Article author: 0x9999in1
Source: MetaEra
Recently, MetaEra Hong Kong Zone was launched, and the "Hong Kong Crypto New Policy Two-Year Anniversary Celebration" series of activities took the lead in the launch. An important part of it is "High-end Dialogue: Hong Kong Web3.0 Influential Leaders". The influential person interviewed in this issue is Liu Yu, CEO of Yuanbi Technology.
Yuanbi Technology
The Hong Kong Monetary Authority announced the list of participants in the "Sandbox" for stablecoin issuers on July 18 this year, which will take effect immediately. Among them, Yuanbi Innovation Technology Co., Ltd., a blockchain-based digital wallet and stablecoin company, currently has two major businesses: the "Yuanbi Wallet" that supports legal currency payments and the "Hong Kong dollar stablecoin" to be issued. The company recently announced the completion of a US$7.8 million A1 round of financing. In this round of financing, Yuanbi Technology received strategic investments from well-known companies in the industry such as Sequoia China, Hivemind Capital, Aptos Lab, Hash Global, SNZ Capital, Solana Foundation, Anagram and Upward Capital. In this interview, Yuanbi Technology CEO Rita Liu shared the development of the Hong Kong dollar stablecoin. She also firmly believes that compliance and credibility are important factors, and Hong Kong's advantages as a global trade center, financial center and payment center will also be reflected.
Highlights
● Different types of tokenized currencies may coexist, serving different application scenarios in different fields and through different channels.
● Compliance is a very important point in bringing Web3 to the next level.
● Stablecoin must be one of the tracks in all Web3 tracks that can solve the pain points in the real world.
● As one of the most important infrastructures and tools in the Web3 industry, the compliance of stablecoins is an inevitable result.
● What the Hong Kong dollar stablecoin needs to do is to increase the amount of money rather than grab the existing share of stablecoins.
● Yuancoin was established with the intention of entering the stablecoin market, playing the role of a promoter and pioneer in the development of stablecoins in Hong Kong.
Full Interview
MetaEra: In July of this year, the Hong Kong Monetary Authority (HKMA) announced the list of participants in the "Sandbox" for stablecoin issuers, including companies such as JD.com and Yuanbi. The emergence of this news has once again increased everyone's attention to the Hong Kong dollar stablecoin. Can you tell us about the development of the Hong Kong dollar stablecoin in Hong Kong?
Liu Yu: Hong Kong is one of the most advanced regions in the world in terms of stablecoin regulation. The Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority jointly issued a public consultation document in December 2023 to collect opinions on legislative proposals for regulating stablecoin activities in Hong Kong. Everyone is quite excited about this. In July this year, the list of participants in the "sandbox" for stablecoin issuers was announced as scheduled. Yuanbi is very happy and honored to be a member of the list.
In fact, the general framework of stablecoin regulation has already been clearly stated in the public consultation document just mentioned. The government’s next step will be to incorporate stablecoin regulation into the legislative process, introduce laws and regulations related to stablecoin regulation, and then issue licenses in accordance with the law. The overall development will be gradual and continuous.
MetaEra: What are the main businesses currently carried out by Yuanbi Company?
Liu Yu: In addition to the stablecoins that are included in the sandbox list, Yuanbi Technology has also obtained a legal currency payment license, which has enabled us to launch the payment platform "Yuanbi Wallet". This business is developing rapidly and can provide SVF-based legal currency accounts and payment services for small and medium-sized enterprises in Hong Kong. Therefore, Yuanbi Technology currently has the above two major businesses.
MetaEra: At present, some people still don’t understand the similarities and differences between the digital Hong Kong dollar and the Hong Kong dollar stablecoin? Can you explain this? In addition, do you agree that the digital Hong Kong dollar and the Hong Kong dollar stablecoin are potential competitors in the short term?
Liu Yu: The most essential difference is that the digital Hong Kong dollar belongs to the category of CBDC (central bank digital currency). As for the legal currency stablecoin, it is also a stablecoin pegged to a certain legal currency. So from this perspective, both are pegged to the Hong Kong dollar, but the former is a digital currency issued by the central bank, while the latter is a stablecoin issued by a private company. All over the world, there are regulatory policies to constrain the two different tokenized assets.
Another big difference is that the digital currency issued by the central bank is generally not issued on the public chain. Globally, we may have seen several central bank digital currencies being tested, but none of them were issued on the public chain. However, stablecoins issued by private companies, including those that already exist on the market, are almost all issued on the public chain.
