Zhao Changpeng appears at Hong Kong University: Talk about the future of stablecoins, RWA, exchanges and AI

# Source: Kite Ideal  

This afternoon, the Crypto Finance Forum 2025 was held at the University of Hong Kong (HKU). During the in-depth dialogue focusing on Web3 development, Changpeng Zhao (CZ), founder of Binance, and Chen Lin, Vice President of HKU and Chair Professor of Finance, engaged in a conversation covering the global Web3 landscape, opportunities in core tracks, and Hong Kong’s positioning.  

Spanning topics from the global competitive logic of stablecoins and the implementation challenges of RWA (Real-World Asset tokenization) to the future competition between centralized and decentralized exchanges, the dialogue offered both vivid insights from frontline practice and macro-level trend judgments. It provided a key perspective for understanding the Web3 ecosystem and Hong Kong’s role within it.  

## I. Stablecoins: The "New Carrier" for Currency Internationalization – How Can Hong Kong Break the Monopoly of USDT/USDC?  

As the "infrastructure" of the Web3 ecosystem, stablecoins served as the core starting point of the dialogue. Based on industry practice, Changpeng Zhao reviewed the development logic of stablecoins and pinpointed the key proposition for Hong Kong to build local stablecoins: amid the dominance of USDT and USDC, how to leverage offshore RMB or HKD to establish competitive advantages?  

### 1. The Growth Logic of Stablecoins: From "Hedge Tool" to "Currency Expander"  

#### Early Positioning: A "User Experience Fix" for Exchanges  

When Binance operated as a cryptocurrency exchange (then known as BB Exchange) in 2017, it noticed that users had to withdraw funds to fiat currency exchanges to cash out during Bitcoin price fluctuations – a cumbersome process. At the time, Binance began supporting USDT (which was still niche), initially intending to provide a "short-term safe haven." Unexpectedly, this move drove USDT’s growth alongside the exchange’s ecosystem: Asian users, who struggled to access USD through traditional accounts, turned to USDT as an alternative, fueling its second wave of growth.  

#### Business Nature: An "Invisible Necessity" with Low Complexity and High Profitability  

The stablecoin business model is simple: after obtaining a license, accept fiat currency from users, issue corresponding stablecoins, and reverse the process when users redeem. Yet it has become one of the most profitable tracks in the industry (on par with exchanges). Take BUSD, a compliant stablecoin Binance once partnered on: its market capitalization grew to $23 billion between 2019 and 2023, without relying on complex operations – only brand authorization and basic promotions (such as free withdrawals).  

#### Global Competition: The "Extension of Dollar Hegemony" via USD Stablecoins  

Changpeng Zhao highlighted a key point: USD stablecoins like USDT are essentially "globalization tools" for the U.S. dollar. The assets backing over $100 billion in USDT are mostly invested in U.S. Treasury bonds, and over 90% of users are outside the U.S. This is equivalent to helping the U.S. dollar penetrate regions not covered by traditional finance. This offers direct insights for RMB internationalization: if Hong Kong can promote offshore RMB or HKD stablecoins, it could serve as a "Web3 channel" for the RMB to go global.  

### 2. Hong Kong’s Challenges and Opportunities: Balancing Compliance and Liquidity  

#### Core Contradiction: The Conflict Between Foreign Exchange Controls and Free Circulation  

As native blockchain assets, stablecoins inherently feature cross-regional free circulation, creating tension with traditional foreign exchange controls. Changpeng Zhao argued that while there is no "perfect solution," over 20 countries worldwide have explored onboarding fiat currencies onto blockchains. Hong Kong, leveraging its offshore financial advantages, can design flexible mechanisms (such as targeted circulation scenarios) within a compliance framework.  

#### The U.S. "First-Mover Advantage": Consolidating Dominance Through Legislation  

In July 2024, when the U.S. introduced the stablecoin regulatory framework (GDS), it simultaneously proposed restricting Central Bank Digital Currencies (CBDCs). Changpeng Zhao interpreted this move as an attempt to support USD stablecoins: CBDCs, due to overly strict regulations and low flexibility, have struggled to gain market acceptance (over 20 countries globally have piloted CBDCs without success). In contrast, the high liquidity of USD stablecoins better aligns with industry needs. Hong Kong needs to learn from this "policy adapting to the market" approach.  

## II. RWA: Is "Onboarding Real-World Assets onto Blockchains" a False Proposition? Financial Assets Are the Breakthrough  

As discussions around "everything can be tokenized" heat up, RWA (Real-World Asset tokenization) is regarded as the next growth track for Web3. However, Changpeng Zhao bluntly stated that implementing RWA is far more difficult than expected. Only assets closely tied to finance with high tradability have the conditions to take the lead – not all assets are suitable for onboarding onto blockchains.  

