Author: Lawyer Liu Honglin
On September 18, 2025, Lawyer Liu Honglin, founder of Shanghai Mankun Law Firm, was invited to share insights on global stablecoin regulatory trends and compliance development at the Hong Kong-Shanghai Web3 Digital Asset Conference. This article is a transcript, with some content omitted.
Today, I met many old friends at the venue, and I am very happy to have this opportunity to discuss the hottest tracks and directions in the current Web3 industry with everyone.
The first three guests mainly focused on the RWA track and how to address issues related to emerging cross-border financing or asset tokenization. However, today I want to talk about the origins of Web3, why RWA has emerged, and the significant impact of stablecoins and cross-border payments on the entire Web3 construction and compliance exploration.
Before I stood here, I was worried that some of the topics today might not be shareable. But I saw that President Wang just mentioned how friends bought Bitcoin over a decade ago. So I believe there are still some things we can share with everyone.
We all know that the Bitcoin white paper is the starting point of Web3. The Times once reported, "The UK Chancellor is once again on the brink of saving the banks," which actually reveals the original intention of Bitcoin. As an emerging asset or currency in the digital age, Bitcoin aims to build a complete decentralized system to break the traditional bank-dominated payment system.
However, as we reach 2025, one undeniable reality is that Bitcoin's original intention has changed. It is no longer the payment tool it was initially envisioned to be, nor does it fit the original positioning of an internet currency system. Today's Bitcoin has become an alternative investment target in the capital market and even a strategic reserve asset for some countries. For high-net-worth individuals, it is a choice for risk hedging in asset allocation; for the capital market itself, it has become the underlying support asset for a large number of ETF products.
From a decentralized payment tool to an alternative investment, while Bitcoin's core positioning has changed, the value of the blockchain technology behind it has never faded. Especially when applied to cross-border settlement and transmission, its efficiency and convenience are still unmatched by the traditional financial system today.
Stablecoins Take Over Bitcoin's Payment Mission
So, who has taken over the payment mission that Bitcoin did not complete? The answer is stablecoins. Currently, the global market value of stablecoins is approximately $270 billion, with 60% coming from Tether (USDT). Industry partners are well aware of its operational logic; in simple terms, it is a currency/deposit point system, like "1:1 exchange digital points." You deposit $1 (whether in RMB or USD) into a listed company, and the company issues you a corresponding point that can be freely used and exchanged on the blockchain, which you can redeem whenever you no longer want it. The underlying logic relies on blockchain's efficient storage and asset transfer technology, but it is fundamentally different from Bitcoin: Bitcoin is completely decentralized; if you hold the private key, you truly own the asset. However, stablecoins are different; they are essentially commercial services. Even if you have the private key, the corresponding asset may not fully belong to you, as the issuer, like Tether, has the ability to freeze your assets.
Here’s a real case that happened just yesterday: a netizen sought my help because his on-chain wallet had received 100,000 USDT of gray funds, resulting in the entire wallet of 1 million USDT being frozen. This situation is much more troublesome than with traditional banks; if it were a bank, you could communicate with a customer manager to unfreeze it, but when facing global law enforcement agencies, the frozen 1 million assets may take at least six months to see any substantial progress. It is precisely because of such financial security risks that Hong Kong is focusing on promoting stablecoin compliance, and the national level is also highly concerned about the regulation of stablecoin issuance.
Why Are Stablecoins So Popular?
Some may wonder why stablecoins have developed so rapidly over the past decade. In 2024, their trading volume even surpassed that of Visa. The core reason is two words: efficiency. Let me give you two personal experiences: recently, I transferred money from a mainland bank card to a bank card under the same name in Hong Kong, and it took two full days to arrive; later, I checked the cross-border transfer on Alipay, and the minimum fee was 100 RMB. Even if I only transferred 10,000, I still had to pay that 100. In traditional cross-border payments, "T+1 arrival" and "dozens of dollars in fees" are the norm.
But in the blockchain world? Whether you transfer $0.1 or $100,000, mainstream public chains can generally settle within one or two minutes at a very low cost. The BSC chain can even achieve zero fees, while other mainstream public chains only charge about $0.03. From the perspective of transaction costs and efficiency, stablecoins have improved traditional payments by at least ten times. Therefore, from an industry and business perspective, stablecoins are undoubtedly an essential track in 2025's Web3 with real commercial value.
