Changpeng Zhao Appears at HKU: Discussing Stablecoins, RWAs, Exchanges, and the Future of AI

On the afternoon of August 27th, the University of Hong Kong held the Crypto Finance Forum 2025. In an in-depth discussion focused on the development of Web3, Binance Founder Changpeng Zhao (CZ) and Vice-President and Chair Professor of Finance at the University of Hong Kong, Lin Chen, engaged in a dialogue on the global Web3 landscape, opportunities within core sectors, and Hong Kong's position. From the global competitive landscape of stablecoins to the implementation challenges of RWA (real asset tokenization), to the future of centralized and decentralized exchanges, this conversation offered both fresh insights from frontline practices and macro-level trend analysis, providing a key perspective for understanding the Web3 ecosystem and Hong Kong's role.

1. Stablecoins: A New Vehicle for Currency Internationalization: How Can Hong Kong Break the USDT/USDC Monopoly?

As the "infrastructure" of the Web3 ecosystem, stablecoins are the core starting point of this dialogue. Drawing on industry practices, Changpeng Zhao reviewed the development logic of stablecoins and addressed the key issue facing Hong Kong in developing its own stablecoin: how can it establish a competitive advantage by leveraging offshore RMB or the Hong Kong dollar, given the dominance of USDT and USDC? 1. The Growth Logic of Stablecoins: From "Safe-Haven Tools" to "Currency Expanders" Early Positioning: A "User Experience Patch" for Exchanges In 2017, when Binance was a cryptocurrency exchange (BB Exchange), users found it cumbersome to withdraw their Bitcoin to fiat exchanges when Bitcoin prices fluctuated. Initially intended to provide a short-term safe haven, it unexpectedly fueled its growth within the exchange ecosystem. Asian users' demand for US dollars was difficult to meet through traditional accounts, and USDT became an alternative, driving its second wave of growth. The business essence: a low-complexity, high-profitability, "invisible demand." The stablecoin business model is simple: after obtaining a license, it accepts user fiat currency and issues a corresponding stablecoin, and then reverses the process when users redeem their funds. However, it has become one of the most profitable sectors in the industry (on par with exchanges). Take BUSD, a compliant stablecoin previously partnered with Binance, for example. Its market capitalization grew to $23 billion between 2019 and 2023, relying not on complex operations but solely on brand licensing and basic promotion (such as free withdrawals). Global Game: The "Extension of Monetary Hegemony" of US Dollar Stablecoins Changpeng Zhao points out the key point: USDT and other US dollar stablecoins are essentially "globalization tools" of the US dollar. The assets behind USDT, which exceeds $100 billion, are mostly invested in US Treasury bonds, and more than 90% of its users are outside the United States. This is equivalent to helping the US dollar penetrate areas beyond the reach of traditional finance. This has direct implications for the internationalization of the RMB: if Hong Kong can promote offshore RMB or Hong Kong dollar stablecoins, it can become a "Web3 channel" for the RMB to go global. 2. Challenges and Opportunities for Hong Kong: Balancing Compliance and Liquidity Core Conflict: The Conflict between Foreign Exchange Controls and Free Circulation As native blockchain assets, stablecoins naturally possess the ability to circulate freely across regions, creating tension with traditional foreign exchange controls. Zhao Changpeng believes that while there is no "perfect solution," more than 20 countries around the world are exploring the possibility of putting fiat currencies on blockchains. Hong Kong can leverage its offshore financial strengths to design flexible mechanisms (such as targeted circulation scenarios) within a regulatory framework. The US's "First Move": Consolidating Advantage Through Legislation In July 2024, when the US released its regulatory framework for stablecoins (GDS), it simultaneously proposed restrictions on central bank digital currencies (CBDCs). Zhao Changpeng interpreted this move as intended to support US dollar stablecoins. CBDCs, due to their strict regulation and limited freedom, have struggled to gain market acceptance (over 20 countries worldwide have attempted to launch CBDCs without success). The high liquidity of US dollar stablecoins better meets industry needs, and Hong Kong should learn from this "policy-market fit" approach. Second, RWA: Is the "false proposition" of putting physical assets on the blockchain? Financial assets hold the key. As the debate over "tokenizing everything" intensifies, RWA (tokenization of physical assets) is seen as the next growth area for Web3. However, Zhao Changpeng bluntly stated that the difficulty of implementing RWA was far greater than expected. Only assets close to finance and highly tradable meet the first-mover conditions, and not all assets are suitable for on-chain. 