Many crypto enthusiasts have likely seen the recent speeches by Changpeng Zhao, the former richest Chinese entrepreneur, at the University of Hong Kong and Bitcoin Asia 2025. From the dock in a Seattle federal courtroom to his current podium at the Hong Kong conference, Zhao's trajectory has been nothing short of dramatic. His appearance in Hong Kong at this juncture coincides with a crucial juncture in the city's crypto regulation: the official implementation of the Stablecoin Ordinance, which has seen tech giants like Ant and JD.com rush to enter the stablecoin market. This article will provide an in-depth summary of Zhao's key speeches at the two Hong Kong conferences, bridging the gap between traditional finance and on-chain value creation, and exploring potential compliance paths and opportunities for Web3 projects in the future. 1. What are the three major obstacles and key themes of RWA? RWA holds enormous potential and has been a hot topic recently. Kaisa Capital (00936.HK) saw its stock surge 250% today after announcing its strategic transformation and expansion into tokenized real-world assets (RWA). So, are RWAs truly that easy to implement? Changpeng Zhao previously outlined the three major obstacles to implementing RWAs in Hong Kong: The first obstacle is liquidity. Real estate and collectibles already have low transaction frequencies. If tokenized on-chain, the order book depth will undoubtedly be insufficient. Buyers can't buy, and sellers can't sell, making it difficult for large funds to flow in and out. Without liquidity, tokenization loses its core value. The second obstacle is regulatory complexity. Are tokenized assets securities or commodities? Who regulates them? The China Securities Regulatory Commission, the Commodity Futures Trading Commission, or something else? How do you obtain a license to operate this business? The asset attributes of RWAs are very ambiguous. Whether they are securities or commodities can vary greatly across different countries and regions. This means that if an RWA business wants to go global, it may have to apply for a wide variety of licenses worldwide. The compliance costs and complexity are enormous, severely limiting the scalability of its business model. Currently, tokenized stock products haven't yet resolved the issue of linking to real stock prices, making them unviable from a systemic perspective. The third obstacle is product mechanics flaws. Currently, some tokenized stocks are emerging on the market, but the token prices often decouple from the underlying stock price, suggesting that the inherent arbitrage mechanism may be ineffective. A financial product that cannot self-correct its price through market forces has an unstable foundation. Despite facing so many challenges, should RWAs be abandoned? Changpeng Zhao believes that this is a necessary undertaking, and that stocks and bonds with transparent profits are the core of RWAs. Currently, stablecoins are the most successful RWAs. Their underlying assets are real-world assets such as the US dollar and US Treasury bonds. US Treasury bonds are the most liquid and standardized assets globally. For an international financial center like Hong Kong, developing RWAs is even a strategic necessity. If you don't, and others do, you'll be marginalized. Today is a golden window for RWA development. It's time to overcome challenges and seize opportunities. The Hong Kong government is also actively promoting this initiative. If a company plans to issue bonds through an RWA program, Lawyer Liu urges them to first consider two key issues: First, does your project meet the requirements for issuance? Will the brokerage firm sell the bonds? Also, do the asset classification, valuation, and collateral arrangements meet the brokerage firm's standards? Second, are the costs and profit margins acceptable to you? It's important to note that some RWA bond issuance fees are even higher than traditional IPOs, involving domestic and foreign lawyers, fund agency services, accounting and auditing, blockchain technology services, and brokerage fees. Besides the brokerage firm's service fee calculated based on the financing amount and subsequent underwriting fees, other costs can reach no less than HK$5 million. These considerations must be fully considered during the project design phase, including the entire implementation cycle. If a company rushes in simply to boost its stock price and then exits midway, it will only end up with more losses than gains. Second, can stablecoins evolve from “cryptocurrency tools” to “financial infrastructure”? Changpeng Zhao calls stablecoins “a new vehicle for the internationalization of currency,” believing they will shift from safe-haven assets to infrastructure for global payments and capital flows. He believes the US government deeply understands the value of stablecoins to the global strategic position of the US dollar. Currently, the vast majority of USDT users are outside the US, which is