Article Author: 0x9999in1
Source: MetaEra
Recently, the MetaEra Hong Kong section has been launched, leading the series of events for the 'Two-Year Anniversary Celebration of Hong Kong's New Crypto Policy', with an important segment being 'High-End Dialogue: Influential Leaders in Hong Kong Web3.0'. The influential figure interviewed this time is Liu Yu, CEO of Round Dollar Technologies.
Round Dollar Technologies
The Hong Kong Monetary Authority announced the participant list for the stablecoin issuer 'sandbox' on July 18 of this year, effective immediately. The list prominently includes Round Dollar Technologies, which is a blockchain-based digital wallet and stablecoin company, currently with two major businesses: the 'Round Dollar Wallet' supporting fiat payments and the upcoming 'Hong Kong Dollar Stablecoin'. The company recently announced the completion of a $7.8 million Series A1 financing round, during which Round Dollar Technologies received strategic investments from well-known firms including Sequoia China, Hivemind Capital, Aptos Lab, Hash Global, SNZ Capital, Solana Foundation, Anagram, and Upward Capital. Liu Yu Rita, CEO of Round Dollar Technologies, shared the development of the Hong Kong dollar stablecoin in this interview, affirming that compliance and credibility are critical factors, and that Hong Kong's advantages as a global trade, financial, and payment center will be reflected.
Key Insights
● Different types of tokenized currencies may coexist, serving different application scenarios in various fields and pipelines.
● Compliance is a very important point to bring Web3 to the next level.
● Stablecoins will definitely be one of the tracks within the Web3 space that can solve real-world pain points.
● As one of the most important infrastructures and tools in the Web3 industry, the compliance of stablecoins is an inevitable result.
● The Hong Kong dollar stablecoin aims for increment, not to seize existing market share of stablecoins.
● Round Dollar aimed to enter the stablecoin track from the very beginning, playing the role of a promoter and pioneer in the development direction of Hong Kong's stablecoin.
Full Interview
MetaEra: In July of this year, the Hong Kong Monetary Authority announced the list of participants for the stablecoin issuer 'sandbox', which included companies such as JD.com and Round Dollar. This announcement has increased attention on the Hong Kong dollar stablecoin. Can you introduce the development status of the Hong Kong dollar stablecoin?
Liu Yu: Hong Kong is one of the leading regions in the world regarding stablecoin regulation. The Hong Kong government’s Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority jointly published a public consultation document in December 2023, gathering opinions on legislative proposals regarding the regulation of stablecoin activities in Hong Kong. Everyone is quite excited about this. In July of this year, the list of participants for stablecoin issuers' 'sandbox' was announced, and Round Dollar is very pleased and honored to be part of this list.
In fact, the stablecoin regulation has already outlined a clear framework in the aforementioned public consultation document. The next step for the government is to incorporate stablecoin regulation into the legislative process, issue relevant laws and regulations regarding stablecoin regulation, and then issue licenses based on the law. The overall development is gradual and continuously forward.
MetaEra: What are the main businesses currently being developed by Round Dollar Technologies?
Liu Yu: Currently, besides the stablecoin entering the sandbox list, Round Dollar also has a fiat payment license, through which we launched the payment platform 'Round Dollar Wallet'. This business is developing rapidly and can provide fiat accounts and payment services based on SVF for small and medium-sized enterprises from Hong Kong. Therefore, Round Dollar Technologies primarily has these two major businesses.
MetaEra: There are still people who are unclear about the similarities and differences between the digital Hong Kong dollar and the Hong Kong dollar stablecoin. Can Mr. Liu explain this? Also, do you agree with the statement that the digital Hong Kong dollar and the Hong Kong dollar stablecoin have a potential competitive relationship in the short term?
Liu Yu: The fundamental difference is that the digital Hong Kong dollar falls under the category of CBDC (Central Bank Digital Currency), while a fiat stablecoin is also a stablecoin pegged to a certain fiat currency. From this perspective, both are pegged to the Hong Kong dollar, but the former is a digital currency issued by the central bank, while the latter is a type of stablecoin issued by a private company. Globally, there are regulatory policies governing both types of tokenized assets.
Another significant difference is that central bank-issued digital currencies generally are not issued on public chains. In the global context, we may have seen a few trial central bank digital currencies, and they have not been issued on public chains. However, stablecoins issued by private companies, including those already existing in the market, are almost all issued on public chains.
