"We are entering a period of explosive growth in the digital economy, and we will soon see many new phenomena and business species in the digital economy."
Written by: Meng Yan
Introduction: With the U.S. Senate passing the voting motion for the dollar stablecoin bill and the Hong Kong Legislative Council passing the Hong Kong dollar stablecoin ordinance draft, stablecoins have quickly become the hottest topic in the industry, attracting broader attention.
It is widely expected that with the implementation of the dollar stablecoin bill, the blockchain digital economy will usher in a spectacular explosion, creating a new window for entrepreneurship around dollar stablecoins and real-world assets (RWA).
Dr. Xiao Feng is a leading figure in Chinese blockchain research and practice, with a deep understanding of blockchain, stablecoins, and RWAs.
To fully understand the opportunities of this era, I had the privilege of having an in-depth exchange with Dr. Xiao Feng through video conferencing and text, which I have organized into an article for publication and discussion with peers. Due to the length of the original text, it is published in two parts. The first part mainly interprets the significance of dollar stablecoins, while the second part focuses on the opportunities that the stablecoin economy and RWAs bring to Chinese entrepreneurs. The views expressed in the article are solely those of the author, and readers are welcome to engage in discussion.
1. The Motivation Behind Stablecoin Legislation
Meng Yan: Dr. Xiao, your recent speeches have caused a significant stir in the entire Chinese blockchain community, especially your speech "Back to the Origin" aimed at blockchain entrepreneurs, which has had a profound impact. In this speech, you not only reiterated the value logic of blockchain but also clearly pointed out that the industry is facing a new explosive cycle, and entrepreneurs need to return to their original intentions and set out again on the right path. This is my understanding of your speech.
The timing of your speech was indeed very precise. On May 19, the U.S. Senate passed the voting motion for the GENIUS stablecoin bill, followed by the Hong Kong Legislative Council passing the "Stablecoin Ordinance Draft" on May 21. A legislative race regarding stablecoins has quietly begun. A new consensus is forming that the blockchain field is about to welcome a golden window for entrepreneurial innovation, and for a period of time, its energy intensity may even surpass that of AI. Many outsiders who have never participated in blockchain and Web3, who may have looked down on it last month, are now adjusting their views and starting 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 feel quite emotional about it. Over the past few years, major countries around the world have generally taken a very cautious or even negative attitude towards blockchain, crypto assets, tokens, DeFi, and Web3, with tight regulations, while mainstream media have almost unanimously stigmatized it. In my impression, there has been no other example of such treatment of an emerging technology in over two hundred years since the Industrial Revolution. But the green mountains cannot hide the flowing water; this day has finally come.
However, the sudden shift of the Trump administration in the U.S. requires an explanation. I have seen some self-media interpreting this matter from a conspiracy theory perspective, suggesting that it is a money-making tool for the Trump family or a currency war launched in conjunction with the trade war.
What do you think is the motivation behind the U.S. promoting stablecoin legislation?
Xiao Feng:
The U.S. presidential team and Congress are quite frank and transparent about the motivations behind stablecoin legislation. They openly state that the first is to modernize the U.S. payment and financial system, and the second is to consolidate and enhance the position of the dollar, creating trillions of dollars in demand for U.S. Treasury bonds within a few years. I believe this is the answer; there are not so many conspiracy theories involved.
Not long ago, I spoke with a crypto policy advisor to the U.S. president, who told me very directly that national reserves of Bitcoin are secondary for the U.S., while dollar stablecoins are the primary concern and are a core interest of the U.S. From what I understand, the goal of the Trump administration is to ensure the passage of the GENIUS bill before Congress goes on recess in August, and it seems that it may happen even sooner.
In this context, the Hong Kong legislative authorities have demonstrated flexibility and efficiency by passing the stablecoin ordinance in three readings, which is commendable.
Meng Yan: Some people are already comparing this bill to the Bretton Woods Conference of 1944 and the Nixon Shock of 1971, claiming that it is constructing a "Bretton System of the Digital Economy Era." The logic behind this statement is that as the U.S. undergoes de-globalization, it is very concerned about the weakening of the dollar's position. Therefore, it uses digital currency as a "nuclear weapon" to launch a dimensional shock against the existing international monetary financial system, hedging against the impact on the dollar and consolidating dollar hegemony. What do you think of this viewpoint?
