Speaker 1: Stable coins. You've probably heard about them, you may not
Speaker 1: know what they are, and you should. In June, US
Speaker 1: Congress passed the Genius Act, creating a regulatory system for
Speaker 1: these digital assets. And here in Hong Kong, very recently,
Speaker 1: the city began the process of issuing licenses to stable
Speaker 1: coin companies. These are big steps towards legitimizing the asset
Speaker 1: in the global financial system.
Speaker 2: Total circulation of stable coins is also booming. The two
Speaker 2: largest plays in the market, Circle and Tether, now hold
Speaker 2: over two hundred and seventy billion dollars in US treasuries.
Speaker 2: That's more than what sovereign countries like South Korea, Saudi
Speaker 2: Arabia and Germany hold, and this could have profound implications
Speaker 2: for interest rates and currencies.
Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence. I'm Kaetidmitriva
Speaker 1: in Hong Kong.
Speaker 2: I'm John Lee, also in Hong Kong. Today we have
Speaker 2: one of the industry leaders in this space. He is
Speaker 2: Yatsu founder of Animoker Brands, a digital assets conglomerate based
Speaker 2: in Hong Kong with one point eight billion dollars in assets. Yeah,
Speaker 2: welcome to the show.
Speaker 3: Thank you for having me.
Speaker 2: It's a great pleasure to be here now. Yet there's
Speaker 2: a lot of sophisticated crypto investors. There's obviously bitcoin bros.
Speaker 2: But for crypto luotites like myself and me, can you
Speaker 2: explain what exactly is a stable coin?
Speaker 3: Right? Maybe before we even go to what is a
Speaker 3: stable coin, I think it's important to think about what
Speaker 3: does tokenization do and what is tokenization. When you tokenize
Speaker 3: an asset, any asset on chain, what you're really doing
Speaker 3: is you're giving it the qualities of togonization, which is
Speaker 3: enhancing its network effect, and that actually brought about an
Speaker 3: entirely new industry. Whether this is a stable coin which
Speaker 3: is essentially expanding the network of the value of the
Speaker 3: dollar in this case, the sort of a stable coin
Speaker 3: in itself, or if it's something like a pure network
Speaker 3: asset like bitcoin or ethereum. These are assets that don't
Speaker 3: have necessary something underlying it, but are held up by
Speaker 3: the power of the community and the network effects inherent
Speaker 3: and the builders and developers on top of it. So
Speaker 3: it's really a way for the first time to own
Speaker 3: a network asset that wasn't really possible for And so
Speaker 3: what a stable coin is is the marrying of essentially
Speaker 3: the real word asset of the dollar or any currency
Speaker 3: around the world with that of tokenization, which then essentially
Speaker 3: brings it both the speed and distribution of the Internet.
Speaker 3: And if you think about what the Internet did for information,
Speaker 3: basically stable coins and tokenization is now doing that for
Speaker 3: money and value. And that's why you see this massive expansion.
Speaker 3: The growth that you've seen in stable coins is really
Speaker 3: what you see when you put something on the Internet,
Speaker 3: which is essentially global scale, reach, distribution, and everything else
Speaker 3: that comes with that.
Speaker 1: And before we get into how it actually functions and
Speaker 1: how it's you know, different from a bitcoin, for example,
Speaker 1: where did it come from? Because I feel like just
Speaker 1: in recent months you're suddenly hearing about the US Genius
Speaker 1: Act Hong Kong issuring what's kind of the history of
Speaker 1: stable coin?
Speaker 3: Well, I mean, stable coins have been around for a while,
Speaker 3: and you know, companies like Tether and Circle thereafter, and
Speaker 3: there's actually many other companies there as well, whether it's
Speaker 3: like you know, for instance, companies like pack Sauce, they
Speaker 3: actually provide services to enable other people to launch their
Speaker 3: own stable coids, and in principle what they're doing is
Speaker 3: is they're basically saying I'm buying something that underpins the
Speaker 3: value of the dollar and keeping it stable with a
Speaker 3: basket of assets and in the case of something like
Speaker 3: circle treasury bills or maybe just you know, in the
Speaker 3: case of sort of what the HKMA is mandating it
Speaker 3: has to be in the currency, so on hundred dollars.
Speaker 3: But also some people have, especially in the early days when
Speaker 3: there was no regulation in no clarity around it, have
Speaker 3: basically put other assets in them, and so controversially in
Speaker 3: the early days, and the reason why teather has had
Speaker 3: a controversial past, according to some is because some of
Speaker 3: those assets consisted of bitcoin. So what they would say is, hey,
Speaker 3: we have x amount of bitcoin, and then essentially we
Speaker 3: would mint a certain amount of dollars based on the
Speaker 3: value of bitcoin which we had in the reserve, and
Speaker 3: the reserve asset essentially creates that way in which we
Speaker 3: sort of represent the dollars. So if you have a
Speaker 3: one hundred million dollars worth of bitcoin, then I can
Speaker 3: basically mint on a hundred million dollars worth of dogs,
Speaker 3: and if the bitcoin goes down, I have to basically
Speaker 3: buy more. If it goes up, then maybe you so
Speaker 3: well you can basically create kind of a stable reserve balance.
Speaker 3: This is of course much less controversial when you do
Speaker 3: it with cash or with treasury bills because there's a
Speaker 3: clear value denomination, But when you start mixing it with
Speaker 3: digital assets in the past, that was more controversial. Tether
Speaker 3: has definitely moved further away from that, but in its
Speaker 3: early days it was essentially pegging against that, and it
Speaker 3: was also an era of sort of experimentation as well.
Speaker 3: People were sort of seeing these kind of interesting new
Speaker 3: financial constructs and say, okay, this could be a stable coin.
