Original Article Title: "E56 | A Conversation with Xiao Feng: A Cold Reflection on Returning to Common Sense in the Booming Stablecoin Moment in Hong Kong"

Original Source: Web3 101

Compilation, Translation: DeepTech TechFlow

Guest: Xiao Feng, Chairman and CEO of HashKey Group

Hosts:

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

· Hongjun Jane, Founder of Silicon Valley 101, Podcast Host

Podcast Source: Web3 101

Original Title: E202 | A Conversation with Xiao Feng: A Cold Reflection on Returning to Common Sense in the Booming Stablecoin Moment in Hong Kong

Release Date: July 31, 2025

Key Points Summary

During the issuance of stablecoins in Hong Kong, stablecoins and RWAs have become extremely popular terms in the Chinese-speaking world. Dr. Xiao Feng, Chairman and CEO of HashKey Group, known as the "Chinese Blockchain Godfather," shared with us some cold reflections on returning to common sense amidst this wave of enthusiasm.

Highlight Quotes

· Hong Kong's regulation of stablecoins has been unexpectedly strict.

· Stablecoins were not created for payments.

· Mainland China will start by accepting stablecoins and then move to accept the entire crypto space. Discussions in the mainland about stablecoins focus on the perspective of major power currency competition, while Hong Kong is more concerned about anti-money laundering vulnerabilities.

· Crypto performs better in anti-money laundering than traditional finance.

· Consortium chains are not viable, and stablecoins on consortium chains will not succeed.

· Most successful applications have emerged in a permissionless state.

· Hong Kong may once again become the world center for digital asset trading.

· Singapore's positioning is the Switzerland of Asia, while Hong Kong's positioning is the Wall Street of Asia.

· Next year will see a very rapid growth in embracing cryptocurrency in traditional financial markets.

· The underlying protocol of blockchain is decentralized, but the application layer must be centralized.

· Although the Hong Kong stablecoin is hot, the regulatory authorities are very cautious about this topic, which is a huge gap.

· In Beijing, a two-point consensus is gradually forming. The first point of consensus is that in the face of the global legislative compliance wave led by the United States on Crypto, stablecoins, and blockchain, China cannot continue to turn a blind eye; the second consensus is how to respond. If China continues to turn a blind eye and does not accept these new things, it may be at a disadvantage in the competition for national currencies.

· By this time next year, we may be discussing RWA, the mainland may start to accept asset tokenization, and after RWA, the next step in the future may be accepting Bitcoin.

· Since you are starting to accept stablecoins, you will inevitably have to accept public chains; otherwise, your stablecoin will not be globally competitive, and issuing it would be in vain.

· RWA has three stages: the easiest is the tokenization of fiat currency; the second stage is financial assets; the final stage is tokenizing physical assets.

· Today, the market interprets stablecoins from a currency perspective, lacking consideration of the underlying logic revolution.

· All tokens will not exist without technology, accounting methods, and financial infrastructure.

· The key point of Hong Kong's stablecoin legislation for licensed issuances is related to anti-money laundering.

· Stablecoins will become a value scale in the virtual world and digital world, serving as the medium of exchange for all virtual and crypto assets.

· Exchange platforms are working hard to build very good liquidity for any trading pair. The construction of any liquidity pool comes at a cost that needs to be amortized.

· Hong Kong has become the darling of the capital market for two reasons. The first factor is the emergence of DeepSeek, and the second aspect is that due to Trump's policies, the traditional alliance relations of the United States have faded, and everything has become business-oriented.

Calm Thinking in the Heat of Stablecoins and RWA

Liu Feng: Now I can see that throughout the Chinese-speaking world, whether in Hong Kong or the mainland, stablecoin has become a hot term. Can you first briefly tell our audience why everyone is so concerned about the Hong Kong stablecoin regulations? Also, if possible, could you highlight what particularly noteworthy points there are in Hong Kong's regulation of cryptocurrency and digital assets?

Dr. Xiao Feng: Personally, I feel that the hype has gone a bit overboard. A few days ago, I was having coffee with a friend at a hotel café and found that people at nearby tables were all discussing stablecoins. Not long ago, we also had an exchange with officials from the Hong Kong Monetary Authority (HKMA) about stablecoins, and the officials repeatedly reminded us that the stablecoin space is overly heated, and Hong Kong will not issue many licenses.

The issuance of stablecoins in Hong Kong will be very stringent in the initial stage. Not only will licensing be strict, but regulation will also be very strict, especially in terms of regulating the use of stablecoins in anti-money laundering. August 1st was just the effective date of the Hong Kong Stablecoin Act, but it does not mean that everyone can apply for a stablecoin license in Hong Kong starting on August 1st. Although there are rumors in the market that dozens or even hundreds of companies are applying, I believe that the number of applications truly accepted by the HKMA will be very, very few. The focus is mainly on the background of each applicant, especially their financial risk management background, anti-money laundering experience, and capabilities.

Hong Kong is an international financial center with decades of experience. Therefore, the regulatory authorities in Hong Kong, whether it's the SFC or the HKMA, are very sensitive to some trends in the international financial market, which is in stark contrast to the mainland. The mainland interprets stablecoins, especially offshore RMB stablecoins, more from the perspective of currency, major currency competition, and the dominance of the US dollar. But Hong Kong is different. Originally, I thought that if there were so many institutions, people, and money from the mainland willing to come to Hong Kong, whether it's for building stablecoins, issuing stablecoins, or using stablecoins, this 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 or core concern is whether the issuance of stablecoins will lead to regulatory loopholes by exiting the banking system. In fact, at present, financial regulatory agencies lack the means to regulate stablecoin circulation after minting.

So in this respect, Hong Kong is more concerned about whether there will be any loopholes in anti-money laundering. As an international financial center, if Hong Kong is criticized by other major international financial centers globally for anti-money laundering, then this will have a huge impact on Hong Kong's reputation as an international financial center. Conversely, this may be completely different from everyone's perception. Although Hong Kong is enthusiastic, the regulatory authorities have a very cautious attitude toward this topic, which is a significant gap.

Reflecting on the Journey: Cold Reception by Hong Kong Regulatory Agencies

Liu Feng: You have actually been advocating and promoting transparent and standardized legislation on digital assets in Hong Kong for many years. Can you talk about how you view today's understanding that while Hong Kong, as a global financial center, is embracing digital assets and cryptocurrencies comprehensively, there are still many concerns and a very cautious attitude? How do you see this contrast, as well as the different contrasts over the years, the past criticisms and rejections, and the seemingly welcoming new attitude?

