Meng Yan talks with Xiao Feng: Talking about stablecoin legislation, RWA and Chinese entrepreneurs

Meng Yan: Dr. Xiao, your recent speeches have caused a great response in the entire Chinese blockchain community, especially the "Back to the Origin" speech for blockchain entrepreneurs, which has a wide impact. In this speech, you not only reiterated the value logic of blockchain, but also clearly pointed out that this industry is facing a new outbreak cycle, and entrepreneurs need to return to their original intentions and start again to get on the right track. This is my understanding of your speech.

The timing of your speech is indeed very accurate. The US Senate passed the voting motion of the GENIUS Stablecoin Act on May 19, and the Hong Kong Legislative Council passed the Stablecoin Bill on May 21. A legislative competition on stablecoins has quietly begun. At present, a new consensus is forming that the blockchain field is about to usher in a golden window period for entrepreneurship and innovation, and its energy intensity may exceed that of AI for a period of time. Now many outsiders who have never participated in blockchain and Web3 may have been dismissive of it last month, but now they have adjusted their ideas and started to pay attention to opportunities in this field.

This situation is hard-won. I have been involved in this industry for ten years, and I am still quite emotional about this. In the past few years, major countries around the world have basically adopted a very cautious or even negative attitude towards blockchain, encrypted assets, Tokens, DeFi, Web3 and other new technologies. Supervision is tight, and the mainstream media almost unanimously engages in stigmatization. In the more than 200 years since the Industrial Revolution, there is no other example in my memory of treating an emerging technology in this way. But the green mountains cannot cover it, after all, it flows eastward, and finally waited for this day.

However, the public still needs an explanation for the sudden U.S. Trump administration’s about-face. I’ve seen some self-media interpret this from a conspiracy theory perspective, such as a tool for the Trump family to enrich themselves, or a currency war launched in conjunction with the trade war.

So what do you think is the motivation behind the United States’ push for stablecoin legislation?

Xiao Feng : The US Presidential team and Congress are relatively frank and transparent about the motivations for stablecoin legislation. They openly say that the first is to modernize the US payment and financial systems, and the second is to consolidate and enhance the status of the US dollar and create trillions of dollars of demand for US Treasury bonds within a few years. I think this is the answer, there are not so many conspiracy theories here.

Not long ago, I talked with a crypto policy advisor to the US President. He told me very directly that the national reserve of Bitcoin is secondary to the United States, and the stable currency of US dollar is the first, which is the core interest of the United States. As far as I know, the goal of President Trump's team is to ensure that the GENIUS Act is passed before the US Congress goes on vacation in August. Now it seems that it may be even faster.

Under such circumstances, the Hong Kong legislative authorities demonstrated flexibility and efficiency and passed the Stablecoin Ordinance in the third reading, which is commendable.

Meng Yan: Some people have compared this bill to the Bretton Woods Conference in 1944 and the Nixon Shock in 1971, saying that it is building the "Bretton Woods system in the digital economy era." The general logic of this statement is that the United States is very worried about the weakening of the status of the US dollar in the process of deglobalization. Therefore, the use of digital currency as a "nuclear weapon" will have a dimensionality reduction impact on the existing international monetary and financial system, hedge the impact on the US dollar, and consolidate the hegemony of the US dollar. What do you think of this view?

Xiao Feng : I mentioned earlier that the United States has publicly acknowledged that one of the important purposes of promoting stablecoin legislation is to consolidate and enhance the status of the US dollar. And judging from the Senate’s vote, this is a bipartisan consensus, and they also know that they are making history.

It took the United States a long time to come to this understanding, and it also paid a price. The previous US government, especially expert bureaucrats like former SEC Chairman Gensler, knew about blockchain, but why did they still struggle with it for so many years? It was simply because they were reluctant to give up the existing payment network, including SWIFT, and the financial governance, supervision, and anti-money laundering mechanisms built on this network.

However, the progress of blockchain technology in recent years, especially the practice of financial sanctions against Russia after the Russo-Ukrainian war, shows that the technological advantages of blockchain are solid and irrefutable. Therefore, the entire financial infrastructure is moving towards blockchain, just like the transition from steam engines to the electrification era. There is no doubt that no force can stop it. There is no point in burying your head in the sand. The situation is stronger than people.

Compared with the previous administration, the Trump administration has shown a more realistic attitude in all aspects. At worst, it is unprincipled, but at best, it is proactive. So the current attitude of the United States is that if it is inevitable for payment and settlement to bypass SWIFT, then at least do not let it bypass the US dollar; if the tokenization of the US dollar is inevitable, then at least ensure that each US dollar token is created based on US assets. Since it cannot be blocked, then it can be properly guided to ensure that the US dollar remains the main payment and settlement tool in the digital economy, in the Web3 world, and in the AI ​​era. This is the core national interest of the United States. From the perspective of the United States, this is an open conspiracy and an open card.