Another interesting phenomenon is that the penetration speed of stablecoins in emerging countries and regions is faster than in Europe and America. This reminds me of the development of the internet in China; we skipped the desktop PC era and directly entered the mobile internet era. Why? Because many people couldn't afford computers or found it troublesome to pull network cables, but companies like Xiaomi brought smartphone prices down to under 1,000 RMB, directly lowering the barrier to mobile internet access and turning ordinary people into internet users. This is an industrial leap.
Stablecoins are similar; in modern financial services and facilities in China and Europe and America, everything is so convenient that there is no urgent need for change. However, in regions with underdeveloped financial facilities like Africa, South America, and Southeast Asia, stablecoins have become a very friendly choice. There are no convenient cross-border payment options locally, and globally, 1.7 billion people lack bank accounts. Stablecoins directly address their financial inclusion issues. Just like when we travel in Central Asia or South America, we see local vendors and service staff displaying signs saying, "Welcome to use USDT/USDC." For them, stablecoins are universally accepted currencies with no depreciation risk, serving as both payment tools and asset preservation options. The founder of Tether mentioned in an interview last year that they are very focused on such "non-mainstream markets," where nearly 2 billion people globally rely on companies like Tether for payment solutions. Therefore, from the perspective of financial inclusion, stablecoins and cryptocurrency payments are very important payment links in a global context.
The Ultimate Users of Cryptocurrency May Be AI
Of course, in the world of Web3, there are many application scenarios like DeFi, which require support from virtual currencies with programmable features. Recently, we have been engaging in in-depth discussions with many partners in the AI field, and our views align: the true core users of cryptocurrency, or those who can achieve large-scale applications, are not living natural persons like us, but AI.
Why do I say this? The core pain point for the lack of large-scale adoption of cryptocurrency over the past decade has been poor user experience. Remembering private keys, managing authorizations, and dealing with a bunch of incomprehensible smart contracts are very unfriendly to ordinary people. But AI is different; it can precisely adapt to the programmability and complexity of cryptocurrencies. We often joke, "Embracing AI on the left, holding Web3 on the right," that the core of the next generation of the internet (Web3.0) is actually the combination of AI and blockchain technology. This aligns with what the previous guests shared.
The Value of Stablecoins Has Been Greatly Underestimated
Domestic investment institutions and practitioners began to feel the heat of stablecoins around June of this year. At the end of May, Hong Kong passed regulations related to stablecoins, and in early June, Circle went public. Within less than a month, Circle's stock price increased tenfold. It was at this point that everyone realized that as early as 2015, institutions like Baidu, Everbright, and Shanghai's Wanxiang had already invested in Circle's stablecoin, revealing that the value of this track had been greatly underestimated. Therefore, in June and July of this year, I visited many brokerages, banks, and asset management companies to discuss the global business logic and industrial chain opportunities of stablecoins. Everyone is paying attention to the investment window in this track, as the advantages of stablecoins in the cross-border payment field are too obvious.
From a business value perspective, the profit model of stablecoins is already very clear, and the profit margin is quite considerable. For example, Tether, as a stablecoin issuer, made a profit of $13.7 billion last year with fewer than 200 employees; in contrast, traditional payment giant Visa has over 30,000 employees and made a profit of $19.7 billion last year. Based on this trend, we estimate that by 2025, the overall profit of stablecoins may surpass that of Visa. It is also for this reason that traditional financial institutions like Visa are now actively laying out cryptocurrency, even officially participating in Web3-related conferences.
The Development of Stablecoins Has Its Ups and Downs
Of course, the development of stablecoins has not been smooth sailing. Over the past decade, we have seen currency-collateralized stablecoins (such as those issued with bank deposits or bonds), over-collateralized stablecoins on Ethereum, and algorithmic stablecoins that were once popular but ultimately collapsed. It wasn't until 2024-2025 that the EU, the US, and Hong Kong began to introduce feasible compliance plans, allowing the industry to truly move towards the mainstream, compliance, and commercial implementation.
