On August 27, the 'Crypto Finance Forum 2025 - HKU Session' was held at the University of Hong Kong. Professor Lam Chen, Vice President (Business Strategy) of HKU, Chair Professor of Finance, and Director of the Center for Financial Innovation and Development, conducted a summit dialogue with Binance co-founder and former CEO Changpeng Zhao on the theme 'New Order, New World of Web3 Industry'. The two guests engaged in in-depth discussions on global stablecoin development, practical applications of RWA (Real World Asset tokenization), and the future positioning of exchanges.

Changpeng Zhao (CZ) focused his discussion around five main themes: the evolution of stablecoins and USD's strategic position, regulatory and liquidity bottlenecks in RWA, the potential of decentralized exchanges, how Digital Asset Treasury (DAT) models provide new investment directions for traditional investors, and the trading model transformation that AI and Web 3.0 integration will bring.

CZ's perspectives not only reflect his deep insights into current industry development but also demonstrate his strategic thinking about the future landscape of digital finance. These insights provide important reference value for understanding development trends and investment opportunities in the crypto finance industry.

The following is organized based on CZ's on-site viewpoints, with the author attempting to preserve CZ's original expressions as much as possible.

**Changpeng Zhao (CZ) on Stablecoins: From Volatility 'Safe Haven' to USD Globalization Tool**

Actually, I'm not an expert in the stablecoin field, but Binance platform carries about 70% of global stablecoin trading volume, making us the most important stablecoin distribution channel in the industry.

Let me briefly introduce the development history of stablecoins. The earliest stablecoin technology prototype was 'Colored Coins', which was the Bitcoin community's earliest exploration of 'asset on-chain' solutions. In 2014, USDT was initiated by Brock Pierce. The project's early development was lukewarm, and Pierce gradually withdrew, making way for the current USDT team including Craig Sellars and others. Even by 2017, there wasn't much progress.

When Binance was established in 2017, we focused on crypto-to-crypto trading, supporting trading pairs like Bitcoin to Ethereum and BNB, but lacked fiat trading functionality. This created a user experience problem: whenever Bitcoin prices fell, users could only withdraw Bitcoin to other fiat exchanges to convert to fiat currency, and there was great uncertainty whether these funds would flow back to our platform.

This was also extremely unfriendly to user experience. To improve user experience, we decided to support USDT as a 'safe haven' during market downturns. At the time, we understood stablecoins as a short-term store of value tool, so the decision to support USDT was relatively simple—we didn't sign complex cooperation agreements or strategic partnerships, we simply integrated this product.

This is when USDT entered its rapid development period:

First, after 2017, crypto-to-crypto exchanges entered a rapid development phase, with numerous platforms including Binance starting to support USDT, driving USDT's rapid growth.

Subsequently, USDT welcomed a second wave of growth momentum: many Asian users had demand for USD, but faced difficulties opening USD accounts directly. USDT provided them with an alternative solution. Tether's profitability has always been outstanding. Due to facing US regulatory pressure and banking cooperation difficulties, they have maintained a relatively low profile.

In 2019, US compliance institution Paxos proactively contacted us, proposing cooperation to issue stablecoins, which led to the later BUSD. From 2019 to 2023, BUSD's market cap grew to $23 billion. During this period, we didn't invest significant resources, mainly providing some brand support and promotional activities, such as 'free withdrawal' campaigns.

In 2023, the US government shut down the BUSD project. If BUSD had continued, it would have achieved considerable scale, as BUSD's growth rate was surpassing both USDT and USDC at the time. It's worth emphasizing that when the BUSD project was closed, all user funds were completely returned, fully proving BUSD's characteristics as a compliant, transparent, and secure project.

Stablecoins and exchanges have become one of the most core profitable sectors in the crypto finance field. Their business model is highly simplified: after obtaining compliance licenses, when users deposit funds, platforms can issue tokens; when users redeem tokens, platforms provide cash exchange. This model has low barriers, high liquidity, and enormous market potential, with significant long-term profitability.