Can the US dollar stablecoin create a new "Bretton Woods system"? It remains to be seen. Over the past few years, the global status of the US dollar has declined. If the United States hopes to consolidate the status of the US dollar through stablecoins, there is no doubt about that. However, whether such a measure alone can achieve the goal, especially whether it can be said that it has created a new system, I am afraid it still needs to see the subsequent practice and legislative interaction process. However, I have a judgment that although the Trump team and the US Congress have a deep understanding of the US dollar stablecoin, the long-term impact of this matter may not be fully imagined. In this sense, promoting the GENIUS Act is taking some risks. Will the future be like his trade war policy? It remains to be seen.

2. Two US dollar stablecoin systems and their complex consequences

Meng Yan : Speaking of long-term impact, the conspiracy theory of "currency war" is very popular on the Chinese Internet now, which believes that the United States launched stablecoin legislation to "weaponize" stablecoins. Do you agree with this statement?

Xiao Feng: "Currency war" has been a popular narrative for more than a decade. From the perspective of other countries, it is indeed necessary to make a full estimate of the impact of the US dollar stablecoin. Legislation to promote tokenized fiat currency is an unprecedented event in the history of world currency, which is bound to trigger a series of complex economic and financial reactions. No one can fully foresee its consequences, not even the US President and Congress. However, there are at least two issues that need special attention in terms of the content revealed by the GENIUS Act.

The first is that the boundaries of sovereign currencies have become more fragile. The current use of currency is based on national administrative divisions. Sovereign states have internal currency monopolies and control foreign exchange exchange at the border. This governance mechanism has been in place for hundreds of years. Once the US dollar stablecoin is widely used, this mechanism will be broken. Blockchain transforms the Internet into a payment network and financial infrastructure, so that currency no longer relies on the traditional banking system and clearing network, but can penetrate into the micro level of another economy like capillaries through smart contracts, encrypted accounts and peer-to-peer transmission mechanisms, covering daily consumption, labor payment, cross-border e-commerce, freelance settlement, and even AI-to-AI and machine-to-machine payment behaviors. At this stage, stablecoins are no longer just a payment tool, but a financial infrastructure that can be embedded in the economic system of other countries. It can "incorporate" part of the economic activities of other countries into its own economic map, essentially forming a new monetary network expansion mechanism. This poses a structural challenge to existing sovereign currencies, financial regulatory frameworks, and even macroeconomic policy control measures. Because what you originally relied on to build the banking system, foreign exchange controls, and payment settlement rules are becoming increasingly fragile in the face of blockchain and stablecoin technology.

Meng Yan: The situation you are talking about has already happened. In some countries in Africa, Southeast Asia, and Latin America, the national currencies have been depreciating year after year, and young people are using USDT and other stablecoins in large quantities, which has caused headaches for the monetary authorities of these countries. When I was on a business trip to Ghana last year, local central bank officials told me that the US dollar stablecoins were spreading like wildfire among young people in Ghana and Nigeria, weakening the status of their national currencies. They asked me how to resist the invasion of US dollar stablecoins through technical means, and I couldn't answer. Because your national currency depreciates by 20-30% every year, it would be strange if ordinary people didn't use US dollars.

Xiao Feng: This is just the beginning. With the development of the US dollar stablecoin, the second problem will arise, that is, the complex ecology that may emerge in the offshore US dollar stablecoin system. According to the GENIUS Act, institutions outside the United States can also issue US dollar stablecoins, but they must be based on US dollar legal currency assets, registered in the United States, subject to the supervision of relevant US institutions, comply with relevant US laws, and respond to orders from US law enforcement authorities at any time. These requirements are very high, but it is important to understand that these requirements are conditions for "legal circulation in the US market." If you do not enter the US market and do not contact Americans and US entities, then even these conditions can be relaxed. This is actually equivalent to opening up a gray space, conditionally allowing foreign institutions to mint US dollars. In this way, there will be two systems of onshore US dollar stablecoins and offshore US dollar stablecoins in the future, similar to today's US dollar and Eurodollar system. Among them, the onshore US dollar is relatively strict and consistent, while the offshore US dollar ecosystem will be more complex. Dozens or even hundreds of digital currencies called "US dollar stablecoins" will circulate, circulate, map, exchange, and interact in dozens of public chains and hundreds of private chains in the two systems, which will produce complex effects that no one has seen before and no one can foresee.

Meng Yan : Can we think that this is actually the United States ceding part of its coinage rights to foreign non-bank institutions, and decentralizing the coinage rights of the US dollar stablecoin? This reminds me of the early Western Han Dynasty in China, when the coinage rights were decentralized and private currency was allowed to be minted, but there was no detailed record in the literature on how these currencies interacted and what kind of economic problems they caused. Since the advent of industrial civilization, no country has tried to decentralize the coinage rights to foreign entities, and today we are about to witness a new stage in the history of world currency development. I will make a comparison that may not be appropriate. The future US dollar stablecoin is like the copper coins during the reign of Emperor Wen and Emperor Jing. There are many "brands", some high-quality, some low-quality, some minted by Deng Tong, and some minted by Liu Bi, circulating and competing in the global market. On the surface, the US government has ceded part of the US dollar coinage rights, but in fact, through supervision and law enforcement, it has turned US debt into a "copper mine" for minting copper coins, retreating to advance, and making the world's stablecoin issuers become "chain stores" of the US dollar, greatly increasing the global economy's demand for US debt, enhancing the penetration of the US dollar, and magnifying the long arm of US financial supervision.