Why do we emphasize the importance of supervision for stablecoins issued by private companies? The credibility of this is very important. First, there must be a 1:1 anchored reserve asset, and there must be real asset reserves behind it. Second, under the Hong Kong stablecoin framework, stablecoins cannot give users interest. Third, stablecoin issuers need to regularly publicize asset certificates to the public to prove how much stablecoin you have issued and how much actual assets are behind it.
In addition, you mentioned whether there is a competitive relationship between the digital Hong Kong dollar and the Hong Kong dollar stablecoin. We do not think so. Now when people talk about tokenized currencies, one is the central bank digital currency, one is the stablecoin issued by private companies, and the other is the tokenized deposit issued by banks. We can call these three types of tokenized currencies. These currencies must coexist because they serve different application scenarios. For example, the central bank digital currency can be applied to bulk transactions/wholesale levels, and the stablecoin issued by private companies is issued on the public chain, so it can be more closely integrated with Web3, digital assets and other industries. The scenarios it serves include digital currency trading scenarios, or transactions/payment scenarios between individuals in the private sector. So in summary, I think these different types of currencies may coexist, serving different application scenarios in different fields and on different channels.
MetaEra: Can you share with new industry users: What substantive problems can the emergence of Hong Kong dollar stablecoin solve? Is Hong Kong dollar stablecoin an asset that must exist?
Liu Yu: Under the stablecoin framework implemented in Hong Kong, stablecoin is not necessarily equal to Hong Kong dollar stablecoin, because everyone can see that Hong Kong's stablecoin regulatory framework does not specify the currency, but the first stablecoin issued by Yuanbi Technology will be the Hong Kong dollar stablecoin.
I think the stablecoins that appear under the Hong Kong stablecoin regulatory framework have a very substantial role. The most important point is compliance. In the context of the increasing compliance of the global Web3 industry, stablecoins are one of the most important infrastructures and tools in the Web3 industry, and its compliance must be an inevitable result. In countries and regions around the world, the regulation of stablecoins is moving towards compliance. Hong Kong is one of the earliest regions to start exploring and promoting it. It is precisely with compliance that Web3 technology can be used to solve the pain points in Web2. For example, cross-border payments are a good example. We often mention that the emergence of Bitcoin invented a global peer-to-peer electronic payment system, and blockchain can now develop to this day. In addition to Bitcoin, stablecoins have also played a relatively important role to a large extent, because stablecoins have brought out the payment advantages based on blockchain technology.
In traditional cross-border payments, fund settlement requires an intermediary bank system to complete, and may require one bank to settle the funds one by one. For example, if you want to transfer money from Hong Kong to Brazil, you may have to go through several intermediary banks for settlement. In this process, the information flow and fund flow are separated. However, in the blockchain payment system, I send a stablecoin to the other party, and the settlement is completed. There is no need for a third-party institution to settle the funds.
Through this example, I want to say that blockchain payment has great advantages. Its atomic settlement and tamper-proof characteristics based on blockchain can solve many pain points of traditional payment and traditional finance, but why has blockchain payment not solved real-world problems for a long time? I think one of the biggest obstacles is compliance. When you don’t have compliance and credibility, it’s difficult for many traditional institutions to enter the market. Therefore, compliance is a very important point to bring Web3 to the next level.
MetaEra: Currently, USD stablecoins occupy most of the market, especially USDT, which is the leader. What is the significance of the emergence of HKD stablecoins as a benchmark against USD stablecoins? How much market share can HKD stablecoins grab?
Liu Yu: The most important word to answer this question is increment. What we want to do is increment, not to grab the stock share of stablecoins. Yuanbi wants to make this cake bigger. Only by complying with regulations can traditional institutions bring in more funds. If you can't solve other people's pain points, others will naturally not come in. After these institutions come in, it will be incremental.
Stablecoins like USDT have been developed for several years and have a first-mover advantage. The application scenarios of stablecoins at that time were compared with those of today. At that time, it was mainly used as a tool for the entry and exit of crypto risk assets, and it may also be used as a tool in the DeFi track. But now it has been extended to payment more and more, including B To B and C To C. Now some reports show that the funds on a large number of addresses do not exceed $100. In fact, stablecoins help many people make cross-border remittances, which is much cheaper and more convenient than traditional cross-border remittance channels.
To sum up, as a latecomer to stablecoins, our most important thing is to grasp the issue of compliance, and we will develop the incremental market for stablecoins.
MetaEra: Regarding the Hong Kong dollar stablecoin, how do the relevant agencies of the Hong Kong government consider compliance issues and introduce relevant regulatory measures? Are there any policies learned from the United States and other Western countries?
