trust that your accounts are genuine? In fact, the cost of this entire system is very high. Even with the protection and regulation of this system, almost no company's accounts are 100% accurate.

Distributed Ledger Reconstructing Financial Market Infrastructure

Liu Feng:

This is the core and foundation of our entire credit system and financial system today. This is also why, when Bitcoin emerged, the earliest crypto natives, or the proponents of cryptocurrency, challenged the core of this system.

Dr. Xiao Feng:

Yes, this challenge has an overly idealistic side, such as anarchism. I believe that human society cannot become an anarchic state; a small number of people may live in a utopia, but for 99% of people, it is impossible to survive in a utopia. The emergence of distributed ledgers is due to the combination of this demand and technology, which is why such a thing was born in 2009. This ledger primarily means a new financial market infrastructure based on distributed ledgers is being reconstructed for the financial system.

The so-called financial market infrastructure can be summarized in one sentence from classic textbooks: it is a complete set of institutional arrangements related to trading, clearing, and settlement. Whether you are trading stocks, funds, bonds, or other transactions, it is basically the same. Traditional financial market infrastructure implements centralized registration, central deposits, central counterparty trading, and central settlement. Any transaction cannot be completed without the help of at least three intermediaries. For example, stock trading, settlement of funds at brokerage exchanges, and share clearing require four intermediaries to complete a transaction.

The new recording method established on distributed ledgers eliminates all these intermediaries, allowing for peer-to-peer transactions. The reason peer-to-peer transactions can be realized is that the accounting methods are different. In a public ledger, both Zhang San and Li Si are recording in the same ledger, and the data is consensual. The blockchain distributed ledger is a publicly transparent global public ledger where people worldwide record their accounts, and everyone can see all the information on this ledger. Therefore, intermediaries are no longer needed, and transactions become peer-to-peer, rather than the previously mentioned centralized registration, central custody, central trading, and central settlement. This allows for peer-to-peer transactions with near-instant settlement and almost zero costs.

From a business perspective, if a new financial market infrastructure can achieve higher efficiency, lower costs, and fewer steps, it will definitely be viable. Given time, it will inevitably replace the old system. If it cannot be replaced, it contradicts business laws.

Traditional financial market infrastructure operates on net settlement, which means that all financial institutions, such as the banking system, basically stop processing transactions at 5 PM. Stopping means everyone settles accounts, and once the accounts are settled, the day's transactions are concluded. The new financial market infrastructure operates on gross settlement, where cash and goods are settled simultaneously, and settlement is completed after transaction confirmation. Therefore, you see the huge differences between stock exchanges and crypto exchanges; crypto exchanges are built on a gross settlement system, allowing them to operate 24/7 without the need to pause for account reconciliation.

Why can't stock trading operate 24/7? Because it operates on a net settlement system, which necessitates a cutoff time to settle accounts before the end of the day. This is why the New York Stock Exchange says it will implement 5 + 23 hours of trading this year. Why 23 hours and not 24 hours?

Because it must pause; otherwise, the accounts cannot be settled. Thus, the change brought by distributed ledgers has led to a transformation of financial market infrastructure. Whether stablecoins or other tokens, they are all based on this set of infrastructure, a new accounting method of blockchain technology and distributed ledgers, as well as the new financial market infrastructure built upon this technology and accounting method. We must view stablecoins from this perspective, rather than just from a monetary angle.

Liu Feng:

This is also something I particularly want you to share, because I see that when people discuss stablecoins, they only talk about their convenience as a payment method. Many people say that it is not as good as the mobile payment systems we use, like WeChat or Alipay. However, if we truly understand the distributed decentralized ledger behind stablecoins, we can grasp their true significance.

Although we, as Chinese, find WeChat and Alipay very convenient, when it comes to cross-border transactions within a vast global financial system, or even in the securities market, we find that there is a fundamental difference between today's system and the new financial system driven by blockchain, public chains, or crypto. Therefore, understanding the significance of stablecoins is essential to comprehend why they represent a profound new financial innovation.

Dr. Xiao Feng:

Clarifying the three layers of technology, accounting methods, and financial infrastructure, all tokens will not occur without these three foundations; not just stablecoins, but other tokens and RWA will not occur either.