Xiao Feng:
As I mentioned earlier, the U.S. openly acknowledges that one of the important purposes of promoting stablecoin legislation is to consolidate and enhance the position of the dollar. From the Senate's voting, this is a bipartisan consensus, and they know they are creating history.
The U.S. has come to this realization through a process and has paid some costs. The previous U.S. government, especially experts like former SEC Chairman Gary Gensler, understood blockchain, but why did they still struggle for so many years? It was simply because they were reluctant to let go of the existing payment network, including SWIFT, and the financial governance, regulation, and anti-money laundering mechanisms built on this network.
However, in recent years, the progress of blockchain technology itself, especially the financial sanctions against Russia following the Russia-Ukraine war, has shown that the technological advantages of blockchain are undeniable and irrefutable. Therefore, the entire financial infrastructure moving towards blockchain is as certain as the transition from the steam engine to the electrification era; there is no doubt about it, and no force can stop it. It is no longer meaningful to bury one's head in the sand; the situation is stronger than any individual.
Compared to the previous administration, the Trump administration has shown a more realistic attitude in various aspects. To put it negatively, they do not adhere to principles; positively, they are proactive and effective. Therefore, the current U.S. attitude is that if payment and settlement bypassing SWIFT is inevitable, then at least it should not bypass the dollar; if dollar tokenization is unavoidable, then at least ensure that every dollar token is created based on U.S. assets. Since it cannot be blocked, it should be guided well, ensuring that in the digital economy, in the Web3 world, and in the AI era, the dollar remains a major payment and settlement tool. This is a core national interest for the U.S. From the U.S. perspective, this is an open strategy.
Can dollar stablecoins create a new "Bretton System"? It remains to be seen. Over the past few years, the global position of the dollar has declined. If the U.S. hopes to consolidate the dollar's position through stablecoins, there is no doubt about that. However, whether this single measure can achieve its purpose, especially whether it can be said to have created a new system, will likely depend on the subsequent practice and legislative interaction process. However, I have a judgment: although the Trump team and the U.S. Congress have a deep understanding of dollar stablecoins, they may not fully imagine the long-term impact of this matter. In this sense, promoting the GENIUS bill carries some risks. Whether it will be as inconsistent as its trade war policy in the future remains to be seen.
2. Two Dollar Stablecoin Systems and Their Complex Consequences
Meng Yan: Speaking of long-term impacts, there is a popular narrative in the Chinese internet about "currency wars," suggesting that the U.S. initiated stablecoin legislation to "weaponize" stablecoins. Do you agree with this statement?
Xiao Feng:
"Currency wars" have been a popular narrative for over a decade. From the perspective of other countries, it is indeed necessary to fully assess the impact of dollar stablecoins. The legislative push for the tokenization of fiat currency is unprecedented in the history of world currencies and will inevitably trigger a series of complex economic and financial reactions, the consequences of which no one can fully foresee, including the U.S. president and Congress. However, based on the content revealed by the GENIUS bill, at least two issues need special attention.
The first is that the boundaries of sovereign currencies are becoming more fragile. Current currency usage is defined by national administrative boundaries, with sovereign states maintaining a monopoly on currency internally and controlling foreign exchange transactions at the borders. This governance mechanism has been in place for over a century. Once dollar stablecoins are widely adopted, this mechanism will be disrupted. Blockchain transforms the internet into a payment network and financial infrastructure, allowing currency to no longer rely on traditional banking systems and clearing networks, but instead to penetrate the micro-level of another economic entity through smart contracts, encrypted accounts, and peer-to-peer transmission mechanisms, covering daily consumption, labor payments, cross-border e-commerce, freelancer settlements, and even payments between AI and AI, machine and machine. At this stage, stablecoins will no longer just be a payment tool; they will become a financial infrastructure that can embed itself into the economic systems of other countries. It can "incorporate" a portion of foreign economic activities into its own economic map, effectively forming a new mechanism for currency network expansion. This poses a structural challenge to existing sovereign currencies, financial regulatory frameworks, and macroeconomic policy tools, as the systems built on banking systems, foreign exchange controls, and payment settlement rules are becoming increasingly fragile in the face of blockchain and stablecoin technology.