Dr. Xiao Feng: I would like to share a story from my own experience, which perfectly illustrates the issue you just mentioned. HashKey was established in Hong Kong at the end of 2018. The reason for choosing 2018 was that mainland China had stricter regulatory measures during the previous year, so we moved this business to Hong Kong because, after all, Hong Kong is legal and compliant. In early 2019, I visited the Hong Kong Securities and Futures Commission to apply for a license for a Crypto trading platform. The official who received me said, "Mr. Xiao, opening a virtual currency trading platform in Hong Kong does not require a license, nor is it illegal. You can just take a left turn out the door and open one."

In fact, in 2022, when I visited the director and deputy director of the Economic Bureau in Hong Kong, I heard the same thing. I said we wanted to apply for a license for a stablecoin in Hong Kong. The deputy director said, "Mr. Xiao, issuing a stablecoin in Hong Kong is not illegal, and we do not have the authority to regulate you." I told him that we had actually invested in a stablecoin company in Hong Kong, but we couldn’t proceed because not a single bank in Hong Kong dared to provide us with stablecoin-related services, and customers could not have normal fiat currency deposits and withdrawals.

Why did these two officials say the same thing? Because Hong Kong follows the Anglo-American legal system, under the framework of common law, the first phrase is "Everything is allowed unless prohibited by law." Therefore, in 2019, there were no laws in Hong Kong regarding Crypto, so you could do anything, even establish a trading platform, without any legal prohibition. At the same time, both institutions (the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority) said that they had no authority to issue licenses or regulate you because the second phrase in the common law system is "You cannot act without authorization." If you open a trading platform on the street, they have no power to penalize you.

At that time, I also joked, saying, "So you mean, no one will regulate me in Hong Kong?" He replied that it’s not entirely unregulated, as the Commercial Crime Bureau of the police station would regulate you. Although what you are operating isn’t securities, it can at least be considered a commodity, and there is oversight in terms of consumer protection.

Indeed, in the industry, everyone talks about the high compliance costs in Hong Kong, and that conducting this type of business in Hong Kong is unprofitable. Compliance comes with a cost, but there is a rationale behind it. After all, we are engaged in an emerging financial industry, with financial technology bringing about new finance that has strong externalities. Over the past few hundred years, a set of rules has gradually been accumulated to protect investors and consumers, and these rules, of course, come with operational costs.

If our industry is unwilling to bear these costs, it may never grow. If you envision this as a market worth trillions of dollars, or even hundreds of trillions of dollars, then you will inevitably be subject to constraints that have spillover effects on you, which you must be prepared to bear.

New Hope: "The mainland will start by accepting stablecoins and then accept the entire Crypto space."

Dr. Xiao Feng: So, up to now, in my opinion, since 2017 when mainland China started restricting, regulating, and even banning certain Crypto-related businesses, I have been pondering a question: From when and where will mainland China start re-accepting these? In these years, there has actually been no answer. In the past month and a half, I felt I found an answer because I attended many internal seminars in Beijing, partly due to the impact of Hong Kong and the U.S.' stablecoin bills.

Most of the mainland discussions took place after the Hong Kong stablecoin regulations were passed on May 21. Subsequently, the U.S. also vigorously promoted related bills, sparking many discussions in Beijing. In these discussions, a sudden idea came to me, and I realized one thing: Mainland will start from accepting stablecoins, then move on to accepting the entire Crypto.

During this time, I participated in many discussions, spanning a month and a half. Although as of Sunday, there are still different opinions in Beijing, everyone is gradually forming two key consensuses. The first consensus is that faced with the global legislative compliance trend of 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? In the words of my Beijing friends, it's "Will there be a Huaihai Campaign?" This question has been settled; it must be fought. How to fight? Will it be a small battle or a big one? Which army should be defeated first? This is the current discussion. Sitting there, I felt that the mainland will start accepting from here because if China forever turns a blind eye and does not accept these new things, it may be at a disadvantage in the competition of national currencies. I believe that China's top leadership actually realizes this issue, which is why not long ago at the Lujiazui Forum, former PBOC Governor Zhou Xiaochuan's keynote speech was to beware of the impact of the USD stablecoin on the international monetary system's dollarization.

Clearly, this is viewed from the perspective of national currency competition regarding the USD stablecoin. China evidently cannot ignore this. At the same time, I predict that this is as the saying goes, "Once you start the first day of the month, the full moon will follow inevitably." Since you start accepting stablecoins, then you will inevitably accept public chains, or else your stablecoin will not be globally competitive, and your efforts will be in vain.

So, after accepting RWA, what might be the next step? I think, by this time next year, we might be talking about RWA, and the mainland might begin to accept asset tokenization. After all, RWA has the same attribute as stablecoins, as it can support the real economy. Something that can support the real economy is easier for mainland officials, regulatory authorities, and the government to accept. Once you have accepted RWA next year, you will also have to consider accepting Bitcoin in the future.

Challenge Impacting China's Embrace of Digital Assets: Increased Scams

Host: You have outlined for us a possible path in your mind of how we might truly embrace blockchain and digital assets in the future on this vast land of China. It sounds like starting with stablecoins to understand this technology, due to the inevitable nature of the great power currency game behind it, forcing everyone to first embrace stablecoins, which may not appear particularly Crypto, and then slowly embrace trends like RWA that utilize blockchain technology for tokenization but can support the real economy. Moving on, we may find ourselves having to embrace a broader range of technologies centered around blockchain or some product forms, business models, and financial innovations. I would like to ask, what challenges do you think may arise in this process that could impact this promising outlook?

Dr. Xiao Feng: I think the challenges come from two aspects. On one hand, whether it's the EU, the US, or some economically developed countries, or international organizations such as the Financial Stability Board of the Bank for International Settlements, they have all expressed their concerns to Hong Kong about the vigorous promotion of stablecoins in Hong Kong, especially the Renminbi stablecoin. Stablecoins could facilitate China's oil trade with Russia, Iran, and Venezuela because these countries are all under UN sanctions.

In the past, if it was a fiat currency channel, it was relatively troublesome, and it could be monitored, but if stablecoins are used outside of the banking system, outside of SWIFT, then it completely decouples from the entire set of financial rules and norms originally established by Europe and the United States. This pressure is something they have already begun to pay attention to, and I also believe they will continue to exert pressure. But if we want to issue offshore Renminbi, stablecoins, there is definitely demand for this as well.