essentially an extension of the US dollar's global influence. Stablecoins are tools for the globalization of underlying currencies, and every country should have its own stablecoin product. Interestingly, when the US enacted the "Genius Act," it also proposed banning central bank digital currencies (CBDCs). This is because the US already has dollar-denominated stablecoins like USDT and USDC. For my country, promoting the development of RMB or Hong Kong dollar stablecoins can provide a new Web3 channel for the RMB. Although freely circulating blockchain assets pose challenges to foreign exchange controls, countries are actively exploring solutions, and Hong Kong is leading the charge. Regarding the challenges posed by stablecoins to foreign exchange controls, stablecoin trading is currently not permitted within my country, and related cross-border capital flows remain subject to foreign exchange regulations. The system, represented by the "Notice of the State Administration of Foreign Exchange on Issues Concerning Foreign Exchange Administration of Overseas Investment, Financing, and Roundtrip Investment by Domestic Residents through Special Purpose Vehicles" (Document No. 37), remains the primary compliance path for domestic individuals and institutions to legally repatriate capital and earnings from outbound investments. However, we believe that SAFE may consider opening policy loopholes for stablecoins in certain regulatory scenarios in the future, a step China must take. This is an important step in responding to international competition and the development of the digital economy, and in avoiding marginalization in the global crypto and payment landscape. Third, will DATs become a compliant bridge for traditional capital to enter Web3? DATs (Digital Asset Treasury Companies) are listed or public entities that hold digital assets (primarily cryptocurrencies, stablecoins, tokenized real-world assets, etc.) as a core component of their balance sheets. They raise capital by issuing stocks, bonds, or similar instruments to gain exposure to crypto assets, providing traditional investors with an indirect way to participate in the digital asset market. Changpeng Zhao strongly supports the DAT model, believing that the traditional stock market is far larger than the cryptocurrency market. Institutional management is the vast majority of assets in the world's largest economies. Until the advent of ETFs, these institutions were unable to directly hold cryptocurrencies on a large scale. However, DATs now offer more options. For entities that cannot directly purchase bitcoins, such as listed companies, state-owned enterprises, and central enterprises, DATs can gain indirect exposure to cryptocurrencies through stock purchases, creating a compliant entry point for large amounts of traditional capital into Web3. DAT can be thought of as a channel, a bridge, connecting traditional finance and Web3. With more money flowing in, the market will naturally become more stable. Zhao Changpeng suggests that while your strategy can vary greatly within the DAT model, from simply holding Bitcoin to actively managing transactions or even investing in entire ecosystem projects, a simpler strategy is often more reliable: clear positions, simple trading, and clear risk control. This is because bull markets can lead to numerous lawsuits. Lawyers advise: If your strategy is clear and you have professional support, the likelihood of being sued is much lower. Fourth, "AI + Web3": Is it just hype or can it truly be implemented? Changpeng Zhao pointed out that most so-called "AI + Web3" projects currently on the market are mere hype, devoid of practical impact. While the integration of the two is still immature, it's by no means a mere concept and holds great promise for the future. He believes that programmable money is the foundation of everything: if money itself can be programmed to automatically trigger certain logic, it can greatly expand the role of AI in payments and value settlement. The ultimate development of AI ultimately depends on cryptocurrency. Because AI lacks identity cards and cannot perform know-your-customer (KYC) like humans, payments will inevitably be conducted using digital currencies and blockchains. In the future, interactions between AIs and between AIs and services will be both financial and non-financial. This type of machine-to-machine payment is likely to involve massive, high-frequency interactions and value settlements. Especially for very small micropayments, using cryptocurrency through APIs is the most convenient and efficient method, potentially triggering a thousand-fold increase in on-chain transaction volume. While our RMB, USD, and HKD are not programmable, projects are already underway in this direction: In September, Google launched the Agent Payments Protocol (AP2), allowing AI agents to use programmable currencies like stablecoins to execute automated payments in agent-to-agent or agent-to-service scenarios. The