Speaker 3: This is how we do this, And when bitcoin didn't
Speaker 3: have the legitimacy the head today, using that as an
Speaker 3: underlying asset, it would have been controversial, but that was
Speaker 3: really the history, and the history was also around how
Speaker 3: do I onboard people into the digital assets world? You know,
Speaker 3: now we talk about it in terms of crypto or
Speaker 3: with three for instance, and if I tell someone, you
Speaker 3: know what, you can enter this world by converting your
Speaker 3: one thousand dollars into one thousand digital dollars. It's a
Speaker 3: much easier way to onboard someone and then they can
Speaker 3: start buying other tokens and on, and really the biggest
Speaker 3: use case for stable coins has been trading and purchasing
Speaker 3: and activities that are on chain or in exchanges, so
Speaker 3: all of the decentralized exchanges where people can trade, all conferences,
Speaker 3: the stable coins have a big use case, and of
Speaker 3: course it's used for remittisances and everything else like that
Speaker 3: as well.
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Speaker 2: and share. I wanted to talk about the recent US
Speaker 2: legislation in particular, you know, the Genius Act. Can you
Speaker 2: explain why this is so important?
Speaker 3: Well, is particularly important because when you consider what the
Speaker 3: US stance was on crypto generally including stable coins, up
Speaker 3: until the Trumpe administration, it was quite hostile. So to
Speaker 3: see essentially the US go from very negative to the
Speaker 3: industry to incredily positive to pass legislation on the stable
Speaker 3: coin is a massive legitimization of the market. And you
Speaker 3: can see this already not just an impact on prices,
Speaker 3: but also people want to build and develop on that.
Speaker 3: So that's one way to look at it just macro
Speaker 3: what it means. But the other thing is that this
Speaker 3: administration certainly believes, which is maybe diferent what the previous
Speaker 3: administration believe, that stable coins is a way for the
Speaker 3: US to continue its dollar hegemony through stable coins. Now,
Speaker 3: when you consider where these stable coins are being used,
Speaker 3: they're used all over the world, but they're growing tremendously
Speaker 3: in places like Nigeria, South America, Southeast Asia, places that
Speaker 3: really couldn't be dollarized in a classical sense because you
Speaker 3: couldn't even have a bank account, and now with a cryptoallet,
Speaker 3: I can now have digital dollars, and dollars has always
Speaker 3: been desired in these markets, that's just no way of
Speaker 3: reaching it. So you could say that in a way,
Speaker 3: they've been assimilated to the dollar at a young age.
Speaker 3: And so therefore, if you talk about these rising nations,
Speaker 3: which are mostly young populations like prinstance, Mina, Africa, South America,
Speaker 3: they're also essentially growing up to the dollar, and that's
Speaker 3: basically a way which you can create that influence, which
Speaker 3: is also the reason why other markets are in the
Speaker 3: world are looking at this and say, okay, how do
Speaker 3: we either counter or deal with that sort of circumstance,
Speaker 3: because that's something that you can really control. Also, the
Speaker 3: governments themselves have no oversight of it in a classical sense,
Speaker 3: So if you're a bank, you have to be banked
Speaker 3: first in order to receive any currency, and the bank
Speaker 3: itself might restrict you from being able to exchange money
Speaker 3: or maybe to buy dollars. But with a stable coin,
Speaker 3: basically the internet is all you need and wallet and
Speaker 3: someone or across the world can send it to you
Speaker 3: and you can transact with it, which basically means that
Speaker 3: the digital dollars that were in the form of stable
Speaker 3: coin becomes the way in which you transact in many
Speaker 3: of these economies, effectively dollarizing these economies even more. And
Speaker 3: that's actually one of the key areas around why it's
Speaker 3: important for the US because of course a big part
Speaker 3: of the US business model is around essentially using the dollar, right,
Speaker 3: and it's exactly it's a reserve currency of the world.
Speaker 3: How do you make sure that it's the reserve currency
Speaker 3: of the world. You know, basically you sort of enter
Speaker 3: the internet and make it the native currency. And so
Speaker 3: that's a strategy white so important to the US. And
Speaker 3: what is also interesting is that because of the Genius Act,
Speaker 3: banks before were not allowed to enter into that space.
Speaker 3: So expect that every major bank, maybe even smaller banks,
Speaker 3: are all going to start issuing their own stable coins.
Speaker 3: I mean, you even talk about companies like Walmart and
Speaker 3: Amazon and possibly Google and Apple, all of them who
Speaker 3: have so much dollars in their treasuries, Well, they could
Speaker 3: issue a stable coin now, and they could basically use
Speaker 3: it for their own commerce and receive transaction fees or
Speaker 3: use them in different forms of commerce. And it also
Speaker 3: enables money to move faster from place to place and
Speaker 3: also brings you more loyalty to the customer because they're
Speaker 3: now attached to your currency as it.
Speaker 2: Well, but wouldn't this cannibalize the business model of banks,
Speaker 2: Like that's how they make a lot of money, you know,
Speaker 2: retail customers they send their money through the swift system,
Speaker 2: usually takes like two to three days, sometimes business days,
Speaker 2: and they always give you a bad effects, right, but
Speaker 2: they make big margins. But now if you could do
Speaker 2: this like seamelessly, wouldn't it be bad The margins would
Speaker 2: be smaller.
Speaker 3: Well, first of all, anytime when there's an innovation and
Speaker 3: a change, it necessaries a change in the business model
Speaker 3: and also requires people to become more efficient and more competitive.
Speaker 3: Frankly speaking, so I think it's high time, just generally,
Speaker 3: that the industry move away from something like swift and
Speaker 3: move on to some area where the value doesn't simply
Speaker 3: come from a transaction fee. I mean, just think about.
Speaker 3: You know, what we used to pay for a phone call.
Speaker 3: It's expensive, and what happened when we reduced the call
Speaker 3: or the phone call to something that was essentially deminimus
Speaker 3: in terms of the cost. The value basically didn't come
Speaker 3: in terms of making the call. The value came on
Speaker 3: the speed of the connection that we had and the
Speaker 3: ability for us to conduct business faster and have more interactions.
Speaker 3: I can always reach you all the time. And what happened.
Speaker 3: Networks grew faster, business grew faster, Expansions happened because transactions
Speaker 3: were cheaper, faster, better, And that's basically what we have
Speaker 3: with blockchain. So to me, this is Actually they're positive
Speaker 3: for society because I'm not able to transfer money across
Speaker 3: the world cheaper, better, faster. I mean, think about all
Speaker 3: the extraction that happens for people who are unbanked, right,
Speaker 3: I mean, there's so so much value that goes away.
