This article is a keynote speech by Xiao Feng, Chairman and CEO of HashKey Group, at the Hong Kong Web3 Carnival on April 6, 2025

The topic this morning was about blockchain, and everyone discussed a lot about Crypto and Token. Today, under such a topic, I would like to re-examine it from the perspective of finance. As a blockchain distributed ledger, how should we understand it? How to establish an analysis framework from a financial perspective?

So, my topic is "Public Chain: A New Generation of Financial Infrastructure".

1. What is financial infrastructure?

When it comes to financial infrastructure, you must first figure out 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 infrastructure of the financial system is more "software" and institutional arrangements. 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 one or the entire market, and technology or hardware is not the main content it needs to consider. The financial system infrastructure designs the entire architecture from the perspective of public interests and from the perspective of financial macro security.

2. What is financial market infrastructure?

The financial system infrastructure has a branch, called financial market infrastructure. The financial market infrastructure is more micro, technological and the operation of the entire financial market. The main components include establishing such a basic framework from transactions, clearing and settlement. Therefore, its main contents include registration and custody, clearing and settlement, trading facilities, transaction reporting database, and credit reporting system. When we discuss the main framework of financial infrastructure, we will find that in fact, distributed ledgers based on blockchain may not improve marginal benefits in these aspects, but rather bring about disruptive development in terms of transactions, clearings, and settlements.

The payment, clearing and settlement we often talk about are actually three different stages of the financial market. Payment means that we go to the store to swipe our card, and this behavior is called payment. After you swipe your card, after a clearing system, you will first notify my account opening bank and check on my bank account if I have this money. If there is any, I will detain the money. This is called settlement. The third step is liquidation. The liquidation is that maybe the bank account of this shop is another bank, so I need to transfer my money to that bank and transfer it to the merchant’s account. After the funds are transferred, the settlement process is completed. Financial market infrastructure mainly focuses on this aspect.

3. New financial infrastructure

A new possibility has emerged, namely the possibility of new financial infrastructure brought by blockchain. What are the essential differences between new financial infrastructure and traditional financial facilities?

First, the accounting methods are different. Distributed accounting and duplex accounting are two different accounting methods.

Secondly, accounting accounts are different. Traditional finance relies on bank accounts to record all our economic activities, but in the new financial infrastructure, there is no bank account, but more of a digital wallet, so it is collectively called an encrypted account. Third, the account units are different. The account units in traditional financial infrastructure are fiat currency. Whether it is the RMB, the euro, or the US dollar, these are all sovereign currencies, all fiat currency. In the new financial infrastructure, the account unit is a cryptocurrency, or at least you have to tokenize fiat currencies, such as USDT, USDC, otherwise you will not be able to act as an account unit in the new financial infrastructure.

4. New financial market infrastructure

As a new financial market infrastructure, the ledger that relies on is blockchain, which is an open and transparent global public ledger. The assets registered on the blockchain mean that you have gained globality and established global liquidity. Now we are facing a contradiction, for example, RWA is the issuance of securities, and any issuance of securities is subject to the jurisdiction of a certain regional judicial system. For example, things approved by the SEC in the United States may not be accepted as investment tools in the open market in Hong Kong, and securities-type tokens of a certain RWA approved in Hong Kong may not be accepted by the local regulatory authorities in Tokyo.

However, RWA is registered on the global public account books, custody, transaction, and exchange, and there is no administrative division that can limit it. When it circulates into the secondary market, it has exceeded a specific administrative district. So far, no good way to resolve cross-regional contradictions has been found, but there is no problem with global liquidity for any RWA.

Secondly, many intermediaries have disappeared in the new financial market infrastructure. Third, the clearing and settlement model has changed. All clearing and settlements are net settlement. There will be countless transactions in the two banks in a day, and in the end, according to the net amount, ICBC needs to give 10 billion to CCB, and CCB needs to give 12 billion to ICBC, and in the end, there will only be 2 billion to move from this bank to another bank. This is called purityDeposit. But in Blockchain, in the new financial market infrastructure, the transaction is paid one by one, and the goods are paid two times. Each transaction is completed by payment, settlement and liquidation, and it is completed in one transaction.

5. A new generation of currency creation system

Because you make money programmable through smart contracts on the blockchain, yesterday's news was that the US Securities Regulatory Commission said that the issuance of stablecoins with the US dollar as a reserve asset does not belong to securities. Yesterday there were a lot of discussions in the industry, not securities. You can make many ideas, and it will have certain benefits. But I think the biggest advantage is that when the issuance of stablecoins does not belong to securities, it means that the subjects that can participate in the issuance of stablecoins are no longer limited to licensed institutions or licensed financial institutions, because it is not a securities but a virtual commodity, so the scope of institutions that can issue virtual commodities has been expanded a lot.

After expanding a lot, you actually let unlicensed and unregulated institutions participate in the process of currency creation, because stablecoins can basically be regarded as the M2 link in currency creation. Currency creation is equalized. In the past, only banks and financial institutions could participate in the process of currency creation. Money funds are actually in M2. Now stablecoins are projects in M2, but they are said to be not a securities company. Many institutions may participate in the process of currency creation. This is also a new change brought about by blockchain technology.

6. The new generation of payment and settlement system

Next, let’s quickly summarize what are its characteristics as a new financial infrastructure and a new financial market infrastructure?