Core Highlights of Hong Kong's Crypto Asset Regulation

Changes and Core Framework of Hong Kong's Anti-Money Laundering Regulation for Crypto Assets

Hongjun:

Here are a few questions regarding stablecoins.

First, how does Hong Kong's policy, regulation, and legislative requirements guide the formation of a complete anti-money laundering mechanism for stablecoins?

Second, creating a compliant stablecoin is already super challenging; I think there is also a significant issue regarding how to ensure your stablecoin has liquidity and how to expand the market size?

Dr. Xiao Feng:

The core aspect of Hong Kong's stablecoin legislation for licensed issuers is related to anti-money laundering; other technical issues can be resolved. The anti-money laundering standards in the entire financial market are completely consistent; there are no separate anti-money laundering standards for crypto. Hong Kong pursues the highest or latest global standards in anti-money laundering. Around 2021, the international anti-money laundering organization first revised its anti-money laundering standards to include crypto in its anti-money laundering rules, prompting the Hong Kong Legislative Council to quickly begin amending its anti-money laundering regulations. Early on, around 2022 and 2023, Hong Kong revised its anti-money laundering regulations to add two new components.

The first component is to incorporate the international anti-money laundering organization's guidelines regarding crypto into Hong Kong's anti-money laundering regulations. At the same time, anti-money laundering regulations for gold were also added. This revision directly led to crypto asset exchanges like HashKey initially applying for a Type 7 license, which is an alternative asset trading license.

After the Hong Kong anti-money laundering regulations took effect on June 1 last year, we had to apply for a license called the Virtual Asset Service Provider License (VATP) based on Hong Kong's anti-money laundering regulations. Therefore, exchanges operating in Hong Kong generally hold two sets of licenses: one set is the Type 7 license based on Hong Kong's Securities Ordinance, and the other set is the VATP license based on Hong Kong's anti-money laundering regulations. Because when Hong Kong revised its anti-money laundering regulations, it added provisions for crypto's anti-money laundering, and the specific responsible units for these anti-money laundering measures were assigned to the Hong Kong Securities and Futures Commission. The SFC became the responsible unit for crypto anti-money laundering in Hong Kong and must have regulatory means. Thus, a Virtual Asset Service Provider License (VATP) was established in the anti-money laundering regulations, which officially took effect on July 1 last year. This led many exchanges to announce the closure of their businesses in Hong Kong on June 1 last year.

The Type 7 license has always existed in the Securities Ordinance. Before the Hong Kong Securities and Futures Commission revised the anti-money laundering regulations and was assigned the responsibility for crypto anti-money laundering, it only issued Type 7 licenses based on the Securities Ordinance. This is a very unique situation in Hong Kong.

In addition to adding another license, this regulation has also led to significant changes in the regulation of money exchange point licenses in Hong Kong over the past year and a half. In Hong Kong, money exchange points are licensed by Hong Kong Customs, and money exchange points naturally include the exchange of crypto with fiat currency in their business scope. Therefore, they began to engage in this business, but the growth was so rapid that Hong Kong Customs believed there might be money laundering issues. As a result, Hong Kong Customs drafted its own anti-money laundering requirements for these money exchange points and revised the requirements for money exchange point licenses.

After the revision, Hong Kong's new legislation clarified that the primary responsible unit for crypto's anti-money laundering is the Hong Kong Securities and Futures Commission. Therefore, the Customs' statements no longer hold, as the law did not grant them the authority to manage crypto anti-money laundering. Thus, the proposal put forward last year was that the licenses for money exchange would be jointly reviewed and issued by Hong Kong Customs and the Hong Kong Securities and Futures Commission, but this was merely an idea from both sides.

In May of this year, the law regarding money exchange point licenses was promulgated, namely the VA OTC license. The new law followed public opinion, and Customs is no longer involved in regulation; the VA OTC license is entirely the responsibility of the Hong Kong Securities and Futures Commission for review and issuance. The international anti-money laundering organization's regulations regarding crypto have led to revisions in Hong Kong's anti-money laundering regulations, impacting the entire crypto industry in Hong Kong.