1. The “lifeline” of 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 greatly, it is still a “low-volatility asset” compared to cryptocurrencies. After tokenization, these assets face challenges with low price volatility and weak trading demand (insufficient order book depth), making it difficult for large amounts of capital to flow in and out (e.g., a 100 million yuan fund cannot be quickly converted into cash). This leads to a vicious cycle of "low liquidity → fewer transactions" and even the potential for short-term manipulation due to low trading volume. Financial assets' "natural advantages": Digitalization and high tradability. Financial assets like stocks and bonds are already highly digitized and trade frequently, making them more suitable for the "ledger nature" of blockchain. Zhao Changpeng cited the United States as an example: While the US has attempted to tokenize stocks, it still suffers from a "price disconnect" issue (e.g., the stock tokens issued by XStop are unlinked to the actual stock price). The core issue is that regulators haven't clearly defined whether tokenized stocks are securities or commodities, leading to a murky compliance path. 2. Hong Kong's Opportunity: Leveraging the Hong Kong Stock Exchange (HKEX) to Seize the Lead in "Global Asset Blockchaining." Changpeng Zhao posed a key question: If the HKEX doesn't promote asset tokenization, will it lose its global influence? He cited the development of China's internet as an example—without Tencent and Alibaba, the e-commerce market might be dominated by Amazon. Similarly, if the US were to take the lead in tokenizing stocks (to attract global investors), other regions would be left vulnerable. Hong Kong's advantage lies in the HKEX's global influence and policy flexibility: US policy currently clearly supports asset digitization. If Hong Kong can expedite the definition of its RWA regulatory framework (e.g., differentiating between securities and commodities and streamlining license applications), it could attract global assets to the blockchain through Hong Kong, establishing itself as an "Asian RWA hub." 3. Exchange Competition: How can Hong Kong build a "world-class exchange"? Liquidity is the Core Moat. During the conversation, Professor Lin Chen posed a key question: If Hong Kong wants to become a Web3 hub, how can it cultivate world-class exchanges? Changpeng Zhao analyzed the core contradictions in current exchange development from three perspectives: cost, liquidity, and compliance. 1. The "Misconception" of Traditional Regulatory Approach: "Localized Isolation" Doesn't Work. Cost Trap: Duplicating Exchanges' Billion-Dollar Investments. Large exchanges' infrastructure (such as secure wallets and compliance systems) requires billions of dollars in investment and hundreds of top security experts to maintain. Requiring exchanges to build a separate "localized system" for Hong Kong (with fully isolated servers, data, and teams) would be equivalent to rebuilding an entire exchange, which would be extremely costly and difficult to recruit the right talent. For commercial organizations, this "duplication" is unfeasible. Liquidity Achilles' heel: Small market cannot support "effective trading" Hong Kong has a population of only 8 million. If exchanges are restricted to serving only local users, they will fall into the dilemma of "few users → low liquidity → large price fluctuations": for example, buying 10 bitcoins may result in "high slippage" (increased costs) due to the shallow order book, and large orders may not be executed; on the contrary, global exchanges have a large user base (hundreds of millions of users) and sufficient liquidity, and can protect users through "deep order books" (for example, hundreds of millions of orders will not cause drastic price fluctuations). 2. Hong Kong's breakthrough direction: from "conservative pilot" to "open adaptation" Policy iteration: keeping pace with the global pace and simplifying compliance Changpeng Zhao recognized Hong Kong's policy progress: the Digital Asset Act, which was introduced in May 2024 (earlier than the United States), and the frequent communication with the industry (including exit institutions) demonstrated the advantages of "flexible adjustment". In the future, product restrictions need to be further relaxed (for example, the Hong Kong Stock Exchange currently has relatively few crypto assets that can be listed) to attract more projects and form a positive cycle of "more products → more users → sufficient liquidity". Ecosystem Synergy: Leveraging Existing Global Exchanges, Not Building Newly from Scratch The core of a world-class exchange lies in liquidity and globalization. Hong Kong does not need to reinvent the wheel. Instead, it can leverage policies to attract existing global exchanges (such as Binance) to operate compliantly in Hong Kong while allowing them access to global liquidity. This will both reduce the development costs for local institutions and rapidly enhance Hong Kong's influence as a "Web3 transaction node." Fourth, Centralized vs. Decentralized Exchanges: Not Substitution, but Complementarity With the rapid growth of decentralized exchanges (DEXs) like Hyperliquid and Uniswap, the market is concerned that centralized exchanges (CEXs) will be replaced. However, Changpeng Zhao believes that the two are not in opposition, but rather complementary ecosystems serving different needs.