On the other hand, we have already seen some signs. Recently, in mainland China, because stablecoins have moved from Hong Kong to Beijing, and sometimes Beijing is even hotter than Hong Kong, it has led to an increase in scamming activities. In fact, the trend of using stablecoins in the name of MLM scams has already occurred not just in one province, but in many economically developed regions. So when we see news reports, the financial regulatory authorities of different provinces in mainland China have begun to issue warnings continuously, and this trend is indeed a cause for concern. I often tell myself that we should not add fuel to the fire. We all vividly remember the continuous rectification of internet finance. We should not fall into a state of continuous rectification of internet finance, as this will severely slow down the mainland's acceptance of these stablecoins or RWAs. The current trend is indeed quite grim, and this is the pressure facing the mainland because for regulatory authorities, if they have not seen a good situation yet and all they see are various scams rampant in the mainland, then obviously they will slow down their pace.

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

Liufeng: For innovative projects like RWA that leverage new blockchain technology to drive financial innovation, you mentioned the potential for fraudulent activities. Could you share your thoughts on what are the correct, promising, and truly valuable use cases or directions for utilizing blockchain technology in 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 counted from around 2014, which is the tokenization of USDT as a fiat currency. The second stage should start around 2024 when financial assets were tokenized, such as with U.S. companies like BlackRock, Fidelity, Franklin Templeton, who tokenized their U.S. dollar bond funds, U.S. dollar money market funds, etc., on the chain.

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

Currently, there is not a very good solution for this technology, although DePin is considered one solution. DePin has always been a premature baby, and even after 20 years, it has not found a standalone 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 still has a long way to go. To achieve widespread adoption or acceptance, the oracle problem still needs to be addressed.

The three stages are like flowing water, starting from the easiest to the most difficult. The easiest, of course, is fiat currencies like the U.S. dollar, euro, and Chinese yuan, which have very simple trust endorsements that everyone acknowledges.

The second step, from a trust endorsement perspective, is easier to solve with financial assets. Their issuers and custodians are licensed financial institutions, subject to strict regulation, and it is easier to complete the digitization and tokenization process. Tokenizing physical assets is a very challenging task. I do not believe that a good solution has been found yet, and I think it will take time.

Therefore, my current recommendation for those interested in RWA is to first turn physical assets into financial products, and then tokenize them based on these financial products. For example, with gold, if a gold mine owner tells me they produce 8 tons of gold every year, I would find it hard to believe. But if you produce this gold and according to financial standards, determine what kind of gold ingot can become a currency anchor or collateral asset, there are standards for that.

Once completed, a licensed financial institution will issue a gold fund or gold ETF, with these gold bars held in a vault by a reputable bank, which acts as the custodian of these gold assets. The custodian bank provides us with instructions confirming the receipt of the standardized gold, and then mints a token on the blockchain for circulation, which may be the best solution so far.

Liu Feng: This makes it very easy to understand and deliver when issuing tokens. What you mentioned seems to tell us that although RWA is a so-called real-world asset, not all real-world assets can be easily mapped to the blockchain. Instead, in the early stages, there should be a very standardized process, first being verifiable, auditable, and also as structured as possible. This way, it will be easier for the asset to circulate in transactions, making transactions between parties easier to achieve, which is an effective process for handling RWAs.

But I think in this process, the so-called RWA is not about creating a new type of asset, but rather transitioning from the physical to the original financial ledger, and then to the blockchain. This sounds more like a very simple use of blockchain to settle and transact in the transaction process; in essence, it actually utilizes real-time settlement and real-time consensus of blockchain or Crypto.

Back to Basics: What Problems Does Blockchain Actually Solve

Three Transformations of Human Accounting Methods

Liu Feng: So, the core of RWA is not about issuing coins or assets, which brings us back to what you have been advocating for ten years: Why do you believe blockchain and the Crypto digital assets it supports are a true financial innovation of the future? Can you go back and tell everyone about some of the most basic things you have been talking about for nearly ten years, or even more than ten years, and why we need blockchain?

Dr. Xiao Feng: In fact, including the recent discussions on stablecoins, everyone has been looking at it from a macro perspective, interpreting stablecoins from the perspective of currency, lacking a fundamental logic or technological basis. Whether stablecoins or any tokens, they are based on a new set of technology. This new technology is first based on the blockchain distributed ledger, which in itself is an update to human accounting methods.

Human accounting methods have undergone three transformations. The earliest method of accounting can be traced back to around 3500 BC in the Sumerian region, now Iraq. Excavated at that time was a 3500-year-old clay tablet, later found to be an account book that recorded income and expenses. That was the earliest simple accounting method or single-entry bookkeeping, only recording income and expenses, and nothing else.

Moving forward to the year 1300 AD, in the northern city-states of Italy, particularly Florence and Venice, a new method of accounting emerged. In addition to recording income and expenses, this method also involved recording assets and liabilities. So, why did this new accounting method emerge in Italy around 1300 AD? This was related to technological developments, such as the invention of papermaking, especially advancements in mathematics. Around the year 1200 AD, Italian mathematicians wrote a book called "Principles of Abacus," which was very significant. Without certain mathematical inventions and innovations, there would have been no new accounting method.

The third important change was the replacement of medieval Roman numerals with Arabic numerals. The introduction of Arabic numerals was linked to the Renaissance, during which much of the ancient Greek and Roman knowledge was preserved in Arabic and later translated back. Technological progress 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 in Italy at that time, which involved partnerships, borrowing money, renting ships, and subsequently led city-states to begin taxation, making accounting more intricate.

This demand led to the birth of double-entry bookkeeping, where cash flows were separated. Cash flows from operations, investment, and bank loans all needed to be distinguished. The complexity of human economic and commercial activities drove changes in accounting methods. Over 730 years later, in 2009, the Bitcoin mainnet of the blockchain distributed ledger came online, introducing a new accounting method called distributed ledger technology.

From a technological perspective, this was related to asymmetric encryption algorithms from the 1970s, the development of the internet, distributed databases, and more. The advancement of computer programming languages, smart contracts as computer programs, and others were all outcomes of technological development. On the other hand, demands were also changing as human society increasingly digitized and virtualized, with more activities taking place in the digital world. In the digital world, a fundamental characteristic is the crossing of time, space, organizations, entities, and jurisdictions.

