WEBVTT - Why Stablecoins Matter for Banks and the Dollar 0:00:00.640 --> 0:00:04.440 Stable coins. You've probably heard about them, you may not 0:00:04.559 --> 0:00:09.360 know what they are, and you should. In June, US 0:00:09.400 --> 0:00:13.040 Congress passed the Genius Act, creating a regulatory system for 0:00:13.080 --> 0:00:16.920 these digital assets. And here in Hong Kong, very recently, 0:00:16.960 --> 0:00:20.120 the city began the process of issuing licenses to stable 0:00:20.160 --> 0:00:24.360 coin companies. These are big steps towards legitimizing the asset 0:00:24.440 --> 0:00:26.160 in the global financial system. 0:00:26.640 --> 0:00:30.400 Total circulation of stable coins is also booming. The two 0:00:30.480 --> 0:00:33.920 largest plays in the market, Circle and Tether, now hold 0:00:34.000 --> 0:00:37.600 over two hundred and seventy billion dollars in US treasuries. 0:00:37.960 --> 0:00:41.199 That's more than what sovereign countries like South Korea, Saudi 0:00:41.240 --> 0:00:45.159 Arabia and Germany hold, and this could have profound implications 0:00:45.159 --> 0:00:46.680 for interest rates and currencies. 0:00:48.640 --> 0:00:52.480 You're listening to Asia Centric from Bloomberg Intelligence. I'm Kaetidmitriva 0:00:52.520 --> 0:00:53.080 in Hong Kong. 0:00:53.440 --> 0:00:56.200 I'm John Lee, also in Hong Kong. Today we have 0:00:56.280 --> 0:00:58.800 one of the industry leaders in this space. He is 0:00:58.920 --> 0:01:04.280 Yatsu founder of Animoker Brands, a digital assets conglomerate based 0:01:04.280 --> 0:01:08.280 in Hong Kong with one point eight billion dollars in assets. Yeah, 0:01:08.480 --> 0:01:09.280 welcome to the show. 0:01:09.600 --> 0:01:10.319 Thank you for having me. 0:01:10.360 --> 0:01:12.600 It's a great pleasure to be here now. Yet there's 0:01:12.600 --> 0:01:16.560 a lot of sophisticated crypto investors. There's obviously bitcoin bros. 0:01:16.600 --> 0:01:21.000 But for crypto luotites like myself and me, can you 0:01:21.040 --> 0:01:23.600 explain what exactly is a stable coin? 0:01:24.440 --> 0:01:26.040 Right? Maybe before we even go to what is a 0:01:26.080 --> 0:01:28.360 stable coin, I think it's important to think about what 0:01:28.400 --> 0:01:32.280 does tokenization do and what is tokenization. When you tokenize 0:01:32.680 --> 0:01:36.280 an asset, any asset on chain, what you're really doing 0:01:36.360 --> 0:01:39.039 is you're giving it the qualities of togonization, which is 0:01:39.080 --> 0:01:42.480 enhancing its network effect, and that actually brought about an 0:01:42.600 --> 0:01:45.640 entirely new industry. Whether this is a stable coin which 0:01:45.680 --> 0:01:48.880 is essentially expanding the network of the value of the 0:01:48.920 --> 0:01:51.040 dollar in this case, the sort of a stable coin 0:01:51.080 --> 0:01:53.360 in itself, or if it's something like a pure network 0:01:53.360 --> 0:01:56.080 asset like bitcoin or ethereum. These are assets that don't 0:01:56.080 --> 0:01:58.840 have necessary something underlying it, but are held up by 0:01:58.840 --> 0:02:01.200 the power of the community and the network effects inherent 0:02:01.400 --> 0:02:03.600 and the builders and developers on top of it. So 0:02:03.840 --> 0:02:06.000 it's really a way for the first time to own 0:02:06.080 --> 0:02:08.840 a network asset that wasn't really possible for And so 0:02:08.840 --> 0:02:11.880 what a stable coin is is the marrying of essentially 0:02:12.280 --> 0:02:14.519 the real word asset of the dollar or any currency 0:02:14.560 --> 0:02:17.560 around the world with that of tokenization, which then essentially 0:02:17.960 --> 0:02:20.520 brings it both the speed and distribution of the Internet. 0:02:20.639 --> 0:02:22.600 And if you think about what the Internet did for information, 0:02:23.120 --> 0:02:25.720 basically stable coins and tokenization is now doing that for 0:02:25.800 --> 0:02:28.639 money and value. And that's why you see this massive expansion. 