AsianFin -- Zhao Changpeng, widely known as CZ, the founder and CEO of Binance, the world’s largest digital asset trading platform, said stablecoins are a natural application of blockchain and that every country should develop multiple stablecoin products.
He made the remarks on Wednesday at the Hong Kong Crypto Finance Forum. In a session marked by both technical depth and strategic vision, CZ outlined five core topics: the evolution of stablecoins and the U.S. dollar’s strategic role, regulatory and liquidity challenges for real-world assets (RWA), the growth potential of decentralized exchanges (DEXs), the Digital Asset Treasury (DAT) model as a bridge for traditional investors to enter crypto, and the transformative potential of AI-Web3 integration for trading models.
Looking ahead, he predicted decentralized exchanges will surpass centralized platforms, and Binance will not retain its top position indefinitely. On AI, CZ argued the technology should be treated as a public good, with token holders sharing profits to make large-scale models more open, decentralized, and widely accessible.
Stablecoins: From Volatility “Safe Havens” to a Tool for Dollar Globalization
Despite modestly downplaying his expertise in stablecoins, CZ emphasized Binance’s pivotal role, noting the platform handles roughly 70% of global stablecoin trading, positioning it as a key distribution channel.
Tracing the evolution of stablecoins, CZ noted that early technical prototypes like “Colored Coins” attempted to bring real-world assets onto the blockchain. USDT, launched by Brock Pierce in 2014, experienced slow growth initially. By 2017, Craig Sellars and the current USDT team had taken over, but its adoption remained limited.
Binance’s founding in 2017 highlighted a market gap: crypto-to-crypto trading existed, but fiat integration was lacking. During market downturns, users often had to withdraw funds to convert to fiat elsewhere, creating friction and uncertainty. To address this, Binance integrated USDT as a “safe haven” for users—a simple decision with immediate practical benefits.
“USDT then entered a period of rapid growth,” CZ said. Initially, adoption surged among exchanges worldwide. A second wave of growth was driven by Asian users who needed access to USD but could not open U.S. bank accounts. Tether quietly remained profitable despite regulatory pressures, demonstrating its resilience and low-profile efficiency.
In 2019, U.S. regulator Paxos approached Binance to issue BUSD. The stablecoin’s market capitalization grew to $23 billion by 2023, with minimal resource investment beyond branding and promotional campaigns. When BUSD was discontinued by the U.S. government in 2023, all user funds were fully returned—a move CZ highlighted as proof of the coin’s compliance, transparency, and security.
“Stablecoins and exchanges have become core profit sectors in crypto finance,” CZ explained. Platforms with compliance licenses can issue tokens against deposited funds, redeemable for fiat on demand. This model offers low entry barriers, high liquidity, and significant long-term profitability.
From a strategic perspective, CZ noted that the U.S. government increasingly recognizes stablecoins as instruments that extend the global influence of the dollar. Approximately $100 billion in USDT is invested in U.S. Treasuries, and nearly all users are overseas. “Stablecoins essentially globalize base currencies,” he said. Countries are taking notice, and global adoption is poised to grow further as governments explore local stablecoin initiatives.
RWA Tokenization: Liquidity, Regulation, and Product Challenges
Tokenizing real-world assets carries enormous potential but faces multiple hurdles. CZ identified three major challenges:
Liquidity Issues: Assets like tokenized real estate often have low volatility, shallow order books, and poor liquidity. Large transactions may fail, creating a cycle of limited trading and heightened risk.
Regulatory Complexity: Different jurisdictions classify products differently, requiring multiple licenses and regulatory approvals. This increases operational difficulty, particularly for cross-border projects.
Product Mechanism Flaws: Many tokenized stocks, such as xStocks in the U.S., fail to track underlying asset prices, creating arbitrage opportunities but reflecting flawed product design.
Despite these obstacles, CZ emphasized that financial-asset tokenization is feasible, pointing to stablecoins as a successful model. He noted that virtually all blockchain assets are USD-denominated, reinforcing U.S. dominance in digital finance. Asian exchanges, including Hong Kong, must strategically participate or risk marginalization in the global market.
