On October 23rd, the 11th Global Blockchain Summit, hosted by Wanxiang Blockchain Lab, concluded successfully. At the summit, Xiao Feng, Vice Chairman and Executive Director of Wanxiang Holdings, Chairman of Wanxiang Blockchain, and Chairman and CEO of HashKey Group, delivered the closing speech, "Blockchain: New Financial Infrastructure." The following is a compilation of transcripts from the event, with minor edits and omissions.

What I will share today is "Blockchain: New Financial Infrastructure". I would like to summarize how the blockchain distributed ledger has evolved step by step since the birth of the Bitcoin blockchain in 2009 and has become the infrastructure that will reshape the financial market.

To understand this evolution, we might want to start with the Bitcoin white paper. In 2009, the Bitcoin blockchain white paper, "Bitcoin: A Peer-to-Peer Electronic Cash System," was released. Satoshi Nakamoto's goal wasn't simply to create a system for sending digital currency, but rather a new payment, clearing, and settlement system.

We know that cash, from the perspective of payment, clearing, and settlement, has the following characteristics: first, it is point-to-point: Cash payments are made between parties A and B. Furthermore, cash payments are settled simultaneously, with no intermediaries or clearing processes. Cash payments are "settled simultaneously," with transactions being exchanged simultaneously—you pay, someone delivers, and the goods and the money are exchanged.

However, cash payments have their disadvantages: they cannot be used for remote payments and are not convenient for large-value payments. The electronic cash system created by Satoshi Nakamoto retains the advantages of cash, such as "payment is settlement, transaction by transaction," while overcoming the disadvantages of cash payments. Therefore, Bitcoin not only enables remote payments, but also supports large-value payments.

In addition to Bitcoin, Satoshi Nakamoto also created a new payment and clearing system. Given the shortcomings of cash payments, electronic money emerged, and its payment, clearing, and settlement became more complex. To ensure the consistency, integrity, accuracy, and finality of payments over long distances, intermediaries were required, leading to the development of central registration, central depository, central counterparty transactions, and central clearing.

Under the existing bank account system, we first swipe our card (payment). After swiping the card, the Point-of-Sale (POS) machine contacts the bank to confirm the account's existence and debits the funds. This is called clearing. Finally, the funds are transferred from our account to the merchant's account. This is called settlement. Payment, clearing, and settlement are three separate steps, making them significantly more complex than cash payments. This is essential to ensuring the finality, consistency, and accuracy of payments as we achieve paperless currency.

The evolution of the US financial infrastructure reveals a constant state of evolution. Prior to the 1960s, the US was still in the era of physical/paper stocks. As trading volume continued to grow, clearing and settlement challenges gradually emerged. In the 1970s, the US stock market experienced a "paperwork crisis": As trading volume continued to soar, clearing could not keep pace. After trading, it was common to see vehicles shuttling back and forth on Wall Street, moving stock certificates from Morgan Stanley to Goldman Sachs and then from Goldman Sachs to JPMorgan. This was because different clients had purchased stocks from other brokerage clients, and physical stock certificates had to be physically transported to complete settlement. Severe clearing delays subsequently led to the New York Stock Exchange frequently closing on Fridays. Why? Because the market needed to close for a full week of stock settlement.

The industry then decided to establish a central depository company to centralize all stocks under one roof. Although the physical stocks still needed to be moved, they were simply transferred between different rooms, greatly improving settlement efficiency.

Later, the central registration, central depository, and central clearing systems emerged, and DTCC (Central Depository/Central Clearing Corporation) was established in 1999. This was able to meet the trading volume needs of the U.S. stock market and achieve 100% clearing and settlement on the same day.

Starting in 2025, the United States began rebuilding a new payment and settlement system based on distributed ledgers. This peer-to-peer model features fewer links, greater efficiency, and lower costs. Essentially, it is built on blockchain technology. Essentially, blockchain is a new type of financial infrastructure, and financial infrastructure is defined as a comprehensive set of institutional arrangements for transactions, clearing, and settlement.

What is the difference between the old and new financial infrastructure?

The old system—the financial infrastructure we currently operate—uses a central registration, central depository, central counterparty, and central clearing model. The new financial infrastructure, based on blockchain-based distributed ledgers, enables peer-to-peer payment and settlement, as well as transaction and settlement. This is why all digital asset exchanges around the world can easily offer 24/7 trading, while stock exchanges cannot.