Speaker 3: Is it isn't it better that instead of paying really
Speaker 3: large type of transaction fees where it's not just about
Speaker 3: the swift transfer, but about the middleman who basically is
Speaker 3: able to gouge you sometimes ten twenty percent on the transaction,
Speaker 3: that it now goes with nine nine percent of their
Speaker 3: value to the actual end user, and then in their
Speaker 3: local communities they get to spend it in local economies.
Speaker 3: Now what does it mean though for the banks, Well,
Speaker 3: it means that banks are going to be changing the
Speaker 3: business models around acquiring te bills or maybe looking at
Speaker 3: ways and incentivizing customers to deposit their stable coins that
Speaker 3: they would then generate active yield on, you know, in
Speaker 3: the same way that you would do term deposits for example. Right,
Speaker 3: So there's still ways in which you would make money.
Speaker 3: I don't think the bank is gone because they would
Speaker 3: still have their trading strategies and their yield generitorise they
Speaker 3: just have to be more competitive and ultimately also more transparent,
Speaker 3: which I think is just better for the consumer.
Speaker 1: And how much of this relies on the US dollar
Speaker 1: as the reserve currency relies on US exceptionalism.
Speaker 3: I think it's very critical at this small one in time,
Speaker 3: because the US is the reserve currency of the world.
Speaker 3: It is basically the standard. Without the US dollar, the
Speaker 3: legitimacy and the ability to reach the world wouldn't be there.
Speaker 3: Because it's not just about, you know, the fact that
Speaker 3: the US is behind it and supporting it. It's also
Speaker 3: the fact that the communities around the world desired it.
Speaker 3: I grew up in basically still when we had an
Speaker 3: East and West Europe, and I remember my mom used
Speaker 3: to work at the eastern side of Berlin, and so
Speaker 3: when you cross that border, the dollar was the most
Speaker 3: desired thing. It's like the whole black market around basically
Speaker 3: trading either Deutsch MARKO dollar back in the day. And
Speaker 3: that had to do with because it was stability, it
Speaker 3: could be used as global trade and that sort of
Speaker 3: image persists. So the dollar is the desired asset. Also
Speaker 3: from a branding standpoint, I mean, it's not only about
Speaker 3: the utility, it's also Hollywood, it's movies. It's all that
Speaker 3: kind of stuff, right, you grow up to like, you know,
Speaker 3: whether you do a business deal in the media, you
Speaker 3: talk about it in dollars, you don't talk about it
Speaker 3: in other current and right, so that all of that
Speaker 3: sort of matters. And I would say now as a
Speaker 3: result of that, for deck to get that digital adoption,
Speaker 3: if it's in the dollar, it just has a much
Speaker 3: more legitimate framing, and especially if it's now licensable through
Speaker 3: the Genius Act or maybe also what Hungko was doing
Speaker 3: with their stable coin, it just makes it that much
Speaker 3: more safer and accessible.
Speaker 1: But does that world still exist because we are seeing
Speaker 1: cracks in it? You know, with President Trump tariffs, shifts
Speaker 1: in global trade policy. There was I think it started
Speaker 1: a couple of months ago, but this idea that US
Speaker 1: exceptionalism might not be so solid going forward, those.
Speaker 2: This D dollarization trend.
Speaker 3: So is there a D dollarization trend? There is a
Speaker 3: D dollarization trend only I think primarily because a dollar
Speaker 3: has been so weaponized in a way. But I would
Speaker 3: say there's a difference between a dollar stable coin and
Speaker 3: the CBDC. So what the industry and especially the Republican
Speaker 3: party was railing so much against was the CBDC. The
Speaker 3: reason why the CBDC is such a negative construct, because
Speaker 3: in some ways they're both digital, is that one the
Speaker 3: government has full control over your money, like they can
Speaker 3: literally take it out of your account right and that
Speaker 3: type of control means is never your money and you
Speaker 3: don't have the freedom to transact because they can also
Speaker 3: side where the stable coin technically speaking, it's in your wallet,
Speaker 3: the issuer isn't, you know, they have to comply, but
Speaker 3: they're not actually issued by the government per se, and
Speaker 3: it's not controlled by a single entity. They can just
Speaker 3: basically delete your money as it were, takes stuff away
Speaker 3: from you. So I think the construct over it as
Speaker 3: a stable coin, actually I think will reverse that tread
Speaker 3: because now you have the safety and the assumed security
Speaker 3: of owning your assets, which is also the argument where
Speaker 3: people were so into bitcoin, because there's an asset that
Speaker 3: I have self custody over that I control versus I
Speaker 3: put it in the bank. So you know, putting in
Speaker 3: the bank, the bank can lock you out. You can
Speaker 3: be debanked or unbanked. And then and they're using it
Speaker 3: as well. In some cases you've heard some of these
Speaker 3: stories and as a result you are excluded from the
Speaker 3: financial world, but all the assets that you have in
Speaker 3: there you lose as well. Here you have an element
Speaker 3: in which you can scale self custody. So this is
Speaker 3: also an important point because you know, in the older generations,
Speaker 3: it wasn't that on typical to have a lot of cash,
Speaker 3: maybe in your back pocket or like in Japan, underneath
Speaker 3: your bed, you know, that type of stuff. That is
Speaker 3: something which wasn't feasible or practical anymore. But in the
Speaker 3: digital construct you could actually have your money yourself or
Speaker 3: a certain amount and have the freedom around that. So
Speaker 3: I think it's a way in the combat sort of
Speaker 3: this dedoorganization. Having said that, I think US exceptionalism is unique.
