VP of Strategy and Policy at Circle: The Latest Inflection Point of Crypto is a Leading Opportunity in Asia

Original source: Forkast

Original compilation: hiiro, SevenUpDAO Returnees Association

Regulatory conflict and confusion in the U.S. digital asset industry has prompted policymakers and Web3 developers in the rest of the world to take notice of an emerging opportunity. In Asia in particular, governments in several jurisdictions (notably Hong Kong, Singapore and Japan) are setting new rules of the road to attract investment and jobs in these fledgling industries, while the U.S. has been overwhelmed by debates and lawsuits over the definition of cryptocurrency. distracted.

Circle’s Yam Ki Chan, vice president of strategy and policy at the Boston-based issuer of the world’s second-largest stablecoin USDC, said it was too early to declare the death of the U.S. digital asset market. But he added that Asia's ongoing shift from Web2 consumer to Web3 creator presents an opportunity for the region to play a central role in developing the global digital asset industry.

Chan spoke with Forkast's Will Fee at the WebX conference in Tokyo, July 25-26.

**Will Fee: You joined Circle in April from Google in Hong Kong, and previously served as head of Asian economic policy in the Obama administration. How do you feel about the transition into the digital asset industry? **

Yam Ki Chan: I learned a lot. It's a very dynamic industry, as you can see with WebX. As I've seen in all the various conferences I've attended since joining, there's a lot of excitement in the community. It's still a very nascent industry, and I think it's mostly an ecosystem working together. We all want to see this ecosystem work. We all want to see it prosper. And then we're also all working to improve transparency, consumer protection, and stability across the industry.

**Fee: Corey Then, Vice President of Global Policy at Circle, said in a previous interview that the 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 view? **

Chan: Of course. Before all of this, I was a cryptocurrency skeptic. I'm a traditional finance (TradFi) guy. My first job out of college was at an investment bank in Silicon Valley. A tech-focused investment bank, but an investment bank nonetheless. Then I worked at hedge funds, microfinance institutions, the U.S. Treasury Department. So very traditional finance. There's a lot of legitimate skepticism from people outside the cryptocurrency industry, really wondering and questioning - what can this thing do? And the industry is not helping itself, we have seen a lot of bad behavior from various players in the past 12-18 months.

Now that the industry is weeding out the bad actors, policy makers are coming in and really setting some clearer rules about how they want to see the industry function. I think in the past policy makers hesitated because they weren't sure if it was going to happen or it was a whim. We've seen several cycles in the cryptocurrency industry now, and each time it turns, its equilibrium gets a little bigger. We've also seen traditional financial firms seriously researching this space, such as Citadel Securities backing a decentralized exchange and BlackRock applying for a Bitcoin ETF.

So we're seeing an inflection point where bad players are being purged and traditional financial institutions are starting to have products in this space that you can see and touch. Then, we believe that the final piece of the puzzle that we are about to see is the transition from the speculative phase of digital assets to the practical phase, and legislation and policy can only help this transition.

**Fee: When you joined Circle, you were quoted as believing that the company's role as a stablecoin issuer and Web3 developer was to increase global economic prosperity. You are currently stationed in Singapore. How do you see this mission having an impact in the wider Asian region? **

Chan: We are now seeing stablecoins being used for payments, which is very interesting, especially as it applies very well to Asia. Asian economies have higher trade-to-GDP ratios than the US or Europe (when you exclude intra-European trade) because that is a monetary system. As a result, Asian companies actually pay a higher percentage of revenue in terms of costs.

This not only affects their cost, but also their settlement time. In Asia, there are many companies operating in different countries in the region. You might be an Osaka-based business and your customers are in Taipei or Seoul, so you accept NT or KRW. Then your suppliers and producers may be in Vietnam or Thailand and pay them in VND or THB. All of these deals are expensive for the average Asian business. This is not the case if you are producing in Germany and selling to France or in Oklahoma and selling to Colorado. So those costs do affect businesses here, and disproportionately.

Another aspect is trade finance. The Asian Development Bank estimates a $500 billion financing gap in Asia. These businesses hope to be able to export but cannot because they cannot find financing. That could be working capital, a loan, insurance, or any other type of financing that they need to manufacture the product and ship it overseas, move the product until payment is received. So stablecoins can be a way to help fill some of the gap.

Another aspect has to do with cross-border remittances. In Asia, there are a lot of immigrant workers. They have to pay to send the money back to their families and face high transaction costs of about 5.9% per transaction (average remittance of $200). We therefore see stablecoins as a digitally native way to help reduce transaction costs, shorten settlement times and make users more secure. Not only by being fully reserved, transparent and regulated, but also by being present in users' mobile phones, which are now ubiquitous in Asia and around the world.

You no longer have to take your money to the bank and wait in line, hope it doesn't get robbed and deposit your money, hoping the bank is solvent so it can transfer the money to your family on the other side of the world. Now I can send money home with just a few clicks. So it's really interesting.

**Will Fee: Given the regulatory impasse in the US, there is an argument that Web3 companies may choose to leave the West - specifically the US - 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 think two contradictory things are true. So yes, it's happening. No, it's not, because at the end of the day, the U.S. is still a very important market, very dynamic. It's a big market, but it doesn't yet have regulatory clarity. But it's getting there. Now there is legislation on Capitol Hill that will provide that clarity. We very much support that.

Meanwhile, Asian countries are not standing still. They've seen this happen before. If you step back and look at the development of the Internet, Web1 and Web2 were developed primarily by US companies, and then expanded their products overseas. Asia is the consumer. So Google created a search engine and they put it online. Anyone can use it. Until the second half of Web2, three things came together to make Asian creation possible, and Asia became the creator.

These three things are cheap and powerful smartphones, cheap and easily available broadband (high bandwidth) and the third very important part is the presence of developers. The region benefits from a generally young population who are the same age as the internet and understand very instinctively that this is their global opportunity. This prompted them to start building.

There are countless companies across Asia that are not yet global players, but are certainly regional players and leaders in their respective countries. What's interesting is that as we look toward Web3, these companies, as well as policy makers, are saying wait, we have an opportunity to go beyond other regions and really get ahead here. The question becomes how do we leverage the talent we have, the open source technology and the size of the market that is developing to really build ourselves so that we are not just consumers but creators and technology owners?

I think because of this attitude, Asian countries have been leading efforts to establish new rules for the industry. More coordination will be required. But they are ready. They want to be ready to go there, especially once there is greater clarity in the US. But even in the absence of that, they do their best to support industry growth.