### 1. The "Life-or-Death Line" for On-Chain Assets: Liquidity and Price Volatility  

#### The "Fatal Flaw" of Non-Financial Assets: Insufficient Liquidity  

Take Hong Kong real estate as an example: even though housing prices fluctuate significantly, they are still "low-volatility assets" compared to cryptocurrencies. After tokenization, such assets face weak trading demand (insufficient order book depth) due to low price volatility, making it difficult for large sums of capital to enter or exit (e.g., $100 million cannot be liquidated quickly). This traps them in a vicious cycle of "low liquidity → even less trading" and may even lead to short-term manipulation due to thin trading.  

#### The "Natural Advantage" of Financial Assets: Digitization and High Tradability  

Financial assets such as stocks and bonds are already highly digitized and feature high trading frequency, making them more compatible with the "ledger attribute" of blockchains. Changpeng Zhao cited the U.S. as an example: the U.S. has attempted to tokenize stocks, but currently faces a "price disconnect" issue (e.g., stock tokens issued by XStop have no linkage to actual stock prices). The core reason is unclear regulatory classification – whether tokenized stocks are securities or commodities – resulting in ambiguous compliance paths.  

### 2. Hong Kong’s Opportunity: Leveraging HKEX to Seize the "First Mover Advantage in Global Asset Tokenization"  

Changpeng Zhao posed a key question: If the Hong Kong Exchanges and Clearing Limited (HKEX) fails to promote asset tokenization, will it lose its global influence? He drew a parallel to China’s Internet development: without Tencent and Alibaba, the e-commerce market might have been monopolized by Amazon. Similarly, if the U.S. takes the lead in tokenizing stocks (attracting global investors), other regions will be put at a disadvantage.  

For Hong Kong, its advantage lies in HKEX’s global influence and policy flexibility. Currently, U.S. policies clearly support asset digitization. If Hong Kong can accelerate the clarification of RWA regulatory frameworks (such as distinguishing between securities/commodity attributes and simplifying license applications), it can attract global assets to be onboarded onto blockchains through Hong Kong, establishing itself as an "Asian RWA Hub."  

## III. Exchange Competition: How Can Hong Kong Build a "World-Class Exchange"? Liquidity Is the Core Moat  

During the dialogue, Professor Chen Lin raised a key question: If Hong Kong aims to become a Web3 hub, how should it nurture world-class exchanges? From the three dimensions of cost, liquidity, and compliance, Changpeng Zhao analyzed the core contradictions in the current development of exchanges.  

### 1. The "Misconception" in Traditional Regulatory Thinking: "Localized Isolation" Is Unworkable  

#### The Cost Trap: Replicating the "Billion-Dollar Investment" for Exchanges  

The infrastructure of large exchanges (such as secure wallets and compliance systems) requires billions of dollars in investment and maintenance by hundreds of top security experts. Requiring exchanges to build separate "localized systems" for Hong Kong (with fully isolated servers, data, and teams) is equivalent to rebuilding an entire exchange – a costly endeavor that also struggles to attract matching talent. For commercial institutions, such "redundant construction" is not feasible.  

#### The Liquidity Dead End: Small Markets Cannot Sustain "Effective Trading"  

Hong Kong has a population of only 8 million. If exchanges are restricted to serving only local users, they will fall into a dilemma of "few users → low liquidity → high price volatility": for example, buying 10 Bitcoins may lead to "high slippage" (increased costs) due to a thin order book, and large orders may fail to execute. In contrast, global exchanges, with a large user base (hundreds of millions of users), have sufficient liquidity. Their "deep order books" even protect users (e.g., hundreds of millions of dollars in orders will not trigger sharp price fluctuations).  

### 2. Hong Kong’s Breakthrough Direction: From "Conservative Pilots" to "Open Adaptation"  

#### Policy Iteration: Keeping Pace with Global Trends and Simplifying Compliance  

Changpeng Zhao acknowledged Hong Kong’s policy progress: the digital asset bill introduced in May 2024 (ahead of the U.S.) and frequent communication with the industry (including exiting institutions) demonstrate its advantage of "flexible adjustments." In the future, it needs to further relax product restrictions (e.g., currently, few crypto assets can be listed on Hong Kong exchanges) to attract more projects, forming a positive cycle of "more products → more users → sufficient liquidity."  

#### Ecosystem Collaboration: Leveraging Existing Global Exchanges Instead of "Building from Scratch"  

The core of a world-class exchange lies in "liquidity and globalization." Hong Kong does not need to "start from scratch"; instead, it can use policies to attract existing global exchanges (such as Binance) to operate compliantly in Hong Kong while allowing them to connect to global liquidity. This not only reduces the construction costs for local institutions but also quickly enhances Hong Kong’s influence as a "Web3 trading node."  