0:02:28.760 --> 0:02:31.040 The growth that you've seen in stable coins is really 0:02:31.040 --> 0:02:33.320 what you see when you put something on the Internet, 0:02:33.480 --> 0:02:36.959 which is essentially global scale, reach, distribution, and everything else 0:02:36.960 --> 0:02:37.520 that comes with that. 0:02:38.080 --> 0:02:40.760 And before we get into how it actually functions and 0:02:40.800 --> 0:02:43.720 how it's you know, different from a bitcoin, for example, 0:02:44.280 --> 0:02:46.200 where did it come from? Because I feel like just 0:02:46.320 --> 0:02:49.040 in recent months you're suddenly hearing about the US Genius 0:02:49.040 --> 0:02:51.799 Act Hong Kong issuring what's kind of the history of 0:02:51.840 --> 0:02:52.440 stable coin? 0:02:52.880 --> 0:02:54.720 Well, I mean, stable coins have been around for a while, 0:02:55.360 --> 0:02:58.440 and you know, companies like Tether and Circle thereafter, and 0:02:58.720 --> 0:03:01.440 there's actually many other companies there as well, whether it's 0:03:01.440 --> 0:03:03.480 like you know, for instance, companies like pack Sauce, they 0:03:03.800 --> 0:03:06.720 actually provide services to enable other people to launch their 0:03:06.720 --> 0:03:09.880 own stable coids, and in principle what they're doing is 0:03:09.880 --> 0:03:13.280 is they're basically saying I'm buying something that underpins the 0:03:13.360 --> 0:03:16.600 value of the dollar and keeping it stable with a 0:03:16.800 --> 0:03:19.520 basket of assets and in the case of something like 0:03:19.560 --> 0:03:22.000 circle treasury bills or maybe just you know, in the 0:03:22.040 --> 0:03:24.200 case of sort of what the HKMA is mandating it 0:03:24.200 --> 0:03:26.240 has to be in the currency, so on hundred dollars. 0:03:26.680 --> 0:03:29.360 But also some people have, especially in the early days when 0:03:29.400 --> 0:03:31.400 there was no regulation in no clarity around it, have 0:03:31.480 --> 0:03:34.239 basically put other assets in them, and so controversially in 0:03:34.280 --> 0:03:36.680 the early days, and the reason why teather has had 0:03:36.720 --> 0:03:40.000 a controversial past, according to some is because some of 0:03:40.000 --> 0:03:42.839 those assets consisted of bitcoin. So what they would say is, hey, 0:03:42.880 --> 0:03:45.360 we have x amount of bitcoin, and then essentially we 0:03:45.400 --> 0:03:48.120 would mint a certain amount of dollars based on the 0:03:48.200 --> 0:03:51.240 value of bitcoin which we had in the reserve, and 0:03:51.480 --> 0:03:53.840 the reserve asset essentially creates that way in which we 0:03:53.960 --> 0:03:55.440 sort of represent the dollars. So if you have a 0:03:55.440 --> 0:03:58.000 one hundred million dollars worth of bitcoin, then I can 0:03:58.240 --> 0:04:00.000 basically mint on a hundred million dollars worth of dogs, 0:04:00.520 --> 0:04:03.240 and if the bitcoin goes down, I have to basically 0:04:03.240 --> 0:04:05.160 buy more. If it goes up, then maybe you so 0:04:05.320 --> 0:04:07.640 well you can basically create kind of a stable reserve balance. 0:04:08.200 --> 0:04:10.080 This is of course much less controversial when you do 0:04:10.120 --> 0:04:12.880 it with cash or with treasury bills because there's a 0:04:12.880 --> 0:04:15.000 clear value denomination, But when you start mixing it with 0:04:15.040 --> 0:04:18.320 digital assets in the past, that was more controversial. Tether 0:04:18.360 --> 0:04:20.720 has definitely moved further away from that, but in its 0:04:20.760 --> 0:04:23.479 early days it was essentially pegging against that, and it 0:04:23.520 --> 0:04:27.000 was also an era of sort of experimentation as well. 0:04:27.040 --> 0:04:29.720 People were sort of seeing these kind of interesting new 0:04:29.760 --> 0:04:32.480 financial constructs and say, okay, this could be a stable coin. 0:04:32.600 --> 0:04:34.840 This is how we do this, And when bitcoin didn't 0:04:34.839 --> 0:04:37.400 have the legitimacy the head today, using that as an 0:04:37.440 --> 0:04:39.560 underlying asset, it would have been controversial, but that was 0:04:39.560 --> 0:04:41.719 really the history, and the history was also around how 0:04:41.760 --> 0:04:45.479 do I onboard people