When these crossovers occur, accounting methods must also keep pace, as you cannot use Chinese accounting standards or U.S. accounting standards. Human society has created a parallel universe, where in this parallel universe, what accounting method do you use? Which currency do you account in? Which country's accounting standards do you adopt, and which country's laws do you follow? If errors occur, do you adhere to Chinese law or American law? All of these become impractical, or rather, the costs become very high to the point where the parallel universe cannot function. Thus, the new accounting methods—distributed ledger and double-entry bookkeeping—emerged. The biggest difference is that accounting methods before double-entry bookkeeping were all private ledgers, where individuals accounted for themselves and wanted others to trust their accounts. To ensure the authenticity of the accounts, society as a whole needed to establish a vast system to deter and punish fraudsters.

In order to implement these laws, you need lawyers, accountants, law enforcement, public prosecutors, courts, and even prisons. Otherwise, how can I trust that the accounts you produce are real? In fact, the cost of this whole system is very high. Even under the protection and regulation of this system, hardly any company's accounts are 100% true.

Reconstructing Financial Market Infrastructure with Distributed Ledger

Liufeng: This is the core of our entire credit system and financial system today. That is why when Bitcoin appeared, the earliest Crypto natives, who are the original proponents of cryptocurrency, challenged the core of this system.

Dr. Xiaofeng: Yes, this challenge has an overly idealistic side, such as anarchism. I believe human society cannot become a state of anarchy. A small number of people can live in a utopia, but for 99% of people, it is impossible to survive in a utopia. The emergence of distributed ledger is due to the combination of this demand and technology, so something like this was born in 2009. This ledger first of all means a new financial market infrastructure based on distributed ledger is being reconstructed for the financial system.

The so-called financial market infrastructure, as explained in classical textbooks, can be summarized in one sentence, which is a set of institutional arrangements related to transactions, clearing, and settlement. Whether you are trading stocks, funds, bonds, or any other assets, it's basically the same. The traditional financial market infrastructure follows central registration, central depository, central counterparty trading, and central settlement. Any transaction, without the help of three or more intermediaries, cannot be completed. For example, in stock trading, the fund settlement of a brokerage trading platform, and share clearing, you need four intermediaries to help you complete a transaction.

The new record method established on the distributed ledger means all these intermediaries are gone, and we have become peer-to-peer transactions. The reason peer-to-peer transactions can be achieved is because of the different way of record-keeping. In a public ledger, both Zhang San and Li Si are keeping accounts on the same ledger, and the data is consensual. Blockchain distributed ledger is a publicly transparent global public ledger, where people worldwide keep accounts on the same ledger, and everyone can see all the information on this ledger. Hence, intermediaries are no longer needed, transactions become peer-to-peer, and no longer involve central registration, central depository, central trading, and central settlement as mentioned earlier. This way, it can achieve peer-to-peer, instant settlement, almost zero fees.

From a business perspective, if a new financial market infrastructure can be more efficient, lower in cost, and have fewer steps, it will surely be sustainable. Given time, it will surely replace the old system. If it cannot be replaced, it violates the laws of business.

Traditional financial market infrastructure operates on a net settlement basis, meaning that all financial institutions, such as the banking system, essentially halt operations around 5 p.m., and any transactions after that are not processed. When they say they halt operations, what does that mean? It means everyone reconciles their accounts, and once that is done, the day's accounting is closed. The new financial market infrastructure operates on a gross settlement basis, where the exchange of value is final and irrevocable once a transaction is confirmed. This is why you see a significant difference between stock trading platforms and crypto trading platforms. Crypto trading platforms are built on a gross settlement system, allowing them to operate 24/7 without the need to pause for reconciliations.

Why can't stock trading be 24/7? Because it operates on a net settlement system, which necessitates a cutoff time for finalizing accounts before operations can cease for the day. This is why you see initiatives like the NYSE's plan to implement 5 + 23-hour trading. Why 23 hours and not 24?

Because they have to pause to reconcile accounts; otherwise, the accounts won't balance. Hence, the shift to a distributed ledger has brought about changes in financial market infrastructure. Whether stablecoins or other tokens, they all rely on this infrastructure, a new ledger system enabled by blockchain technology, and a new financial market infrastructure built upon this technology and ledger system. We need to view stablecoins from this perspective rather than just as forms of currency.

Liu Feng: This is precisely what I wanted you to elaborate on because I've noticed that when discussing stablecoins, many only focus on their convenience as a means of payment. Many argue that they are not as convenient as the mobile payment systems like WeChat or Alipay that we use. However, only by truly understanding the distributed and decentralized ledger behind stablecoins can one grasp their true significance.

Even though as Chinese, we find WeChat and Alipay very convenient, once they engage in cross-border or cross-party transactions within a vast global financial system or even in the securities market, we realize that there is a fundamental and intrinsic difference between today's system and the new financial system driven by blockchain, public chains, or crypto. Hence, understanding the meaning of stablecoins is crucial to comprehending why they represent a profound new financial innovation.

Dr. Xiao Feng: To explain the three layers of technology, ledger systems, and financial infrastructure clearly, no tokens would exist without these three foundations. Not just stablecoins but also other tokens and RWAs wouldn't exist.

Key Points of Cryptocurrency Regulation in Hong Kong

Changes and Core Framework of Cryptocurrency AML Regulation in Hong Kong

Horizon: Here are several questions regarding stablecoins.

The first is how Hong Kong's policies, regulations, and legislation require everyone to structure stablecoins in order to establish a comprehensive anti-money laundering mechanism? The second is that it is already extremely difficult to create a regulatory-compliant stablecoin, and I think another major issue is how to ensure your stablecoin has liquidity and how to grow the market?

Dr. Xiao Feng: In Hong Kong, the legislation regarding stablecoins focuses primarily on anti-money laundering for stablecoins issued through licensing, and all other technical issues can be resolved. The anti-money laundering standards in the entire financial market are completely consistent, and there are no separate anti-money laundering standards for crypto. Hong Kong pursues the highest or most recent global anti-money laundering standards. Around 2021, the Financial Action Task Force revised its anti-money laundering standards for the first time to include cryptocurrency in the anti-money laundering rules, prompting the Hong Kong Legislative Council to quickly begin amending its anti-money laundering regulations. Quite early, around 2022 and 2023, Hong Kong amended its anti-money laundering regulations by adding two key elements.

The first element is to incorporate the Financial Action Task Force's guidance on cryptocurrency anti-money laundering into Hong Kong's anti-money laundering regulations. At the same time, it also added anti-money laundering provisions for gold. This revision directly led to cryptocurrency exchanges like HashKey initially applying for a Type 7 ATS license, which is an alternative asset trading license.