From a national strategic perspective, the US government's attitude toward stablecoins has changed significantly in recent years. This administration is very smart, and with their business background, they deeply understand Tether's strategic value to the USD's global position. Currently, about $100+ billion in USDT funds have purchased US Treasury bonds, and Tether is widely used globally. The key point is that Americans themselves don't need stablecoins—they can directly use the banking ACH system for USD transactions. Almost all USDT users are outside the US, which actually expands the USD's global influence.

This aligns perfectly with China's desire to expand the RMB's international influence. Stablecoins are essentially tools that help underlying currencies achieve globalization, which should be hugely attractive to all countries. Of course, as freely circulating blockchain assets, stablecoins do pose challenges to foreign exchange controls, but these problems can also be solved. Currently, the dozen or so countries I've been in contact with all show strong interest in developing local stablecoins—everyone wants their fiat currency to go on-chain.

When the US passed the GENIUS Act in July, proposing policy directions to limit Central Bank Digital Currency (CBDC) development, this move reflects profound strategic planning for the USD's global dominance. Stablecoins are popular precisely because of their high degree of free circulation and good user experience, while some government-issued digital currencies may be stricter in regulation and monitoring, which would actually affect market acceptance. In fact, since 2014, more than 20 countries have attempted to issue CBDCs, but none have achieved true market-level success.

Blockchain technology is essentially ledger technology, and its first application scenario is finance, so stablecoins are a natural application of blockchain technology. Currently we only see USD stablecoins developing relatively maturely, while stablecoins of other national currencies haven't yet risen, meaning the growth potential of this track is extremely huge in the future. Now, every country wants to develop stablecoin business. I think every country should have at least several stablecoin products.

**Changpeng Zhao (CZ) on RWA: Triple Challenges of Liquidity, Regulation, and Mechanisms**

Although the RWA (Real World Asset tokenization) track has broad market prospects, its implementation difficulty is far higher than market expectations. Specific challenges can be summarized in the following three aspects:

1. **Liquidity Dilemma**

From a practical perspective, products with stronger financial attributes are relatively easier to tokenize, mainly because traditional financial products inherently have high trading characteristics and relatively mature digital expression. However, tokenization of non-financial assets faces fundamental obstacles. Although theoretically we can 'Tokenize Everything'—all cities, buildings, individuals can issue tokens—practical operations are problematic.

Taking real estate as an example, even Hong Kong's highly volatile property market still has much smaller volatility compared to Bitcoin. Such low-volatility assets, after tokenization, have weak trading characteristics due to small volatility, resulting in insufficient order book depth. This leads to low liquidity, investors won't place many orders, creating a vicious cycle: order books are too shallow, trading volume becomes low. If investors try to move hundreds of millions in funds, it's almost impossible to execute; even if assets go on-chain, liquidity remains insufficient, making them more prone to unexpected volatility and even short-term manipulation.

2. **Regulatory Complexity**

Products with financial attributes often involve a core question—are they securities or not? Are they securities, commodities, or something else?

In major countries or financially developed nations, there will be very clear definitions and different regulatory departments; in some smaller countries, there might be one regulatory department managing everything. If different regulatory departments are involved, compliance terms become quite complex. Companies need to apply for different licenses: futures licenses, spot licenses, digital currency licenses, bank custody licenses, etc. When you have many licenses, business models become quite restricted, and often you can't even run a single business properly.

3. **Product Mechanism Flaws**

In my view, US securities tokenization is currently not viable at the product level. The stock tokenization products we see now, like xStocks, don't have their token prices pegged to real stock prices, which is unreasonable. Theoretically, if there's a price difference between the two, investors could profit through arbitrage. But the reality is that this price difference persists—indicating the product mechanism itself doesn't work.

In other words, in the current stock tokenization track, there's no real linkage between tokens and stocks, so the entire model isn't viable at the product level. Although the US is trying various tokenization methods, it hasn't yet found a truly feasible solution.