Xiao Feng : Yes, but the actual situation is more complicated. When trade frictions lead to "anti-globalization", the global digital economy is experiencing a "dollarization" trend. When AI is advancing by leaps and bounds, the "value Internet" is suddenly accelerating. The complex reactions of these economic and technological trends are beyond everyone's ability to predict.

In particular, the offshore dollar stablecoin system will have multiple levels, attracting many financial institutions, Internet companies and even sovereign states to participate, and a particularly rich ecology will emerge. From high-level offshore dollar stablecoins issued by foreign countries but fully complying with US regulatory rules and circulated in the United States, to local dollar stablecoins that follow the supervision of other sovereign countries but do not enter the United States and do not touch Americans, to "wild" non-compliant dollar stablecoins, and the inevitable problems of various counterfeit coins, over-issuance, dirty money, etc., on the one hand, it will lead to a sharp increase in the "brand effect" of the US dollar, the global spread of the psychological anchoring effect of the US dollar as a "unit of account", and the expansion of the scope of US financial regulatory enforcement. On the other hand, the super-complex currency system is bound to bring unprecedented challenges to the supervision and financial stability of countries around the world and the United States. In the early stage, the US regulatory capacity is likely to be unable to keep up and reach the problem, and it may even lead to policy repetition. In short, the real world will be very exciting and very messy. I can say with certainty that we will enter a period of ecological explosion of the digital economy, and soon see many new digital economic phenomena and business species.

At this stage, the discussion on this issue is still insufficient, especially on the Chinese Internet.

However, I still believe that the main purpose of the United States to introduce a stable dollar currency is to follow the trend of technological development, take the initiative, and consolidate the status of the dollar, rather than to attack the current international monetary system. The so-called "weaponization" is the "companion" effect of the disruptive technological advantages of blockchain. If we discuss this issue emotionally, it is easy to be misled. In the current Chinese Internet public opinion, conspiracy theories and struggle narratives are very fashionable and exciting. We must pay special attention to prevent being misled by emotions and standing on the opposite side of the historical trend. It's very simple. If this is a currency war, should we guard against it? Should we continue to block the entire set of technologies such as blockchain, tokenization and crypto finance? If you think about it this way, you will make a big mistake.

We need to understand that the "aggressiveness" of blockchain stablecoins is to naturally absorb and bind more real economic activities under a framework of higher efficiency, lower cost and fewer links. Its expansion is based on technological advantages, relying on efficiency, institutional design, technological advantages and network effects, and it is impossible to resist it for a long time. We admit that it has the characteristics of disruptive innovation, and it is aggressive and destructive to the existing technological system. It is not an exaggeration to say that it is a dimensionality reduction attack. But what attitude should we use to treat it? Isn't it a dimensionality reduction attack on hot weapons against cold weapons in history? Isn't it a dimensionality reduction attack on steam engines against human and animal power? Isn't it a dimensionality reduction attack on the postal and telephone networks by the Internet? So which side are you on?

My attitude has been consistent and has not changed in the past ten years. In the face of technologies like blockchain, we should follow the trend and develop our own stablecoin ecosystem in an open, compliant and trustworthy way, so as to have a place in the new generation of financial networks. Some people talk about monetary sovereignty and financial sovereignty. I would like to say that in the face of disruptive technological innovation, actively responding is the truly responsible attitude towards sovereignty.

3. The breakthrough of stablecoins is ultimately a victory of technological innovation

Meng Yan: The United States is the first to promote stablecoin legislation, which is still special. The special thing is that the first to come out to eat crabs is actually the world's largest and most advanced economy to promote the transformation of the world's most important reserve currency. For many countries, they may prefer to do some pilots in some less important economies with less important currencies and slowly promote this matter, which will be safer. But now the attitude of the United States is equivalent to pushing a storm of changes directly in front of everyone, which has indeed formed a situation of reverse pressure, and posed a Sphinx-like problem to everyone: answer me, or I will eat you.

Therefore, facing this challenge, many people have a defensive mentality out of stress reaction. Especially in the media, how blockchain is used for money laundering, illegal financing and illegal transactions, and various speculation stories are reported every day. Now suddenly the United States uses this technology to promote stablecoins and RWA. Many people naturally think that this is the United States trying to start a currency war and using blockchain as a weapon. This mentality is understandable.

Xiao Feng: The mentality is understandable, but we still have to use the first principles and go back to the origin to think. Now when we discuss the topic of blockchain and stablecoin, there are too many macro discussions. The first thing we talk about is the monetary system, the hegemony of the US dollar, and the financial war, but the micro discussion is very insufficient. Many of us have forgotten that the first driving force for the development of stablecoins has always been technological innovation, which is to create value for ordinary users and consumers. The reason why stablecoins have such a great impact is that the root cause is still the series of technical advantages given to it by blockchain. I have talked about these contents for ten years, but it is not enough. At this moment, it is necessary to repeat them again and again to make everyone understand that the blockchain technology really has great advantages. It is bound to succeed and no one can stop it.

