Opening remarks

Entrepreneurship Web3, discussing every Wednesday!

(Entrepreneurship Web3.0) is a China Web3.0 entrepreneur interview program initiated by Mankun Law Firm. Every Wednesday evening, we invite industry leaders, frontline institutions, and well-known entrepreneurs to join our live broadcast, helping the compliance and healthy development of China's Web3.0 industry through positive expression, rational discussion, and experience sharing.

There is no doubt that stablecoins are a hot topic right now; what is the regulatory status of stablecoins? Where are the opportunities for small and medium-sized enterprises to participate? This time we invite AllScale's Co-Founder & CEO Shawn Pang to engage in a deep conversation with Mankun lawyer Wang Lei, to share AllScale's ongoing exploration in the field of stablecoins, as well as their observations and viewpoints on global stablecoin projects.

(Audio transcription text recorded by AI processing may have omissions and errors.)

Welcome our guest this episode, please introduce yourself to everyone!

Lawyer Wang Lei: Good evening, everyone! Welcome to the weekly (Entrepreneurship Web3.0) column! Tonight's theme coincidentally aligns with recent hot topics: stablecoins. Especially this afternoon, there was new movement in the U.S. stablecoin bill, and the community and media have engaged in heated discussions, which we will also touch upon tonight.

Today, we have a special guest, AllScale's CEO Shawn Pang—they are not only building a stablecoin business operating system for small and medium-sized enterprises but have also organized a global stablecoin project list on their official Twitter, providing detailed observations on market and regulatory trends. Today, Shawn will chat with us about the current status of stablecoins, regulation, and new opportunities for small and medium-sized enterprises.

Shawn: A special thanks to the Mankun team for the invitation, and I appreciate Lawyer Wang for taking the time to communicate. It's great to meet everyone. My name is Shawn, currently in Vancouver, mainly commuting between San Francisco and Vancouver, and I am a co-founder of AllScale. I'm very happy to communicate with everyone today.

Q1: What is AllScale currently doing?

Lawyer Wang Lei: With Singapore's DPT service regulations coming into effect at the end of June, Hong Kong accelerating stablecoin regulatory legislation, and official agencies in Shanghai organizing stablecoin study seminars last week, everyone is preparing for compliant stablecoins. We noticed that AllScale has organized a global stablecoin project list on its official Twitter, with detailed observations on market and regulatory trends. Could you please briefly introduce what AllScale is currently doing?

Shawn: Of course, simply put, AllScale is creating an operating system to help traditional enterprises and small and medium-sized enterprises use stablecoins, aiming to bridge the 'last mile' of enterprise-level stablecoin payments, assisting enterprises to comply, securely, and conveniently complete end-to-end needs such as collections, sales, and payroll through stablecoins.

In this process, we see the rapid development of the entire ecosystem's infrastructure, with many enterprises exploring at the public chain level, stablecoin issuers, payment channels, compliance layers, etc. However, we believe that the 'last mile' of enterprise payments still lacks mature solutions: In the U.S. ecosystem, the 'first mile' and 'last mile' of stablecoin payments develop quickly (the 'first mile problem' that was often discussed half a year ago is exactly the infrastructure issue solved by Bridge, BVNK, etc.); while the Asia-Pacific ecosystem focuses more on the 'middle mile,' centering on payment channels. Our team was established this year, with members from core players in the payment industry like Cracking Blog, Capital One, OKX, TikTok, and we focus on bridging the 'last mile' of enterprise-level stablecoin payments.

Q2: Can you describe with specific examples how enterprises can 'use stablecoins without perception'?

Lawyer Wang Lei: Can you use specific examples to describe how enterprises can 'use stablecoins without perception' to help everyone better understand?

Shawn: Yes. Instead of saying we are a stablecoin payment company, it's better to say we are an 'application layer solutions provider' born out of the popularization of stablecoin payments. We focus on two core points:

First, follow the logic of the 'smile curve'—like Apple focusing on upstream design and downstream application distribution, leaving the middle tier to ecological partners. We help the middle layer to land scenarios in the 'downstream' of stablecoin payments.