into the digital assets world? You know, 0:04:45.520 --> 0:04:47.719 now we talk about it in terms of crypto or 0:04:47.720 --> 0:04:50.680 with three for instance, and if I tell someone, you 0:04:50.720 --> 0:04:53.080 know what, you can enter this world by converting your 0:04:53.080 --> 0:04:56.240 one thousand dollars into one thousand digital dollars. It's a 0:04:56.279 --> 0:04:58.800 much easier way to onboard someone and then they can 0:04:58.839 --> 0:05:01.599 start buying other tokens and on, and really the biggest 0:05:01.680 --> 0:05:04.400 use case for stable coins has been trading and purchasing 0:05:04.480 --> 0:05:07.720 and activities that are on chain or in exchanges, so 0:05:07.880 --> 0:05:10.839 all of the decentralized exchanges where people can trade, all conferences, 0:05:11.080 --> 0:05:12.600 the stable coins have a big use case, and of 0:05:12.640 --> 0:05:14.440 course it's used for remittisances and everything else like that 0:05:14.480 --> 0:05:15.680 as well. 0:05:15.920 --> 0:05:19.240 Asia Centric is produced by Bloomberg Intelligence, where more than 0:05:19.240 --> 0:05:23.120 five hundred experienced analysts and strategists work around the clock 0:05:23.160 --> 0:05:26.680 to bring you timely, world class research. Our coverage spans 0:05:26.680 --> 0:05:31.000 two hundred market industries, currencies, commodities, and industries, as well 0:05:31.040 --> 0:05:34.040 as over two thousand equities and credits. To learn more 0:05:34.080 --> 0:05:38.279 about Bloomberg Intelligence, visit bi go on the Bloomberg terminal. 0:05:38.839 --> 0:05:41.360 If you like what you're hear, don't forget to subscribe 0:05:41.360 --> 0:05:45.279 and share. I wanted to talk about the recent US 0:05:45.400 --> 0:05:48.680 legislation in particular, you know, the Genius Act. Can you 0:05:48.760 --> 0:05:50.760 explain why this is so important? 0:05:51.040 --> 0:05:55.039 Well, is particularly important because when you consider what the 0:05:55.120 --> 0:05:59.440 US stance was on crypto generally including stable coins, up 0:05:59.520 --> 0:06:03.599 until the Trumpe administration, it was quite hostile. So to 0:06:03.640 --> 0:06:07.480 see essentially the US go from very negative to the 0:06:07.520 --> 0:06:10.440 industry to incredily positive to pass legislation on the stable 0:06:10.480 --> 0:06:13.320 coin is a massive legitimization of the market. And you 0:06:13.320 --> 0:06:15.200 can see this already not just an impact on prices, 0:06:15.279 --> 0:06:16.839 but also people want to build and develop on that. 0:06:16.880 --> 0:06:18.520 So that's one way to look at it just macro 0:06:18.600 --> 0:06:20.719 what it means. But the other thing is that this 0:06:20.800 --> 0:06:23.320 administration certainly believes, which is maybe diferent what the previous 0:06:23.320 --> 0:06:26.560 administration believe, that stable coins is a way for the 0:06:26.680 --> 0:06:29.960 US to continue its dollar hegemony through stable coins. Now, 0:06:29.960 --> 0:06:32.520 when you consider where these stable coins are being used, 0:06:32.880 --> 0:06:35.680 they're used all over the world, but they're growing tremendously 0:06:35.720 --> 0:06:39.599 in places like Nigeria, South America, Southeast Asia, places that 0:06:39.680 --> 0:06:42.240 really couldn't be dollarized in a classical sense because you 0:06:42.240 --> 0:06:46.280 couldn't even have a bank account, and now with a cryptoallet, 0:06:46.600 --> 0:06:49.240 I can now have digital dollars, and dollars has always 0:06:49.279 --> 0:06:51.080 been desired in these markets, that's just no way of 0:06:51.080 --> 0:06:53.640 reaching it. So you could say that in a way, 0:06:53.839 --> 0:06:57.279 they've been assimilated to the dollar at a young age. 0:06:57.560 --> 0:06:59.960 And so therefore, if you talk about these rising nations, 0:07:00.000 --> 0:07:04.640 which are mostly young populations like prinstance, Mina, Africa, South America, 0:07:04.760 --> 0:07:07.000 they're also essentially growing up to the dollar, and that's 0:07:07.000 --> 0:07:09.000 basically a way which you can create that influence, which 