Author: Meng Yan

Original link: https://mp.weixin.qq.com/s/FkYKAmvNE7JivHN5Q-HQDQ Statement: This article is a reprint. Readers can get more information through the original link. If the author has any objection to the reprint form, please contact us and we will modify it according to the author's requirements. The reprint is only for information sharing, does not constitute any investment advice, and does not represent the views and positions of Wu Shuo.


At the beginning of August, I was invited by Uweb to teach in Hong Kong. The course itself was only one day, but because I heard from friends that stablecoins and RWA are very popular in Hong Kong, I specially stayed a few more days, visited some industry insiders, and met some old and new friends, mainly to understand the stablecoin and RWA industry situation in Hong Kong. What I saw, heard, and discussed had a great impact on me, and also brought some thoughts. While the memory is still fresh, I will write it down and discuss it with my peers. I have a problem with writing articles, that is, they are too long. People nowadays don't have the patience to read particularly long texts, and the excessive length affects the interest in reading. This Hong Kong travelogue will be even longer because there are more things to think about. So I divided the article into three parts for publication. The first part is about the changing trend of Hong Kong and Singapore as dual centers of the crypto industry in the Asia-Pacific region. The second part is some thoughts on the development of the stablecoin and RWA industries in Hong Kong. The third part is some thoughts on the two popular topics of "token economy" and "coin-stock linkage", especially some new ideas after meeting and communicating with Dr. Xiao Feng. 1. One tightens and the other loosens, the offensive and defensive positions of Singapore and Hong Kong have changed Since the crypto industry sprouted in the mid-2010s, Hong Kong and Singapore have been the two most active regions in the Asia-Pacific region. Both are global offshore financial centers, with a good financial foundation, a large number of professional financial talents, and open and flexible policies. Therefore, for a long time, which city to choose as a base for development has been a hot topic in the Chinese crypto circle. However, in the past three or four years, Singapore's advantages have been obvious. A large number of Chinese practitioners have come to live and work in Singapore, building a global crypto ecological capital on a small island about the size of Haidian District plus half of Chaoyang District, and nurturing a large number of well-known projects with good continuity. When it comes to Hong Kong's crypto industry, in addition to the new flowers opened by the new policies in recent years, we can only trace back to Bitfinex and BitMEX in the mid-2010s and Crypto.com, which has long been relocated and renamed. Last November, after attending the Singapore Fintech Festival, I went to Hong Kong on a business trip. At that time, I felt that although Hong Kong had policy advantages in Web3, the density of talent, awareness, and discussion atmosphere were far inferior to Singapore. I made an appointment with several local Hong Kong peers to communicate, and they all advised me not to have too high expectations for Hong Kong's crypto. One of them summarized that Hong Kong is still deeply attached to the traditional finance that was once a great sea and is now a fading flower. As for this crypto arranged marriage, Hong Kong's attitude is not to refuse, not to promise, and not to invest true feelings. When I was about to leave Hong Kong, I encountered an autumn rain. I sat on the double-decker old tram in Central and looked at this city that has deeply influenced our generation, and a sense of bleak autumn wind and where is the way came to my mind. Only eight or nine months have passed, and the atmosphere has completely changed when I came to Hong Kong again. With the stablecoin legislation in the United States and Hong Kong, and the resulting stock market and coin market trends, everyone in Hong Kong is now talking about stablecoins and RWA. Every dinner table is discussing the recent trends and market rumors. The giants of traditional finance have begun to actively participate in crypto opportunities. A large number of entrepreneurs from traditional Internet and AI are rushing to Hong Kong to seek Web3 integration. Many entrepreneurs with forward-looking vision from traditional industries have also begun to pay attention to crypto. Even when we discuss stablecoins and RWA in the hotel lobby, it will attract curious inquiries and exchanges from others. I don't think I've experienced this kind of grand occasion since 2018. Before coming to Hong Kong, I guessed that the current center of global crypto is in New York, but coincidentally, a Wall Street banker I know just arrived in Hong Kong from New York. He told me that the crypto enthusiasm in Hong Kong far exceeds that of New York. So if ranked by enthusiasm, Hong Kong is definitely number one in the world now. I went to Singapore once in mid-June, and our stablecoin payment technology company is also located in Singapore, so I also have some understanding of the situation in Singapore. As we all know, in June of this year, the Monetary Authority of Singapore (MAS) significantly tightened regulations on the digital currency payment industry, and the Singapore crypto industry felt a wave of coldness. There are rumors that some family office funds involving crypto have encountered some troubles during registration, and related practitioners have encountered stricter scrutiny when applying for work and residence visas and even permanent residence status. These rumors may not be true, but they have already caused some substantial impact. Many crypto practitioners have recently left Singapore, and a considerable number of them have come to Hong Kong. One immediate consequence of this is that industry-related activities and conferences have immediately seen a rise and fall. It is said that Singapore's annual Token 2049 has encountered a cold reception in terms of investment promotion this year. Let's take this Uweb course as a sample analysis. Uweb is definitely the number one brand in blockchain and digital asset training in the Chinese world, and its teachers and