Secondly, focus on small and medium-sized enterprises and individuals in the micro-capillary economy—especially in Asia, Africa, and Latin America. The innovation of stablecoins will not first occur in traditional large enterprises—these enterprises have already enjoyed the conveniences of mature financial technology. For example, in Canada, only 3-4 out of every 100 people do not have a bank account, making receiving payments extremely easy; in China, mobile payments like WeChat and Alipay are nearly free, with some of the lowest rates globally. However, at the economic fringes, many small and medium-sized enterprises and individuals, especially in Asia, Africa, and Latin America, lack these basic financial tools. For them, stablecoins are the true 'disruptors.' Our team often says 'the future is here, just unevenly distributed,' and these regions are a concentrated reflection of the value of stablecoins.

However, there is a premise that needs to be clarified: AllScale is not a bank, does not provide custody services, does not touch funds, and does not issue stablecoins; the core is to develop and streamline the entire process at the application layer. For example, if an enterprise in Singapore or the United States needs to collaborate with a Web3.0 developer in Argentina—Argentina has a high proportion of excellent developers, but local currency volatility is significant, and they prefer to receive USD but lack convenient USD payment tools, leading them to be more inclined to accept stablecoins. Then the question arises—where to buy stablecoins? There are high asset requirements for account opening; how to manage chain addresses during transfers? How to comply with anti-money laundering? Finally, how to file taxes and integrate with accounting systems? The entire process is fragmented and has significant resistance.

Our solution is to streamline the entire process, allowing enterprises to use it with 'no perception': we develop invoicing systems for labor brokers and small and medium-sized enterprises in Asia, Africa, and Latin America, managing accounts receivable, enabling their clients to pay easily, safely, and compliantly with stablecoins through all channels—even if the payer doesn't understand stablecoins, the transaction can be completed smoothly. This is the problem we are solving.

Lawyer Wang Lei: You organized a list of global stablecoin projects on your official Twitter; what trends are there among global stablecoin projects? What are the characteristic differences between different regions?

Shawn: I would like to share some of our observations, which may not be absolutely correct but hope to provide different perspectives:

The U.S. market highly values APIs and SaaS. Six months ago (in January), the infrastructure for the 'first mile' and 'last mile' of stablecoins was already clear, with high enthusiasm in the tool layer and application layer, but the middle layer was not as focused on as in Asia. The core logic is that the most challenging aspects of enterprise payments are digital currency custody, deposit and withdrawal conversion, anti-money laundering (AML), etc., and these needs are interconnected, so there is no need for each enterprise to build underlying capabilities. Thus, a large number of 'middleware' solutions appear, bundling compliance, technology, and risk control, allowing the application layer to reuse directly. For example, Paxos issues PY USD for PayPal, and professional institutions can provide a full solution for stablecoin issuance, including compliance management.

The Asian market has many brands moving towards payments, exploring the issuance of stablecoins, especially cross-border payment companies that are very active.

Another trend: Many projects (including DeFi projects) are exploring transformation in 'compliance.' For instance, some DeFi projects in the United States are beginning to consider 'custodial' centralized solutions, even exploring digital banking models. We believe that the pace of U.S. banks' digital currency custody capabilities being outsourced will accelerate—this means more institutions can focus on product distribution and scenario integration without needing to build their own compliance custody, significantly lowering barriers.

Q4: What is the long-term potential of payment-type stablecoins? Where are the opportunities for small and medium-sized enterprises?

Lawyer Wang Lei: Returning to the perspective of small and medium-sized enterprises, what is the long-term potential of payment-type stablecoins? Some say 'stablecoins are the game of financial giants,' where are the opportunities for small and medium-sized enterprises?

Shawn: There are two core viewpoints:

First, stablecoins are 'overvalued in the short term and undervalued in the long term.' In the short term, due to high enthusiasm, people may overestimate progress within a year; but in the long term, their value is underestimated—just like underestimating the changes within ten years.

Secondly, there are opportunities for small and medium-sized enterprises at the 'application layer.'