Meng Yan: It is indeed important to make this point clear. I saw you mentioned in a speech that you have been fascinated by blockchain for ten years and your original intention remains unchanged. So can you summarize again what technical advantages of blockchain fascinate you?

Xiao Feng: Its most fundamental technical advantages are reflected in four aspects: accounts, ledgers, accounting methods and accounting units.

In terms of accounts, traditional finance relies on bank custody accounts to record all our economic activities, but in blockchain, there are no bank accounts, and digital asset wallets take their place, called crypto accounts. The creation of crypto accounts is done by users themselves through cryptographic tools, and assets are self-custodied.

From the perspective of ledgers, the public chain is a global public ledger with global liquidity. It is not restricted by administrative divisions and has no boundaries in geographical space or time.

In terms of accounting methods, distributed accounting is different from double-entry accounting, and the clearing and settlement models are also different. Traditional finance is net settlement, while blockchain is transaction-by-transaction settlement, where both money and goods are paid, which is the so-called payment is settlement, and payment, clearing and settlement are completed in one go.

In terms of accounting units, the accounting units on the blockchain are native encrypted digital currencies. If you want to use legal currency as the accounting unit, it is useless to just issue orders. You must first tokenize the legal currency and create a digital twin of the legal currency on the chain.

These technical advantages are more abstract, but reflected in the application, they will provide tangible benefits to users. There is actually a simple way to judge whether a new technology has an overwhelming advantage, that is, to see how many times the efficiency has increased and how many times the cost has decreased. A ten-fold advantage means upgrading, and if it is a hundred or a thousand times advantage, then no force can stop it. For example, a car is about ten times faster than a horse-drawn carriage, so the entire system of horse-drawn carriages must be eliminated. The Internet is a hundred times cheaper than telegraph, telephone and television networks, so when the Internet first appeared, many people also spared no effort to prevent the use of Internet phones and online videos, but what was the result? These networks have now been replaced by the Internet. In the face of such a huge technological advantage, any reason for conservatism or resistance is invalid.

I have always said that users' demand for finance is eternal. They want to borrow money easily and receive money quickly. Let's compare the efficiency of remittances. Now it may take days or even weeks to send money from Shanghai to the United States; but with blockchain stablecoins, it can be received in seconds. How many times is this efficiency improvement? There is an even more extreme case. I recently sent money from Hong Kong to Shanghai, but it was confirmed to be a failure after a month. If I use stablecoins, it may be completed in ten seconds. How many times is this efficiency improvement? It may be tens of thousands or hundreds of thousands of times. With such a huge technological advantage, what force can stop it?

Let me give you another example. It is difficult to achieve 7x24 hours of uninterrupted operation in traditional trading systems. Now some leading stock trading systems are seeking to extend trading hours. Some are already planning 5x23, five days a week, 23 hours a day, but they still have to stop for one hour every day, because in the traditional clearing and settlement system, there needs to be a time point to pause, net and make net settlement. But you see that we do payments and transactions on the blockchain, which are all running around the clock. Why can it be done? It is because it is a transaction-by-transaction settlement of silver and goods on the global ledger, so it can achieve uninterrupted clearing and settlement. I heard that NASDAQ is working on a 7x24 hour trading system, and I guess it will use blockchain technology internally. Once it is done, investors around the world can use the US dollar stablecoin to trade US assets uninterruptedly, which is self-evident for investors and US companies. So you see, these discussions at the macro-strategic level, in the final analysis, still have to be built on technological innovation.

There are many other advantages, such as no intermediary, peer-to-peer, borderless, global second-level payment, near zero fees, automation and irrevocable transactions on smart contracts, etc. Users can see the advantages as soon as they compare. Do we need to convince anyone? It's like comparing electric motors with steam engines, electric lights with gas lights, and integrated circuits with electron tubes. As an ordinary user, you don't need any professional knowledge or other conditions to know which one is better and which one will be eliminated. This is an obvious fact.

If we understand the basic technical facts above, we will come to a simpler conclusion - the fundamental starting point for the United States to promote stablecoins is to follow the trend of technological development and promote the modernization of payment and financial infrastructure.

Of course, such a strategy must have multiple considerations, including maintaining the hegemony of the US dollar, competing in the monetary and financial system, and even making money for the Trump family. However, all considerations are based on the basic fact that blockchain, as a new generation of financial infrastructure, has overwhelming technical advantages. Many people regard blockchain as a scourge, and one important reason is that they do not have a deep understanding of the inherent advancement and inevitability of blockchain technology itself. I often say that the situation is stronger than people. If you can stop it, you can certainly discuss whether to stop it. If you can't stop it at all, then what's the point of discussing how to stop it? Doing something knowing that it is impossible will only miss the opportunity and fall behind in the new round of competition in financial infrastructure and monetary and financial systems.

So I am very excited about the early passage of the Hong Kong Stablecoin Bill. This is the right response.