Speaker 3: And I know there's some proponents who are like saying, Okay, well,
Speaker 3: the US is kind of done for and you know,
Speaker 3: all that type of stuff. I don't believe that. The
Speaker 3: reason why I don't believe that is because the US
Speaker 3: has probably the only country in the world where it
Speaker 3: can have this amazing amount of creative destruction. Right It's
Speaker 3: the place where you can blow things up, and somehow
Speaker 3: it still works because as a culture it celebrates that
Speaker 3: and it's because it focuses so much on the individual
Speaker 3: versus in other places it's much more focused on the collective,
Speaker 3: for instance, diverging a little bit. China's sort of reach
Speaker 3: in AI for instance and other technologies would not be,
Speaker 3: in my view, as advanced if it wasn't for the US,
Speaker 3: because it's something to comput against. So the US pushes
Speaker 3: a boundary because they have that exceptionalism, this innovation, and
Speaker 3: then China reacts to it as its ability to create
Speaker 3: and produce and innovate as well. But if it wasn't
Speaker 3: for the US, I think China would nearly be as
Speaker 3: competitive or maybe as advanced because it doesn't have to.
Speaker 3: And that's basically the difference between I would say that two,
Speaker 3: both of them being incredibly ingenious in their work. But
Speaker 3: I think that you need that exceptionalist I think the
Speaker 3: world needs that exceptionalism, and the dollar represents that in
Speaker 3: a way.
Speaker 1: On that point, is there a world in which there's
Speaker 1: a stable coin that's actually backed by Chinese currency, by
Speaker 1: the yuan?
Speaker 3: I mean, I think there's a lot of question. No,
Speaker 3: So it's not a dumb question. There's a lot of
Speaker 3: speculation around that. I would say at this moment in time,
Speaker 3: there's a lot of discussion and people are saying it's possible.
Speaker 3: But of course, you know, we for instance, with our
Speaker 3: joint meentor with standard Charter and HKT anchor point. You know,
Speaker 3: we recently submitted our application to have a license here
Speaker 3: from the HKMA to a launch a hundred dollar based
Speaker 3: table coin. And the difference about the HKMA license is
Speaker 3: that it does have the ability to do it with
Speaker 3: different basic currencies. So is it possible it is? Is
Speaker 3: it in the works? No? Right, I mean, that's obviously
Speaker 3: something that is being investigated, is being observed. But for
Speaker 3: sure China is looking at Hong Kong as the test
Speaker 3: bed for that as it always has been, right, Hong
Speaker 3: Kong has always been sort of the experimental financial sandbox
Speaker 3: for what happens in and out of China to learn from.
Speaker 3: And clearly, and this has been already publicly said by
Speaker 3: the Chinese government, they are also observing and reacting to
Speaker 3: what the US is doing with the Genius Act and
Speaker 3: stable coins and blockchain technology because they realize that, you know,
Speaker 3: neither country wants to be behind in any form of
Speaker 3: any shape of anything related to technology. It doesn't matter
Speaker 3: whether there's robotics, whether there's AI, whether it's you know,
Speaker 3: compute or where there's blockchain.
Speaker 2: So let's talk about Hong Kong. So, Hong Kong, you
Speaker 2: know stable coins, the regulations passed on the first of August.
Speaker 3: Yeah, actually ahead of the US.
Speaker 2: Interesting enough, Okay, so Hong Kong's really here, So tell
Speaker 2: us what's the aims of the Hong Kong government with
Speaker 2: this new regulation?
Speaker 3: So, I mean, first, what is Hong Kong. Kong is
Speaker 3: maybe one of the leading financial centers in the world,
Speaker 3: certainly in Asia, if not in the world, you know,
Speaker 3: top three, top five, So you have to stay relevant
Speaker 3: in that and how do you stay relevant. You've got
Speaker 3: to go where the future is going. And Hong Kong
Speaker 3: has made it very clear that the future is digital,
Speaker 3: so that means you have to embrace blockchain technology and
Speaker 3: digital assets. When you look at the demographics, and especially
Speaker 3: younger demographics in places like South Korea or Turkey or
Speaker 3: you know, places in the Mid East, it's something like
Speaker 3: sixty to seventy percent of people under the age of
Speaker 3: thirty in some of these places exclusively old crypto. So
Speaker 3: they don't buy stocks, they only owly tokens. You know
Speaker 3: they're going to get older, and they don't just suddenly
Speaker 3: switch and say, oh, you know, I should buy some stocks.
Speaker 3: They keep buying crypto, So you have to be ready
Speaker 3: for that market. You can't just say, you know, things
Speaker 3: that used to work ten years ago or twenty years
Speaker 3: ago are the same, which is true for everything. I mean,
Speaker 3: change is the only content, sort of famous proverb. So
Speaker 3: I think here Hong Kong recognizes this, but I think
Speaker 3: there was sso a few catalysts. If you think about
Speaker 3: what happened in Hong Kong before, you know, with the
Speaker 3: disruptions with protests with COVID, Hong Kong also lost a
Speaker 3: lot of its financial luster. People left Hong Kong, went
Speaker 3: to Singapore, went to Dubai, went all over the world.
Speaker 3: So Hong Kong wants to sort of reclaim that crown
Speaker 3: that is rightfully hers as it were, and digital assets
Speaker 3: is one way to do that. But I think it's
Speaker 3: also around how do you engage the next generation in
Speaker 3: this area of financial inclusion, because that's a big topic
Speaker 3: as well, which is that people who understand the stock
Speaker 3: market and understand traditional forms of finance, they're in their
Speaker 3: particular world but most people don't actually understand finances as all.
Speaker 3: They're not financially literate. Hong Kong is a little bit
Speaker 3: of an exception because most people here understand and grow
Speaker 3: up in money. But think about the rest of the world.
Speaker 3: I grew up in Europe and we don't talk about
Speaker 3: money at all. And how do you include more people
Speaker 3: into the space? And again, digital money, digital assets. Tokenization
Speaker 3: democratizes access and also educates people about it because it's
Speaker 3: now accessible. Think about how inaccessible it is for a
Speaker 3: first person to enter the financial world. It's not a
Speaker 3: bank acout. He has been able by shares, he has
Speaker 3: a stand about money, He needs to pass certain kind
Speaker 3: of you know, like tests and queries. He has no
Speaker 3: way of experimenting and playing around with it, which basically
Speaker 3: tokenization makes it much easier to do. So it's part
Speaker 3: of that as well. But that's why it's so important
Speaker 3: for Hong Kong to stay relevant in a financial future
Speaker 3: that is digital. You have to embrace blockchain and neoge assets.