Why Are Anti-Money Laundering Measures for Crypto Assets More Effective Than Traditional Finance?

Hongjun:

So what does anti-money laundering specifically refer to in business or practical operations? For example, does it refer to the issue of bank inflows and outflows when exchanging stablecoins or crypto for fiat currency, or does it assume that in the future, all stablecoins will be on-chain and require real-name verification? Is there a specific reference?

Dr. Xiao Feng:

The anti-money laundering measures in traditional finance and those in crypto differ due to their technical logic, forming two different models. This is also a very worthwhile discussion. Traditional finance believes that the entire crypto sector is incapable of anti-money laundering because it is anonymous. Traditional finance's anti-money laundering relies on identity, and there is no identity on-chain or the identity is anonymous, so they believe this poses a significant problem for anti-money laundering.

However, after I explained it clearly to them, many traditional finance professionals believe that crypto's anti-money laundering is better than that of traditional finance. This is because crypto's anti-money laundering tracks wallet addresses, allowing for the tracing of fund flows, such as where this money has gone and where it has not gone. If it is within one country, anti-money laundering is relatively easy, as judicial authorities can access all bank records. However, in Hong Kong, the process of accessing records from other banks can be much more complicated, and discovering identities is much more difficult than in the mainland.

But if it involves cross-border transactions between two or more countries, tracking the flow of money becomes nearly impossible because other countries will not cooperate unless lengthy and complex judicial procedures are followed. Moreover, laws in various countries restrict the disclosure of customer information. Traditional finance's anti-money laundering is essentially a very inefficient, high-cost, and difficult-to-execute mechanism, while crypto does not require these restrictions. For example, at HashKey, whether it is stablecoins or tokens, we can technically trace the date of token creation and its flow path. The global crypto anti-money laundering agencies work daily to label wallet addresses as black or white; as long as a certain address is involved in a blacklist, we consider it suspicious of money laundering and will refuse to accept it.

This is a more effective anti-money laundering mechanism. Traditional finance is gradually understanding and recognizing this approach, believing it to be the best solution currently available.

Real Use Cases for Stablecoins

Liu Feng:

Why do financial institutions in Hong Kong interested in stablecoins feel compelled to choose stablecoins? While it can be understood from the high-level perspective of currency wars and the power struggles of sovereign nations, what about the participants, consumers, and users—why should we get involved?

Dr. Xiao Feng:

I once had a viewpoint that stablecoins solve the last mile of financial inclusion. Stablecoins are easier to obtain than U.S. dollars; they do not require a bank account and do not depend on banks. Suppose in a country where U.S. dollars are in short supply, even if you have a bank account, the bank may not be able to provide services when you try to exchange for dollars because it has no dollars. Currently, the largest group of people holding U.S. dollar stablecoins is in Nigeria, where 30% to 40% of over 200 million people own U.S. dollar stablecoins, most of whom likely do not have bank accounts. They cannot open bank accounts, and banks cannot provide services for them.

Now, as long as they have a mobile phone, they can exchange their local currency for USDT at currency exchange points in Nigeria. After exchanging for USDT, any individual gains the ability to make global payments and can remit money worldwide.

For example, a Filipino domestic worker in Hong Kong sends HKD 1,000 to 2,000 to their parents in a rural area in the Philippines every month. The existing system takes 15 days, with fees ranging from 7% to 10%, before their parents receive the money in the Philippines. If they use stablecoins, whether it is HKD stablecoins, U.S. dollar stablecoins, or offshore RMB stablecoins, their parents also have mobile phones. Currently, about 80% to 90% of people have mobile phones. Payments made with stablecoins arrive in seconds, without needing to pay that 7% to 10% fee, and the key is that the funds arrive in just a few seconds. This is true financial inclusion. Therefore, the new technology and financial market infrastructure actually facilitate the realization of financial inclusion.

Liu Feng:

What do these institutions see that makes them so eager to apply for licenses?

Dr. Xiao Feng:

If you are an institution that started preparing three or four years ago, I believe you see a huge prospect. However, if you are only hastily announcing your intention to create stablecoins this month, I think most of them are speculators who do not truly understand how to operate a stablecoin system.