As for why the stablecoins issued by private companies emphasize the importance of regulation? Credibility is very important. First, there must be a 1:1 pegged reserve asset, with real asset reserves backing it. Second, under Hong Kong's stablecoin framework, stablecoins cannot pay interest to users. Third, stablecoin issuers need to periodically disclose asset proof to the public, demonstrating how many stablecoins have been issued and how many actual assets are backing them.
Additionally, you mentioned whether the digital Hong Kong dollar and the Hong Kong dollar stablecoin have a competitive relationship; we do not think so. Currently, when people mention tokenized currencies, there are central bank digital currencies, stablecoins issued by private companies, and tokenized deposits issued by banks. We can categorize these as three types of tokenized currencies that will definitely coexist, as they serve different application scenarios. For example, central bank digital currencies can be applied at the wholesale level, while stablecoins issued by private companies, because they are issued on public chains, can more closely integrate with Web3, digital assets, and related industries, serving scenarios such as cryptocurrency trading or personal transactions/payments between individuals. Therefore, I believe that these different types of currencies may coexist, serving different application scenarios across various fields and pipelines.
MetaEra: Can you share with new industry users what practical problems the emergence of the Hong Kong dollar stablecoin can solve? Is the Hong Kong dollar stablecoin an essential asset?
Liu Yu: Under the stablecoin framework implemented in Hong Kong, a stablecoin does not necessarily equate to a Hong Kong dollar stablecoin, because everyone can see that Hong Kong's stablecoin regulatory framework does not specify the type of currency. However, the first stablecoin issued by Round Dollar Technologies will be a Hong Kong dollar stablecoin.
The stablecoins emerging under Hong Kong's stablecoin regulatory framework have substantial roles. The most important point is compliance. In the context of the global Web3 industry becoming increasingly compliant, stablecoins, as one of the most crucial infrastructures and tools in the Web3 industry, must inevitably achieve compliance. In various countries and regions around the world, the regulation of stablecoins is developing in the direction of compliance. Hong Kong is one of the early regions to begin exploring and implementing this. Only with compliance can we leverage Web3 technologies to solve pain points present in Web2, such as cross-border payments, which is a great example. We often say that the emergence of Bitcoin invented a global peer-to-peer electronic payment system, and the development of blockchain to this day, besides Bitcoin, stablecoins have also played a significant role because they leverage the payment advantages based on blockchain technology.
In traditional cross-border payments, fund settlement requires a system of intermediary banks, potentially necessitating multiple banks to settle, for instance, sending money from Hong Kong to Brazil may involve several intermediaries for settlement. In this process, both information flow and capital flow are fragmented. However, in a blockchain payment system, if I send a stablecoin to the other party, the settlement is already completed without the need for a third-party institution for capital settlement.
Through this example, I want to say that blockchain payments have huge advantages. The atomic settlement and immutable characteristics based on blockchain can solve many pain points of traditional payments and finance. But why has blockchain payment not addressed real-world problems for a long time? I believe a significant obstacle is compliance. When there is no compliance and credibility, it is difficult for many traditional institutions to enter the market, so compliance is a very important point to bring Web3 to the next level.
MetaEra: Currently, dollar stablecoins occupy the vast majority of the market, especially USDT, which dominates. What is the significance of the Hong Kong dollar stablecoin in relation to dollar stablecoins? What market share do you expect the Hong Kong dollar stablecoin to capture?
Liu Yu: To answer this question, the most important word is incremental. What we want to do is increment, not to seize the existing market share of stablecoins. Round Dollar aims to grow this pie larger; only compliance can bring more funds from traditional institutions into the market. If we cannot solve others' pain points, they naturally will not come in. Once these institutions enter, it represents increment.
Stablecoins like USDT have been developed for several years and have an inherent first-mover advantage. Compared to the application scenarios of stablecoins back then and today, they were mainly used as tools for entering and exiting crypto risk assets, and possibly as tools in the DeFi space. However, now they have increasingly extended to payments, including B to B and C to C transactions. Some recent reports indicate that the funds in a large number of addresses do not exceed $100, and stablecoins help many people with cross-border remittances, which are much cheaper and more convenient than traditional cross-border remittance channels.
In summary, as latecomers in the stablecoin space, our main focus is on compliance, and we aim to develop the incremental market for stablecoins.
MetaEra: Regarding the Hong Kong dollar stablecoin, how do the relevant government agencies consider compliance issues and implement related regulatory measures? Are there lessons learned from policies in the United States and other Western countries?