Meng Yan: What you mentioned is already happening. In some countries in Africa, Southeast Asia, and Latin America, where local fiat currencies have depreciated for years, young people are increasingly using USDT and other dollar stablecoins, causing headaches for their monetary authorities. When I was on a business trip to Ghana last year, local central bank officials told me that dollar stablecoins are spreading like wildfire among young people in Ghana and Nigeria, undermining the status of their local currencies. They asked me how they could use technology to resist the invasion of dollar stablecoins, and I couldn't answer. Because if your local currency depreciates by 20-30% every year, it's no surprise that people use dollars.
Xiao Feng:
This is just the beginning. As dollar stablecoins develop, a second issue will arise: the complex ecology that may emerge from offshore dollar stablecoin systems. According to the GENIUS bill, institutions outside the U.S. can also issue dollar stablecoins, but they must be based on U.S. dollar assets, registered in the U.S., subject to U.S. regulatory oversight, comply with U.S. laws, and respond to U.S. law enforcement commands at any time. These requirements are very high, but it is important to understand that these conditions are for "legal circulation in the U.S. market." If they do not enter the U.S. market and do not interact with U.S. individuals and entities, then even these conditions can be relaxed. This effectively opens up a gray area, conditionally allowing foreign institutions to mint dollars. As a result, there will be two systems of dollar stablecoins in the future: onshore dollar stablecoins and offshore dollar stablecoins, similar to today's dollar and eurodollar systems. The onshore dollar is relatively strict and consistent, while the offshore dollar ecosystem will be more complex, with dozens or even hundreds of digital currencies called "dollar stablecoins" circulating, mapping, exchanging, and interacting across dozens of public chains and hundreds of private chains, producing complex effects that no one has seen before and no one can foresee.
Meng Yan: Can we say that this is essentially the U.S. delegating part of its minting power to foreign non-bank institutions, decentralizing the minting rights of dollar stablecoins? This reminds me of the early Western Han Dynasty in China, when minting rights were decentralized, allowing private coinage, but the literature does not detail how these coins interacted and what economic issues arose. Since the advent of industrial civilization, no country has attempted to decentralize minting rights to foreign entities, and we are about to witness a new phase in the history of world currency development. I make a possibly inappropriate comparison: future dollar stablecoins will be like the copper coins during the reign of Emperor Wen and Emperor Jing, with many "brands," some of high quality, some of low quality, some minted by Deng Tong, some by Liu Bi, circulating and competing in the global market. The U.S. government superficially relinquishes part of its dollar minting rights, but in reality, through regulation and enforcement, it turns U.S. Treasury bonds into the "copper mines" for minting copper coins, retreating to advance, making all global stablecoin issuers "franchises" of the dollar, significantly increasing global economic demand for U.S. Treasury bonds, enhancing the dollar's penetration, and amplifying the long arm of U.S. financial regulation.
Xiao Feng:
Yes, but the actual situation will be more complex. As trade frictions lead to "de-globalization," a trend of "dollarization" in the global digital economy emerges. In an era where AI is advancing rapidly, the "value internet" suddenly accelerates, and the complex reactions of these economic and technological trends exceed everyone's predictive capabilities.
In particular, the offshore dollar stablecoin system will have multiple layers, attracting many financial institutions, internet companies, and even sovereign nations to participate, resulting in a particularly rich and diverse ecosystem. From high-grade offshore dollar stablecoins issued by foreign entities that fully comply with U.S. regulatory rules and can circulate within the U.S., to local dollar stablecoins that follow the regulations of other sovereign nations but do not enter the U.S. or interact with Americans, to "wild" non-compliant dollar stablecoins, as well as the inevitable emergence of various counterfeit currencies, over-issuance, and dirty money issues. On one hand, this will lead to a dramatic amplification of the "brand effect" of the dollar, the global spread of the psychological anchoring effect of the dollar as a "pricing unit," and the expansion of the scope of U.S. financial regulatory enforcement. On the other hand, the super-complex currency system will inevitably pose unprecedented challenges to the regulatory and financial stability of countries around the world and the U.S. In the early stages, the U.S. regulatory capacity may very likely face issues of lagging behind and being out of reach, which could even lead to policy reversals. In short, the real world will be very exciting and very chaotic. I can say with certainty that we are entering a period of explosive growth in the digital economy, and we will soon see many new phenomena and business species in the digital economy.