Liu Yu: Now the world is studying stablecoin regulatory policies, but there are not many places to refer to. For example, Europe's MiCA-compliant euro stablecoin is a relatively complete legal currency stablecoin. As one of the pioneers in the development of stablecoins, I think Hong Kong's relevant institutions will have some exchanges with regulatory peers in other countries. On this basis, I have done a lot of thinking and customized a stablecoin regulatory framework based on the characteristics of Hong Kong's own financial system.
MetaEra: Web3.0 has been criticized by the outside world as a financial game that lacks practical applications. Do you think stablecoins will quickly enter people's lives? In which application scenarios will the Hong Kong dollar stablecoin achieve breakthrough growth?
Liu Yu: Stablecoins must be one of the tracks that can solve the pain points of the real world among all Web3 tracks. This is something we at Yuancoin firmly believe in. As for which application scenarios can be broken through, I think each country and region will have different pain points. For example, in Asia, especially Hong Kong, I think the retail scenario has benefited from the great development of Internet finance. There are many tools available for us to use in the retail scenario, so stablecoins will focus more on the B to B application scenario. Because Hong Kong itself is a trade center, payment center and financial center, from the perspective of the retail market, the market is not large, but from the perspective of the global trade center, there are more active institutions here, and institutions will do business with global partners. So we think that we should start from the perspective of Hong Kong as a trade center, financial center and payment center, and make breakthroughs in scenarios such as cross-border trade and cross-border payments.
But when it comes to payment, everyone thinks that payment sounds like a relatively simple thing, but the pain point is huge. We have entered the AI era, but the speed of money circulation may still remain in the older era, because cross-border remittances still take several days to complete, and we don’t know how much handling fee the intermediary bank will charge. These experiences are actually inconsistent with the development of our era today.
Regarding payment, a popular term is PayFi. PayFi is a combination of Web3 payment and Web3 finance. With payment as the entry point, its circulation speed will be significantly improved due to the acceleration of blockchain payment technology. In this way, we can solve many financial problems, such as whether exporters and importers can borrow or raise funds faster. I think Web3 payment will further develop from stablecoins to PayFi, thereby solving some pain points of global cross-border payments and cross-border trade.
MetaEra: In order to better promote the Hong Kong dollar stablecoin, has Yuanbi taken corresponding risk control measures and which companies has it established cooperative relationships with for this purpose?
Liu Yu: Blockchain itself has advantages in risk control. Everything on the chain is open, transparent and cannot be tampered with, so it also has some advantages in anti-money laundering. However, the weakness of blockchain is that it is easy to be hacked. Therefore, before we officially issue our stablecoin, we are also doing some preliminary preparations. This is also a very important link.
In addition, from the perspective of business expansion, our related work has never stopped. As a stablecoin issuer, the most important thing for us is to build an ecosystem that will serve our users in the future. In countries and regions where it can be implemented, users can easily and compliantly obtain the stablecoins we issue. To do this, we must rely on compliant and relatively liquid exchanges and market makers.
The third part is that we hope to develop financial scenarios, such as DeFi, which is very important.
Fourthly, infrastructure is also very important. It is very important to decide which public chain to cooperate with and whether there will be cross-chain in the future.
Therefore, we are promoting these four areas of cooperation on a global scale, hoping to establish cooperative relationships with global partners under a more compliant trend.
MetaEra: Based on your personal observation, among the many tracks of Hong Kong Web3.0, which one do you think is more promising? Which tracks are suitable for rapid development under the policy environment of Hong Kong and become advantageous projects globally?
Liu Yu: First, I am definitely very optimistic about the stablecoin sector. The main reason is that Hong Kong is a global trade center, payment center and financial center.
Second, I think the tokenization of real-world assets in RWA is also very interesting, because many people think that participating in Web3 is gambling, but many real-world projects have tokenization needs, which requires a more compliant environment to issue their own tokens. At present, we also see various attempts at RWA in the market, including some traditional financial institutions. If we can create a credible institution in a compliant environment to help projects issue tokens, we can achieve real tokenization of real-world assets, which I think is very meaningful.
MetaEra: Yuanbi was established in 2021, earlier than Hong Kong issued the "Policy Statement on the Development of Virtual Assets in Hong Kong". Does this mean that the company was established with an eye on the stablecoin track? What opportunities and challenges are there?
Liu Yu: When Round Dollar was first established, we wanted to be in the stablecoin track and played the role of a promoter and pioneer in the development of stablecoins in Hong Kong. The idea of launching Round Dollar was to make a stablecoin anchored to a basket of mainstream Asian currencies, so there was the name Round Dollar Technologies. At the time of its establishment, there was no regulatory framework for stablecoins, and the relevant policies for Web3 were not clear, but the company was very clear that the issuance of stablecoins must follow the compliance route and would only be done when the regulatory policies were relatively clear.