First, explain 'overvalued in the short term, undervalued in the long term': to judge whether a technology has potential, look at two standards:

1. User stickiness: Stablecoins have passed the test. Cross-border payment users who have used stablecoins find it very difficult to return to traditional methods once they experience their convenience—this is a necessity for early adopters, but it hasn't reached the 'iPhone moment' (explosive growth).

2. Explosive growth: Stablecoins have not yet met the standards. Currently, the entry threshold is high, and onboarding costs are large, not reaching the mass market.

The long-term potential lies in the fact that stablecoins are not just 'fast,' but also 'internet currency'—programmable, composable, and permissionless, which will reconstruct the understanding of currency. Just as 4G was not just 'fast internet,' but also gave rise to new business models like live streaming and O2O, stablecoins will also give birth to unknown scenarios.

For small and medium-sized enterprises, the opportunity is not in issuing stablecoins (due to high funding and compliance costs), but in the application layer:

  • Native scenarios (stablecoin native):For example, on-chain DeFi and smart contract-driven financial services, compliant bypassing of traditional barriers.

  • Embedded scenarios (add-on):Just like AI embedded in Meitu Xiuxiu, stablecoins can be embedded in vertical scenarios. For instance, vertical SaaS (like gym management software) can upgrade from 'collecting management fees' to 'earning payment commissions' through embedded stablecoin payments, reducing revenue-sharing costs with giants.

  • Transforming traditional scenarios: For example, microloans and trade financing, stablecoins can enhance efficiency.

The victory of payments has never been about the payment itself—Alipay's success stems from Taobao, and Square's advantage lies in hardware and merchant data analysis. Small and medium-sized enterprises need to focus on 'payment + scenario,' rather than just making payments.

Q5: What changes in the stablecoin market are you most looking forward to?

Shawn: There are three expectations:

1. Eliminate 'stigma': Make people realize that crypto is a technological innovation, not just associated with speculation and the black and grey economy. In fact, traditional payments also have compliance issues, and the 'white volume' (legal transactions) of stablecoins is quite high; the tool itself is neutral.

2. Traditional financial institutions entering deeply: As stablecoins become an irreversible trend, institutions will shift from 'resistance' to 'participation,' outsourcing compliance and account capabilities—such as banks opening digital currency custody APIs, allowing more enterprises to focus on scenario landing.

3. Forming a closed-loop of use: Just like WeChat Pay relies on micro-businesses to complete the 'sending red packets - consumption' closed-loop, stablecoins need to upgrade from the 'fiat entry - stablecoin transfer - fiat exit' 'sandwich model' to use stablecoins to complete a full scenario of 'salary collection - loans - payments - consumption.' The more such scenarios, the more solid the ecosystem—this may be the 'iPhone moment' for stablecoins.

Q6: Please send a message to the friends online today in one sentence.

Shawn: Bubbles are beautiful, full of romance and opportunity. This 'bubble' is precisely the key to breaking path dependence—the path dependence of traditional finance has lasted too long.

We are now ushering in an opportunity for 'track change,' and it may even achieve a state of 'same track'—this is also an important manifestation of the 'interoperability' often mentioned in the Web3.0 field. In the past, different countries, regions, and currencies had their own path dependence, involving many vested interests, forming inertia that continuously drives the old model. However, this 'bubble' brought by stablecoins may cause people to overestimate its impact in the short term, but this overestimation is crucial—precisely because the 'bubble' exists, it attracts more people to layout and invest, promoting the establishment of a new ecosystem; while long-term impacts are often underestimated.

So my insight is: bubbles are beautiful and romantic; they are the best solution to break path dependence.

Lawyer Wang Lei: Thank you for sharing your views with romantic yet profound expressions that include personal insights and industry observations. Today's topic focused on many thought-provoking collision points, which is the purpose of our Entrepreneurship Web3.0 column—to provide multi-dimensional industry observations from the perspective of front-line practitioners. Shawn's sharing is full of passion, and we can deeply feel the love for the industry. Thank you again for Shawn's sharing.

Next Wednesday at the same time, we will bring more topics. Please stay tuned. Thank you all, see you next week.


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Original author: Mankun Brand Department