Liu Yu: Currently, various regions around the world are researching stablecoin regulatory policies, but there are not many places that can serve as actual references. The EU's MiCA-compliant euro stablecoin is a relatively complete fiat stablecoin. As one of the pioneers in stablecoin development, I believe Hong Kong-related institutions will engage in exchanges with regulatory counterparts from other countries. Based on this, they will conduct extensive reflections and, considering the characteristics of Hong Kong's financial system, customize a stablecoin regulatory framework.
MetaEra: Web3.0 has been criticized as a financial game lacking practical applications. Do you think stablecoins will quickly enter people's lives? In which application scenarios do you expect the Hong Kong dollar stablecoin to achieve breakthrough growth?
Liu Yu: Stablecoins will definitely be one of the tracks in the Web3 space that can solve real-world pain points, and this is something we at Round Dollar firmly believe. As for which application scenarios can break through, I think each country and region will have different pain points. For example, in the Asia region, especially Hong Kong, I believe the retail scenario benefits greatly from the development of internet finance, providing many tools for us to use. Therefore, stablecoins will focus more on the B to B application scenario. Since Hong Kong itself is a trade center, payment center, and financial center, the retail market is not large, but from the perspective of a global trade center, it is more active in institutional business, where institutions engage in business with global partners. Thus, we believe that based on Hong Kong as a trade center, financial center, and payment center, we can make breakthroughs in scenarios such as cross-border trade and payments.
However, when it comes to payments, people often think it is a relatively simple matter, but the pain points are enormous. We have entered the AI era, but the speed of money circulation may still be stuck in a relatively old era, as cross-border remittances still take several days to complete, and we do not know how much intermediary banks will charge in fees. These experiences are not in line with the development of today's era.
Based on payments, a currently popular term is PayFi, which combines Web3 payments and Web3 finance. Using payments as an entry point, its circulation speed will be accelerated by blockchain payment technology, significantly enhancing efficiency. Thus, we can solve many financial issues, such as whether exporters and importers can borrow or finance more quickly. I believe Web3 payments will further develop from stablecoins into PayFi, addressing some pain points in global cross-border payments and trade.
MetaEra: To better promote the Hong Kong dollar stablecoin, has Round Dollar implemented corresponding risk control measures and established partnerships with which companies?
Liu Yu: Blockchain itself has advantages in risk control, as everything on-chain is public, transparent, and immutable, giving it some advantages in anti-money laundering. However, the vulnerability of blockchain is that it can be easily hacked, so before formally issuing our stablecoin, we are also doing some preparatory work, which is a very important step.
From a business development perspective, our related work has not stopped. As stablecoin issuers, our most important task is to establish an ecosystem. This ecosystem will serve our users in the future, allowing them to conveniently and compliantly acquire the stablecoins we issue in countries and regions where this is possible, which relies on compliant and liquid exchanges and market makers.
The third aspect is that we hope to build financial scenarios, such as DeFi, which is very important.
The fourth aspect is that infrastructure is also very important, specifically which public chain to cooperate with and whether cross-chain capabilities will be developed in the future.
Therefore, we are promoting cooperation in these four areas globally, hoping to create partnerships with global partners under the trend of increased compliance.
MetaEra: From your personal observation, which segments of the many Web3.0 tracks in Hong Kong do you see the most potential? Which tracks can rapidly emerge under Hong Kong's policy environment to become advantageous projects on a global scale?
Liu Yu: First, I am very optimistic about the stablecoin sector, primarily because Hong Kong is a global trade center, payment center, and financial center.
Second, I think RWA (Real World Asset) tokenization is also very interesting because many people perceive participation in Web3 as gambling. However, many real-world projects have tokenization needs, which require a more compliant environment for issuing their own tokens. Currently, we also see various attempts in the market for RWA, including some traditional financial institutions entering the field. If we can create a credible institution in a compliant environment to help projects issue tokens, we can achieve genuine tokenization of real-world assets, which I find very meaningful.
MetaEra: Round Dollar was established in 2021, earlier than Hong Kong's announcement of policies regarding the development of virtual assets. Does this mean the company aimed at the stablecoin track from its inception? What kind of opportunities and challenges exist?
Liu Yu: Round Dollar aimed to enter the stablecoin track from the very beginning, playing the role of a promoter and pioneer in the development direction of Hong Kong's stablecoin. The idea behind Round Dollar was to create a stablecoin pegged to a basket of major Asian currencies, hence the name Round Dollar Technologies. At the time of establishment, the stablecoin regulatory framework was not yet in place, and the policies related to Web3 were also unclear. However, the company was very clear that issuing stablecoins must follow a compliant route and would only proceed under clear regulatory policies.