Speaker 2: And you mentioned that China is using Hong Kong as
Speaker 2: almost like a test case. Now for China, could stable
Speaker 2: coins be used as a means to get away from
Speaker 2: the Swift system.
Speaker 3: So first of all, stable coins in general China accepted
Speaker 3: will generally, I think replace Swift And that just makes
Speaker 3: sense because you know, like take a place like Africa.
Speaker 3: So I was just in a meeting with people from
Speaker 3: government and pri certain businesses, and the cross border transaction
Speaker 3: that happens in Africa between their countries basically transactor through
Speaker 3: Swift go to America, and so they paid billions of
Speaker 3: dollars in transaction fees just to do business with each other.
Speaker 3: Stable coin just does as a fraction of a cost,
Speaker 3: and you can still have it with the safety and
Speaker 3: security of knowing that it's a dollar or whatever currency
Speaker 3: that would be. So that value then essentially flows directly
Speaker 3: into the economies that they're building, and so it just
Speaker 3: makes a lot more sense. Now. What it also means
Speaker 3: for global trade is it makes it much more fluid
Speaker 3: and much more transactable because now I can just do
Speaker 3: it very quickly as opposed to having to deal with
Speaker 3: a bank. Just think about how much money through a
Speaker 3: wire transfer is stuck inside a bank somewhere that even
Speaker 3: one day, but on average sometimes three to five days
Speaker 3: in some cases. People will tell you stories of we
Speaker 3: send a wire transfer, and two weeks later, I'm still
Speaker 3: waiting for it. Well, that's maybe a bit of an exception.
Speaker 3: The promise is that that period of time is essentially
Speaker 3: opportunity lost. And maybe thirty or forty years ago, when
Speaker 3: the world was a little slower, it didn't matter, like
Speaker 3: it's okay if the money arrives a week later, but today,
Speaker 3: one day. I mean to think about you being a
Speaker 3: trader or you forge, that opportunity cost is tremendous, right,
Speaker 3: It's not just a matter of it let the money
Speaker 3: come in. Maybe in the laborer construct it's okay, but
Speaker 3: in a capital construct literally seconds can matter, right or
Speaker 3: minutes or certainly hours then, let alone days. So that
Speaker 3: means from a transaction standpoint, it's not just reducing fees,
Speaker 3: it's the value of I get the money right away,
Speaker 3: and I can deploy it right away, and I can
Speaker 3: do something with it right away. That is really important.
Speaker 3: I mean, ask anyone who sort of trades and assets
Speaker 3: of all sorts the opportunity costs related to that. It
Speaker 3: does disrupt things like credit and lending that will have
Speaker 3: to change as well, but it just has to requires
Speaker 3: them to be more innovative and also offer more value.
Speaker 3: As a result of.
Speaker 2: That, the US government has in a way weaponized the
Speaker 2: Swift system. Now they seized Russian assets during the onset
Speaker 2: of the Russia Ukraine War because they relied on these
Speaker 2: transfers via Swift. In this tokenized like stable coins world,
Speaker 2: would countries be able to get away from potential US sanctions.
Speaker 3: So first of all, you can really get away from
Speaker 3: sanctions because of the on and off ramp. Even though
Speaker 3: you could own the crypto, if you want to do
Speaker 3: off rampet in the US for dollars, you can trace it.
Speaker 3: So if this is tainted money or tainted crypto, you
Speaker 3: would be able to see it because the blockchain tracks everything.
Speaker 3: So if someone were to send you money from Russia,
Speaker 3: it could be in the form of a bitcoin. Theoretically,
Speaker 3: if they're sophisticated enough, which is not very difficult, they
Speaker 3: could say, hey, wait a second, this was send from
Speaker 3: a wallet that comes from a Russian bank or something.
Speaker 3: They could basically technically block that, and it's up to
Speaker 3: the basically on and off ramps to do that. So
Speaker 3: it's not the blockchain that does that, it's just basically
Speaker 3: on and off ramps. So it means that the asset
Speaker 3: itself is yours, but for you to utilize it in
Speaker 3: the way you wanted to, there might be some restrictions.
Speaker 3: And one would argue that's one of the reasons why,
Speaker 3: you know, Russia, for instance, their banks have essentially legalized
Speaker 3: crypto for that reason. But I would also counter this
Speaker 3: thought as well in terms of sure, the US has sanctioned,
Speaker 3: you know, using swift, but how effective has it really
Speaker 3: been in the sense that it hasn't really crippled the
Speaker 3: Russian economy. Things seem to be going okay for the
Speaker 3: most part. They're still able to deploy weapons and putin sales,
Speaker 3: seems to be able to say the things he wants
Speaker 3: to say. Generally speaking, I think the age of the
Speaker 3: sanctions as we see only work when the world is
Speaker 3: unified in their direction, which they're not so, meaning that
Speaker 3: you've got different alliances around the world. It's no longer
Speaker 3: a US centric world in the traditional sense of if
Speaker 3: the US wants to Dissuay, everyone follows, because US also
Speaker 3: had a lot of good will which they've lost over time.
Speaker 3: You know, when you look at the alliances. I mean,
Speaker 3: India is a US ally, but they also do business
Speaker 3: with Russia. And China, like, there's many pathways around. So
Speaker 3: I don't think the issue of swift is only something
Speaker 3: related to what's happening in the US. It's also the
Speaker 3: alliances that you need to have with different countries around that,
Speaker 3: and I think stable coins and crypto are just visualizing
Speaker 3: what's already happening in the world today. Again, I would
Speaker 3: argue that actually that becomes a more powerful way for
Speaker 3: them to continue that influence, because you know, if you
Speaker 3: want to have influence in a place like Russia and
Speaker 3: they're using stable coins, actually having the Russian economy become
Speaker 3: more dollarized, I would argue, is much more soft power
Speaker 3: and maybe even hard power for America than just be
Speaker 3: able to sort of turn on and off of the
Speaker 3: swift buttons.