Liu Feng:

Even if they have long-term plans, if we look back, who would want to use this Hong Kong stablecoin today? Including the anticipated RMB stablecoin, what are the use cases for RMB stablecoins given that our capital account is not yet open?

Dr. Xiao Feng:

The understanding of stablecoins is often confined to a narrow scope, which I believe is incorrect. Stablecoins are not just payment tools. Although U.S. legislation views U.S. dollar stablecoins as payment tools, it also leaves a loophole, authorizing the regulatory authorities of stablecoins to submit a research report on non-payment U.S. dollar stablecoins within one year of the law taking effect.

In fact, currently, 99% of U.S. dollar stablecoins are not used for payments but for trading. It can be seen as trading brought about by payments, but primarily it is the trading of crypto assets with stablecoins. The payment volume of stablecoins is expected to be $73.2 billion in 2024, which is not a very large number; more is used for trading crypto assets.

Stablecoins are actually guiding their direction towards becoming a medium of exchange and a measure of value; in the future, they will become a measure of value in the virtual and digital worlds and will serve as a medium of exchange for all virtual assets and crypto assets. A significant portion of future use cases for Hong Kong dollar stablecoins and offshore RMB stablecoins will also be as trading mediums for RWA, I believe that is their primary use, although they can also be used for payments, but at least for the next three years, they will not become the main use.

Re-exploring the Development Context of Crypto Assets

Liu Feng:

The applications in the payment field that everyone is currently focused on will actually take longer to materialize.

Dr. Xiao Feng:

Yes, payments certainly have their accompanying functions. Stablecoins were not created for payment; rather, they were created because the volatility of crypto assets is too high, so we need something with relatively stable value to price and trade these volatile assets. The stability of stablecoins is relative to the volatility of Bitcoin, not relative to the U.S. dollar. Some people explain stablecoins by saying they cannot decouple from the U.S. dollar at a 1:1 ratio; stablecoins do not exist for this purpose.

When stablecoins emerged in 2014, the entire market was calling for something stable because it was too volatile; I cannot use Bitcoin or other currencies as a medium of exchange; I need something with stable value to price these volatile assets, such as how much one Bitcoin is worth. If it is $120,000, you are essentially saying it is 120,000 USDT, and you use it for trading.

Stablecoins on Consortium Chains Will Not Succeed

Liu Feng:

When USDT was born or when U.S. dollar stablecoins emerged, there were actually several years when no one used them. At that time, all crypto assets were priced in fiat currency. Whether it was the U.S. dollar or RMB, for a long time, RMB was actually the main pricing currency for the entire crypto asset market.

In fact, looking at today, an important use case for RMB internationalization is the pricing of crypto assets, but later, due to our regulatory policies, this phenomenon was halted, which prompted the emergence of stablecoins. Today, we are again discussing the resurgence of stablecoins. Ten years ago, we talked about this topic, and there was a wave of sentiment that we wanted blockchain but not Bitcoin. Today, it seems we want both blockchain and Bitcoin, and even more so, stablecoins.

Dr. Xiao Feng:

I remember at the beginning of 2015 or the end of 2014, the UK Government Office for Science released a policy report titled "Blockchain and Distributed Ledger." The argument was that blockchain is great, distributed ledgers are also good, but the currency is not, which led to the concept of consortium chains. To this day, where have these consortium chains gone? The market and technology have provided the answer: consortium chains are not feasible. The essence of a chain lies in its inherent token; if it does not have a token, it remains the internet. In fact, we see that the places most opposed to token-based blockchains are gradually accepting them. If you accept stablecoins, they are tokens on the chain.

Liu Feng:

Is it possible that the stablecoins we are discussing today, or those discussed in the Chinese context, will be issued on consortium chains in the future?

Dr. Xiao Feng:

Some have been trying to do this, but I believe it will not succeed. Who would use it on a consortium chain? If this usage requires applications, permissions, and approvals, think about how difficult it would be to promote from a market perspective. First, I have to apply, and then you have to spend a tremendous amount of effort to review each one, which is similar to traditional financial markets' KYC. The reason blockchain can develop is that it is a permissionless network; anyone can freely join and exit; I can just make my own decision. The most typical example is Bitcoin miners; I buy mining machines, find a place with electricity and internet, and if I want to join, I can, and if I don’t want to, I can shut down the entire mining machine. That is how Bitcoin miners came about.