Why? Because their settlement models differ: the old system uses a "netting" model, while the new blockchain financial infrastructure adopts a "transaction-by-transaction" model. Therefore, there's no need to stop at a specific point in time to settle previous accounts, nor is there a need for netting before settlement. This is a key difference between the old and new systems.

As we all know, the US capital market is engaged in a fierce competition over tokenized stock trading methods. Coinbase has submitted a comprehensive tokenized stock trading proposal to the US Securities and Exchange Commission. This proposal eliminates traditional central registration, central depository, central trading, and central settlement processes. If Coinbase's proposal were adopted, half of Wall Street would be out of work.

Wall Street, of course, is unwilling to accept this reality. A month ago, Nasdaq and other Wall Street institutions submitted a proposed framework for tokenized stock trading to the SEC, retaining the DTCC I mentioned earlier. Currently, the DTCC only clears stocks, bonds, and funds, but according to Nasdaq's proposal, the DTCC will also assume token clearing responsibilities in the future. This means that Nasdaq's plan preserves the jobs of most Wall Street institutions.

The SEC now faces this dilemma. It is expected to make a ruling in the first half of next year on which approach to adopt for allowing businesses to trade tokenized stocks. This could be Coinbase's approach, Nasdaq's, or they could allow a simultaneous pilot of both approaches, or even merge the two into a compromise.

The core differences between these two financial infrastructures are mainly reflected in several aspects:

1. Settlement mechanism. The old system required multiple levels of intermediaries to complete settlement. The new system achieves settlement at the same time as transaction and payment.

2. Architectural Essentials: The old system required centralized registration and depository institutions, while the new system completes registration on a distributed ledger, eliminating the need for registration, depository, and settlement institutions.

3. Trust mechanism. Traditional financial infrastructure requires strong centralized institutions for trust endorsement, while distributed ledgers rely on consensus algorithms and cryptography to establish trust mechanisms.

4. Risk characteristics. Centralized institutions are prone to single points of failure. Decentralized institutions significantly reduce this risk, but they also bring new challenges such as smart contract risks and digital wallet risks.

5. Service coverage. Traditional financial institutions are constrained and restricted by jurisdictions or centralized systems, while distributed ledgers are virtually cross-temporal, cross-regional, cross-spatial, cross-subject, and cross-institutional. This is the core difference between the two.

From this perspective, all of Trump's actions since taking office reveal a fundamental shift beneath the complexities: replacing the infrastructure of the US financial markets. From congressional legislation, to the president's 166-page statement on ensuring US leadership in digital financial technology, to the SEC chairman's repeated statements that the SEC will establish innovation exemptions, safe harbors, and whitelists for all crypto innovations, all of this demonstrates that this isn't just the president's actions alone, but rather a coordinated effort by the US legislature, executive branch, industry law enforcement, and regulatory agencies to move US financial markets from off-chain to on-chain, enabling the US financial system to move on-chain. This is precisely what the SEC's speech conveyed: replacing financial infrastructure. Perhaps in five or ten years, buying US stocks will no longer mean buying stocks, but rather buying equity tokens of specific US companies—a very real possibility.

The Chairman of the U.S. Securities and Exchange Commission has cited the example of "technology transforming industries" in numerous speeches. He explained that over the past few decades, the medium used to record audio has undergone three iterations: the first being the vinyl record, which evolved into magnetic tape in the mid-20th century, and then into digital media in the 21st century, allowing everyone to store audio on their phone. He also noted that these three iterations of audio recording technology have completely reshaped the global music industry, and that distributed ledgers will similarly reshape the U.S. financial system.

This is a brilliant example. He also said, "If it can be tokenized, it will be tokenized": Everything that can be tokenized will eventually be tokenized. This statement is the origin of the saying "everything on the blockchain, everything tokenizable, everything tradable," and also the basis for Coinbase's goal of building a Super App.

The above are the views expressed by the U.S. Securities and Exchange Commission in several speeches. I have sorted them out to prove that what the United States is doing is to reconstruct the entire financial infrastructure.

What will this reconstruction bring? It will lead to a shift from "digital native" to "digital twin." Before this reconstruction, Satoshi Nakamoto invented the blockchain, and Ethereum strengthened, optimized, and enriched the blockchain and distributed ledger. We created digital natives like Bitcoin and Ethereum from scratch on distributed ledgers. These digital natives have been running for 15 years now, and we can think of them as a massive social engineering experiment that has proven the value of blockchain distributed ledgers, digital wallets, and smart contracts. Traditional finance, or digital twins, have inherited the fruits of this experiment and are beginning to move the entire financial market system onto the blockchain, onto a new financial infrastructure with fewer links, greater efficiency, and lower costs.