Despite these challenges, there are currently viable RWA models—stablecoins. Stablecoins' underlying assets are mainly traditional financial instruments like US Treasury bonds, and this model's success validates the feasibility of financial asset tokenization.

The USD has already achieved on-chain presence through stablecoins. In the current blockchain ecosystem, almost all assets are priced in USD, with EUR and RMB basically absent in this field. As the world's largest stock market, the US attracting global investors to buy US stocks through blockchain technology would be extremely beneficial for its economic development. If US stocks can also successfully go on-chain, it will further consolidate America's dominant position in global financial markets.

From a rational perspective, the US should actively support this development direction; other countries that don't participate in this transformation may also face the risk of marginalization. For example, the Hong Kong Stock Exchange, as an important exchange with global influence, if it's absent in this round of transformation, its influence might gradually weaken. The Shanghai Stock Exchange and other Asian exchanges face the same strategic choice.

Economically speaking, this is 100% something that should be done—not doing it will lead to elimination. Just as if China didn't have Alibaba, the e-commerce market might be completely dominated by Amazon, absence in fintech will similarly bring profound economic impacts.

Although there are regulatory challenges, this trend has extremely profound economic impacts, and all countries should seriously consider relevant positioning. With Asian wisdom and innovation capabilities, these problems will eventually be solved, and one of the keys lies in timing.

For commercial institutions and entrepreneurs, precise rhythm control is needed during market window periods: entering too early may face survival pressure, while entering too late may miss opportunities.

The current moment is precisely a rare golden window period. US policy shows unprecedented support for virtual currencies, which will inevitably push other countries hoping to develop their economies to take corresponding actions. Hong Kong, as Asia's long-standing financial center, combined with the Hong Kong government's supportive attitude, such historical opportunities are rare. Therefore, everyone should fully seize this strategic opportunity period.

**Exchange Transformation: Decentralization Will Inevitably Surpass Centralization, How Can Hong Kong Seize Opportunities?**

**The Essence and Future Vision of Exchanges**

I believe exchanges should not limit tradable assets—all assets should be able to freely circulate on the same platform.

All assets after going on-chain are just tokens, whether crypto-native assets or Real World Assets (RWA), from an exchange's technical perspective there's no substantial difference. Adding a new asset category usually doesn't require complex development—just support on existing chains.

Currently most RWA projects don't need independent blockchains, but rather issue tokens based on public chains like Ethereum, BNB, or Solana, so support difficulty at wallet and exchange levels is extremely low. The real difference lies in compliance: which regulatory agency you need to apply for licenses from, and whether you can get approval. Once licensing issues are resolved, there are almost no technical barriers.

In the long term, future exchanges should achieve unified trading of all types of global assets, whether it's a building, a celebrity's future IP revenue rights, or even personal net worth—all should be able to circulate in the same market. This not only maximizes liquidity but also makes price discovery mechanisms more efficient.

Of course, RWA also has some unique challenges. For example, when you tokenize a building, if you later want to sell the building, you might only be able to sell part of it. Because once you've issued tokens, if there are investors holding just one unit of the asset and refusing to sell, you can't fully buy back the entire building or face enormous costs. This can be understood as the concept of 'on-chain holdouts'.

Although achieving 'global asset on-chain' still needs time, for 90% of countries globally it's not unattainable. Compared to some major countries with extremely complex regulatory systems, many countries are more likely to directly adopt unified international standards, thereby leading the way in global asset on-chain and free circulation.

**Hong Kong's Path to Building a World-Class Exchange**

Regarding how Hong Kong can build a world-class exchange, I can analyze this from a logical perspective. Many countries or regions, during the initial stages of crypto industry regulation, often choose strict controls to reduce risks and ensure safety. Regulatory departments worry about making mistakes, so they typically require all business to be conducted locally: local licenses, local offices, local employees, local compliance departments, local servers, local data storage, local matching engines, local user bases, and completely independent local wallet infrastructure separate from foreign systems.