Most applications, or successful applications, arise in an unpermissioned state. Because as we mentioned earlier, the digital economy, which transcends time, space, legal jurisdictions, and subjects, who will permit this? Based on what standards will permission be granted? Therefore, if you truly want to promote and succeed, you must adhere to a fundamental principle of blockchain, just like whether there is a token; this is also a fundamental principle. If a bank wants to create a public consortium chain or an open consortium chain, isn't it more challenging to find clients than offline? If you have no clients, what do you need this chain for? Ultimately, these issues arise because of insufficient efficiency and cost, preventing everyone from truly succeeding.

The Competition and Cooperation Between Traditional Brokerages and Crypto Asset Exchanges

Liu Feng:

In addition to stablecoins and what we just discussed, could you please share your thoughts on the trading licenses currently being issued? This is also a hot topic in the market, as many traditional brokerages are starting to enter the crypto asset trading system. How are these licenses issued? What is your perspective on the value of these licenses, and how should traditional brokerages handle crypto asset trading now and in the future?

Dr. Xiao Feng:

From the perspective of brokerages, they are applying for business upgrades to their existing securities brokerage licenses. They used to buy and sell stocks on behalf of clients, and now they hope their licenses can also allow them to trade crypto assets; crypto is just an extension of this business. Very few brokerages apply separately for a Type 7 trading license or a VATP license.

In Hong Kong, our HashKey exchange is considered an independent third party; almost all brokerages will aggregate their orders to us after upgrading their brokerage licenses, and we serve as a trading system. However, if you are a brokerage trying to set up an exchange, other brokerages will not send their orders to you. This creates a problem: how will you solve your liquidity? You need to establish your own liquidity pool, which is a very costly endeavor, but if you have no orders, how can you establish this liquidity pool? In this case, it is almost certain that you will never make a profit unless you are the only player in the market. Other brokerages are forced to trade with you and send their orders to you.

Exchanges are striving to build very good liquidity for any trading pair; constructing any liquidity pool incurs costs that need to be amortized. Therefore, if you have 40 brokerages sending over those 10 trades, everyone can benefit.

The Value of Compliant Digital Asset Exchanges

Liu Feng:

With the continuous issuance of licenses, have you seen an improvement in the business volume and liquidity of local crypto asset exchanges in Hong Kong?

Dr. Xiao Feng:

From the data of our exchange, not only is trading volume increasing, but customer growth is also very rapid, including a significant increase in the assets held by our exchange. Because when anyone registers as our customer, we have very strict KYC (Know Your Customer) procedures. Customers who pass strict KYC are high-value clients. We also have offshore exchanges, dividing exchanges into two categories: offshore and onshore. The Hong Kong exchange is an onshore exchange, and the customer growth of offshore exchanges is certainly faster because the KYC standards are not as strict, but ultimately, it is found that the value of onshore exchanges is ten times that of offshore exchanges, primarily reflected in trading volume and trading commissions.

We chose to do compliant things, and I believe that since Bitcoin emerged in 2009, or around 2011, I have three observations.

First, since 2009, Bitcoin and ETH have been referred to as digital natives. Due to distributed ledgers, many things have emerged from nothing. With the emergence of USDT, the development of digital twins has reached today, and the digital native phase has given rise to offshore exchanges, which are also very profitable. But now, the digital twin phase is beginning, which will give rise to new exchanges, namely onshore exchanges. Because any digital twin asset is considered a security issuance, you need to be licensed, compliant, and regulated. Any issuance of RWA, if not approved by the Securities and Futures Commission, may face significant trouble in the future. This is not the ICO era, when Hong Kong could not regulate you. But now there are legal provisions, and if you do not change the exchange model, you will encounter significant trouble. At the same time, digital twins also bring us tremendous opportunities; digital twins may increase the market size of tokenized assets from $3 trillion to $30 trillion; otherwise, it would not be possible. Assuming the market size reaches $30 trillion and remains unregulated, would such a market exist? No country would accept such a market. Therefore, this is the first observation: the transition from digital natives to digital twins brings about

The second observation is the change in exchanges. From offshore to onshore, the first phase of offshore exchanges was successful. As HashKey, we do not believe we can imitate them, as that would be a dead end, so we welcome the second wave of the flourishing development of tokenized assets in the form of onshore exchanges, providing services.