4. Stablecoin economy is the primary stage of RWA and will promote blockchain applications to cross the gap

Meng Yan: In any case, with the legislation of the US dollar stablecoin and the Hong Kong stablecoin, the big event of stablecoin is coming. What does this mean for entrepreneurs?

Xiao Feng: In the next few years, stablecoins will drive the explosion of blockchain and RWA applications. On the demand side, billions of users will open encrypted accounts on the chain and hold stablecoins, and the user scale will increase several times in a short period of time. At the same time, on the supply side, millions of platforms, enterprises, Internet merchants, self-media and creators will begin to accept stablecoin payments, and a large number of assets will be tokenized and chained to become RWA. "How to earn stablecoins" will become one of the most concerned topics for all companies in the next few years.

Various application demands around stablecoins and RWA will explode rapidly, and truly capable entrepreneurs will put aside their hesitation and reserve and flock in. Stablecoins and blockchain will become the most attractive track with the most success stories in the next few years.

Here I would like to quote a model from a classic business book to explain this phenomenon: the "Technology Product Market Acceptance Curve" proposed by Geoffrey Moore in "Crossing the Chasm". He divides users into five categories: technology innovators (Innovators), early adopters (Early Adopters), pragmatists (Early Majority), conservatives (Late Majority) and skeptics (Laggards). Most high-tech products die in the "chasm" between "early adopters" and "pragmatists". Technology must be implemented from vision to reality, solve specific problems and bring real value, in order to cross the chasm, otherwise it will be silent.

I believe that stablecoins are becoming a bridge for the blockchain industry to cross this "chasm". In the past, when we talked about encryption and Web3, we always stayed in the small circle of "believers" and "technology enthusiasts". Many people agree with the concept, but once it needs to be used on a large scale, problems such as "cannot find a landing scenario", "users don't understand", and "high compliance risks" arise. Stablecoins will become the first blockchain product that is truly adopted on a large scale by "pragmatists". Cross-border e-commerce, freelancers, platform settlement, global payments, everyone has started to use it. It allows blockchain to exist not as a narrative for the first time, but as an infrastructure integrated into the real economic system.

If users want to use stablecoins, they need to open a digital currency account, and then they will be exposed to and learn about wallets. Therefore, stablecoins are not only a product, but also a pass for the entire blockchain industry to cross the market gap. After crossing this gap, there is a huge blue ocean market, which is the mainstream user market composed of "early majority" and "conservative majority". Once it is crossed, "mass adoption" is no longer a dream, but a natural outcome.

I have recently quoted the words of John Hicks, the Nobel Prize winner in economics, on many occasions: "Behind every industrial revolution, there is a financial revolution." Now we are standing at the next part of this sentence - every outbreak of a financial revolution requires a general-level product to break through the boundaries of users. Stablecoins are becoming such a product.

I want to emphasize that such an explosion will only happen once in an industry, and it will be over once it is over. So entrepreneurs may not hesitate any longer. People who have experienced the Internet and mobile Internet know that if you miss this window of opportunity, the difficulty of the future will increase greatly.

5. RWA innovation cannot be a case of wearing new shoes and walking the same old path

Meng Yan: You mentioned RWA just now. It is a very hot topic after stablecoins. It is said that many entrepreneurs in first-tier cities in China are communicating with each other about how to seize the opportunity of RWA. But I actually have doubts about this. The so-called RWA is the tokenization of real-world assets and then putting them on the chain. Now many people fantasize that if they put their unsaleable assets on the chain and turn them into RWA, they will immediately become popular. I think this is illogical. You must have more contact with it and I believe you have a deeper understanding of it. What do you think?

Xiao Feng: I receive entrepreneurs who come to talk to me about RWA almost every day. I have encountered all the asset types you just mentioned. But in 90% of cases, I will advise them to give up. It is technically simple to turn these assets into RWA on the chain, but the question is, will you buy such RWA? I won’t buy it anyway.

RWA is an irresistible trend and will inevitably grow very large in the future. Not long ago, the Boston Consulting Group issued a report predicting that the total size of RWA assets on the chain will reach 18.9 trillion US dollars by 2033, which means that in the next eight years from now, the annual growth rate of RWA will reach 53%. No entrepreneur wants to miss the opportunity to board this rocket.

However, this does not mean that you can rise to the top by simply putting an RWA label on it. From the development of the crypto industry over the past decade, we have learned that development must follow objective laws and be based on value. Objectively speaking, bubbles are inevitable, but if the bubble is too big, it will always collapse, which will drag down the development of the industry.

I have said this to many people. Now many people have a serious cognitive mismatch about RWA. RWA is not a label on the chain or a layer of technical "gold foil" that can transform an asset. It cannot change the essential attributes of the asset. If the assets in your hands lack liquidity, have opaque prices, and have high transaction costs, then they will not soar on the spot after being put on the chain. RWA is not a magician and cannot turn a crow into a phoenix.

RWA is a digital mapping of real assets. The key lies in what you map. If the underlying assets are not good, there is no clear ownership, and there is a lack of standardization, no matter how you package it, it will be useless. It is not a financial gilding technique, nor is it a panacea on the chain.