We know that JPMorgan has its own JP Coin and has established eight core nodes around the world. Imagine making a cross-border remittance within the JPMorgan ecosystem, for example, from New York to Hong Kong. Using the traditional bank account system, SWIFT, correspondent banks, and accepting banks, the final arrival time could be over a day. If the remittance is from Africa, it could even take over a week, and there's a 3% fee. However, a remittance from JPMorgan New York to a JPMorgan account in Hong Kong takes only two minutes. This is because the remittance is tokenized upon initiation and then converted into US dollar fiat currency upon arrival in Hong Kong. This is a new financial market infrastructure, and a digital twin.

Digital twins will begin in 2024, and RWA is also a digital twin . In fact, the United States is working on two aspects:

1. Tokenization of funds. There are three modes of currency tokenization and fund tokenization:

1. Stablecoins. Stablecoins are essentially tokenized funds or currencies.

2. Deposit tokenization, exemplified by JPMorgan. Last year, HSBC launched a pilot program for deposit tokenization in Hong Kong. The Hong Kong Monetary Authority also established a regulatory sandbox specifically for bank deposit tokenization, with various institutions also conducting trials. Deposit tokenization is also the tokenization of funds or currency.

3. Central Bank Digital Currency. The digital RMB also tokenizes currency and funds. Whether it's a central bank digital currency, tokenized deposits, or a stablecoin, the ultimate goal is to tokenize currency/funds. The tokenization of funds/currency is the ultimate goal and an irreversible trend. As for which model will ultimately capture the largest market share, it's unclear at this point and difficult to judge.

Second, asset tokenization. Since 2024, institutions such as BlackRock, Fidelity, and Franklin Templeton have been tokenizing various types of their funds, including money market funds, US dollar bond funds, and equity funds. Once asset tokenization reaches a critical mass, an on-chain financial market system based on new financial infrastructure will be essentially complete. Over the next three to five years, we are likely to see the gradual formation and closed-loop nature of this on-chain financial market system.

As an emerging financial market infrastructure, blockchain is gradually replacing the original traditional financial infrastructure.

So, what are the benefits of currency tokenization? Looking at the history of currency development, the credit attributes of currency can basically be summarized into three types:

Natural currency. Before legal tender emerged, the credit backing of materials like shells, gold, silver, and copper coins stemmed from their natural properties. These materials were nurtured by nature, and humans refined and processed them, imbuing them with the properties of money, thus declaring them natural currencies.

Legal tender. Since the Treaty of Westphalia in 1774, sovereign states have emerged and have enacted laws to designate certain currencies as their legal tender or sovereign currencies, such as the US dollar and the Chinese yuan. The credit of these currencies can be considered legal tender, thus categorized as legal tender.

Bitcoin is a currency powered by a suite of digital technologies. These technologies, including distributed ledgers, digital wallets, cryptography, and consensus algorithms, have enabled it to become a form of currency increasingly recognized by the public. We call this type of technology-enabled currency a "technical currency."

The credit attributes of currency are nothing more than these three.

Tokenized currency is the only currency in human monetary history that has dual attributes.

Before becoming a token, a tokenized currency is itself a form of legal tender, possessing legal attributes and legal backing. For example, a USD stablecoin is primarily a US dollar, possessing legal attributes. When it is minted as a stablecoin on the blockchain, it acquires the technical attributes conferred by blockchain, cryptography, consensus algorithms, digital wallets, and other technologies. Therefore, it is a currency with dual attributes. Compared to currencies with only one attribute, dual attributes are technologically more advanced and represent the latest form of monetary development.

Not long ago, Ray Dalio, the retired founder of Bridgewater Associates, said in an interview that he believed that the ultimate currency in the world was gold, and only gold could be called real currency. The legal tender such as the US dollar, British pound, euro, and yen were essentially debts based on national credit, and were fundamentally still a type of debt that relied on credit issuance.

Furthermore, a book titled "The Last Economy," which has not yet been translated into Chinese, suggests that the economy may have reached its peak after the development of AI. The author describes how, before the advent of AI, blockchain, and the internet, human wealth primarily consisted of the rearrangement of atomic structure. For example, clay was baked into bricks, which were then built into houses. Houses were considered valuable and a store of family wealth, essentially a reorganization of atomic structure.