0:07:09.000 --> 0:07:10.600 is also the reason why other markets are in the 0:07:10.600 --> 0:07:12.680 world are looking at this and say, okay, how do 0:07:12.760 --> 0:07:15.200 we either counter or deal with that sort of circumstance, 0:07:15.200 --> 0:07:17.920 because that's something that you can really control. Also, the 0:07:17.960 --> 0:07:20.720 governments themselves have no oversight of it in a classical sense, 0:07:21.040 --> 0:07:23.320 So if you're a bank, you have to be banked 0:07:23.320 --> 0:07:25.280 first in order to receive any currency, and the bank 0:07:25.320 --> 0:07:27.840 itself might restrict you from being able to exchange money 0:07:28.200 --> 0:07:30.400 or maybe to buy dollars. But with a stable coin, 0:07:30.720 --> 0:07:33.080 basically the internet is all you need and wallet and 0:07:33.120 --> 0:07:34.960 someone or across the world can send it to you 0:07:34.840 --> 0:07:37.160 and you can transact with it, which basically means that 0:07:37.440 --> 0:07:39.360 the digital dollars that were in the form of stable 0:07:39.400 --> 0:07:42.600 coin becomes the way in which you transact in many 0:07:42.600 --> 0:07:46.840 of these economies, effectively dollarizing these economies even more. And 0:07:46.880 --> 0:07:49.440 that's actually one of the key areas around why it's 0:07:49.480 --> 0:07:51.640 important for the US because of course a big part 0:07:51.680 --> 0:07:55.560 of the US business model is around essentially using the dollar, right, 0:07:55.640 --> 0:07:58.680 and it's exactly it's a reserve currency of the world. 0:07:58.840 --> 0:08:00.960 How do you make sure that it's the reserve currency 0:08:00.960 --> 0:08:03.440 of the world. You know, basically you sort of enter 0:08:03.480 --> 0:08:05.160 the internet and make it the native currency. And so 0:08:05.240 --> 0:08:08.000 that's a strategy white so important to the US. And 0:08:08.080 --> 0:08:10.960 what is also interesting is that because of the Genius Act, 0:08:11.480 --> 0:08:13.800 banks before were not allowed to enter into that space. 0:08:14.200 --> 0:08:17.320 So expect that every major bank, maybe even smaller banks, 0:08:17.440 --> 0:08:19.160 are all going to start issuing their own stable coins. 0:08:19.160 --> 0:08:21.400 I mean, you even talk about companies like Walmart and 0:08:21.480 --> 0:08:24.320 Amazon and possibly Google and Apple, all of them who 0:08:24.600 --> 0:08:28.080 have so much dollars in their treasuries, Well, they could 0:08:28.120 --> 0:08:30.160 issue a stable coin now, and they could basically use 0:08:30.200 --> 0:08:32.559 it for their own commerce and receive transaction fees or 0:08:32.920 --> 0:08:34.640 use them in different forms of commerce. And it also 0:08:34.760 --> 0:08:37.960 enables money to move faster from place to place and 0:08:38.080 --> 0:08:40.719 also brings you more loyalty to the customer because they're 0:08:40.720 --> 0:08:42.600 now attached to your currency as it. 0:08:42.600 --> 0:08:45.800 Well, but wouldn't this cannibalize the business model of banks, 0:08:45.840 --> 0:08:48.000 Like that's how they make a lot of money, you know, 0:08:48.160 --> 0:08:51.800 retail customers they send their money through the swift system, 0:08:52.240 --> 0:08:55.000 usually takes like two to three days, sometimes business days, 0:08:55.280 --> 0:08:57.560 and they always give you a bad effects, right, but 0:08:57.600 --> 0:08:59.320 they make big margins. But now if you could do 0:08:59.400 --> 0:09:02.360 this like seamelessly, wouldn't it be bad The margins would 0:09:02.360 --> 0:09:02.960 be smaller. 0:09:03.120 --> 0:09:05.880 Well, first of all, anytime when there's an innovation and 0:09:05.960 --> 0:09:08.559 a change, it necessaries a change in the business model 0:09:08.840 --> 0:09:12.120 and also requires people to become more efficient and more competitive. 0:09:12.160 --> 0:09:14.680 Frankly speaking, so I think it's high time, just generally, 0:09:14.960 --> 0:09:17.520 that the industry move away from something like swift and 0:09:17.559 --> 0:09:19.760 move on to some area where the value doesn't simply 0:09:19.760 --> 0:09:21.840 come from a transaction fee. I mean, just think about. 