So I think the development of RWA must also follow an objective law. What is this law? It is to start from high-grade assets, standardized assets, and head assets, and gradually expand to long-tail assets and non-standard assets. What are high-grade assets? They are sovereign bonds, blue-chip stocks of large enterprises, and other assets that are highly standardized, highly accepted by the global market, and have transparent pricing mechanisms. Next are head corporate bonds, high-quality bills, accounts receivable, and even real estate mortgages in high-growth areas. This type of asset has the potential to be tokenized. Because their value foundation is solid and the understanding of prices between buyers and sellers is symmetrical, it is possible to amplify liquidity after being put on the chain instead of creating illusions.

You are right. Now many people are doing RWA with a hype mentality, wanting to find a shell on the chain to "cash in" worthless things offline, or even engage in some pyramid scheme-like gameplay. I am not optimistic about this route of wearing new shoes and walking the old path. RWA is not a tool to evade supervision, nor is it a trash can for non-performing assets. If you don't really solve the trust problem, circulation problem, and pricing problem, it doesn't make sense to put it on the chain.

We must seek truth from facts. Objectively speaking, high-quality assets are currently concentrated in the United States. The real opportunity for the Chinese is not to rush to tokenize any assets, but to gain a foothold in the "stablecoin economy" stage. What does it mean? It means going overseas first, selling products and providing services online and on the chain, and earning stablecoins. This is our current advantage. In short, to engage in RWA, start with earning stablecoins.

Why? Because we have the world's strongest supply chain, engineering manufacturing capabilities and Internet operation capabilities. Cross-border e-commerce has already reached scale, and e-commerce bosses are already good at traffic and efficiency. Once stablecoins are used, transaction costs are immediately reduced and settlement speeds are greatly improved. This is the starting point for the real combination with blockchain and the Chinese solution for the stablecoin economy stage.

This is not my imagination, but a reality that is happening. Some small and medium-sized e-commerce companies that went overseas in the past few years, as well as some foreign trade companies and export merchants in Yiwu, are now accepting stablecoins very quickly. Some of them are quite large in scale, and their ability to earn stablecoins is much stronger than many blockchain projects. This is just the beginning. I am sure that once the GENIUS Act is passed, platforms such as Amazon will immediately support stablecoin payments, and tens of thousands or hundreds of thousands of e-commerce merchants will soon become the protagonists of the stablecoin economy.

So I think it is time for Chinese Internet elites to embrace blockchain and the stablecoin economy. As long as you stand firm and gather users, merchants, and cash flow, you will naturally hatch a batch of high-quality RWAs. For example, accounts receivable from cross-border orders and supply chain debts based on real logistics are all natural on-chain assets. At that time, you don't need to tell stories, and investors will naturally come to buy and sell your RWAs.

So I suggest that you take the first step firmly. The stablecoin economy is the primary stage of RWA, and it is the bridgehead for blockchain to truly enter the industry and cash flow. Whoever stands firm at this stage will naturally occupy the RWA high ground in the next stage.

Meng Yan: Some people think that the RWA concept is popular and it is time to issue a coin. Create an RWA project and then launch an ICO. Is this possible?

Xiao Feng: This question should be viewed from two aspects.

On the one hand, the stage of getting rich by telling a chain story, making a protocol, and issuing a coin has passed. In the past ten years, we have experienced the first growth curve of the blockchain industry, which is a development stage dominated by infrastructure construction and coin issuance financing. At that stage, it was indeed "narrative-driven capital". Issuing a coin could drive an entire round of financing.

But looking at it again today, the marginal effect of coin issuance and financing is rapidly declining. Investors in the crypto are becoming more rational, and the market is becoming more and more competitive. Users have seen white papers that are full of hype. The key is whether you have real application scenarios and whether you can acquire users and cash flow. So I say that the energy of the first curve is fading, and what we need is the second growth curve - the explosive stage with applications as the core.

On the other hand, the United States has not adopted a one-size-fits-all approach to token financing. Instead, the United States is establishing a new legal framework for token financing through two paths. The first is the FIT21 Act, and the second is the regulatory exemption mechanism of "Token Safe Harbor". The combination of these two constitutes the prototype of a new token compliance financing system.

If you know a little about the history of US securities law, you will know that the status of FIT21 is similar to the Investment Company Act of 1933. It is a structural legislation for an economic entity, and together with the Securities Act of 1933 and the Exchange Act of 1934, it laid the legal foundation for the prosperity of the US capital market for a century. Now we see that the SEC and CFTC are also constantly issuing explanatory documents to define whether tokens are securities, commodities or virtual commodities, and at the same time, they are also defining regulatory responsibilities. This is the process of gradually clarifying the entire framework.

I think if these two efforts can be sustained and combined, today's US legislation may set a precedent for token financing and token market regulation around the world. If it develops smoothly, it may lay the foundation for a new century of prosperity in digital finance. In the past, we talked about stocks and bonds, and now we talk about RWA and Token. The form is changing, but the underlying logic of finance has not changed - that is, risk pricing, information transparency and legal protection.

