On April 6, the 2025 Hong Kong Web3 Carnival officially opened in Hong Kong. Xiao Feng, Chairman of Wanxiang Blockchain and Chairman and CEO of HashKey Group, delivered an opening speech entitled Public Chain: A New Generation of Financial Infrastructure. Xiao Feng said: As a new financial infrastructure, the public chain can programmable transaction settlement through smart contracts, change the currency creation process, and realize a decentralized and open and transparent mechanism. In the future, a new generation of programmable currency payment and settlement systems can be built through stablecoins, CBDCs and other media. The new capital market and financing model created by the issuance of new assets can achieve value co-creation.
The following is the full text of the speech:
Thank you very much for coming to the event so early. I know that the preparations for the event last night lasted until two or three oclock in the morning, and today you all got up so early again, which is really hard work.
The topic this morning is about blockchain, and everyone discussed Crypto and Token a lot. Under this topic today, I would like to re-examine it from a financial perspective. As a blockchain distributed ledger, how should we understand it? How to establish an analytical framework from a financial perspective?
So, my topic is Public Chain: The New Generation of Financial Infrastructure.
(1) What is financial infrastructure?
When it comes to financial infrastructure, we must first understand what financial infrastructure is. Financial infrastructure can be divided into two parts: the first part is the financial system infrastructure; the second part is the financial market infrastructure.
The financial system infrastructure is more of a software and institutional arrangement. Its main content is composed of laws, accounting standards, regulatory frameworks, and the entire social payment and settlement system. It is mainly an institutional arrangement of a country or the entire market. Technology or hardware is not the main content it needs to consider. The financial system infrastructure is more about designing the entire architecture from the perspective of public interest and financial macro-security.
(2) What is financial market infrastructure?
There is a branch of financial system infrastructure, called financial market infrastructure. Financial market infrastructure is more micro-oriented, technical and the operation of the entire financial market. Its main components include trading, clearing and settlement, and the establishment of such a basic framework. Therefore, its main contents include registration and custody, clearing and settlement, trading facilities, transaction reporting library, and credit reporting system. When we discuss the main framework of financial infrastructure, we will find that the distributed ledger based on blockchain may not improve marginal benefits in these aspects, but bring disruptive development in terms of trading, clearing and settlement.
We often talk about payment, clearing and settlement, which are actually three different stages of the financial market. Payment means that we swipe our cards at a store, and this behavior is called payment. After you swipe your card, it goes through a clearing system, which first notifies my bank to check whether I have the money in my bank account. If I do, the money will be withheld, which is called settlement. The third step is clearing. Clearing means that maybe the bank account of this store is in another bank, so my money needs to be transferred to that bank and transferred to the merchants account. After the funds are transferred, the settlement process is also completed.
Financial market infrastructure mainly focuses on this aspect of work.
(3) New financial infrastructure
Now a new possibility has emerged, that is, the possibility of new financial infrastructure brought by blockchain. What are the essential differences between the new financial infrastructure and traditional financial infrastructure?
First, the accounting methods are different. Distributed accounting and double-entry accounting are two different accounting methods.
Second, the accounting accounts are also different. Traditional finance relies on bank accounts to record all our economic activities, but in the new financial infrastructure, there are no bank accounts, but more digital wallets, so they are collectively called crypto accounts.
Third, the accounting unit is different. The accounting unit in the traditional financial infrastructure is legal tender, whether it is RMB, Euro, or USD, these are all sovereign currencies and legal tender. In the new financial infrastructure, the accounting unit is cryptocurrency, or at least you must tokenize the legal tender, such as USDT and USDC, otherwise you cannot use it as the accounting unit in the new financial infrastructure.
(4) New financial market infrastructure
As the new financial market infrastructure, the ledger it relies on is the blockchain, which is an open and transparent global public ledger. Assets registered on the blockchain mean that you gain globality and establish global liquidity.
Now we are facing a contradiction. For example, RWA is the issuance of securities. The issuance of any securities is subject to the jurisdiction of a certain region. For example, something approved by the SEC in the United States may not be accepted as an investment tool in the public market in Hong Kong. A security token of a certain RWA approved in Hong Kong may not be accepted by local regulatory authorities in Tokyo.