0:09:21.880 --> 0:09:23.400 You know, what we used to pay for a phone call. 0:09:23.960 --> 0:09:27.160 It's expensive, and what happened when we reduced the call 0:09:27.240 --> 0:09:29.679 or the phone call to something that was essentially deminimus 0:09:29.679 --> 0:09:32.520 in terms of the cost. The value basically didn't come 0:09:32.559 --> 0:09:34.440 in terms of making the call. The value came on 0:09:34.480 --> 0:09:36.520 the speed of the connection that we had and the 0:09:36.559 --> 0:09:39.400 ability for us to conduct business faster and have more interactions. 0:09:39.440 --> 0:09:41.560 I can always reach you all the time. And what happened. 0:09:41.600 --> 0:09:45.359 Networks grew faster, business grew faster, Expansions happened because transactions 0:09:45.400 --> 0:09:47.800 were cheaper, faster, better, And that's basically what we have 0:09:47.880 --> 0:09:51.400 with blockchain. So to me, this is Actually they're positive 0:09:51.480 --> 0:09:54.360 for society because I'm not able to transfer money across 0:09:54.400 --> 0:09:56.680 the world cheaper, better, faster. I mean, think about all 0:09:56.679 --> 0:09:59.439 the extraction that happens for people who are unbanked, right, 0:09:59.480 --> 0:10:01.200 I mean, there's so so much value that goes away. 0:10:01.280 --> 0:10:03.640 Is it isn't it better that instead of paying really 0:10:03.720 --> 0:10:06.040 large type of transaction fees where it's not just about 0:10:06.080 --> 0:10:08.880 the swift transfer, but about the middleman who basically is 0:10:08.920 --> 0:10:11.640 able to gouge you sometimes ten twenty percent on the transaction, 0:10:12.120 --> 0:10:14.320 that it now goes with nine nine percent of their 0:10:14.360 --> 0:10:17.080 value to the actual end user, and then in their 0:10:17.080 --> 0:10:19.679 local communities they get to spend it in local economies. 0:10:20.080 --> 0:10:22.240 Now what does it mean though for the banks, Well, 0:10:22.240 --> 0:10:23.559 it means that banks are going to be changing the 0:10:23.600 --> 0:10:27.360 business models around acquiring te bills or maybe looking at 0:10:27.400 --> 0:10:31.680 ways and incentivizing customers to deposit their stable coins that 0:10:31.720 --> 0:10:34.280 they would then generate active yield on, you know, in 0:10:34.320 --> 0:10:37.200 the same way that you would do term deposits for example. Right, 0:10:37.240 --> 0:10:39.040 So there's still ways in which you would make money. 0:10:39.040 --> 0:10:41.480 I don't think the bank is gone because they would 0:10:41.520 --> 0:10:44.199 still have their trading strategies and their yield generitorise they 0:10:44.280 --> 0:10:47.599 just have to be more competitive and ultimately also more transparent, 0:10:47.800 --> 0:10:49.280 which I think is just better for the consumer. 0:10:50.480 --> 0:10:54.600 And how much of this relies on the US dollar 0:10:54.640 --> 0:10:58.920 as the reserve currency relies on US exceptionalism. 0:10:58.559 --> 0:11:00.560 I think it's very critical at this small one in time, 0:11:00.960 --> 0:11:03.640 because the US is the reserve currency of the world. 0:11:03.720 --> 0:11:06.920 It is basically the standard. Without the US dollar, the 0:11:07.000 --> 0:11:09.800 legitimacy and the ability to reach the world wouldn't be there. 0:11:09.800 --> 0:11:11.960 Because it's not just about, you know, the fact that 0:11:12.000 --> 0:11:14.400 the US is behind it and supporting it. It's also 0:11:14.440 --> 0:11:17.000 the fact that the communities around the world desired it. 0:11:17.600 --> 0:11:20.440 I grew up in basically still when we had an 0:11:20.440 --> 0:11:23.600 East and West Europe, and I remember my mom used 0:11:23.600 --> 0:11:26.040 to work at the eastern side of Berlin, and so 0:11:26.280 --> 0:11:29.720 when you cross that border, the dollar was the most 0:11:29.760 --> 0:11:32.320 desired thing. It's like the whole black market around basically 0:11:32.320 --> 0:11:35.720 trading either Deutsch MARKO dollar back in the day. And 0:11:35.880 --> 0:11:38.840 that had to do with because it was stability, it 0:11:38.840 --> 0:11:41.480 could be used as global trade and that sort of 0:11:41.600 --> 0:11:45.920 image persists. So the dollar is the desired asset. Also 0:11:45.960 --> 0:11:48.440 from a branding standpoint, I mean, it's not only about 0:11:48.679 --> 0:11:52.640 the utility, it's also Hollywood, it's movies. It's all that 0:11:52.720 --> 0:11:54.600 kind of stuff, right, you grow up to like, you know, 0:11:55.080 --> 0:11:57.640 whether you do a business deal in the media, you 0:11:57.679 --> 0:11:59.400 talk about it in dollars, you don't talk about it 0:11:59.440 --> 0:12:01.120 in other current and right, so that all of that 0:12:01.160 --> 0:12:03.760 sort of matters. And I would say now as a 0:12:03.800 --> 0:12:06.360 result of that, for deck to get that digital adoption, 0:12:06.800 --> 0:12:09.000 if it's in the dollar, it just has a much 0:12:09.040 --> 0:12:12.640 more legitimate framing, and especially if it's now licensable through 0:12:12.640 --> 0:12:15.000 the Genius Act or maybe also what Hungko was doing 0:12:15.280 --> 0:12:17.439 with their stable coin, it just makes it that much 0:12:17.440 --> 0:12:18.559 more safer and accessible. 0:12:19.280 --> 0:12:22.120 But does that world still exist because we are seeing 0:12:22.120 --> 0:12:26.080 cracks in it? You know, with President Trump tariffs, shifts 0:12:26.120 --> 0:12:29.160 in global trade policy. There was I think it started 0:12:29.160 --> 0:12:31.600 a couple of months ago, but this idea that US 0:12:31.679 --> 0:12:36.439 exceptionalism might not be so solid going forward, those. 0:12:36.280 --> 0:12:37.920 This D dollarization trend. 0:12:38.040 --> 0:12:40.520 So is there a D dollarization trend? There is a 0:12:40.559 --> 0:12:43.560 D dollarization trend only I think primarily because a dollar 0:12:43.600 --> 0:12:45.920 has been so weaponized in a way. But I would 0:12:45.920 --> 0:12:48.200 say there's a difference between a dollar stable coin and 0:12:48.200 --> 0:12:52.360 the CBDC. So what the industry and especially the Republican 0:12:52.400 --> 0:12:54.640 party was railing so much against was the CBDC. The 0:12:54.679 --> 0:12:57.800 reason why the CBDC is such a negative construct, because 0:12:57.800 --> 0:13:00.480 in some ways they're both digital, is that one the 0:13:00.520 --> 0:13:02.560 government has full control over your money, like they can 0:13:02.600 --> 0:13:04.640 literally take it out of your account right and that 0:13:04.720 --> 0:13:07.080 type of control means is never your money and you 0:13:07.080 --> 0:13:09.480 don't have the freedom to transact because they can also 0:13:09.559 --> 0:13:12.800 side where the stable coin technically speaking, it's in your wallet, 0:13:13.240 --> 0:13:15.960 the issuer isn't, you know, they have to comply, but 0:13:16.000 --> 0:13:18.360 they're not actually issued by the government per se, and 0:13:18.480 --> 0:13:20.280 it's not controlled by a single entity. They can just 0:13:20.280 --> 0:13:22.280 basically delete your money as it were, takes stuff away 0:13:22.280 --> 0:13:24.520 from you. So I think the construct over it as 0:13:24.520 --> 0:13:27.800 a stable coin, actually I think will reverse that tread 0:13:28.120 --> 0:13:31.480 because now you have the safety and the assumed security 0:13:31.480 --> 0:13:34.319 of owning your assets, which is also the argument where 0:13:34.320 --> 0:13:36.720 people were so into bitcoin, because there's an asset that 0:13:36.800 --> 0:13:39.720 I have self custody over that I control versus I 0:13:39.800 --> 0:13:41.600 put it in the bank. So you know, putting in 0:13:41.640 --> 0:13:44.160 the bank, the bank can lock you out. You can 0:13:44.200 --> 0:13:47.320 be debanked or unbanked. And then and they're using it 0:13:47.360 --> 0:13:48.959 as well. In some cases you've heard some of these 0:13:48.960 --> 0:13:51.200 stories and as a result you are excluded from the 0:13:51.200 --> 0:13:52.800 financial world, but all the assets that you have in 0:13:52.840 --> 0:13:54.720 there you lose as well. Here you