After the Hong Kong anti-money laundering regulations took effect on June 1 of last year, we had to apply for a Virtual Asset Service Provider license (VATP) in accordance with the Hong Kong anti-money laundering regulations. Therefore, cryptocurrency exchanges operating in Hong Kong basically hold two sets of licenses: one is the Type 7 alternative asset trading license under the Hong Kong Securities Ordinance, and the other is the VATP license under the Hong Kong anti-money laundering regulations. When Hong Kong amended the anti-money laundering regulations, adding anti-money laundering provisions for cryptocurrency, these specific anti-money laundering obligations were entrusted to the Securities and Futures Commission of Hong Kong. The Securities and Futures Commission of Hong Kong has become responsible for cryptocurrency anti-money laundering in Hong Kong and must have regulatory powers. Therefore, the Virtual Asset Service Provider license (VATP) was established in the anti-money laundering regulations, which officially took effect on July 1 of last year. This led to many exchanges announcing the closure of their Hong Kong operations on June 1 of the previous year.

In the Securities Ordinance, the Type 7 License has always existed. Before the Hong Kong Securities and Futures Commission amended the Anti-Money Laundering Ordinance and before being granted Crypto AML responsibility, it only issued the Type 7 License based on the Securities Ordinance. This is a very unique situation in Hong Kong.

In addition to adding another type of license, this ordinance has also led to significant changes in the regulation of money changers' licenses in Hong Kong over the past year and a half. In Hong Kong, money changers are licensed by Hong Kong Customs, and money changers naturally include the exchange between Crypto and fiat currency in their scope of business. Therefore, they started to conduct 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 independently drafted anti-money laundering requirements for these money changers and amended the requirements for money changers' licenses.

After the amendments were completed, Hong Kong's new legislation clearly stated that the maximum AML responsibility for Crypto is the Hong Kong Securities and Futures Commission. Therefore, Customs' statements no longer hold weight, as the law did not grant them the authority to oversee Crypto AML. Therefore, the proposal made last year was to have money changer licenses jointly reviewed and issued by both Hong Kong Customs and the Hong Kong Securities and Futures Commission, but this was just an idea from both parties.

In May of this year, the law regarding money changer 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 now entirely under the purview of the Hong Kong Securities and Futures Commission for review and issuance. The Financial Action Task Force's AML regulations on Crypto have led to amendments to Hong Kong's AML Ordinance, affecting the entire Crypto industry in Hong Kong.

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

Hongjun: So what does anti-money laundering specifically refer to in business or in practical terms? For example, does it refer to issues of stablecoin or Crypto exchange to fiat currency bank deposits and withdrawals, or does it assume that stablecoins will all be on-chain in the future and require real-name verification on-chain? Does it have a specific reference?

Dr. Xiao Feng: The AML in traditional finance and Crypto AML have formed two different models due to different technological logics, which is also a very worthy topic of discussion. Traditional finance believes that AML for the entire Crypto space is impossible because it is anonymous. AML in traditional finance is based on identity, but on-chain there is no identity or the identity is anonymous, so they believe there is a big issue and AML is not possible.

Later, after I explained it clearly to them, many traditional finance professionals believed that Crypto's AML is done better than in traditional finance. This is because Crypto's AML tracks wallet addresses and can trace the flow of funds, such as where the money has been and where it has not. If within one country, AML is relatively easy, as there are judicial agencies that can access all banks' data. But in Hong Kong, the process of accessing other banks' data may be much more complicated, and discovery based on identity is much more difficult than on the mainland.

However, in the case of cross-border transactions involving two or more countries, where the individual's funds flow across multiple countries, anti-money laundering efforts are nearly impossible because other countries may not cooperate unless lengthy and complex legal procedures are followed. Additionally, laws in different countries restrict the disclosure of customer information. The traditional financial system's anti-money laundering measures are actually a highly inefficient, costly, and challenging-to-enforce mechanism, but Crypto does not require these limitations. For example, whether it's a stablecoin or a token, technically, on the HashKey trading platform, we can trace the token's date of creation and its flow path. The global Crypto anti-money laundering institutions' daily work is to label wallet addresses as either black or white; as soon as an address is associated with a blacklist, we consider it suspicious of money laundering and reject the transaction.

This is a more effective anti-money laundering mechanism. The traditional financial sector is gradually understanding and embracing this approach, believing it to be the best current solution.

Stablecoin Real-World Use Cases

Leo Fung: Why are financial institutions in Hong Kong, as an example, interested in stablecoins, and why do they have to choose stablecoins? Taking a bird's-eye view of the currency war and the struggle for currency power by sovereign nations, we can understand, but why should participants, consumers, and users get involved?

Dr. Xiao Feng: I once had a viewpoint that stablecoins solve the last mile of inclusive finance. Stablecoins are easier to obtain than the US dollar, do not require a bank account, and do not rely on banks. For example, in a country where the US dollar is extremely scarce, even if you have a bank account, going to a bank to exchange for US dollars, the bank may not be able to provide the service because it does not have US dollars. Presently, the largest group of people holding USD stablecoins is in Nigeria, Africa, where over 200 million people, 30% to 40% of them have USD stablecoins, and most of these people may not have a bank account. They cannot open a bank account, and banks cannot serve 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 converting to USDT, any individual has the ability for global payments and can remit money to anywhere in the world.

For example, a domestic worker in Hong Kong sends one to two thousand Hong Kong dollars to his parents in rural Philippines every month. The existing system takes 15 days to transfer with fees between 7% to 10%, for his parents to receive the money in rural Philippines. If they use stablecoins, whether it's an HKD stablecoin, USD stablecoin, or offshore RMB stablecoin, his parents also have mobile phones. Currently, about eighty to ninety percent of people have mobile phones. With stablecoin payments, they receive the money instantly, without needing to pay that 7% to 10% fee, and most importantly, the transfer is completed in seconds. This is the real essence of inclusive finance. Therefore, the new technology and financial market infrastructure actually contribute to achieving inclusive finance.

Liu Feng: So why are these institutions so eager to apply for a license? What do they see?

Dr. Xiao Feng: If you are an institution that started preparing three or four years ago, I believe you saw tremendous potential. If an institution hastily announces this month that they want to issue a stablecoin, I think most of them are speculators who don't really understand how to operate a stablecoin system.

Liu Feng: Even if they have long-term plans, if we look back now, who would want to use a Hong Kong stablecoin if launched today? Including the anticipated Chinese Yuan stablecoin, in a situation where our capital account is not yet open, what are the use cases for a Chinese Yuan stablecoin today?