At this stage, discussions on this issue are still insufficient. Especially in the Chinese internet, the discussions are severely lacking.
However, I still believe that the main purpose of the U.S. introducing dollar stablecoins is to align with technological development trends, to take the initiative, and to consolidate the dollar's position, rather than to target the existing international monetary system. The so-called "weaponization" is a "byproduct" of the disruptive technological advantages of blockchain. If we engage in emotional discussions on this issue, it is easy to be misled. Currently, in the Chinese internet public opinion, conspiracy theories and narratives of struggle are very fashionable and thrilling, and we must be particularly cautious to prevent being misled by emotions and standing against the historical trend. It is simple: if this is a currency war, should we not be on high alert? Should we continue to block the entire set of technologies related to blockchain, tokenization, and crypto finance? If we think about the problem this way, it would lead to a major mistake.
We need to understand that the "aggressiveness" of blockchain stablecoins is to naturally attract and bind more real economic activities under a framework of higher efficiency, lower costs, and fewer links. Its expansion is based on technological advantages, relying on efficiency, institutional design, technological advantages, and network effects, which cannot be resisted in the long term. We acknowledge that it has disruptive innovation characteristics and is aggressive and destructive to the existing technological system; even calling it a dimensional strike is not an exaggeration. But what attitude should we adopt towards it? Wasn't the historical use of firearms a dimensional strike against cold weapons? Wasn't the steam engine a dimensional strike against human and animal power? Wasn't the internet a dimensional strike against postal and telephone networks? So, which side are you on?
My attitude has been consistent and unchanged for ten years. In the face of a technology like blockchain, we should go with the flow, develop our stablecoin ecosystem in an open, compliant, and trustworthy manner, and secure a place in the new generation of financial networks. Some people talk about monetary sovereignty and financial sovereignty; I want 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 U.S. taking the lead in promoting stablecoin legislation has its uniqueness. This uniqueness lies in the fact that the first to take the plunge is the world's largest and most advanced economy, pushing for the transformation of the world's most important reserve currency. For many countries, they might prefer to pilot this in less significant economies with less important currencies, gradually advancing the matter, which would be more prudent. But now, the U.S. attitude is equivalent to directly pushing a storm of reform in front of everyone, creating a situation that compels action, presenting everyone with a Sphinx-like dilemma: answer me, or I will consume you.
So, in the face of this challenge, many people have a defensive mindset as a reaction. Especially with the media constantly reporting how blockchain is used for money laundering, illegal financing, and illegal trading, and daily stories of speculation, when suddenly the U.S. uses this technology to promote stablecoins and RWAs, many people naturally think that this is the U.S. waging a currency war, using blockchain as a weapon. This mindset is understandable.
Xiao Feng:
The mindset is understandable, but we still need to use first principles and return to the origin to think. Now, when we discuss blockchain and stablecoins, there is too much macro discussion, starting with the monetary system, dollar hegemony, and financial wars, but the micro discussions are very insufficient. Many of us forget that the primary driving force behind the development of stablecoins has always been technological innovation, creating value for ordinary users and consumers. The reason stablecoins have such a significant impact is rooted in the series of technological advantages conferred by blockchain. I have been talking about these points for ten years, but it is still not enough; at this moment, it is necessary to reiterate that everyone must understand that blockchain technology truly possesses enormous superiority, and it is bound to succeed—no one can stop it.
Meng Yan: It is indeed important to clarify this reasoning. I saw you mention in a speech that you have been fascinated by blockchain for ten years and have not changed your original intention. Could you summarize again what technological advantages of blockchain have captivated you?
Xiao Feng:
Its fundamental technological advantages are reflected in four aspects: accounts, ledgers, accounting methods, and accounting units.
From the perspective of accounts, traditional finance relies on bank custodial accounts to record all our economic activities, but in blockchain, there are no bank accounts; digital asset wallets take their place, referred to as encrypted accounts. The creation of encrypted accounts is completed by users themselves through cryptographic tools, self-created, with assets self-custodied.
From the perspective of ledgers, public chains serve as global public ledgers, with global liquidity, free from administrative boundaries, and without geographical or temporal limits.
