Source: Forkast

Translation: hiiro, SevenUpDAO

The regulatory conflicts and confusion in the digital asset industry in the United States have prompted policymakers and Web3 developers in other parts of the world to take notice of an emerging opportunity. Particularly in Asia, governments in some jurisdictions (especially Hong Kong, Singapore, and Japan) are establishing new regulatory frameworks to attract investment and job opportunities in these emerging industries, while the United States is distracted by debates and lawsuits over the definition of cryptocurrency.

Yam Ki Chan, Circle's Vice President of Strategy and Policy, the issuer of the world's second-largest stablecoin USDC based in Boston, said it is premature to declare the death of the U.S. digital asset market. However, he added that Asia's ongoing transition from Web2 consumers to Web3 creators presents an opportunity for the region to play a key role in the development of the global digital asset industry.

Chan spoke with Will Fee from Forkast at the WebX conference held in Tokyo on July 25-26.

Will Fee: You joined Circle in April this year from Google in Hong Kong, where you previously served as the Asia Economic Policy Lead in the Obama administration. What has the transition into the digital asset industry been like for you?

Yam Ki Chan: I've learned a lot. It's a very dynamic industry, as you can see at WebX. As I've seen in all the various conferences I've attended since joining, the whole community is very excited. It's still a very nascent industry, and I think a lot of it relies on collaboration within the ecosystem. We all want to see the ecosystem function. We all want to see it thrive. And we're all working towards improving transparency, consumer protection, and overall stability in the industry.

Fee: Circle's VP of Global Policy, Corey Then, previously stated in an interview that regulatory scrutiny in the United States will have a long-term positive impact on the development of the digital asset industry. Do you agree with this perspective?

Chan: Absolutely. Prior to all of this, I was a skeptic of cryptocurrency. I come from a traditional finance (TradFi) background. My first job out of college was at an investment bank in Silicon Valley. A tech-focused investment bank, but still an investment bank. Then I worked at hedge funds, microfinance institutions, and the U.S. Treasury. So, very traditional finance. There are a lot of valid skeptics outside the cryptocurrency industry who genuinely want to know and question—what can this thing do? And the industry hasn't helped itself, with a lot of bad actors from various participants in the past 12-18 months.

Now, the industry is clearing out bad actors, and policymakers are coming in and setting some clearer rules on how they want to see this industry operate. I think in the past, policymakers were hesitant because they weren't sure if this would become a reality or just a fad. We have now seen several cycles in the cryptocurrency industry, and with each turn, its state of equilibrium grows a little. We have also seen traditional financial companies seriously exploring this space, such as Citadel Securities backing a decentralized exchange and BlackRock applying for a bitcoin exchange-traded fund.

So, we are seeing a turning point where bad actors are being removed, and traditional financial institutions are starting to have products that you can see and touch in this space. And then, the final piece of the puzzle that we believe we will soon see is the transition from the speculative stage of digital assets to the utility stage, and legislation and policies will only help facilitate this transition.

Fee: When you joined Circle, you were quoted as believing in the company's role as a stablecoin issuer and Web3 developer to enhance global economic prosperity. You are now based in Singapore. How do you see this mission impacting the broader Asian region?

Chan: We are now seeing stablecoins being used for payments, which is very interesting, particularly as it is highly relevant for Asia. The trade-to-GDP ratio in Asian economies is higher than that in the United States or Europe (when you exclude intra-European trade), as it is a currency system. Therefore, Asian companies are actually paying a higher proportion of their income in terms of costs.

This not only affects their costs but also their settlement time. In Asia, there are many companies operating within different countries in the region. You might be a company based in Osaka, while your customers are located in Taipei or Seoul, so you accept New Taiwan Dollars or Korean Won. Then your suppliers and manufacturers might be in Vietnam or Thailand, and they are paid in Vietnamese Dong or Thai Baht. All of these transactions can be expensive for a regular Asian company. This is not the case if you are producing in Germany and selling to France or producing in Oklahoma and selling to Colorado. So, these costs do have an undue impact on businesses here.

Another aspect is trade financing. The Asian Development Bank estimates that there is a $500 billion trade financing gap in Asia. These companies want to be able to export but are unable to because they cannot find financing. That could be working capital, loans, insurance, or any other type of financing they need to produce their products and move them overseas before receiving payment. So stablecoins can be one way to help bridge part of that gap.

Another aspect is related to cross-border remittances. In Asia, there are many migrant workers. They have to pay high transaction costs, around 5.9% per transaction (average remittance of $200), to send money back to their families. So, we think stablecoins are a digitally native way to help lower transaction costs, reduce settlement time, and make users more secure. This is done not just through being fully backed, transparent, and regulated but also by existing on users' mobile phones, which are now prevalent in Asia and around the world.

You no longer need to bring money to the bank and wait in line, hoping not to be robbed and to deposit the money, hoping that the bank has the ability to make payments so that it can transfer the money to your family on the other side of the world. Now, all I need to do is click a few times to send the money back home. So it's really fun.

Will Fee: Given the regulatory stalemate in the United States, there is a view that Web3 companies may choose to leave the West - particularly the United States - and move to Asian jurisdictions that are more favorable to their activities. Do you believe this? If so, where is the evidence?

Yam Ki Chan: A smart person can believe that two contradictory things are true. So yes, it is happening. No, it is not because ultimately, the US is still a very important and dynamic market. It is a big market, but it lacks regulatory clarity. But it is moving towards that. There is legislation on Capitol Hill now that will provide that clarity. We are very supportive of that.

At the same time, Asian countries are not standing still. They have seen this before. If you take a step back and look at the development of the internet, the development of Web1 and Web2 was primarily driven by US companies and then they expanded their products overseas. Asia was the consumer. So Google created a search engine and put it online. Anyone could use it. It wasn't until the latter part of Web2 that three things came together to make Asia a creator and Asia a creator.

These three things were cheap and powerful smartphones, cheap and accessible broadband (high bandwidth), and the third very important part was the emergence of developers. The region benefited from a generally young population who were internet-native, and they instinctively understood that this was their global opportunity. That prompted them to start building.

There are countless companies in various parts of Asia that have not yet become global companies, but they are certainly regional players and leaders in their respective countries. Interestingly, as we look to Web3, these companies as well as policymakers are saying, wait a minute, we have an opportunity to outpace other regions and truly be ahead here. The question becomes how do we leverage the talent we have, open-source technologies, and the growing market size that we have to truly build our own so that we are not just consumers, but creators and technology owners?

I think Asian countries have been leading efforts to establish new industry rules due to this mindset. More coordination will be needed. But they are ready. They want to be ready to go there, especially once there is greater clarity in the US. But even without that, they will do their best to support industry growth.