The third observation is actually the mutual integration between on-chain and off-chain. Since last year, Bitcoin and ETH will have many digital native tokens in the future, transitioning from on-chain to off-chain, and once they reach exchanges, they become ETFs, which have no relation to the chain. At the same time, companies like BlackRock are also transforming their off-chain assets into on-chain assets, tokenizing various funds, and even now, the hot discussions about tokenizing stocks can be summarized as three development trends since 2009.

Hong Kong vs. Singapore

Hong Kong is Likely to Become a Digital Asset Trading Center

Liu Feng:

In this trend, do you think Hong Kong really has the potential to become the world's center for digital asset trading again?

Dr. Xiao Feng:

I believe Hong Kong has a great possibility, or rather, it possesses unique advantages. The core factor of this advantage is actually China; from the internet, AI to crypto, the main competition globally comes from China and the U.S. Among the top twenty internet platforms established globally by the U.S., half are in the U.S. and the other half in China, while Europe or other countries have virtually none. The same applies to the AI field; apart from the U.S. and China, almost no other countries are developing large models.

It is said that in any major model team in the U.S., 40% to 50% of the members are Chinese, especially first-generation international students. The development of Python is similar; globally, Europe has hardly contributed to foundational technology development. When it comes to the application layer, namely the application layer of digital twins, Europe also has virtually no one working in this area; the real work is either being done in the U.S. or within the Chinese community.

Thus, this is the most core factor that makes Hong Kong likely to become a global center for crypto. Additionally, Hong Kong's common law system under "one country, two systems" and its structure of Anglo-American law distinguishes it from mainland China, giving it a unique advantage. Mainland China follows the civil law system, where everything requires permission to proceed. In contrast, Hong Kong follows the common law system, so under the context of "one country, two systems," Hong Kong is more likely to represent China in doing more in this area.

Two Reasons Why Hong Kong Has Become the Darling of Capital Markets Again

Liu Feng:

What you just said sounds very reasonable today, but if it were a year or two ago, many people might have jumped out to say it was nonsense because Hong Kong's situation was not good then. Now it seems that Hong Kong has once again become the darling of capital markets. Can you talk about the changes and core factors you have observed behind this?

Dr. Xiao Feng:

I think there are mainly two factors. The first factor is that sometimes I jokingly say, DeepSeek saved China. The emergence of DeepSeek has led to a massive change in the global valuation of Chinese assets. When you dislike it, you give it an 8x price-to-earnings ratio (PE); when you like it, you give it an 80x PE. Because we suddenly became optimistic about the valuation level of Chinese assets, everyone adjusted significantly; indeed, we were overly pessimistic before, so the rebound is substantial. Before DeepSeek, people believed that AI in China could not succeed, which led to a downward adjustment in the overall valuation level of Chinese assets.

The second aspect is that due to Trump's policies, traditional alliances in the U.S. have weakened, and everything has turned into business. This has caused funds that were originally concentrated in the U.S. to begin reallocating, with much capital no longer entirely placed in the U.S. due to high uncertainty. Therefore, during the reallocation process, some funds naturally flowed into China.

Including many Chinese who had worked hard to move their money to the U.S., now seeing the tense Sino-U.S. relations and fearing that the U.S. might freeze their funds, they also began to move some of their funds out, with Hong Kong becoming a landing place.

Another landing place is that the Russia-Ukraine war has led Switzerland to abandon its neutral stance and support Ukraine. After abandoning its neutral stance, funds that were originally in Switzerland began to rebalance. Since Switzerland is no longer neutral, those funds do not necessarily have to remain entirely in Switzerland.