This thinking is relatively easy to implement in the traditional physical world, such as through safes and physical isolation for control. But in the digital currency industry, this distinction is meaningless. Whether servers are located in Hong Kong, Singapore, or the US, the probability of being hacked is the same, because everything runs online.

More importantly, if operations need to be segmented, just building a secure wallet infrastructure often requires investment at the $1 billion level. And the problem isn't just funding, but talent shortage—it's very difficult to repeatedly recruit hundreds of top global security experts to build this foundational system. The cost of replicating a complete system actually equals the cost of building a first-class international exchange.

From a liquidity perspective, if only local residents are allowed to trade, using Hong Kong as an example with 8 million people, or other small countries with 200,000 to 300,000 active user bases, simply cannot generate sufficient trading volume. Without liquidity, price volatility becomes very severe, which is actually harmful to users.

Real user protection comes from sufficiently deep order pools—when there are orders worth hundreds of millions, prices won't crash through, and when futures prices fluctuate, forced liquidation isn't needed due to sufficient market liquidity. Buying 10 bitcoins on a low-liquidity exchange will have considerable price slippage, and users need to bear higher costs. Therefore, large global exchanges can provide the most basic user protection—reducing users' trading costs.

When countries all try to build independent systems, it inevitably brings complex management challenges, which isn't commercially viable. Meanwhile, many countries have restrictions on tradable assets—for example, Hong Kong currently has many restrictions on listed coins, with limited product coverage. From what I understand, most licensed exchanges in Hong Kong are currently operating at losses. While they can maintain operations short-term, this loss-making model is difficult to sustain long-term.

However, Hong Kong also has its advantages—Hong Kong's improvement speed is very fast. We've seen Hong Kong launch new stablecoin drafts in May, even earlier than the US. The government actively communicates with industry participants, including dialogues with industry insiders like us. Hong Kong may have been relatively conservative in previous years, which is completely understandable. With global situation changes, Hong Kong now appears very proactive.

I think now is a very good starting point. Past restrictions don't mean future limitations will continue—rather, now is an excellent time to explore opportunities. This is why many Web 3.0 practitioners, including myself, choose to explore opportunities in Hong Kong.

**Future Trends of Decentralized Exchanges**

I believe that in the future, decentralized exchanges will definitely be larger than centralized exchanges. Although Binance might be relatively large currently, I don't think it will always maintain the largest position.

Decentralized exchanges currently have no KYC requirements, making them very convenient and fast for users who can use wallets, and they have high transparency—though sometimes overly transparent, where everyone can see others' orders.

From a regulatory perspective, we paid a heavy price because our KYC work at centralized exchanges wasn't good enough. However, the US currently seems to have few regulatory measures for DeFi, which might bring regulatory dividends to DeFi. But due to historical reasons, I personally find it difficult to try this field again.

From a user experience perspective, decentralized exchanges have decent user experience, but require users to understand how to use wallets. Actually, people who have used decentralized exchanges know that user experience isn't ideal. Interfaces are filled with addresses, contracts, and other numbers and 'gibberish', operations often require frequent checking of block explorers, and you need to guard against MEV attacks and various detailed issues. I myself was attacked multiple times while learning.

Therefore, for users just entering Web 3.0 from Web 2.0, most will still choose centralized exchanges, because email plus password login methods and having customer service support feels more familiar. But over time, when some users become familiar with wallets, they might switch to decentralized exchanges. Currently decentralized exchanges' fees are actually more expensive than centralized exchanges, but long-term, with technological progress, decentralized exchange fees should become cheaper.

Now many decentralized exchanges have their own token incentive mechanisms, using token issuance for incentives. But these incentives will disappear eventually, because you can't issue tokens infinitely—infinite token issuance leads to existing token price drops.

Therefore, the current market is still at a relatively early stage, with these token incentives still existing. But long-term, I think 5 to 10 years from now, decentralized exchanges will become very large. I believe 10 to 20 years from now, decentralized exchanges will definitely exceed centralized exchanges in scale—this is the future trend.

Although I won't lead related projects anymore, from an investment perspective, we've invested in many similar projects, though all with small stakes. We now provide support from behind. I think this field's future development potential is still quite large.