Another example is the car, which is also the transformation and reorganization of atomic structure. Wealth is obtained through the transformation of atomic structure, and the new atomic structure is used as a storage medium.

What about Bitcoin? Bitcoin is a new form of wealth created by rearranging and combining bits, a process that includes Bitcoin and Ethereum.

As humanity enters the digital age, the Fourth Industrial Revolution—the digital revolution—is driving a shift in the structure of wealth, which explains Bitcoin's value. Initially questioned as a scam at $100, it continued to be skeptical at $1,000 and $10,000. However, when it reached $100,000, the skepticism gradually subsided as more and more people realized that in the digital age, future wealth is likely to be primarily represented by the reorganization of bit structures.

As humanity entered the digital age, the structure of wealth shifted since the Fourth Industrial Revolution. This explains Bitcoin's value. Initially questioned as a scam at $100, it continued to be skeptical at $1,000 and $10,000. However, when it reached $100,000, the skepticism gradually subsided as more and more people realized that in the digital age, future wealth would likely be primarily represented by the reorganization of bit structures.

New wealth is fostered on new financial infrastructure. This is precisely the role that blockchain, a technology born for the AI and digital age, plays. It is a complete financial infrastructure created for new economic structures, new economic organizations, and new forms of wealth in the future.

Why do we need this form of wealth based on bit structure? Why do we need tokenization?

First, the digital economy and digital age span time, space, entities, and regions. In the digital world, Newtonian laws of physics no longer apply. You can "build" a house in mid-air, housing millions of people, without even laying a foundation. The law of gravity is invalid in the digital space, and many physical structures and laws are ineffective. Therefore, new forms of wealth and financial services are necessary to represent things and value in the digital space. This is precisely why we need tokens, as well as tokenized currencies and assets based on the reorganization of bit structures.

Once a token is minted on a public blockchain, it inherently possesses global visibility. Anyone in the world can find it on the public blockchain, thus becoming globally investable. Investors no longer need a bank account; they can use USDT to invest in other tokens on any blockchain. Every asset holder desires global liquidity and global investability.

New financial infrastructure makes clearing and settlement more efficient and less costly. Any business activity that can be accomplished with fewer steps, greater efficiency, and lower costs will inevitably replace the existing methods that involve more steps, lower efficiency, and higher costs. This is basic business logic.

Fund turnover time is greatly shortened. For example, JP Morgan's JP Coin has increased settlement efficiency from 24 hours to 2 minutes.

In the digital age, with the development of open-source hardware, robotics, and AI agents, as AI begins to create wealth, the need for payments, collections, and disbursements will inevitably arise. Currency in the digital and AI eras will inevitably be programmable, enabling machine-to-machine payments through smart contracts. Currently, only technologies based on distributed ledgers, digital wallets, and smart contracts can provide a complete programmable currency solution. This is a key reason for tokenizing currency, funds, and assets. In the future, AI-generated assets will inevitably possess programmable properties, and the currency AI requires will also be programmable.

On the last slide, I'd like to clarify a few concepts. When we talk about tokens, tokenization, digital currencies, and digital assets, we can actually separate them. When you discuss these things, it's important to understand which category you're referring to.

Payment tokens. Stablecoins, as well as the aforementioned tokenized bank deposits and central bank digital currencies, are collectively referred to as "payment tokens" and are used for payment and settlement. These tokens require a license, and various countries are currently developing relevant stablecoin regulatory policies.

Reserve tokens. Bitcoin is a representative example of “digital gold,” and I believe everyone is familiar with it.

Utility tokens. Also known as "digital oil." I mentioned this morning that blockchains are divided into two categories: those that don't support applications, and those that do. Bitcoin is a prime example of these, while Ethereum, Solana, and others support applications. The latter are designed to enable widespread adoption, while Bitcoin itself was designed to prevent widespread adoption. In common law jurisdictions (such as Hong Kong and the United States), reserve and utility tokens generally don't require approval.

Security tokens. These tokens are the tokenization of financial assets such as stocks, bonds, and funds. These tokens require approval and must be licensed, compliant, and regulated.

MemeCoins. MemeCoins, like Trumpcoin, don't inherently hold real value, but they can potentially provide some emotional value, similar to the trendy Labubu collectibles. Some people spend millions of yuan bidding for special Labubu toys, and others are willing to buy Trumpcoins. Meme is a cultural phenomenon, referring to the personal IP and influencer economy of the internet age.

Okay, that’s all for my sharing today, thank you everyone!