Dr. Xiao Feng: Stablecoins have been framed in a narrow range when understood, which I think is incorrect. Stablecoins are not just payment tools. Although U.S. legislation views the USD stablecoin as a payment instrument, it also leaves a loophole, authorizing the regulatory agency of stablecoins to submit a research report on non-payment USD stablecoins within one year of the law taking effect.

Currently, 99% of USD stablecoins are not used for payments but for trading. It can be considered trading brought about by payment, but it mainly involves transactions between crypto assets and stablecoins. The USD stablecoins used for payments are expected to have a payment volume of $73.2 billion in 2024, which is not a large number and is more geared towards crypto asset trading.

Stablecoins have actually already set their course towards being a medium of exchange and unit of value, and in the future, they will become a unit of value in the virtual and digital worlds, serving as a medium of exchange for all virtual and crypto assets. In the future, the Hong Kong dollar stablecoin and offshore Chinese Yuan stablecoin will also be used in many scenarios such as RWA transactions. I think this is its main purpose, and of course, it can also be used for payments, but at least in the next three years, it will not be the primary use.

Revisiting the Development Context of the Crypto Asset World

Liu Feng: What everyone is eagerly anticipating in the payment field actually needs more time.

Dr. Xiao Feng: Yes, payment certainly has its associated functionality. The stablecoin itself was not created for payments, but because of the significant volatility of Crypto assets, we need something with a relatively stable value to price and trade these highly volatile assets. The stability of stablecoins is in comparison to the volatility of Bitcoin, not in relation to the USD. Some people now explain stablecoins by saying they are pegged 1:1 to the USD and cannot be decoupled; stablecoins do not exist for this purpose.

When stablecoins appeared in 2014, the entire market was calling out, saying that the volatility was too high. I couldn't use Bitcoin or any other currency as a medium of exchange. I needed something with a stable value to price these highly volatile assets. For example, how much is one Bitcoin worth? $120,000? Actually, what you're saying is $120,000 USDT, and then used for transactions as well.

Stablecoins on Private Blockchains Will Not Succeed

Liufeng: When USDT or USD-pegged stablecoins were born, in fact, no one used them for several years. At that time, all crypto assets were priced in fiat currencies. Whether it was the US dollar or the Chinese yuan, for a long time, the Chinese yuan was actually the main pricing currency for the entire crypto market.

In fact, from today's perspective, an important use case for the internationalization of the Chinese yuan is the pricing of crypto assets. However, due to our regulatory policies, this phenomenon was stopped, leading to the emergence of stablecoins. Today, we are once again discussing the resurgence of stablecoins. Ten years ago, this topic should have been discussed, and at that time, there was actually a trend that we wanted blockchain but not Bitcoin. Today, it seems like 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 Chief Scientific Adviser's Office issued a policy report titled "Blockchain and Distributed Ledger." The argument in it was that the blockchain is good, the distributed ledger is also good, it's just that the currency is not good, so the concept of private blockchains was proposed. Up to now, where have these private blockchains gone? The market and technology have provided answers; private blockchains are not feasible. The essence of a blockchain is that it comes with its own token. If it doesn't have a token, it's still just the Internet. In fact, we see that those who were most against blockchain with a native token have gradually come to accept it. If you accept stablecoins, it is the token on the chain.

Liufeng: Is it possible that the stablecoins we are discussing today, or stablecoins discussed in the Chinese context, will be issued on private blockchains in the future, is this possible?

Dr. Xiao Feng: Some people have always tried to do this, but I believe it is impossible to succeed. Who will use it on a private blockchain? If this usage requires application, permission, and approval, think about it. From a market perspective, how difficult the promotion would be. First, I have to apply, and then you have to spend a lot of effort to review one by one, this is similar to traditional financial market KYC. A very important feature of blockchain development is that it does not require permission because it is a permissionless network where anyone can freely join and leave, and I can make my own decisions. The most typical example is Bitcoin miners. I buy a mining machine, find a place with electricity and the internet, want to join, just join, don't want to join, I can turn off the entire mining machine. This is how Bitcoin mining started.

Most applications, or successful applications, are generated in a permissionless state. Because of the digital economy we mentioned earlier, the so-called cross-time, cross-space, cross-jurisdictional, cross-subject organization, then who will grant permission for this? Based on what standards will permission be granted? So if you really want to promote and succeed, you must follow a basic principle of blockchain, just like whether there is a coin, which is also a basic principle. If a bank wants to create a public consortium chain or open consortium chain, isn't it even more difficult to find customers than offline? What's the point of having this chain if you have no customers? In the end, all these problems arise because of your lack of efficiency and cost-effectiveness, causing everyone to be unable to truly come forward.

Coopetition Between Traditional Brokerages and Cryptocurrency Exchanges

Liu Feng: In addition to stablecoins and what we just talked about, could Dr. Xiao please talk about the trading licenses currently being issued? This is also a hot topic in the market, as many traditional brokerages are enthusiastically entering the cryptocurrency trading system. How are these licenses issued? How do you view the value of these licenses, and how can traditional brokerages do cryptocurrency trading well now and in the future?

Dr. Xiao Feng: From the perspective of brokerages, they are applying for a business upgrade of their existing securities brokerage license. They used to trade stocks on behalf of clients, and now they hope their license can also allow them to trade cryptocurrencies on behalf of clients; Crypto is just one thing they do. Very few standalone brokerages apply for, for example, the Type 7 trading platform license or the VATP license.

In Hong Kong, our HashKey trading platform is referred to as an independent third party, and almost all brokerages, after upgrading their financial licenses, will aggregate orders to us, as we are a trading system. But if you are a brokerage setting up a trading platform, other brokerages will not come to you. This can lead to a problem: how do you solve your liquidity? You need to build a liquidity pool yourself, which is a very costly endeavor, but if there are no orders, how do you build this liquidity pool? In this case, it can be almost certain that you will never make money unless you are the only player in this market. Other brokerages are forced to trade with you and send orders to you.

Trading platforms are striving to build very good liquidity for any trading pair, and the construction of any liquidity pool requires costs that need to be amortized. Therefore, if you have 40 brokerages all coming together for 10 trades, everyone benefits.

What is the Value of a Compliant Digital Asset Trading Platform?

Liufeng: As licenses continue to be issued, have you seen the trading volume and liquidity of local Hong Kong-based crypto asset trading platforms improve?