students are quite representative. In the past, even if Uweb's courses were taught in Hong Kong, a considerable proportion of the lecturers and students came from Singapore. However, this time, not only has the proportion from Singapore decreased, but according to my communication with them, many of them are considering moving to Hong Kong. So now we can say with certainty that compared with the end of last year, the development momentum of the crypto industry in Hong Kong and Singapore has reversed in just a few months. Perhaps in terms of stock, Singapore is still more powerful, but looking at the increment and development speed, Hong Kong has surpassed it. When discussing this matter with some friends in Hong Kong, many people were happy, but they were also confused about Singapore's policy choices. Recalling 2022 and 2023, the entire industry fell into deep despair and negative public opinion due to a series of dark events such as the collapse of Luna, the bankruptcy of Three Arrows Capital, and the collapse of FTX. It was Singapore that gave a place for a large number of practitioners in the trough with an open and flexible attitude. Why, when the crypto industry is beginning to move towards standardization, is Singapore so generous in making wedding clothes for others and handing over a potential industry to Hong Kong? This is a hot topic of discussion among peers during this trip to Hong Kong. The Singapore government has always been known for its wisdom, and I believe this must be a well-thought-out choice. However, I certainly cannot know the specific reasons, so I can only provide a few explanations that I have heard here. The first explanation is "positioning theory." Although both Singapore and Hong Kong are offshore financial centers in the Asia-Pacific region, their positioning is different. As early as the 1980s, (The Economist) magazine put forward an interesting statement, comparing Singapore to the "Switzerland of Asia", focusing on wealth hedging and value preservation, and comparing Hong Kong to the "Wall Street of Asia", focusing on capital markets and investment and financing functions. From the current direction of crypto development guided by the United States, after gaining a firm foothold through Bitcoin and stablecoins, the next step is obviously to expand towards trading and application, which is more in line with Hong Kong's positioning, so Singapore actively "does something and does not do something." I think this statement is very profound, but it needs to be patched. Because Singapore's attitude towards crypto has been very positive in the past few years, did they not think of this before, and only suddenly realized this year that crypto conflicts with their national positioning? The second explanation is the "new policy theory", which refers to the fact that the Huang Xun Cai government, which just won the general election in Singapore this year and came to power, prefers AI and has no interest in crypto. It even accused the industry of bringing negative impact to Singapore's national reputation during the election, so the current tightening of the crypto industry reflects the new policy attitude. This explanation is more superficial, because supporting AI does not mean abandoning crypto, and it is normal for politicians to abandon the propositions during election debates for the sake of national technology strategies. With the maturity of the People's Action Party, it is impossible to tie itself up in this matter. The third explanation is the "risk aversion theory", which refers to the fact that after Trump came to power, the Singapore government judged that the Sino-US game has entered a new period, and it needs to be extra cautious about financial-related risks. Due to the disruptive nature of crypto technology in the fields of payment and finance, it will lead to a considerable period of time in which the crypto industry will introduce huge shocks and risks to traditional financial supervision and international anti-money laundering and anti-financial crime mechanisms. Therefore, after weighing the pros and cons, the Singapore government decided to impose stricter restrictions on related industries, which is also a reasonable consideration. This last explanation seems more logical to me, but it needs to be supplemented by the fact that the Singapore authorities have not yet finally confirmed the significance and prospects of crypto technology, and have chosen a cautious attitude. Singapore's unique advantage in the financial industry is that it can play a special role as a bridge between the two super economies of China and the United States. The continuation of this advantage depends on the recognition of its positioning by the two major countries. With this positioning, the economic and financial circles of China and the United States can cooperate and integrate at the factual level through Singapore under the general trend of strategic competition. According to friends who understand the situation, before 2020, Singapore had only more than 400 family office funds in its 55 years of establishment. Since 2020, Singapore has received nearly 2,000 applications for family office funds every year, and more than 1,000 family office funds have been approved for establishment. In just a few years, thousands of family offices have settled in Singapore, bringing a large amount of funds. It is revealed that hundreds of billions of dollars of foreign investment are pouring in every year, and Singapore has been among the largest sources of foreign investment in China for many years. As long as Singapore's positioning as a bridge is continuously recognized, Singaporeans can get a huge fortune every year without any effort. On the contrary, if either party, especially the United States, no longer recognizes Singapore's special financial status, it will be a disaster for Singapore. It is said that the Financial Action Task Force (FATF) will conduct a compliance assessment of Singapore this year, which is related to Singapore's lifeline. In this case, it is understandable that the Singapore government chooses to be prudent and cautious. However, AI also has huge disruptive power. Applying AI deeply to traditional finance will also bring huge risks to anti-money laundering, anti-fraud and other goals. Not only that, according to the current way of AI and finance