**Changpeng Zhao (CZ) on Digital Asset Treasury (DAT) Strategy: A Bridge for Traditional Investors to Enter the Crypto World**

Many people often understand DAT (Digital Asset Treasury) concepts too simply, but in fact this track has many subdivisions. But ultimately, their core logic is to package digital currencies in stock-like formats, allowing traditional stock investors to conveniently participate in investment.

The DAT field has multiple levels and forms, just like traditional companies—various models can coexist. Crypto ETFs are mainly issued in the US, but many investors lack US stock accounts or are unwilling to bear their high trading and management costs.

In comparison, listed companies like MicroStrategy, through directly holding digital currencies, can often achieve asset allocation at lower costs. Meanwhile, their financing methods are more diverse, allowing fundraising in different markets like the US, Hong Kong, and Japan. Differences in funding channels and investor structures of listed companies in different regions also shape their unique market landscapes.

In the listed company model, DAT companies mainly have the following operational modes:

1. **Passive Single Asset Holding Model** Represented by MicroStrategy, focusing on passive holding of Bitcoin as a single asset. This model is relatively simple, with low management and decision costs, allowing consistent adherence to established strategies regardless of Bitcoin price movements.

2. **Active Single Asset Trading Model** While also holding only one type of coin, management strategy is completely different. Such companies attempt to judge rises and falls for active trading, requiring evaluation of managers' trading capabilities. Because it involves subjective judgment factors, results of this model could be positive or negative.

3. **Multi-Asset Portfolio Management Model** More complex DAT companies hold multiple different digital currencies. Managers need to make complex decisions: how much Bitcoin, how much BNB, how much Ethereum to hold, how often to adjust this investment portfolio, when to adjust—all testing managers' capabilities.

4. **Ecosystem Investment Building Model** This is the most complex model. Besides holding coins, they allocate 10%, 20% or more funds for ecosystem investment. For example, companies focused on Ethereum might hope to help Ethereum's entire ecosystem development through investment. This model is more interesting. Projects like BNB supporting other digital asset ecosystems have similar practices, but this places higher demands on management capabilities.

Therefore, DAT isn't just as simple as 'holding coins'—different models correspond to different management costs and requirements.

The DAT companies we currently support tend toward the simplest first form. We prefer companies focusing on single assets, especially BNB, because judgment is easy and doesn't require much daily management participation. In bull markets, listed companies generally benefit, but in bear markets, especially in the US, companies often easily face lawsuits. If strategies are clear and simple enough, litigation risks are relatively lower, and companies' legal costs can be reduced accordingly—after all, lawsuits are extremely expensive.

Our goal is to minimize operational costs while promoting long-term holding concepts. We don't want companies to use funds for additional investments, but hope they can participate more deeply in supporting ecosystem development.

The important significance of the DAT model is that many companies' finance departments, listed companies, even state-owned enterprises and central enterprises can't directly buy digital currencies, but through the DAT model, we can actually let these traditional investors gain digital currency exposure. This group is actually a very large market, much bigger than the crypto circle.

In DAT projects we participate in, we usually only play the role of small supporters. Most funding for these projects comes from traditional stock markets or other channels, providing tremendous help to our ecosystem development, attracting many groups outside the crypto circle to purchase digital currencies.

We generally don't take the lead or manage these companies, but find suitable managers through ecosystem and networks. Listed company management isn't our specialty, but many people in the industry have relevant experience—we prefer to cooperate with them, leveraging synergistic effects.

**AI and Web 3.0 Integration: The Necessary Path from Concept to Reality**

Frankly speaking, the combination of AI and Web 3.0 currently isn't ideal enough. But I believe this trend is definitely not conceptual hype, but a trend that will inevitably see breakthrough development in the future. A few months ago I raised a question: What currency will AI use? The answer obviously isn't USD or traditional payment systems, because AI cannot complete KYC. AI's monetary system must be based on digital currencies and blockchain, completing payments through API calls or broadcasting transactions.