Dr. Xiao Feng: From the data of our trading platform, not only has the trading volume been growing, but customer growth has also been very rapid, including the growth of assets on our trading platform. This growth is very significant because every individual who registers as our customer undergoes very strict KYC (Know Your Customer). Customers who have undergone strict KYC are high-value customers. We also have an offshore trading platform, categorizing trading platforms into two types: offshore and onshore. Hong Kong-based trading platforms belong to the onshore category. The growth of customers in offshore trading platforms is, of course, faster because the KYC standards are not as strict. However, we ultimately found that the value of onshore trading platforms is 10 times that of offshore trading platforms, mainly reflected in trading volume and trading commissions.

We have chosen to do things in a compliant manner, I believe that since 2009 for Bitcoin, or around 2011, there has been trading, I have three observations.

First, the first one is from 2009, Bitcoin and ETH etc. are called native digital assets. Due to the distributed ledger, many things have come out of nothing. With the emergence of USDT, the development of digital twins to today, the native digital stage has created offshore trading platforms, which have also made a lot of money. But now, the digital twin stage has begun, which will create new trading platforms, namely onshore trading platforms. Because anything related to digital twins is seen as securities issuance, you need to be licensed, compliant, and regulated. Any issuance of RWA, if not approved by the regulatory authorities, may face significant troubles in the future. This is not the era of ICOs, back then Hong Kong could not regulate you. But now there are laws in place, if you do not change the trading platform model, you will run into big trouble. At the same time, digital twins also bring us huge opportunities, digital twins may increase the market size of the entire tokenized asset market from $3 trillion to $30 trillion, otherwise it would be impossible. Assuming the market size reaches $30 trillion, still unregulated, does such a market exist? No country will accept such a market. Therefore, this is the first observation, from native digital to digital twins has brought.

The second observation, that is the transformation of trading platforms. From offshore to onshore, the first stage offshore trading platforms have been successful. As Hashkey, we do not believe we can emulate them because that is a dead end, so we are welcoming the second wave of vibrant development of digital twin token assets in the form of onshore trading platforms to provide services.

The third observation is actually the integration between on-chain and off-chain. Since last year, Bitcoin and ETH have seen many native digital tokens that move from on-chain to off-chain, transforming into ETFs on exchanges which have no actual relation to the chain when they become ETFs. At the same time, companies like BlackRock are also moving their off-chain assets onto the chain, tokenization of various funds, and even the currently hot topic of stock tokenization. All of these can be summarized as the three development trends since 2009.

Hong Kong vs. Singapore

Hong Kong Poised to Become Digital Asset Trading Hub

Liufeng: Do you think Hong Kong could truly become the world center for digital asset trading again in this trend?

Dr. Xiao Feng: I think it is highly probable for Hong Kong; or I should say it has its own unique advantages. The core factor of this advantage is actually China. From the internet, AI to Crypto, global competition mainly comes from the United States and China. Among the top twenty global internet platforms established by the United States, half are in the US and the other half are in China, with almost no presence from Europe or other countries. The same applies to the AI sector; apart from the US and China, there are hardly any other countries developing large models. It is said that 40% to 50% of members in any large model team in the US are Chinese, especially first-generation overseas students. The same goes for the development of Python; globally, Europe has almost no contribution to the development of underlying technologies. Even in the application layer, which is the application layer of digital twins, hardly anyone in Europe is working on these things. The actual work is either in the US or in China or within the Chinese community.

Therefore, this is one of the most crucial factors for Hong Kong to potentially become the global center for Crypto. In addition, under the "One Country, Two Systems" framework, Hong Kong's common law system and the structure of the Anglo-American legal system differentiate it from mainland China, giving it unique advantages. Mainland China follows a civil law system where everything requires a permit to proceed. Hong Kong, on the other hand, follows common law, so under the "One Country, Two Systems" framework, Hong Kong is more likely to represent China and do more in this regard.

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

Liufeng: The statement you just made sounds very reasonable today, but if we put it in the context of last year or the year before, many people might have immediately dismissed it as nonsense because Hong Kong was not doing very well at that time. Now, it seems Hong Kong has become the darling of the capital markets again. Can you talk about the changes and key factors that you have observed behind this?

Dr. Xiao Feng: I think there are mainly two factors at play here. The first factor is, sometimes I joke that DeepSeek is saving China. The emergence of DeepSeek has led to a significant change in the global valuation of Chinese assets. When you don't like it, give it an 8x price-to-earnings (PE) ratio; when you like it, give it an 80x PE ratio. Because our valuation of Chinese assets has suddenly become optimistic, everyone has made significant adjustments. Previously, we were overly pessimistic, so the rebound will be very significant. Before DeepSeek, everyone thought that Chinese AI could not succeed, which led to a downward adjustment in the overall valuation of Chinese assets.

The second aspect is that due to President Trump's policies, traditional ally relationships in the U.S. have weakened, and everything has turned into business. This has caused money that was originally concentrated in the U.S. to begin to reallocate. Many funds are no longer all placed in the U.S. due to high uncertainty. Therefore, in the process of reallocation, some funds naturally flow to China.

This includes many Chinese who had a hard time moving their money to the U.S. before. Now, seeing the tension in U.S.-China relations and worrying that the U.S. may freeze their assets, they have also started to move some funds, with Hong Kong becoming a haven.

Another haven is that the Russia-Ukraine war has caused Switzerland to abandon its neutral stance and support Ukraine. After giving up its neutral stance, the funds that were originally in Switzerland began to rebalance. Since Switzerland is no longer a neutral country, those funds do not necessarily have to stay entirely in Switzerland.

So you can see that there are actually two places that 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 money was managed through London, but now with Brexit, much Middle Eastern capital has returned to Hong Kong and Dubai. Now, Dubai is also a place where capital is overflowing.

Singapore's Positioning as Asia's Switzerland, Hong Kong's Positioning as Asia's Wall Street

Liu Feng: For a long time, throughout the Chinese-speaking region, people have had a better outlook on Singapore, seemingly viewing Singapore as a significant challenger and alternative to Hong Kong's financial center status. We have seen regional centers of large financial institutions moving from Hong Kong to Singapore, financial media also shifting from Hong Kong to Singapore, including some core cryptocurrency institutions as well.

Dr. Xiao Feng: Both of these places are international financial centers, but each has a completely different positioning. Singapore's positioning is as Asia's Switzerland, while Hong Kong's positioning is as Asia's Wall Street. In Singapore, there is not much good trading going on; the most active trading market for various assets is in Hong Kong. If you position yourself as Asia's Switzerland, you hope for social stability, a calm market, and no major ups and downs to avoid criticism. Therefore, Singapore will allow those unlicensed entities that do not serve Singaporeans to leave because they only bring reputational damage and do not pay taxes, which does not benefit Singapore much. If you position yourself as Asia's Wall Street, it's a different story. You have to make the market active and provide many investment and trading opportunities; otherwise, it's not Wall Street. These are the different choices made by these two places.