I still say the same thing: Don't rush to issue coins now. First, do a good job in the stablecoin economic stage, develop applications, and lay a solid foundation. When your model is verified by the market and cash flow runs smoothly, then issue coins for financing according to the new US rules. Why worry about not being able to raise funds efficiently? Why worry about not being able to successfully go public? First make good products and good applications, the road of rule of law is being opened, and the bridge of capital will naturally come to pick you up.

In the future, tokens will be traded on Nasdaq and NYSE, and in turn, exchanges like HashKey will be able to trade stocks. Recently, the US crypto exchage Kraken has taken the lead in announcing support for trading of some US stock tokens. As US SEC Chairman Atkins recently said, there will be some "super applications" in the future that trade all types of assets on one platform - stocks, bonds, tokens, stablecoins, RWA. This day will not be too long.

6. Chinese people must be the protagonists of RWA innovation

Meng Yan: But I have communicated with many Chinese blockchain entrepreneurs, and I feel that they are generally lacking in confidence. The main doubt is that the center of this wave of stablecoins and RWA is in the United States. Due to the overall strategic competition between China and the United States, the idea of ​​"decoupling and breaking the chain" is rampant, and nationalism is rising on both sides. Will Chinese entrepreneurs be treated differently and will they have a fair chance to compete?

Xiao Feng: If I say that this problem does not exist, it is certainly not objective. The geopolitical game between China and the United States will indeed have an impact on the entrepreneurial environment, especially in highly sensitive areas such as technology and finance. However, history has never been a single-line advancement, and reality is often more complicated and more tense than public opinion. Despite the friction, I am still very confident that Chinese entrepreneurs have not only opportunities but also unique advantages in this round of stablecoin economy and RWA.

The first reason is the huge stock advantage. Even in the most difficult stages in recent years, China is still one of the regions with the most blockchain developers, the highest innovation and engineering quality, and the most active community activities. We cannot be confused by superficial phenomena. Behind many of the world's top projects, there are actually Chinese engineers' codes, algorithms and infrastructure. In an interview, I once bluntly suggested to the Ethereum Foundation: "Ethereum has fallen to this point today because you have lost China." From 2014 to 2016, China was the most solid base for Ethereum developers and users. Later, due to various reasons, Ethereum was absent from China, which was an important reason for its loss of momentum. This is true for Ethereum, and it is true for any global blockchain project. Whoever wins the Chinese wins the world, and no one can ignore Chinese developers and communities.

The second reason is that real interests are highly consistent. Stablecoin economy and RWA are actually a brand-new globalization channel in the digital economy era. What does it mean to China? It means that we can bypass the traditional US dollar settlement system and centralized platforms and export Chinese goods, services and content in new ways. This can not only create jobs, drive growth and stimulate innovation, but more importantly, it can build China's own competitiveness in the Web3 world. In other words, this is a new "digital overseas".

The third reason is that the new system itself is diversified. The future stablecoin economy will not be a single structure, but a multi-level, multi-regional, global network with spectrum and granularity. We will see an onshore dollar stablecoin economy and an offshore dollar stablecoin economy, similar to today's Eurodollar system, with broad space in Asia, Africa, and Latin America. These regions have large innovation space and more flexible rules. With the enterprising spirit and vigor of Chinese entrepreneurs going overseas, these markets will become our home ground.

The fourth reason is that the trend is irreversible. Once the United States completes the breakthrough, other major economies will inevitably follow suit. You see, Hong Kong has taken the lead and passed the Stablecoin Ordinance. I believe that sooner or later we will start discussing whether to develop offshore RMB stablecoins. I think this is a strategic issue that deserves serious discussion. If it can be promoted, Chinese entrepreneurs will have greater dominance and voice in these non-US dollar stablecoin ecosystems.

The fifth reason is my long-term judgment that China will sooner or later embrace the trend of blockchain and digital assets. We are a country known for pragmatism. As long as this thing can promote development, serve the real economy, and create benefits, it will eventually be accepted. Once it is open, with China's market size and entrepreneurial density, coupled with the Chinese people's hardworking and pragmatic characteristics, blockchain in China will surely usher in a blowout development and become the world's most prosperous innovation hotbed.

Therefore, for Chinese entrepreneurs, you must not be blinded by a single leaf and miss the entire era because of local obstacles. The stablecoins and RWAs you see today are a big wave that only comes once every ten years. If you don't stand up, you will voluntarily give up your voice. If you dare to go up, no matter how big the waves are or how strong the wind is, you will have a chance to occupy a place in this new world. I believe that Chinese entrepreneurs will be able to do it. Five or eight years later, the stablecoin economy may be worth two or three trillion US dollars. I believe that at that time, among the entrepreneurs standing at the top of the industry, a large proportion of them will be Chinese faces.