This means blockchain transaction volume will see exponential growth. In the future, each person might own hundreds or thousands of AI agents, completing video production, multilingual translation, content distribution, booking, and message replies in the background. Their frequent interactions will generate massive micro-payments, and crypto finance transaction volume will conservatively grow by thousands of times.

For example, a blogger can set the first 1/3 of articles free, with the latter 2/3 charging only 0.1 yuan per read. If hundreds of thousands pay, they could earn tens of thousands of yuan—this model cannot be achieved under traditional financial systems, but can be easily supported through AI and Web 3.0 integration.

Trading will also be more global. I can simultaneously hire engineers and designers from China, India, and around the world, with AI automatically handling settlement and payments. However, currently most so-called 'AI agents' in the Web 3.0 field still remain at the Memecoin-style pseudo-product stage: front-end displays some novel content, while back-end calls mature large model APIs like ChatGPT, lacking real use value. What we really need are AI tools that can complete actual work and create economic value, and top large model companies are also working hard to explore this direction.

But AI development requires extremely massive funding. Large model computing power competition is extremely fierce, with staggering costs. Reportedly, OpenAI currently has about 1-2 PB of computing power, with each PB costing about $6.5 billion annually, while their expansion plan is 10 to 100 times larger—investment will be astronomical, not including chip expenses. No VC, company, or even country can single-handedly bear such enormous financial pressure, which is why the AI industry has started exploring new financing paths through Web 3.0.

Fundamentally, AI should be viewed as a public good. Currently many large models are too closed. Letting token holders share revenue, making models more open-source, decentralized, and democratized might be a more reasonable development direction. I've also discussed this with several top large model founders. Although everything is still early, this trend will inevitably come.

Although the combination of AI and Web 3.0 isn't yet perfect, its future development prospects still deserve high expectations.

**Extended Reading**

**CZ's Seven Classic Quotes @Hong Kong 2025 Bitcoin Conference** **No Waste, Real Substance**

1. "Everyone sees USDT's global circulation exceeding one trillion, but no one calculates how much cross-border settlement it helped the USD do—conservatively speaking, $100 billion in 'side work'. Hong Kong, backed by mainland China, if it launches Hong Kong dollar stablecoins, can both connect global markets and open doors for RMB cross-border use—this is an advantage other places can't steal."

2. "Some say cutting luxury homes into 10,000 shares on-chain is RWA, but ordinary people buying one share still can't live there—nobody will take over. The real opportunity is in stocks and bonds, assets that are already in computers, moving ledgers to blockchain for fast settlement and low costs. If the Hong Kong Stock Exchange seizes this, it can completely become a 'chain-based NYSE'."

3. "I calculated an account: rebuilding a compliant exchange costs $1 billion just for technology and security, plus digging up 300 top security experts. If Hong Kong lets Binance operate compliantly, it can save these costs while quickly accessing global liquidity—the saved money is enough for everyone to drink morning tea for several years!"

4. "Today everyone's used to registering CEX with email, finding it convenient; but in ten years, wallets will be as common as WeChat, DEX fees will be lower with better privacy—big players are already quietly moving assets to DEX—it's not whether it will change, just a matter of time."

5. "In the future, AIs will trade with each other—AI helps you write reports, another AI helps you make charts, settlement might be just $0.01. Traditional banks find the amount too small to handle, but blockchain can arrive instantly with zero fees. Hong Kong positioning for this now will be the settlement center for the AI economy in the future."

6. "First, don't wait for perfection in regulation before launching—let products run first, fix problems as they arise, being slow will miss opportunities; Second, liquidity must be globalized—don't trap users in small ponds, or you won't retain big funds; Third, don't just focus on current mainstream—DEX, AI+Web3, today's 'fringe areas' might be tomorrow's main lines."

7. "When I left the mainland four years ago, I thought I'd never return to the core stage of the Chinese-speaking world. But standing in Hong Kong today, I clearly know—my previous wandering was just a prelude, the real story is just beginning."