Speaker 1: Interesting, yeah, to Jones's point on the geopolitics of it,
Speaker 1: So you basically don't see stable coins or in your words,
Speaker 1: sort of the dollarization of Russia. You know, this goes
Speaker 1: more wide scale, of course, so you don't see that
Speaker 1: as having kind of a negative impact for that because
Speaker 1: from the US perspective, you know, they wouldn't have those
Speaker 1: on and off switches anymore, right, Well.
Speaker 3: They wouldn't have the on and off switches in the
Speaker 3: way that Swift has it, but they can still block
Speaker 3: the transaction because it's on chain. So if a known
Speaker 3: wallet in let's say, North Korea is a good example
Speaker 3: of that, because North Korea is known to be hacking
Speaker 3: for a lot of that crypto, that crypto that's sitting
Speaker 3: in North Korean accounts is frozen effectively because people can
Speaker 3: see its source and origin. So no exchange in the world,
Speaker 3: no intermediary is ever going to touch that money. And
Speaker 3: if that money was transferred from that wallet or you know,
Speaker 3: from whatever sort of wallets that they've tracked that they
Speaker 3: know is North Korean, it would immediately be frozen wherever
Speaker 3: it was set. So that's something that's very easy to detect.
Speaker 2: So you don't get this animity that supposedly was scriptocurrency.
Speaker 3: The anonymity is down to the individual. I don't know
Speaker 3: who owns the wallet, but the assets itself you can
Speaker 3: track all the time, right, And I think there's often
Speaker 3: a misunderstanding around that because of our thinking around identity
Speaker 3: in the physical world, like when you think, oh, you're
Speaker 3: not anonymous because I know your face, have your passport,
Speaker 3: of your idea, all that kind of stuff. Right, and
Speaker 3: people often think of it as, oh, that's my public
Speaker 3: bank account. I don't want that. Blockchain has the ability
Speaker 3: for you to anonymize the identity of who owns it,
Speaker 3: but the transactions themselves is essentially that display of truth.
Speaker 3: And that's actually what makes it work because every time
Speaker 3: I do a transaction, I can verify that this transaction
Speaker 3: is real and the whole world is witness to it.
Speaker 3: But I don't need to know that it's your money,
Speaker 3: and you know, you don't have to be too technical
Speaker 3: about it. But what you can now do with schools
Speaker 3: and blockchain with zero knowledge proofs, is you can now
Speaker 3: also attest, for instance, the value of what you might
Speaker 3: have without ever revealing your wallet. You know, like today,
Speaker 3: for instance, when you have to give a credit statement, right,
Speaker 3: I mean you have to literally, outside of a letter,
Speaker 3: print out your bank statement, send it over to whoever
Speaker 3: agent is doing it, and say, look, this is proof
Speaker 3: how many assets I have. You know, maybe I cross
Speaker 3: off the bank account, but like, oh, I see it's
Speaker 3: a JP Morgan account, and look you have ten million
Speaker 3: here and I know your name, right, Whereas on blockchain
Speaker 3: I don't even have to know your name. I can
Speaker 3: just attest because blockchain can say I could verify this
Speaker 3: and this absolute truth because the blockchain can be tempered
Speaker 3: that Okay, he has enough assets, and I just need
Speaker 3: to know that you have enough assets. I don't need
Speaker 3: to see everything. And when you do your tax refund,
Speaker 3: how ridiculous is that, here's my passport, so you can
Speaker 3: see everything about me, so I can go buy one
Speaker 3: hundred dollar thing to get like a you know, three
Speaker 3: dollars discount on tax, and then all of that information
Speaker 3: is in some database that is completely unsecure in some
Speaker 3: shopping mall. It's crazy, and we think it's normal. It's
Speaker 3: not normal at all because it's just been normalized societally,
Speaker 3: and blockchain solves all of that. So again it's not
Speaker 3: to say that you're anonymous, but you can use it
Speaker 3: as proofs.
Speaker 1: I also like have an example you pull the number
Speaker 1: out of the hat and the number was ten million.
Speaker 1: We have very different make accounts. I wanted to talk
Speaker 1: a bit about because you know, we've talked about stable
Speaker 1: coins being backed by currency. We've talked a little bit
Speaker 1: about tea bills, but there's other assets. And you were
Speaker 1: involved in a very interesting transaction involving a violin and
Speaker 1: I would love to hear about that.
Speaker 3: Yeah. So about a year and a half ago we
Speaker 3: proceeded together with Galaxy, I purchased a stratavirus violent and
Speaker 3: Antonio Strativaru was probably the most celebrated ruth year in
Speaker 3: the world, a violin maker from the sort of classic
Speaker 3: criminal schools, you know, hundreds of years ago. And that
Speaker 3: strata virus is worth millions of dollars, and all strata
Speaker 3: varrays are expensive. There's maybe six hundred of them around
Speaker 3: the world, give or take. And we tokenized that. We
Speaker 3: tokenized that first as a way to create collateral and
Speaker 3: then later on to essentially offer it for people to buy,
Speaker 3: essentially as a kind of quasi fractionalized asset. The vision
Speaker 3: behind that was so I grew up learning classical music.
Speaker 3: My parents are musicians, specifically my mother. She didn't anything
Speaker 3: about money. And by the way, this is not just
Speaker 3: true for artists around the world. It's more even more
Speaker 3: true for artists in Europe, I would say, or just
Speaker 3: generally people in Europe, right, because you know, we don't
Speaker 3: talk about money. It's not like in Hong Kong or
Speaker 3: in Singapore. It's normal to have a you know, in
Speaker 3: dinner you talk about real estate and stock market and prices.
Speaker 3: You don't do that in Europe. Like if someone does that,
Speaker 3: you're like, mm, you're kind of weird, you know my
Speaker 3: crowd type of thing, right, it's like it's like, gosh,
Speaker 3: it's like rude to talk about money. So we are
Speaker 3: generally quite financially illiterate, I would say, in those circles.
