Dr. Xiao Feng of HashKey Group, often dubbed as The Father of China’s Blockchain, warns that cryptocurrency hype far exceeds regulatory reality in Asia’s emerging markets.
The influential CEO argues stablecoins aren’t payment tools but represent a fundamental reimagining of global financial infrastructure.
The Stablecoin Fever: Hong Kong’s Cautious Regulators vs. Market Enthusiasm
In a recent in-depth interview with an industry expert, Liu Feng, Dr. Xiao Feng shared his rational perspective on the current cryptocurrency craze.
Dr. Xiao, Chairman and CEO of HashKey Group, noted there is a fever around stablecoins in Hong Kong. On the contrary, regulators remain extremely cautious, he observed. This reveals a major gap between market hype and reality, he said.
“Mainland China is beginning to re-engage with the crypto world. This process would start with stablecoins. The pressures of global monetary competition are driving the shift.”
Xiao predicted a clear path for adoption. After stablecoins, he said, the focus would turn to Real World Assets (RWA). Eventually, this might even lead to accepting Bitcoin.
People often misunderstand the core purpose of stablecoins, he argued, rebutting claims that they were created simply for payments. Their main use was as a trading medium for volatile crypto assets, he explained.
Beyond Payments: Blockchain as Financial Infrastructure
To understand their value, he said, we must look deeper. “Blockchain is more than just tokens,” Xiao stated. “It is a new method for accounting.”
This technology creates a new financial market infrastructure, he explained. It enables peer-to-peer, real-time settlement, which dramatically improves efficiency and lowers costs, according to the CEO.
For the industry to grow, compliance is essential. Hong Kong’s regulators are highly focused on Anti-Money Laundering (AML), Dr. Xiao noted. This is crucial for protecting its reputation as a financial hub.
Crypto’s approach to AML could be superior to traditional systems, he argued. “We can trace all transactions on-chain,” he said. “This provides a transparent and effective monitoring tool.”
He asserted that successful stablecoins need permissionless public blockchains to thrive. Stablecoins built on permissioned consortium chains would not succeed, he warned, because they lack the openness required for widespread adoption.
Hong Kong’s Strategic Position in Asia’s Digital Finance Race
The market is undergoing a profound transformation, he observed. “We are moving from digital-native assets to digital-twin assets,” he said, adding that this next phase would be defined by RWA.
This evolution demands regulated, onshore exchanges, he argued. The old offshore model is becoming obsolete for these assets. Compliance is necessary to unlock a market potentially worth trillions, according to Xiao.
In his view, Hong Kong is uniquely positioned to become a global hub. It has a common law system under the “One Country, Two Systems” framework, he noted. It served as a vital bridge between China and the world.
“Hong Kong’s destiny is to be the Wall Street of Asia,” he declared. “Singapore, by contrast, acts as the Switzerland of Asia. Their financial strategies are completely different.”
Dr. Xiao Feng believed the future of this industry is layered. The base protocol layer must be decentralized and permissionless, he said. However, the application layer would require centralization. This is not a contradiction but a necessary balance, he explained.
“We need decentralization for fairness and openness. We need centralization for efficiency and consumer protection at the application level.”