However, RWA is registered on the global public ledger. There is no administrative division to restrict its registration, custody, trading, and exchange. When it circulates into the secondary market, it has already exceeded a specific administrative region. So far, no good way has been found to resolve cross-regional conflicts. However, there is no problem with the global liquidity of any RWA.
Second, many intermediaries have disappeared in the new financial market infrastructure. Third, the clearing and settlement model has changed. All clearing and settlement are net settlement. Two banks will have countless transactions a day, and the net amount will be calculated. ICBC needs to pay CCB 10 billion, and CCB needs to pay ICBC 12 billion. In the end, only 2 billion will be moved from one bank to another. This is called net settlement. But in Blockchain, in the new financial market infrastructure, it is a transaction-by-transaction settlement, and each transaction is completed with payment, settlement, and clearing.
(5) A new generation of money creation system
Because you make the currency programmable through smart contracts on the blockchain, yesterdays news was that the US Securities and Exchange Commission said that the issuance of stablecoins with the US dollar as a reserve asset does not belong to securities. There were many discussions in the industry yesterday. If it does not belong to securities, you can make many assumptions and it will have certain benefits. But I think the biggest benefit is that when the issuance of stablecoins does not belong to securities, it means that the entities that can participate in the issuance of stablecoins are no longer limited to licensed institutions or licensed financial institutions, because it is not a security, but a virtual commodity, so the scope of institutions that can issue virtual commodities has been greatly expanded.
After a lot of expansion, you actually let unlicensed and unregulated institutions participate in the process of money creation, because stablecoins can basically be seen as the M2 link in money creation. Money creation has been equalized. In the past, only banks and financial institutions could participate in the process of money creation. Money funds are actually in M2. Now stablecoins are projects in M2, but they are not securities. Many institutions may participate in the process of money creation. This is also a new change brought about by blockchain technology.
(6) New generation payment and settlement system
Next, let’s quickly summarize what are its characteristics as a new financial infrastructure and new financial market infrastructure?
Based on this new financial market infrastructure, a new generation of payment and settlement systems has been built. The payment tool is stablecoin, or the central banks CBDC in the future, and it is a peer-to-peer, second-level, zero-cost payment and settlement system. President Trump of the United States specifically requested that the bill on the stablecoin of the US dollar must be passed before the Congress adjourns in August this year. This is actually much more important than the US governments discussion of establishing a national reserve of Bitcoin, because it can ensure that the US dollar remains the main settlement tool in Web3, in the digital economy, in the Web3 world, and in the Crypto world. This is the core national interest of the United States, and it is necessary to ensure the global hegemony of the US dollar.
So we see a process. After the end of World War II, there was first the gold-backed dollar. When gold began to decouple from the dollar, there was the petrodollar as a commodity settlement currency. Now we are really moving towards the third step. In the virtual world, in the metaverse world, they continue to work hard to ensure the dollars position as the mainstream currency for payment and settlement, from the gold dollar, petrodollar, to the tokenized dollar.
(7) Next-generation asset issuance system
Based on this new financial market infrastructure, a new generation of asset issuance system is actually being built. All tokens are divided into five categories: payment tokens, such as stablecoins; reserve tokens, Bitcoin; functional tokens, such as ETH; security tokens, RWA, tokenized money market funds. There is another category that I am not sure is appropriate. Later, I saw A16Z classify all tokens. We all listed MiniCoin as a separate category. There is a reason for it, not to say that it is completely unreasonable. These five types of tokens must be issued based on blockchain and new financial market infrastructure. So if we look at the past since the Industrial Revolution, a Nobel Prize winner in economics once said: The Industrial Revolution has to wait for a financial revolution, because without the cooperation of the financial revolution, the Industrial Revolution may not happen. This is the result of a Nobel Prize winner in economics lifelong research.