Based on such a new financial market infrastructure, a new generation of payment and settlement system has been built. The payment tool is stablecoins, or the future CBDC of the central bank, and it is a point-to-point, second-level payment and settlement system, and zero-cost payment and settlement system. President Trump of the United States specifically demanded that the US dollar stablecoin bill must be passed before Congress recession in August this year. This is actually much more important than the United States’ discussion about the establishment of Bitcoin reserves and is much more important to the United States, because it can ensure that in Web3, digital economy, Web3 world, and Crypto world, ensuring that the US dollar still becomes the main settlement tool. This is the core interest of the United States and that the US dollar must ensure the global hegemony of the US dollar.

So we see a process. After the end of World War II, the US dollar was first endorsed by gold. When gold began to decouple the US dollar, then there was oil dollar as a commodity settlement currency. Now it is really going to the third step. In the virtual world, in the meta-universe world, they continue to work hard to ensure the status of the US dollar in the payment settlement mainstream currency, from the gold dollar, petrodollar, to tokenized USD.

7. A new generation of asset issuance system is actually building a new generation of asset issuance system based on such a new financial market infrastructure. All tokens are divided into five categories: payment tokens, such as stablecoins; reserve tokens, Bitcoin; functional tokens, such as ETH; securities tokens, RWA, and tokenized money market funds. There is another category that I may not be sure of being appropriate for this classification. Later, I saw that A16Z classified all tokens, and we all listed MiniCoin as a category, which also has its reasons, not that it is completely unreasonable. These five types of tokens must be issued based on blockchain and based on new financial market infrastructure. So if we look at the past 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 might not have happened." This is the result of a lifelong research by a Nobel Prize winner in Economics.

We do see that any industrial revolution is accompanied by a new financing revolution. At that time, the British Industrial Revolution mainly relied on bank credit support. But the reason why the Second Industrial Revolution happened in the United States was because of the U.S. stock market, from credit capital to stock capital. The third industrial revolution in the United States is called the information revolution. The reason why the information revolution was born is closely related to the VC risk capital in Silicon Valley. You can also say that without venture capital such as VC, there would not be Silicon Valley, and therefore there would not be the current technological revolution in the United States.

Now it has entered the Fourth Industrial Revolution, the Fourth Industrial Revolution is called digitalization/intelligence. Doesn’t 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 most core financial innovation to support the Fourth Industrial Revolution, which is a change in the capital market.

8. A new generation of financial market system

In fact, a 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 depend on? Relying on increasing leverage and maximizing leverage to increase investment returns; but DeFi is not, DeFi is a loan of excess assets. If you borrow on DeFi, it must be an excess mortgage., after over-collateralization, DeFi can provide 8%, 10% or even 15% returns. How did it come about? The returns of DeFi come from improving the efficiency of capital turnover. We know how long does it take from the fastest loan based on DeFi to complete? It only takes one second or three seconds. The so-called "Flash Loan" on blockchain is an extreme situation. It does not mean that everything is a flash loan, but it is only possible to complete a loan on the blockchain within a few seconds. If a loan can be completed within 10 seconds and the principal and interest are recovered, how many times will your capital turnover be over in a year? Relying on the increase in capital turnover frequency, low-risk returns are obtained without changing the risk attributes or reducing the risk attributes.

9. New generation asset trading system

In fact, based on blockchain technology, we are building a new generation asset trading system. There are two stock exchanges in the United States, one is the New York Stock Exchange and the other is the Nasdaq. They have all announced that they will establish a 5×23-hour trading system, but they cannot currently trade 7×24-hour. I believe this is the future reform trend of the stock market, and I also believe that the Hong Kong Stock Exchange and Mainland Exchange may also change to a trading system similar to 5×23 hours a day.

But the Crypto market and Token are traded 7×24 hours from the first day of their birth, so it is a new trading system. Moreover, there are two new trading systems, one is called a centralized exchange and the other is called a decentralized exchange. A centralized exchange takes digital native assets off-chain and trades on a centralized exchange off-chain. At the same time, Trump’s Meme coins now fully prove that from the issuance of assets to transactions, it can be completed completely 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 settlement system built on blockchain is also a new wealth distribution system. It is possible that AI will independently create commercial value based on human command and operation. So, how should the created value be distributed? AI itself does not require drinking or eating Cantonese cuisine, so the wealth it creates must be distributed to others for use. This distribution method is the so-called UBI (basic income) studied by the economics community twenty years ago, which distributed the huge wealth created by AGI (general artificial intelligence) through UBI.

So we see that two representative figures in the United States are Sam Altman and Elon Musk. Both of them are leftHand AI, right hand Crypto. SamAltman even has his own blockchain network, his own world ID card, and also issues his own Worldcoin. This system will be used in the future to distribute the huge wealth created by AGI.

11. A new generation of business governance system

Based on blockchain technology, we can establish a new business governance system. We know that blockchain is first and foremost open source, and at the same time it requires permissionlessness. Anyone using Ethereum, or you want to deploy an application with Ethereum, you don't need anyone's consent or approval. From a commercial application perspective, the blockchain system is a "plug and play" system. At the same time, based on the characteristics of blockchain itself, it can allow strangers around the world to collaborate effectively on a large scale, which is also an innovation for commercial organizations.

Based on an open and transparent ledger, its information disclosure is very different from that of listed companies. From a theoretical and technical perspective, blockchain-based commercial applications disclose information according to blocks. When the data of any block is packaged, the information is actually on the chain and cannot be tampered with, and can be traced, and anyone around the world can view this data on the blockchain.

That's all for my sharing, thank you everyone!