From the perspective of accounting methods, distributed accounting differs from double-entry bookkeeping, and the clearing and settlement models are also different. Traditional finance uses net settlement, while blockchain uses gross settlement, meaning that payment is settlement—payment, clearing, and settlement are completed in one transaction.
From the perspective of accounting units, the accounting unit on the blockchain is the native encrypted digital currency. If you want to use fiat currency as the accounting unit, mere orders will not suffice; you must first tokenize the fiat currency and create a digital twin of the fiat currency on the chain.
These technological advantages may sound abstract, but when reflected in applications, they provide users with tangible benefits. A simple way to judge whether a new technology has overwhelming advantages is to look at how many times efficiency has improved and how much costs have decreased. A tenfold advantage indicates an upgrade; if it is a hundredfold or thousandfold advantage, then it is something that no force can resist. For example, if a car is roughly ten times faster than a horse-drawn carriage, then the entire system of horse-drawn carriages will inevitably be eliminated. The internet is a hundred times cheaper than telegraph, telephone, and television networks, so when the internet first emerged, many people also tried their best to stop applications like internet telephony and video, but what was the result? These networks have now all been replaced by the internet. In the face of such enormous technological advantages, any conservative or resistant reasoning is untenable.
I have always said that users' demands for finance are timeless: they want to borrow money easily and receive money quickly. Let's compare the efficiency of remittances. Now, remitting from Shanghai to the U.S. may take several days or even weeks; however, with blockchain stablecoins, it can arrive in seconds. How many times is that an efficiency improvement? There are even more extreme cases; I recently remitted from Hong Kong to Shanghai and it took a month to confirm failure, while using stablecoins could complete the transaction in ten seconds. How many times is that an efficiency improvement? It could be tens of thousands or hundreds of thousands of times. What force can block such a huge technological advantage?
Let me give another example. In traditional trading systems, it is very difficult to achieve 24/7 uninterrupted operation. Now, some leading stock trading systems are seeking to extend trading hours; some are already planning for 5x23, trading five days a week for 23 hours a day, but they still need to pause for an hour each day because traditional clearing systems require a time point to pause, net, and settle. But look at how we conduct payments and transactions on the blockchain; they operate continuously around the clock. Why can this be achieved? It is because, as mentioned earlier, it involves gross settlement on a global ledger, allowing for uninterrupted clearing and settlement. I have heard that NASDAQ is working on a 24/7 trading system, and I suspect they will use blockchain technology internally. Once implemented, investors worldwide can trade U.S. assets continuously using dollar stablecoins, which is undoubtedly significant for investors and U.S. companies. Therefore, you see, these discussions at the macro-strategic level ultimately need to be built on technological innovation.
There are many other advantages, such as eliminating intermediaries, peer-to-peer transactions, borderless operations, near-instantaneous global transactions, close to zero fees, automation on smart contracts, and irrevocable transactions. When users compare, the benefits become clear. Do we still need to persuade anyone? It is like comparing electric motors to steam engines, electric lights to gas lamps, and integrated circuits to vacuum tubes. As an ordinary user, you do not need specialized knowledge or other conditions; you can see at a glance which is superior and which will be eliminated. This is an obvious fact.
If we understand these basic technological facts, we will arrive at a simpler conclusion—the fundamental starting point for the U.S. promoting stablecoins is still to align with the trend of technological development and to promote the modernization of payment and financial infrastructure.
Of course, such a strategy must have multiple considerations, including maintaining dollar hegemony, competing in the monetary and financial system, and even the Trump family's profit motives. However, all these considerations are based on the fundamental fact that blockchain, as a new generation of financial infrastructure, possesses overwhelming technological advantages. Many people view blockchain as a formidable threat, and one important reason is that they do not deeply recognize the inherent advancement and inevitability of blockchain technology. I often say that the situation is stronger than any individual. If you can resist it, then you can certainly discuss whether to resist; if you cannot resist it at all, then what is the point of discussing how to resist? Knowing it is impossible yet trying to do so will only waste opportunities and lead to falling behind in the new round of competition in financial infrastructure and monetary financial systems.
Therefore, I am very excited about the early passage of the stablecoin bill in Hong Kong; this is the correct response.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