Speaker 3: But that also means in the capitalist world that we
Speaker 3: live in, we get taken advantage of. So you give
Speaker 3: money to an agent, they run it for you and
Speaker 3: they abuse it. And today in the digital construct, that
Speaker 3: entity is called Spotify. There's no musician in the world
Speaker 3: that makes money selling music, right, they have to do gigs,
Speaker 3: they have to do other things. Music is advertising, But
Speaker 3: who makes the money off the music? Someone like Spotify
Speaker 3: and Spotify used to be the agent, I mean, was
Speaker 3: personified by an agent or something. But the point is
Speaker 3: that the middleman takes all the value because they understand
Speaker 3: money and they can transact from that. So how do
Speaker 3: we break that cycle? And the idea was the stradivarius
Speaker 3: instrument has always appreciated historically over decades between ten to
Speaker 3: fifteen percent a year that's also why groups like fifteen
Speaker 3: per year. Yes, and that is also why Nippon Foundation
Speaker 3: and banks around the world, especially Japanese ones literally by
Speaker 3: violence and just vaultam. But that's obviously a little known fact.
Speaker 1: Why is that though, sorry, just why is it the
Speaker 1: specific violin that appreciates that ten to fifteen percent a year?
Speaker 1: There's only six hundred of them. Sure they're scarcity, but
Speaker 1: there is there other Yeah, I.
Speaker 3: Mean the quality of the fact that the instrument has
Speaker 3: a distinguishable sound tonal quality, the fact that it can
Speaker 3: never be reproduced. So it's kind of like it has
Speaker 3: that art history element, and you know, in a way
Speaker 3: you could say it it's now created incredible lore where
Speaker 3: there's a marketplace for it. And the marketplace is someone
Speaker 3: will pay more money for this violin over time because
Speaker 3: of the fact that they appreciate it and also its
Speaker 3: historical importance. And today the world's most famous violinists or
Speaker 3: play on a strat or del jesu because these are
Speaker 3: the two most valuable instruments and they have the best sound.
Speaker 3: So that's kind of that value construct. The point is that,
Speaker 3: you know, if I go to a traditional investor and say, hey,
Speaker 3: you should buy a strat because it's a good investment.
Speaker 3: Unless he's culturally inclined or he's into music, it doesn't matter,
Speaker 3: and that's okay. But to me, the opportunity that was
Speaker 3: more exciting was how do I teach people who don't
Speaker 3: know anything about money about the world of money, and
Speaker 3: by tokenizing something they appreciate, which is every musician in
Speaker 3: the world will say a Strata viarus is valuable. They
Speaker 3: know it's worth millions, but they can never afford it.
Speaker 3: So they're not going to buy a bitcoin and then
Speaker 3: I'll got my bonds or tesla because they don't care,
Speaker 3: but they will care about that, and in that process
Speaker 3: they're going to start learning about money because they're going
Speaker 3: to say, Okay, I have an ownership in this strat
Speaker 3: or it goes up in value, I appreciate it, I
Speaker 3: can talk about it, I love it, and at the
Speaker 3: same time, I can also make money on this, and
Speaker 3: then suddenly I understand what it's all about. So the
Speaker 3: inspiration was, rather than trying to teach people about money
Speaker 3: in let's call it somewhat abstract concepts of stocks or commodities,
Speaker 3: copper or gold, o lithium, this is pretty abstract For
Speaker 3: people who don't deal in this kind of world, why
Speaker 3: don't you own assets in you know, the artists that
Speaker 3: you love. That is a much easier way to teach
Speaker 3: people about value and money because they immediately appreciate the
Speaker 3: constructs themselves because they're passionate about it.
Speaker 2: So what's next in terms of tokenized assets?
Speaker 3: Like?
Speaker 2: Is is it a burken bang? Is it a on
Speaker 2: the peak in Hong Kong solid gold?
Speaker 3: Yeah? Well, I mean just on the leaboou point. I
Speaker 3: would argue that Laboobu's inspiration very much came from what
Speaker 3: happened in the NFT world in some way of fashion,
Speaker 3: although they don't have digitasties. If you look at what
Speaker 3: happens with board apes or you know today we have
Speaker 3: it with like Mocha verse or pudgy penguins like these
Speaker 3: are all NFTs and digital acids that build Oh you
Speaker 3: haven't heard of pudget penguins, I guess, yeah, so, I
Speaker 3: mean pudgie Penguins is basically another NFT kind of like
Speaker 3: a board ape, excepted to keep penguin. And the floor
Speaker 3: price of a pudget penguin is now fourteen eighth to
Speaker 3: fifteen eath. It's a serious asset, right, and of course
Speaker 3: crypto punks, which are for the og assets that are
Speaker 3: worth hundreds of thousands or some of these millions of dollars.
Speaker 3: But anyway, the point is that these are cultural artifacts
Speaker 3: that have meaning. And just quickly, why do these NFTs
Speaker 3: have value? To your point about the birken bag, why
Speaker 3: do people buy birkenback and why do buy rolics? People
Speaker 3: don't buy a rolics to tell the time, and they
Speaker 3: don't buy a broken bag to put stuff in it.
Speaker 3: The utility is not the reason. It's the status, the
Speaker 3: cultural capital that is associated with it, right, whether I
Speaker 3: made it, or whether it's the group of people who
Speaker 3: own a rolex that I want to be associated with,
Speaker 3: or that status at success and in the world of
Speaker 3: digital assets, that's represented by NFTs. And you can see
Speaker 3: this in every context. When you have a new wealth
Speaker 3: class emergent, this is important to recognize. Crypto is a
Speaker 3: new wealth class for the most part. Yes, sure you
Speaker 3: have Wall Street and institutions getting into it now, but
Speaker 3: the class that got into crypto didn't come from money.
Speaker 2: At least most of them.