true catalyst for achieving these goals is the development of AI itself. AI computing power requires astronomical amounts of funding, which will drive the AI industry to embrace Web3, such as through tokenization for financing or even a more open and public model. In the future, everyone may have hundreds of AI agents performing various tasks behind the scenes, spurring massive micropayments. This model is impossible under traditional financial models, but can be easily supported by Web3. This poses significant legal challenges. First, when AI agents engage in erroneous transactions, fraudulent attacks, or authorization abuse, who bears liability? The protocol designer, the entity to which the agent belongs, or the user? Secondly, there are the issues of regulatory and privacy compliance, such as whether transaction audits, payment chain transparency, and anti-money laundering (AML) and counter-terrorist financing (CFT) mechanisms are embedded in the system. Finally, with the potential for a surge in on-chain transaction volume, cybersecurity, tax compliance, cross-border payments, and data sovereignty will also be brought to the fore. Fifth, Institutionalization and Regulatory Clarity: Boon or Barrier? A common debate in the cryptocurrency world right now is: Should the state and institutions enter the market? Extreme decentralization advocates and "Bitcoin purists" strongly oppose this. However, Zhao Changpeng's speech at the conference offered a completely different answer—it's a good thing. Zhao Changpeng stated bluntly: The involvement of the state and large institutions will bring in funding, nodes, credibility, and, more importantly, application scenarios. Once a country begins to establish a "national strategic reserve of crypto assets," oversight will be in place, rules will become clearer, and the market will be more stable. Bitcoin's performance in 2025 already partially reflects this trend. At the beginning of the year, everyone praised the UAE for being ahead of the curve, but now the US has clearly accelerated its pace. On August 29th, Zhao Changpeng saw that the US Commodity Futures Trading Commission (CFTC) was preparing to release draft regulations on the registration of foreign exchange companies (FBOTs). This would provide non-US exchanges with a compliant path to allow US users to participate. He lamented that he had been imprisoned for his country's trade protectionism, yet he remains an advocate for economic globalization. Blockchain technology can easily achieve economic globalization, so old laws need to be updated to keep pace with globalization. While the US is accelerating, Hong Kong, following the implementation of the Stablecoin Ordinance, is striving to establish itself as a "new frontier" for compliance through legislation, licensing, and regulatory guidance. Standard Chartered (Hong Kong), Animoca, and HKT have jointly established Anchorpoint to apply for a stablecoin issuance license. This signals that licensing and application scenarios will be the main themes of the next round of competition. This means that the crypto industry is no longer a game for a small circle, but an arena for large institutions and real capital. Interestingly, Eric Trump, Trump's second son, made a high-profile pitch for Bitcoin during the closing keynote at Bitcoin Asia 2025, publicly predicting a future price increase of $1 million and praising China's role in the development of cryptocurrencies. Meanwhile, a senior official and legislator from the Hong Kong Securities and Futures Commission temporarily withdrew from the speaker list to avoid interacting with Eric, further demonstrating the intertwined nature of crypto, geopolitics, and politics. Amidst heightened political sensitivities, both companies and individuals must be more cautious and compliant in their public statements and marketing efforts. Institutionalization means a massive influx of traditional capital, making the crypto industry no longer a niche pursuit. While regulation raises barriers to entry, the influx of capital will boost the overall market's liquidity and scale. How can compliance red lines be reconciled with the speed of business? On a practical level, the Hong Kong authorities have reminded the market that as of August 1st, when the Stablecoin Ordinance came into effect, no entity had yet been licensed. The initial batch of licensees is expected to be issued in early 2026. At the same time, the HKMA emphasizes that applicants should "apply early, communicate early, and be fully prepared," emphasizing the importance of careful communication to avoid creating unrealistic expectations. Therefore, for Web3 entrepreneurs who want to succeed, don't even think about skirting the line. Institutional funds require audits, custody, and KYC, and won't invest in "black box" projects. If you still cling to the mindset of "running away when regulations come," you won't be part of the future growth market.
Catherine
Weatherly
Anais
Kikyo