have an element 0:13:54.720 --> 0:13:56.640 in which you can scale self custody. So this is 0:13:56.640 --> 0:13:59.520 also an important point because you know, in the older generations, 0:13:59.559 --> 0:14:01.959 it wasn't that on typical to have a lot of cash, 0:14:02.000 --> 0:14:05.040 maybe in your back pocket or like in Japan, underneath 0:14:05.040 --> 0:14:06.960 your bed, you know, that type of stuff. That is 0:14:07.000 --> 0:14:09.960 something which wasn't feasible or practical anymore. But in the 0:14:09.960 --> 0:14:13.640 digital construct you could actually have your money yourself or 0:14:13.640 --> 0:14:16.080 a certain amount and have the freedom around that. So 0:14:16.160 --> 0:14:18.080 I think it's a way in the combat sort of 0:14:18.080 --> 0:14:22.520 this dedoorganization. Having said that, I think US exceptionalism is unique. 0:14:22.880 --> 0:14:25.000 And I know there's some proponents who are like saying, Okay, well, 0:14:25.040 --> 0:14:27.480 the US is kind of done for and you know, 0:14:27.480 --> 0:14:29.440 all that type of stuff. I don't believe that. The 0:14:29.440 --> 0:14:31.120 reason why I don't believe that is because the US 0:14:31.200 --> 0:14:34.840 has probably the only country in the world where it 0:14:34.960 --> 0:14:37.720 can have this amazing amount of creative destruction. Right It's 0:14:37.760 --> 0:14:40.200 the place where you can blow things up, and somehow 0:14:40.240 --> 0:14:43.080 it still works because as a culture it celebrates that 0:14:43.480 --> 0:14:46.240 and it's because it focuses so much on the individual 0:14:46.560 --> 0:14:48.960 versus in other places it's much more focused on the collective, 0:14:49.320 --> 0:14:52.560 for instance, diverging a little bit. China's sort of reach 0:14:52.640 --> 0:14:55.680 in AI for instance and other technologies would not be, 0:14:55.960 --> 0:14:58.680 in my view, as advanced if it wasn't for the US, 0:14:59.080 --> 0:15:01.560 because it's something to comput against. So the US pushes 0:15:01.600 --> 0:15:04.560 a boundary because they have that exceptionalism, this innovation, and 0:15:04.560 --> 0:15:07.280 then China reacts to it as its ability to create 0:15:07.280 --> 0:15:09.800 and produce and innovate as well. But if it wasn't 0:15:09.800 --> 0:15:11.640 for the US, I think China would nearly be as 0:15:11.680 --> 0:15:14.440 competitive or maybe as advanced because it doesn't have to. 0:15:14.600 --> 0:15:17.320 And that's basically the difference between I would say that two, 0:15:17.520 --> 0:15:20.320 both of them being incredibly ingenious in their work. But 0:15:20.400 --> 0:15:22.040 I think that you need that exceptionalist I think the 0:15:22.080 --> 0:15:25.040 world needs that exceptionalism, and the dollar represents that in 0:15:25.080 --> 0:15:25.400 a way. 0:15:26.040 --> 0:15:28.400 On that point, is there a world in which there's 0:15:28.400 --> 0:15:32.520 a stable coin that's actually backed by Chinese currency, by 0:15:32.520 --> 0:15:32.880 the yuan? 0:15:33.800 --> 0:15:35.880 I mean, I think there's a lot of question. No, 0:15:36.000 --> 0:15:37.600 So it's not a dumb question. There's a lot of 0:15:37.600 --> 0:15:40.200 speculation around that. I would say at this moment in time, 0:15:40.320 --> 0:15:43.280 there's a lot of discussion and people are saying it's possible. 0:15:43.640 --> 0:15:45.720 But of course, you know, we for instance, with our 0:15:45.800 --> 0:15:49.480 joint meentor with standard Charter and HKT anchor point. You know, 0:15:49.520 --> 0:15:52.440 we recently submitted our application to have a license here 0:15:52.760 --> 0:15:54.840 from the HKMA to a launch a hundred dollar based 0:15:54.880 --> 0:15:57.960 table coin. And the difference about the HKMA license is 0:15:57.960 --> 0:15:59.560 that it does have the ability to do it with 0:15:59.640 --> 0:16:03.800 different basic currencies. So is it possible it is? Is 0:16:03.840 --> 0:16:05.720 it in the works? No? Right, I mean, that's obviously 0:16:05.720 --> 0:16:09.000 something that is being investigated, is being observed. But for 0:16:09.080 --> 0:16:11.640 