Dr. Xiao Feng: For example, today we are sitting in an office in Central which used to be part of the world's financial center. In your observation, how many of the surrounding bankers and wealth managers have truly embraced cryptocurrency and digital assets?

Dr. Xiao Feng: Currently, the proportion of the traditional financial market that has embraced cryptocurrency is not too high. It's like a bottle of water where half is left—some say there's only half left, some say there's still half. The trend I see is that although the proportion is not high, it is increasing. I think next year will be a period of very rapid growth. The most basic reason is that U.S. legislation has provided legitimacy and compliance for the entire crypto industry.

Previously, the proportion of the traditional financial sector was not high mainly due to compliance issues. They wouldn't risk a lot for a little. Although the returns on the asset class are currently high enough, the vast majority of financial institutions will not take risks, especially those managing other people's money, because a compliance issue would be their responsibility. However, once there is legal endorsement, coupled with the push from the Trump administration, traditional financial institutions and investors can massively enter this field. Therefore, it is expected that after the U.S. legislation is passed this year, next year will enter a period of explosive growth.

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

Hong Jun: You just mentioned what bankers are doing. I am thinking about whether this round of regulatory and licensing policies in Hong Kong is too strict? Blockchain is actually a place for borderless transactions, and has it inadvertently benefited many overseas projects, making it more difficult for local projects in terms of compliance and licensing?

Dr. Xiao Feng: It is inevitable for a jurisdiction to obtain a license and be regulated. The offshore space will gradually be compressed mainly from two aspects: legal and regulatory, and operational resources. It is unlikely that asset-backed entities will go to completely unregulated places for trading, as securities regulators will not agree.

In addition, things that are native to the digital world are also contracting. This world does not need hundreds of chains; ideally, shrinking to one chain like Bitcoin and one chain like Ethereum is already sufficient. The underlying protocols of the Internet are globally unified, and if there are two protocols, the world will become complex, and cross-chain will face problems.

The underlying protocol of blockchain should be open-source and decentralized, representing a globally consistent entity. At the application layer, it is necessarily centralized to address specific scenarios, requirements, and consumer protection. In the upcoming eras of Real World Assets (RWA), stablecoins, and digital twins, allowing rug pulls will no longer be feasible.

Liufeng: Dr. Xiao, you have been emphasizing decentralization and permissionlessness, yet you also mention embracing regulation and conducting compliant business. This seems contradictory to the native spirit of cryptocurrency. How do you view this contradiction?

Dr. Xiao Feng: When viewed in a layered manner, this is not contradictory. The underlying protocol must be decentralized, while at the application layer, some level of centralization is inevitable. Centralization and decentralization can be explained from the perspective of fairness and efficiency in economics. Emphasizing fairness requires decentralization with more inclusive voting, while emphasizing efficiency requires centralization because the highest efficiency often stems from a single decision-maker. Most commercial applications should find a balance between fairness and efficiency.

At the application layer, 100% decentralization is not realistic. This is indeed a paradox I have been contemplating, reflecting the unity of contradictions. Recently, I have been reading a book by Professor Tian Tao from Renmin University about Huawei, titled "Advancing in Paradox," which discusses the importance of paradoxes.

HashKey's Listing Goals and Choices

Liufeng: Have you considered listing in the Hong Kong market?

Dr. Xiao Feng: We had this goal since our establishment in Hong Kong in 2018, so we have very strict requirements for our compliance. We are one of the few globally that can provide audit reports from the Big Four accounting firms for over three consecutive years. Therefore, we naturally hope to realize our IPO dream, as we should also become a public company to operate in a more transparent manner.

Unforgettable Moments in the Crypto World

Liufeng: Additionally, I am curious to hear about your past experiences. You are a veteran in the financial industry, transitioning from traditional finance, and for almost a decade, you have been emphasizing the importance of blockchain. Soon, it will be Ethereum's tenth anniversary, on July 30th.

Specifically, you and the underlying Wanchain blockchain were actually the most critical funding before Ethereum went live that year, and you supported it. Could you briefly look back on the past decade or so and share some of the most enlightening moments you have witnessed in the development of this industry?

Dr. Xiao Feng: That may have to go back to 2014. I started to get in touch with and research blockchain in 2013, and in 2014, we went on a trip overseas. That year, I went to San Francisco and also visited Ripple. At that time, Justin Sun had just been appointed as the chief representative.

After the trip, my indirect understanding from China turned into firsthand experience. From New York to Silicon Valley and back, at that time, I firmly believed that this new technology could really reshape the financial industry. Therefore, after returning in 2014, we started to take action in 2015. At the end of 2014, I discussed Ethereum at a forum in a financial magazine, which was live-streamed by Sina Finance. After the live stream, Shen Bo introduced me to Vitalik. In 2015, we met, and then there were investment matters. At that time, I thought Vitalik's narrative to me was worth it. First, it was definitely correct, logically correct; second, if there were difficulties, it was worth supporting. So, initially, I never calculated what investment could bring in return, never considered it at all.

The support for the Ethereum Developers Conference in Shanghai in 2016, the moment I saw the faces of the attendees

Dr. Xiao Feng: In 2015, I supported with $500,000. By 2016, when ETH was already launched on the mainnet, the price had risen to tens of dollars. I continued to ask the Ethereum Foundation, "Do you need money this year?" At this point, they said, "We don't need money this year." I said, "But I promised that we would continue to support you in 2016, so I still plan to spend this money."

We had a discussion with a condition: if you hold Devcon in Shanghai, I will cover all the costs, and the advertising and other ticket fees will all go to the Taiwan Foundation. In this case, Devcon in 2016 was held in Shanghai, with all costs amounting to $500,000. I think that's good too. We fulfilled our commitment, not only giving $600,000 in 2015 but also continuing to support in 2016. At the same time, I think that conference made me feel that when I entered the venue and found over 800 people, 90% of the attendees were foreigners. I estimate that no international conference held in China has had such a high proportion of foreign participants.

Liu Feng: We are very emotional because a few years ago, China was actually one of the centers of the blockchain world. The reason I bring up this point is that today everyone is discussing the so-called dispute over national currency sovereignty, and blockchain has become the embraced technology. But in fact, for a long time, our motherland was one of the centers of blockchain technology.

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