Speaker 3: They made money through crypto, and they had a new
Speaker 3: wealth class and with them, they deliver and bring a
Speaker 3: new form of culture, which is you know, NFTs and
Speaker 3: certain kind of where you know, I've been in the
Speaker 3: tech industry now for thirty years, and I remember in
Speaker 3: the early days, you weren't taken seriously if you didn't
Speaker 3: have a suitain tie, or if you were drinking you know,
Speaker 3: wine or something like that. But because that was the
Speaker 3: culture of the wealth class of that time, which is
Speaker 3: you have to be dressed a certain way, and you
Speaker 3: had a certain kind of the chorum in terms of
Speaker 3: what you drink and do and even smoking in the eighties,
Speaker 3: and then you had this new form of wealth, which
Speaker 3: is a Silicon valley and the tech wealth, and these
Speaker 3: guys were all you know about I don't drink, I
Speaker 3: wear hoodies and so on, and suddenly you had billionaires
Speaker 3: with hoodies, right, and they created a whole new type
Speaker 3: of sort of cultural capital where they're driving electric cars.
Speaker 3: And now it's kind of wild to see how these
Speaker 3: sort of sports where brands are now priced almost like luxury,
Speaker 3: where brands in some cases precisely because that audience that
Speaker 3: is that new wealth class, have emerged into that and
Speaker 3: that's their product category. So the same people who, let's say,
Speaker 3: were the Wall Street bankers in the eighties, Maybe that's
Speaker 3: not their cup of tea, But for the Silicon Valley guys,
Speaker 3: that's a cup of tea. And what we're seeing here
Speaker 3: is with NFTs and digital assists, it's the same. So
Speaker 3: where it's going to go is we're going to see
Speaker 3: this toganization of everything. And the biggest form of current
Speaker 3: form of tokenization, which you see in old coins like
Speaker 3: all these funny meme coins and tokens and other things
Speaker 3: and gaming tokens, what they're really tokenizing is attention. And
Speaker 3: I think a lot of people misunderstand that because I
Speaker 3: think it's like out of thin air. But I would
Speaker 3: argue attention and digital advertising is kind of out of
Speaker 3: thin air as well, because what are you really trading
Speaker 3: or investing in. You're trading the attention of here's a
Speaker 3: biddle board, here's a banner, here's a TV ad. Right arguably,
Speaker 3: broadcast networks like Bloomberg, you make a lot of money
Speaker 3: probably on advertising and sponsorships. That is also a form
Speaker 3: of attention or sort of paying for that attention that
Speaker 3: may be fleeting, but it's still important for generating business
Speaker 3: from that and now through tokenization, you have a way
Speaker 3: of owning that attention. And what was the form of
Speaker 3: digital attention in the early days of the Internet, It
Speaker 3: was a website. If you remember, back in the nineties,
Speaker 3: we had a website, and today we have many websites.
Speaker 3: If you look at your TikTok page, your Instagram page,
Speaker 3: your website, your LinkedIn profile, these are just evolutions of
Speaker 3: websites and all of these are forms of generating attention.
Speaker 3: And all of these forms of attention are going to
Speaker 3: be tokenized. Now, that doesn't mean that they're gonna be valuable,
Speaker 3: just like you know, there's someone who has a million
Speaker 3: followers on Instagram is probably a little bit more for
Speaker 3: valuable than someone who has five thousand followers or a
Speaker 3: hundred followers. But the point is there is a value,
Speaker 3: as small as it might be, and that's now represented
Speaker 3: the toganization and the first wave of all these tokens
Speaker 3: that have come out are that which means, if this
Speaker 3: is true, then we're gonna have billions and billions of
Speaker 3: tokens as we have billions and billions of websites.
Speaker 2: Yeah, your company animoker, you're the founder of that company
Speaker 2: or coin founder invests in these digital assets. And look,
Speaker 2: I'll be remiss to not ask you, like you've announced
Speaker 2: that you're in a list or you're going to do
Speaker 2: an IPO, give us, you know, can you give us
Speaker 2: anything like I know, there's a lot of discussion of
Speaker 2: ways you can at least is it going to be
Speaker 2: in the US, is it going to be in Hong Kong?
Speaker 2: You know, just give us some color?
Speaker 3: Can I say, no comment? So I think the I mean,
Speaker 3: it's not a secret that we want to go public. Again,
Speaker 3: we were once a public company in Australia and we
Speaker 3: were small and we had to actually dealist because we
Speaker 3: were dabbling and dealing in crypto at the time because
Speaker 3: the Essex did not like that. That was in twenty nineteen,
Speaker 3: so you know, lifetimes ago. But now, of course the
Speaker 3: capital markets are ready for it. You know, Hong Kong
Speaker 3: Us are great markets for this. There's a lot of
Speaker 3: attension if you look at all the treasury companies. What's happening,
Speaker 3: you know, between companies accumulating bitcoin, whether it's like a
Speaker 3: strategy or a DDC or whichever, right, all these companies
Speaker 3: are basically showing the value of digital assets or like
Speaker 3: the circle IPO which was incredibly blockbuster success. All of
Speaker 3: these basically pointing attention to it, so it would be
Speaker 3: remiss for us not to look at that seriously. But
Speaker 3: I'm not really at liberty to discuss our specific plans,
Speaker 3: but it's definitely clear that we're looking at it. As
Speaker 3: a company. We are very institutionally focused. We do have
Speaker 3: a roster of some of the most sophisticated investors in
Speaker 3: the world. We also have over three thousand shareholders, so
Speaker 3: we're a little bit of a different beast. And I
Speaker 3: would say us, having worked in the space, you know,
Speaker 3: having the revenues that we have, which hasn't been nine
Speaker 3: digital the last four years, has made us very much
Speaker 3: a consistent player in the field. So I think again,
Speaker 3: I think the timing is right, but you know, I'm
Speaker 3: not at liberty to discuss some more specifics other than
Speaker 3: to say that it is very important for us, and
Speaker 3: of course we are here to also deliver value to
Speaker 3: our shareholders and our stakeholders.
Speaker 1: Fair enough, what an interesting discussion. Thank you so much
Speaker 1: for joining us today.
Speaker 3: Thank you for having me.
Speaker 1: You've been listening to Asia Centric from Blooming Intelligence. I'm
Speaker 1: cut Jamey Treva in Hong Kong.
Speaker 2: I'm John Lee, also in Hong Kong. This podcast was
Speaker 2: produced and edited by Clara Chen and you can listen
Speaker 2: to all our episodes on Apple Podcasts, Spotify, or where
Speaker 2: you listen. Thanks for joining