“The economic logic is clear—participate now or face obsolescence,” CZ said, drawing an analogy to China’s e-commerce market if Alibaba had not emerged. Regulatory challenges exist, but they are surmountable with innovation and timing, particularly in Asia.
Exchange Evolution: Decentralized Exchanges Poised to Surpass Centralized Platforms
CZ argued that exchanges should allow all assets—crypto-native or RWA—to circulate freely. Token integration is technically straightforward; the real challenge lies in compliance and licensing.
For Hong Kong, CZ highlighted the tension between strict local control and global liquidity needs. Early regulatory frameworks often required local offices, staff, servers, and separate wallets, which is expensive and talent-intensive. Smaller populations also struggle to generate sufficient liquidity, harming users.
“Deep liquidity protects users by minimizing price slippage and reducing forced liquidations,” CZ said. Large, globalized exchanges are better positioned to achieve this.
Looking forward, CZ predicted that DEXs would eventually outgrow centralized exchanges. Currently, DEXs offer convenience for wallet users, high transparency, and no KYC requirements. Fees are higher today but likely to decline over time. Token-based incentives, while prevalent now, are temporary and expected to diminish. Over a 10- to 20-year horizon, DEXs could dominate the market.
While Binance remains large, CZ stressed that centralized dominance is not guaranteed. His firm invests in decentralized projects, typically as minor stakeholders, providing strategic support rather than operational control.
DAT Strategy: Bridging Traditional Investors to Crypto
The Digital Asset Treasury (DAT) model packages crypto assets in a stock-like structure, allowing traditional investors—listed companies, finance departments, and even state-owned enterprises—to participate.
CZ outlined several DAT models:
Passive Single-Asset Holding: Simple, low-management-cost strategies, such as holding BNB.
Active Single-Asset Trading: Requires management to make decisions based on market conditions.
Multi-Asset Portfolio Management: Complex allocations across multiple tokens, demanding sophisticated decision-making.
Ecosystem Investment: Beyond holding tokens, portions of capital are deployed to support broader ecosystem development.
Binance tends to support the simplest single-asset DATs, minimizing management and litigation risks. CZ emphasized that the model allows traditional investors to access digital assets in a compliant, manageable way, opening the market to a far larger group than the crypto-native community.
AI-Web3 Integration: From Concept to Reality
CZ discussed the nascent but inevitable integration of AI and Web 3.0. He noted that AI agents require digital currencies for payments, as they cannot perform KYC under traditional systems. Blockchain microtransactions will scale exponentially as hundreds or thousands of AI agents perform tasks like translation, content creation, and automated services.
“This will create massive microtransactions, increasing crypto transaction volume by conservative estimates of 1,000x,” CZ said. He gave the example of content monetization via micro-payments that are impossible under traditional finance but feasible on blockchain.
AI’s development is extremely capital-intensive. Large models, such as those operated by OpenAI, cost billions per petabyte annually. No single venture capital firm, company, or government can fund such operations alone, prompting exploration of decentralized, token-based funding via Web3.
CZ emphasized the importance of treating AI as a public good. Token holders sharing profits could make AI more open, decentralized, and accessible. While still early, he predicted that AI-Web3 integration would fundamentally change how digital finance operates.
CZ’s remarks painted a clear picture of the emerging digital finance ecosystem:
Stablecoins are no longer just hedging tools—they are instruments of dollar globalization and strategic currency influence.
RWA tokenization faces hurdles, but success is achievable with careful attention to liquidity, compliance, and product design.
Decentralized exchanges are poised to surpass centralized platforms over the next 10–20 years, reshaping trading infrastructure globally.
DAT strategies open crypto exposure to traditional investors, expanding the market far beyond the crypto-native community.
AI-Web3 integration will drive exponential growth in microtransactions and redefine trading and business models in the coming decade.
For Hong Kong, CZ sees a rare “golden window” for strategic participation. The city’s proactive regulatory stance and established financial infrastructure could allow it to lead in global digital finance, provided it navigates liquidity, compliance, and innovation challenges effectively.
“Timing is critical,” CZ said. “Enter too early, and survival is difficult. Enter too late, and opportunities are lost. With the U.S. showing unprecedented support for digital assets, now is the time for Hong Kong and Asia to act decisively.”