sure China is looking at Hong Kong as the test 0:16:11.720 --> 0:16:13.560 bed for that as it always has been, right, Hong 0:16:13.640 --> 0:16:17.040 Kong has always been sort of the experimental financial sandbox 0:16:17.360 --> 0:16:19.720 for what happens in and out of China to learn from. 0:16:20.120 --> 0:16:22.680 And clearly, and this has been already publicly said by 0:16:22.720 --> 0:16:27.040 the Chinese government, they are also observing and reacting to 0:16:27.080 --> 0:16:28.680 what the US is doing with the Genius Act and 0:16:28.720 --> 0:16:32.280 stable coins and blockchain technology because they realize that, you know, 0:16:32.720 --> 0:16:35.960 neither country wants to be behind in any form of 0:16:36.160 --> 0:16:38.720 any shape of anything related to technology. It doesn't matter 0:16:38.760 --> 0:16:41.600 whether there's robotics, whether there's AI, whether it's you know, 0:16:41.680 --> 0:16:43.160 compute or where there's blockchain. 0:16:44.080 --> 0:16:46.760 So let's talk about Hong Kong. So, Hong Kong, you 0:16:46.760 --> 0:16:50.360 know stable coins, the regulations passed on the first of August. 0:16:50.480 --> 0:16:51.520 Yeah, actually ahead of the US. 0:16:51.560 --> 0:16:54.240 Interesting enough, Okay, so Hong Kong's really here, So tell 0:16:54.320 --> 0:16:56.240 us what's the aims of the Hong Kong government with 0:16:56.280 --> 0:16:57.280 this new regulation? 0:16:57.600 --> 0:17:00.600 So, I mean, first, what is Hong Kong. Kong is 0:17:00.880 --> 0:17:03.480 maybe one of the leading financial centers in the world, 0:17:03.800 --> 0:17:05.679 certainly in Asia, if not in the world, you know, 0:17:05.720 --> 0:17:08.199 top three, top five, So you have to stay relevant 0:17:08.240 --> 0:17:10.719 in that and how do you stay relevant. You've got 0:17:10.760 --> 0:17:13.320 to go where the future is going. And Hong Kong 0:17:13.320 --> 0:17:16.119 has made it very clear that the future is digital, 0:17:16.440 --> 0:17:18.760 so that means you have to embrace blockchain technology and 0:17:18.800 --> 0:17:21.600 digital assets. When you look at the demographics, and especially 0:17:21.600 --> 0:17:24.600 younger demographics in places like South Korea or Turkey or 0:17:24.840 --> 0:17:27.359 you know, places in the Mid East, it's something like 0:17:28.200 --> 0:17:31.199 sixty to seventy percent of people under the age of 0:17:31.200 --> 0:17:35.000 thirty in some of these places exclusively old crypto. So 0:17:35.000 --> 0:17:37.639 they don't buy stocks, they only owly tokens. You know 0:17:37.760 --> 0:17:39.639 they're going to get older, and they don't just suddenly 0:17:39.680 --> 0:17:41.560 switch and say, oh, you know, I should buy some stocks. 0:17:41.760 --> 0:17:44.320 They keep buying crypto, So you have to be ready 0:17:44.320 --> 0:17:46.720 for that market. You can't just say, you know, things 0:17:46.760 --> 0:17:48.240 that used to work ten years ago or twenty years 0:17:48.240 --> 0:17:50.240 ago are the same, which is true for everything. I mean, 0:17:50.359 --> 0:17:52.639 change is the only content, sort of famous proverb. So 0:17:52.680 --> 0:17:55.399 I think here Hong Kong recognizes this, but I think 0:17:55.440 --> 0:17:56.920 there was sso a few catalysts. If you think about 0:17:56.960 --> 0:17:59.359 what happened in Hong Kong before, you know, with the 0:17:59.400 --> 0:18:03.560 disruptions with protests with COVID, Hong Kong also lost a 0:18:03.560 --> 0:18:06.200 lot of its financial luster. People left Hong Kong, went 0:18:06.200 --> 0:18:08.560 to Singapore, went to Dubai, went all over the world. 0:18:08.760 --> 0:18:11.679 So Hong Kong wants to sort of reclaim that crown 0:18:11.760 --> 0:18:15.240 that is rightfully hers as it were, and digital assets 0:18:15.320 --> 0:18:16.920 is one way to do that. But I think it's 0:18:16.960 --> 0:18:19.800 also around how do you engage the next generation in 0:18:19.800 --> 0:18:22.320 this area of financial inclusion, because that's a big topic 0:18:22.359 --> 0:18:25.040 as well, which is that people who understand the stock 0:18:25.080 --> 0:18:28.399