So you can see that actually, two places have become targets for capital inflows: one is Hong Kong, and the other is Dubai. Dubai has also attracted a lot of funds because money from the Middle East has started to withdraw from Europe. Originally, Middle Eastern funds were managed through London, but now that London has Brexit, many Middle Eastern funds have also returned to Hong Kong and Dubai. Now, Dubai is also a place where capital is flooding in.

Singapore Positions Itself as the Switzerland of Asia, While Hong Kong Positions Itself as the Wall Street of Asia

Liu Feng:

For a long time, in the entire Chinese-speaking region, people have favored Singapore, seemingly viewing it as a significant challenger and alternative to Hong Kong's financial center status. We have seen large financial institutions move their regional centers from Hong Kong to Singapore, and financial media has also migrated from Hong Kong to Singapore, including some core cryptocurrency institutions.

Dr. Xiao Feng:

Both places are international financial centers, but they have completely different positions. Singapore positions itself as the Switzerland of Asia, while Hong Kong positions itself as the Wall Street of Asia. There is not much to trade in Singapore; the most active trading market for various assets is in Hong Kong. If you position yourself as the Switzerland of Asia, you hope for social stability and a calm market, avoiding significant ups and downs to prevent criticism. Therefore, Singapore will expel those institutions without licenses that do not serve Singaporeans because they only bring reputational damage without paying taxes, providing little benefit to Singapore. If you position yourself as Wall Street in Asia, it is different. You must make the market active and provide many investment and trading opportunities; otherwise, you are not Wall Street. This is the different choices made by the two places.

Liu Feng:

For example, today we are sitting in an office in Central, which was once part of the world's financial center. In your observation, how many bankers and wealth management professionals around here have truly embraced cryptocurrencies and digital assets?

Dr. Xiao Feng:

Currently, the proportion of traditional financial markets embracing cryptocurrencies is not very high. It is like a bottle of water that is half full; some say it is half empty, while others say it is half full. I see the trend that although the proportion is not high, it is increasing. I believe next year will be a period of very rapid growth. The fundamental reason is that U.S. legislation provides legitimacy and compliance backing for the entire crypto industry.

The proportion in traditional finance was previously low mainly due to compliance issues; they would not risk losing much for a small gain. Although the return rates of asset classes are sufficiently high, the vast majority of financial institutions will not take risks, especially those managing other people's funds, because compliance issues will be their responsibility. However, once there is legal backing, coupled with the push from the Trump administration, traditional financial institutions and investors can enter this field in large numbers. Therefore, it is expected that after the U.S. legislation passes this year, there will be an explosive growth period next year.

Whether the entire crypto industry will see a second growth curve depends on this year's legislation in the U.S. U.S. legislation will influence the world, and other countries will follow suit, even forcing China to reform. As an international financial center, Hong Kong is very sensitive to changes in the international financial market. The regulators and builders in Hong Kong have decades of operational experience, and they will closely follow these changes.

Hongjun:

You just mentioned what bankers are doing; I wonder if Hong Kong's current round of regulatory policies and licensing policies is too strict? Blockchain is actually a place for borderless transactions; does it instead benefit many overseas projects while making local projects more challenging in terms of compliance and licensing?

Dr. Xiao Feng:

Obtaining licenses and being regulated in a certain jurisdiction is inevitable. The offshore space will gradually be compressed, mainly from two aspects: one is legal and regulatory, and the other is operational resources. It is unlikely that things with asset-backed tickets will be traded in a completely unregulated environment because the securities regulatory authorities will not agree.

Additionally, digital native things are also shrinking. This world does not need hundreds of chains; ideally, it should shrink to one Bitcoin chain and one Ethereum chain, which is sufficient. The underlying protocols of the internet are globally unified; if there are two protocols, the world will become complicated, and cross-chain issues will arise.

The underlying protocol of blockchain should be open-source and decentralized, and there should be something of the same nature globally. The application layer must be centralized, because it involves specific scenarios, demands, and consumer protection. In the future, in the era of RWA, stablecoins, and digital twins, it is impossible to continue allowing situations where people can freely exploit others.