1. Current situation: CEX is still the "first choice for entry", DEX needs to break through the "user experience barrier"

CEX's core value: lowering the threshold for Web3

For users who have just entered Web3 (especially those migrating from Web2), CEX's "email + password" registration, customer service support, and fiat currency deposits and withdrawals are more in line with their usage habits; while DEX requires users to master wallet operations (such as addresses and private keys), and the interface is mostly "code and garbled code" (such as contract addresses), which is difficult for ordinary users to understand. They also need to guard against MEV attacks (Changpeng Zhao admitted that he had been "squeezed").  

Advantages of DEX: Regulatory Benefits and Privacy Needs   

Stricter KYC (identity verification) requirements for CEXs in the United States and other regions have in turn spurred demand for DEXs. Their KYC-free and free-trading features attract privacy-conscious users. Furthermore, DEXs currently have high transaction fees and rely on token incentives (such as issuing tokens to subsidize users). However, in the long run, technological advances (such as Layer 2 expansion) will reduce costs. After token incentives are phased out, real user demand will support their development. 2. Future: DEXs may surpass CEXs in scale within 10 years, and Hong Kong needs to reserve "policy space." Zhao Changpeng predicts that within 5-10 years, as users become more familiar with wallets and DEX technology improves, their scale may surpass CEXs. Twenty years from now, DEXs may become mainstream. Hong Kong needs to consider DEX compliance frameworks in advance (for example, how to protect users without stifling flexibility) to avoid missing out on this market due to overly strict regulation.   

5. Web3+AI: Not a concept, but a "new scenario for trillion-level transactions" 

In addition to Web3, Zhao Changpeng also shared his views on "Web3+AI" - the current combination of the two is still shallow, but in the future it will give birth to a "new economic form" rather than a simple "concept hype." 1. Core Logic: AI Requires "Web3-Style Currency and Transactions" AI's "Payment Pain Point": Traditional finance cannot meet the high-frequency, small-value payments required for interactions between AI agents (such as booking air tickets, design services, and content distribution). However, traditional finance (credit cards, bank transfers) is cumbersome and has high fees, making it unable to support the "million-fold growth" of micro-transactions (e.g., charging 0.01 yuan for an article to 100,000 readers). Conversely, digital currency, enabled by blockchain, can achieve "second-level payment and zero fees," making it a perfect fit for AI's payment needs.  

Transaction scale: AI will drive Web3 transactions to "grow 1,000 times"

In the future, everyone may have hundreds of AI agents (such as helping to book hotels, reply to messages, and manage assets). The interactions between these agents (financial + non-financial) will generate massive transactions - Zhao Changpeng gave an example: AI is currently used to help them translate and publish videos. In the future, such scenarios will become popular, and the transaction scale will be more than 1,000 times the current level, and will be mainly "micro-transactions", which can only be carried out through Web3. 2. Hong Kong's Opportunity: Seizing the "AI + Web3" Infrastructure Changpeng Zhao believes that the integration of AI and Web3 requires "infrastructure first": such as developing AI-friendly digital currency payment interfaces and establishing a micro-transaction compliance framework. If Hong Kong can make early preparations in this area (such as supporting AI companies' use of local stablecoins and simplifying micro-transaction regulation), it could become a global testing ground for "AI + Web3." VI. Conclusion: Hong Kong's Web3 Opportunities - Finding a Balance between "Order" and "Innovation" At the end of the conversation, Professor Lin Chen concluded: The value of this dialogue lies in its integration of "macro-order" and "frontline practice"—Professor Lin's academic perspective provided a "framework for thinking," while Changpeng Zhao's sharing revealed "real market needs." For Hong Kong, the key to becoming a global Web3 hub lies in maintaining compliance (such as foreign exchange risk management for stablecoins and asset ownership confirmation for RWAs) while not hindering innovation (such as liberalizing exchange liquidity and reserving policy space for DEXs and AI+Web3). As Changpeng Zhao said: "The development speed of Web3 is far beyond imagination. When Binance was founded 8 years ago, BNB increased by more than 10,000 times. Tracks that seem far away now (such as RWA and Web3+AI) may explode in a few years." If Hong Kong can seize the current window of "flexible policies and global capital attention", it may be able to forge a development path with "Eastern characteristics" in the global competition of Web3.