We have indeed seen that every industrial revolution is accompanied by a revolution in new financing methods. The British Industrial Revolution at that time was mainly supported by bank credit. But the reason why the second industrial revolution occurred in the United States was due to the US stock market, from credit capital to stock capital. The third industrial revolution in the United States is called the information revolution. The birth of the information revolution is inseparable from the VC venture capital in Silicon Valley. You can also say that without venture capital such as VC, there would be no Silicon Valley, and therefore there would be no current technological revolution in the United States.
We have entered the fourth industrial revolution, which is called digitalization/intelligence. Doesnt the fourth industrial revolution need a new financial revolution to match it? To promote the development of the new industrial revolution? What we are seeing now is actually Crypto and crypto finance. Crypto finance will become the core financial innovation supporting the fourth industrial revolution. This is a change in the capital market.
(8) Next-generation financial market system
In fact, the new financial market infrastructure based on blockchain is building a new financial market system. We call traditional finance CeFi (centralized finance) and blockchain-based finance DeFi (decentralized finance).
What does CeFi rely on? It relies on constantly increasing leverage and maximizing leverage to increase investment returns. But DeFi is not like that. DeFi is an over-asset mortgage loan. If you borrow money on DeFi, you must over-collateralize it. After over-collateralization, DeFi can still provide 8%, 10% or even 15% returns. How is it? DeFis returns come from improving the efficiency of capital turnover.
We know how long does it take for the fastest loan based on DeFi to be completed? It only takes one or three seconds. The so-called flash loan on the blockchain is an extreme case. It does not mean that all loans are flash loans, but only on the blockchain can a loan be completed within a few seconds. If a loan can be completed within 10 seconds and the principal and interest can be recovered, how many times will your funds turn over in a year? The increase in the frequency of capital turnover has achieved low-risk returns without changing the risk attributes, or by reducing the risk attributes.
(9) New generation asset trading system
In fact, based on blockchain technology, we are building a new generation of asset trading system. There are two stock exchanges in the United States, one is the New York Stock Exchange and the other is Nasdaq. They have announced that they will establish a 5 × 23-hour trading system, but they cannot achieve 7 × 24-hour trading at present. I believe this is the trend of future stock market reforms, and I also believe that the Hong Kong Stock Exchange and the Mainland Stock Exchange may have to change to a similar 5 × 23-hour trading system one day.
But the Crypto market and Token have been traded 24/7 since the first day of their birth, so it is a new trading system. Moreover, there are two new trading systems, one is called centralized exchange and the other is called decentralized exchange. Centralized exchange is to take digital native assets off-chain and trade them on centralized exchanges off-chain. At the same time, Trumps Meme coin now fully proves that the issuance of assets to transactions can be completed in a closed loop on the chain, which is the so-called Onchain, which fully proves that such a business model is feasible.
(10) A new generation of wealth distribution system
The new payment and settlement system built on blockchain is also a new wealth distribution system. It is possible that AI will create commercial value independently of human command and operation. So, how should the created value be distributed? AI itself does not need to drink alcohol or eat Cantonese food, so the wealth it creates must be distributed to others for use. This distribution method is the so-called UBI (National Basic Income) studied by the economics community 20 years ago, which distributes the huge wealth created by AGI (General Artificial Intelligence) through UBI.
So we see that the two representative figures in the United States are Sam Altman and Elon Musk. Both of them have AI in their left hand and Crypto in their right hand. Sam Altman even has his own blockchain network, his own world ID card, and has issued his own Worldcoin. This system will be used to distribute the huge wealth created by AGI in the future.
(11) Next-generation business governance system
Based on blockchain technology, we can build a new business governance system. We know that blockchain is open source and permissionless. Anyone who uses Ethereum or wants to deploy an application with Ethereum does not need to get anyones consent or approval. From the perspective of business applications, the blockchain system is a plug and play system. At the same time, based on the characteristics of the blockchain itself, it allows strangers around the world to collaborate effectively on a large scale, which is also an innovation for business organizations.
Based on an open and transparent ledger, its information disclosure is very different from that of listed companies. In theory and technology, business applications based on blockchain disclose information in blocks. When the data of any block is packaged, the information is actually on the chain and cannot be tampered with, it can be tracked, and anyone in the world can view this data on the blockchain.
That’s all for my sharing, thank you everyone!