## IV. Centralized vs. Decentralized Exchanges: Not Substitution, but Complementarity  

With the rapid growth of decentralized exchanges (DEXs) such as Hyperliquid and Uniswap, the market has worried that "centralized exchanges (CEXs) will be replaced." However, Changpeng Zhao believes that the two are not opposites but form a "complementary ecosystem" serving different needs.  

### 1. Current Situation: CEXs Remain the "First Choice for Beginners," While DEXs Need to Overcome the "User Experience Barrier"  

#### The Core Value of CEXs: Lowering the Web3 Threshold  

For users new to Web3 (especially those migrating from Web2), CEX features such as "email + password" registration, customer support, and fiat currency deposits/withdrawals align better with their usage habits. In contrast, DEXs require users to master wallet operations (e.g., addresses, private keys), and their interfaces are often filled with "codes and garbled text" (such as contract addresses), which are difficult for ordinary users to understand. Additionally, users need to guard against MEV (Maximal Extractable Value) attacks – Changpeng Zhao admitted that he had even been "front-run" before.  

#### The Advantages of DEXs: Regulatory Dividends and Privacy Needs  

Stricter KYC (Know Your Customer) requirements for CEXs in regions like the U.S. have instead spurred demand for DEXs. The ability to trade freely without KYC attracts users sensitive to privacy. Furthermore, while DEXs currently have high fees and rely on token incentives (e.g., issuing tokens to subsidize users), technological advancements (such as Layer2 scaling) will reduce costs in the long run. After token incentives are phased out, genuine user demand will sustain their development.  

### 2. Future Outlook: DEX Scale May Surpass CEXs Within a Decade – Hong Kong Needs to Reserve "Policy Space"  

Changpeng Zhao predicted that within 5-10 years, as users become more familiar with wallets and DEX technology improves, the scale of DEXs may surpass that of CEXs; in 20 years, DEXs may become mainstream. Hong Kong needs to proactively develop a compliance framework for DEXs (e.g., how to protect users without stifling flexibility) to avoid missing out on this track due to overly strict regulations.  

## V. Web3 + AI: Not Just a Concept, but a "Billion-Dollar New Trading Scenario"  

Beyond Web3, Changpeng Zhao also shared his views on "Web3 + AI" – while the integration of the two is still in its early stages, it will spawn a "brand-new economic form" in the future, rather than mere "conceptual speculation."  

### 1. Core Logic: AI Needs "Web3-Style Currency and Trading"  

#### AI’s "Payment Pain Point": Traditional Finance Cannot Meet Demand  

Interactions between AI Agents (intelligent agents) – such as booking flights, design services, and content distribution – require high-frequency, micro-payments. Traditional finance (credit cards, bank transfers) involves cumbersome processes and high fees, making it unable to support "micro-transactions with million-fold growth" (e.g., charging 0.01 yuan to 100,000 readers for an article). In contrast, digital currencies built on blockchains enable "instant settlements with zero fees," perfectly matching AI’s payment needs.  

#### Trading Scale: AI Will Drive Web3 Transactions to "Grow 1,000-Fold"  

In the future, each person may own hundreds of AI Agents (e.g., helping book hotels, reply to messages, manage assets). Interactions between these Agents (both financial and non-financial) will generate massive transactions. Changpeng Zhao gave an example: AI already helps him process video translations and publications, and such scenarios will become widespread in the future. The transaction scale will be over 1,000 times larger than it is now, dominated by "micro-transactions" that can only be supported by Web3.  

### 2. Hong Kong’s Opportunity: Seizing "AI + Web3" Infrastructure  

Changpeng Zhao believes that the integration of AI and Web3 requires "infrastructure first": for example, developing digital currency payment interfaces adapted for AI and establishing a compliance framework for micro-transactions. If Hong Kong can take early steps in this field (e.g., supporting AI companies to use local stablecoins and simplifying micro-transaction regulations), it can become a "global testbed for AI + Web3."  

## VI. Conclusion: Hong Kong’s Web3 Opportunity – Finding a Balance Between "Order" and "Innovation"  

At the end of the dialogue, Professor Chen Lin summarized: the value of this conversation lies in integrating "macro order" and "frontline practice" – the academic perspective represented by Professor Chen provides a "framework for thinking," while Changpeng Zhao’s sharing reveals "real market demands." For Hong Kong, the key to becoming a global Web3 hub is to uphold compliance bottom lines (such as foreign exchange risk management for stablecoins and asset ownership verification for RWA) without restricting innovation (such as opening up exchange liquidity and reserving policy space for DEXs and AI + Web3).  

As Changpeng Zhao put it: "The development of Web3 is faster than imagined. When Binance was founded 8 years ago, BNB rose by over 10,000 times; tracks that seem distant now (such as RWA and Web3 + AI) may explode in just a few years." If Hong Kong can seize the current window of "flexible policies and global capital attention," it may carve out a "distinctively Eastern" development path in the global competition for Web3.  

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