Now, global regulators are gradually forming a consensus on risk prevention and control for stablecoins, such as requiring full reserves and independent custody. These requirements are not unfounded; there have been cases indicating that Tether's cash reserves accounted for only 3%, with the rest being long-term investment reserves or other types of reserves, and there were even instances of user fund accounts being mixed with funds from other exchanges, all of which represent visible major financial risks. Therefore, we also understand some of the international regulatory attitudes and positions. From a legal compliance perspective, we usually advise clients to be cautious about algorithmic stablecoins. Under the current regulatory framework, it is difficult for such products to obtain compliance licenses. Another type of interest-bearing stablecoin also faces compliance challenges; when users hold interest-bearing stablecoins, they can enjoy some returns generated by US Treasury bonds or underlying assets. At the end of last year, a former French parliament member launched a similar project, which gained high attention in the early stages but fell into a death spiral in less than three months. Such products also struggle to gain recognition on the compliance front. This is also why both Hong Kong and the US define stablecoins as payment tools rather than investment products, with the core purpose being risk prevention.
Entrepreneurs, Don't Panic; There Are Blue Oceans in the Industry Chain
Here, I also want to give everyone a calm reminder: the stablecoin issuance track is already a game for giants. After the introduction of Hong Kong's stablecoin regulations, many domestic companies expressed their intention to apply for issuance qualifications, but the Hong Kong regulatory authorities also clearly advised caution, indicating that stablecoins do not have investment value. However, I do not believe that stablecoins lack investment value; crypto players who invest in stablecoins have at least outperformed 80% of investors. Why? Because at least the principal is not lost, avoiding huge volatility. Of course, this is our jest, but it is true that those who can issue stablecoins now are all commercial giants like Standard Chartered Bank, Ant Group, and JD.com. But this does not mean that ordinary entrepreneurs have no opportunities; the stablecoin industry chain has blue oceans in asset custody and application scenario services.
For example, there are companies specializing in stablecoin crypto payment solutions for the gaming industry, those providing cross-border payroll payment solutions, those creating fiat and cryptocurrency channels, those focusing on B2B cross-border acquiring, or those starting cryptocurrency debit card businesses for individual customers. Web3 still has a wealth of business opportunities to explore.
In the B2B cross-border acquiring field, a new cryptocurrency payment channel is added on top of traditional bank accounts, allowing merchants to accept cryptocurrencies and directly complete exchanges within their accounts. This is a typical application of cryptocurrency technology, and users are completely unaware of the operational aspects. Currently, the top ten cross-border payment institutions in China are actively laying out related businesses in Hong Kong and Singapore.
Another path is typified by PayPal. For PayPal's merchants and users, they only need to pay with local fiat currency, while local service providers will directly convert the fiat currency into locally compliant stablecoins within the network. Once the stablecoins are transferred to the recipient's account, they can be further exchanged for the fiat currency of the recipient's region, completing the flow of funds.
Cryptocurrency debit cards for individual customers (commonly referred to as USDT cards) are designed to meet users' daily consumption needs using USDT while avoiding the risk of bank card freezes due to virtual currency transactions. In simple terms, this means adding cryptocurrency account functionality on top of existing personal bank accounts, allowing users to recharge their accounts with cryptocurrencies like USDT. Subsequently, when consuming in global offline scenarios, even if it's just buying a cup of coffee at the neighboring Starbucks, as long as they show the Alipay or WeChat QR code for payment, the actual deduction will be from the cryptocurrency in their account. This is one of the hottest tracks in the industry this year and a key area of focus for many domestic companies and entrepreneurs.
Finally, let's return to the topic of RWA. I have always believed that stablecoins are extremely important for RWA, jokingly stating that "RWA without stablecoins is just playing rogue." Why do I say this? Because the truly valuable RWA in the future must meet two core standards:
First, business data must be "end-to-end on-chain." If the data of an RWA project is not on-chain, it is difficult to prove its authenticity and credibility; data integrity is the foundation of RWA.
Second, it must be able to automatically perform and allocate through smart contracts. The core value of blockchain is "programmable" and "trustless." Only by allowing the operating profits of the project to be automatically allocated to the accounts of equity holders through smart contracts can trust costs and operational costs be significantly reduced.
Currently, there is a pain point in Hong Kong's RWA model: overseas financing requires a commitment of 8%-10% returns and also incurs service fees of 3-5 million, which directly excludes small and micro enterprises. However, when stablecoins achieve compliance, data is end-to-end on-chain, and smart contracts automatically allocate value, RWA can truly break through financing limitations and unleash commercial value. This is also the core supporting role of stablecoins for RWA.
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