Liu Feng:

Dr. Xiao Feng, you have been emphasizing decentralization and permissionlessness, but at the same time, you mention embracing regulation and conducting compliant business. This seems to contradict the original spirit of cryptocurrency. How do you view this contradiction?

Dr. Xiao Feng:

From a layered perspective, this is not contradictory. The underlying protocol must be decentralized, while at the application layer, some degree of centralization is inevitable. Centralization and decentralization can be explained from the angles of fairness and efficiency in economics. Emphasizing fairness requires decentralization, allowing more people to participate in decision-making; emphasizing efficiency requires centralization, as the highest efficiency often comes from a single decision-maker. Most commercial applications should find a balance between fairness and efficiency.

In terms of application, 100% decentralization is unrealistic. This is indeed a question I have been contemplating, reflecting the unity of contradictions. Recently, I have been reading a book written by Professor Tian Tao from Renmin University about Huawei, titled "Advancing Amid Paradoxes," which discusses the importance of paradoxes.

HashKey's Goals and Choices for Going Public

Liu Feng:

Have you considered going public in the Hong Kong market?

Dr. Xiao Feng:

We have had this goal since we established HashKey in Hong Kong in 2018, so we have very strict requirements for our own compliance. We are one of the few groups globally that can provide continuous audit reports from the Big Four accounting firms for over three years. Therefore, we certainly hope to realize our IPO dream, and we should become a public company to operate in a more transparent manner.

Unforgettable Moments in the Crypto World

Liu Feng:

Additionally, I would love to hear about your past experiences. You are a veteran in the financial industry, having transitioned from traditional finance, and you have been emphasizing the importance of blockchain for over a decade. Soon it will be the tenth anniversary of Ethereum on July 30.

Specifically, you and the underlying Wanxiang Blockchain were actually one of the most important funding sources before Ethereum went live. Could you briefly reflect on the past decade and share some of the moments in the industry's development that have left a deep impression on you?

Dr. Xiao Feng:

That probably goes back to 2014. I started to engage with and study blockchain in 2013, and in 2014, we traveled overseas. That year, I went to San Francisco and even visited Ripple. At that time, Sun Yuchen had just been appointed as the chief representative.

After traveling around, my indirect understanding from the mainland turned into firsthand experience. From New York to Silicon Valley and back, I firmly believed that this new technology could indeed reconstruct the financial industry. Therefore, after returning in 2014, we began to take action in 2015. At the end of 2014, I spoke about Ethereum at a forum hosted by a financial magazine, which was live-streamed by Sina Finance. After the live stream, Shen Bo introduced me to Vitalik. We met in 2015, and then investment discussions began. At that time, I felt that what Vitalik was telling me was worth supporting. First, it was definitely correct, logically sound; second, if there were difficulties, it was worth lending support. So initially, I did not calculate what returns the investment would bring; I did not consider it at all.

Supporting the Ethereum Developer Conference in Shanghai in 2016 and the Moment of Seeing Participants' Faces

Dr. Xiao Feng:

In 2015, I supported $500,000, and by 2016, ETH had already launched on the mainnet, with its price rising to several tens of dollars. I continued to ask the Ethereum Foundation, "Do you need money this year?" At that point, they said, "We don't need money this year." I replied, "But I promised that we would continue to support you in 2016, so I still plan to spend this money."

We discussed a condition: if you bring Devcon to Shanghai, I will cover all the expenses, including advertising and other ticket fees, which will all go to the Taiwan Foundation. Under this condition, the 2016 Devcon was held in Shanghai, with all expenses amounting to $500,000. I thought this was great; we fulfilled our promise, not only giving $600,000 in 2015 but also continuing our support in 2016. At the same time, I felt that conference made me realize that when I stepped into the venue and saw over 800 participants, 90% of whom were foreigners, I estimated that no international conference held in China had such a high proportion of foreign attendees.

Liu Feng:

We are quite moved; a few years ago, China was indeed one of the centers of the blockchain world. I bring this up because today everyone is discussing the so-called great power currency sovereignty struggle, and blockchain has become the technology embraced by everyone. However, for a long time, our motherland was one of the centers of blockchain technology.

Original link: https://www.youtube.com/watch?v=pR78J-hhbM8