integration, efficiency is prioritized, and the more serious problem that may be brought about is the aggravation of financial inequality, which runs counter to the agenda of "inclusive finance." So why does the Singapore authorities support the development of AI without hesitation? Are they not worried about the risks of AI? I think the main reason is that the new authorities have confirmed that the trend of AI is unstoppable. Only by joining and actively leading can they not be more passive. At the same time, AI seems to give people the impression of "more controllable" in terms of technology. Although I think this impression is extremely unreliable in the long run, many people currently judge it this way. In contrast, crypto is not so convincing. Although the Trump administration in the United States strongly supports crypto, at least in the eyes of decision-makers in other countries, to regard crypto as an unquestionable future technology trend and say that it can bring huge benefits, there is currently a lack of substantial evidence. On the contrary, the risks and destructiveness have been confirmed after more than ten years of experimentation. Singapore has seen this risk and destructiveness. The three black events mentioned above in 2022 all originated from or affected Singapore. Before Trump came to power, in the global financial regulatory circle, the vigilance and hostility towards crypto were almost frozen. Not only Singapore, but technology policy makers in many countries have concluded that "blockchain technology has no future." The risks are certain and the prospects are unclear, so it is reasonable for the new government to favor AI and despise crypto. So does this mean that the Hong Kong government is convinced of the value of crypto? I don't think so. In today's world, probably only a small number of politicians in the White House and Capitol Hill in the United States think they have figured this out. Decision-makers in other economies may still be undecided on this matter. Optimists are half-believing, pessimists sneer and watch coldly, and those who are waiting to see a joke are by no means rare. Judging from the stablecoin regulatory条例 promulgated by Hong Kong this time, although the Hong Kong financial regulatory authorities have a positive attitude towards crypto, there are concerns when it comes to actual policies. However, today Hong Kong is in a completely different external situation. Hong Kong once had a similar offshore financial center status as Singapore, and even ranked above it for a long time, but in recent years this label has gradually faded. To revitalize its glory, inheriting the routine will only continue to be passive. It must take a risky path and dare to innovate boldly and compete in the new financial frontier. In this case, the promotion of crypto by the United States has provided sufficient external incentives to push Hong Kong forward boldly. By extension, I think the positioning of crypto technology is the core issue that major economies around the world are still struggling with. Is crypto really a core component of the new round of technological revolution? This is the key issue. Currently, decision-makers in most economies other than the United States have an attitude of "doubt and fear" towards this issue. The doubt is about the true value of crypto technology, especially the real advantages of crypto technology compared to the existing Web2 FinTech, whether it is certain. The fear is that in case, even if it is just in case, they have misjudged it, and crypto is indeed an important part of this technological innovation. Then, due to strategic misjudgment, the national technology and economic strategy will have a major setback, repeating the mistakes of the Soviet Union in semiconductors and Japan in the mobile Internet industry, and the consequences will be unbearable. Like most of my peers in the crypto field, I have no doubt about this issue. We not only believe that crypto technology is an important component of this round of technological revolution, but it is also not an ordinary "important component", but a catalyst with a global impact. It can be deeply integrated with AI, robots, new energy, the Internet of Things, and biomedicine to accelerate and change the development trajectory of these technologies. For example, AI is of course still in the money-burning stage, but if a profit model is established in the future, then I dare to assert that continuing to let users swipe their cards to pay monthly fees for AI like today is one form, while AI that can accept crypto real-time streaming payments and provide incentives for data and resource contributors will be a completely different and higher level form. If the two forms compete in the same market, the former will suffer a dimensional reduction blow. For example, a robotics startup can of course use the current method to raise funds, but if its competitors use the new method promoted by the US CLARITY Act to raise funds and develop the market, then the former may not even see the taillights of the latter. But these are just our views. You can see that even today, there are still a large number of technology opinion leaders and FinTech industry professionals who firmly assert that crypto and blockchain technology have no practical value other than fueling gambling speculation, and question the Trump administration's promotion of crypto as purely out of unhealthy personal motives. We cannot ask decision-makers to listen only to me, so we can only sympathize with the hesitation and swaying of policies. For peers, instead of arguing hoarsely, it is better to seize the limited space in the United States and Hong Kong and truly make a few undisputed successful cases. People teach people, they can't teach, things teach people, they will learn as soon as they teach. If crypto really has a future, we should prove it ourselves. Recently, the story of the twin cities of Singapore and Hong Kong around crypto has taken a turn for the better. I think the logic is probably like this. The two major financial cities have made the most sensible choices based on their own positions. As for who history stands with and whether both parties will adjust their positions soon, it depends not only on luck and timing, but also on what we builders do.

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