7. The most important innovation is the innovation of order

Meng Yan: No one doubts the ability of Chinese entrepreneurs to create high-quality products now. The market's doubts are focused on integrity. As a blockchain entrepreneur, I am very dissatisfied with the order formed in the current industry. When I decided to join this industry, I was inspired by the spirit of Satoshi Nakamoto and felt that I could use blockchain, an open and transparent infrastructure, to construct a more inclusive and fair large-scale collaboration mechanism outside of commercial companies. However, looking back over the past ten years, it is not an exaggeration to say that the order established by this industry is "sowing dragon seeds and harvesting fleas." Our ideal was to oppose excessive centralized regulation, but the current order of the crypto market is worse than the order we originally wanted to replace, full of fraud, dishonesty, bullying, secret operations, and mutual harm without bottom line. To be honest, if it was ten years ago, the United States proposed to legislate and regulate stablecoins and crypto projects, I am afraid I would jump out to oppose it. But now I think that since this industry cannot spontaneously generate a healthy order, it can only be imported from the outside.

Xiao Feng: Order is also a product, and it is the most important product.

You just said "sow dragon seeds and harvest fleas", I don't refute it. Over the past decade, everyone has indeed experienced the gap between ideals and reality. From the perspective of technological idealism, we once hoped that blockchain could spontaneously form an open, transparent, and fair economic order that does not rely on traditional regulatory structures. But reality has proved that it is difficult for a market without basic rules to operate stably. This is the same as the US stock market in the 19th century. Human nature has not changed, and the results will not be different.

But the problem is not just our own fault. In the past decade, financial regulators in major jurisdictions have mostly adopted a "one-size-fits-all" approach to block the rapid development of blockchain, and have been slow to provide a clear compliance path. This has actually led to reverse selection in the market where the inferior survives the superior. Many entrepreneurs who were willing to innovate honestly and have the ability to do a good job in the project withdrew because they could not see the rules and hope. Many more radical and speculative people remained.

The FIT21 Act and the Token Safe Harbor proposal proposed by the United States are positive signals that we have been waiting for for a long time. It is not to ban tokens completely, but to "set rules and leave a way out" for them. For example, in Token Safe Harbor, after the project party registers with the SEC, it can use tokens for financing. After three years, the regulatory agency will evaluate the degree of decentralization of the project: if it meets the standards, it can continue to operate without being treated as a security; if it does not meet the standards, it will be included in securities supervision in accordance with the law. This is the dynamic balance between supervision and innovation. It not only recognizes the high efficiency of token financing, but also establishes a bottom line and exit mechanism for supervision. In my opinion, this is a process of creating order. It is not to cut off tokens across the board, but to use the system to put it on the track of sustainable development.

More importantly, the establishment of this order is not only meaningful to the crypto industry. In the future, entrepreneurs in emerging industries such as AI, robotics, biomedicine, new energy, and carbon assets may also be able to raise funds and govern in the form of tokens. This is not just a matter for Web3, but a new infrastructure issue for the entire innovation ecosystem.

So I am optimistic. As long as the right people are willing to come in and do things according to the rules, as long as there is a clear order, success will eventually come. The market is not afraid of regulation, but it is afraid of no rules. As long as order can be established, innovation will naturally follow.

Meng Yan: Do you have any advice for Chinese entrepreneurs who have the courage to participate in this stablecoin and RWA boom?

Xiao Feng: I have been asked this question quite often recently. I want to say that entrepreneurs who stand out today do need more courage than in previous years. But just because the threshold has been raised, it also shows that this industry has begun to enter a real construction period. My suggestions are also relatively simple, summarized into five points for your reference.

The first is to go overseas. This wave is global, you must go out and enter the eye of the storm of the times. Go to the United States, Hong Kong, Singapore, and Dubai, which are becoming the innovation frontiers of global stablecoins and RWA. If you want to participate, you can't worry about gains and losses, you must fight in the wind and waves and seize a position where the rules are being made.

The second is to have a positive mind. The rules of the game in the industry have changed. The old path of getting rich by issuing a coin is no longer feasible. Now is an era of competing for real user value and application capabilities. For every product you make and every model you design, you must ask: Can it really solve the user's problem? Can it create new efficiency? Only projects that truly create value for users will be retained by this era.

The third is learning. Not only learning technology and compliance, but also learning new ideas and new institutional frameworks. You can't use Web2 thinking to do Web3 things, nor can you use the thinking of issuing coins to cut leeks to speculate in the era of stablecoins and RWA. Behind this is a whole set of new paradigms, and you must continue to learn and constantly break through yourself.

The fourth is to work together. In this new stage, Chinese entrepreneurs must work together, not only for self-protection, but also for resource integration, mutual learning, and even mutual supervision. This is also the beginning of building a new order in the industry. We have suffered from the "chaos in the crypto" in the past, and those lessons cannot be repeated. Now is the starting point for rebuilding order, and we need everyone to work together to create a healthy ecosystem.

Finally, it is openness. The essence of blockchain is an open, transparent, and fair collaborative network, which is the soul of blockchain. We should use the spirit of blockchain to participate in the stablecoin economy and RWA to innovate blockchain.

That’s all I have to say. It’s not a big truth, but I hope it can be of some inspiration to entrepreneurs who are still considering whether to join this industry.