Circle Vice President of Strategy and Policy: The Latest Turning Point for Cryptocurrency is a Leading Opportunity in Asia

Source: Forkast

Compiled by: hiiro, SevenUpDAO Overseas Returnees Association

The regulatory conflicts and chaos in the U.S. digital asset industry have prompted policymakers and Web3 developers in other parts of the world to stand up and notice an emerging opportunity. Particularly in Asia, some jurisdictions (especially Hong Kong, Singapore, and Japan) are formulating new roadmaps to attract investment and job opportunities in these emerging industries, while the U.S. is distracted by debates and lawsuits over cryptocurrency definitions.

Yam Ki Chan, Vice President of Strategy and Policy at Circle, the global second-largest stablecoin USDC issuer based in Boston, stated that it is too early to declare the death of the U.S. digital asset market. However, he added that the ongoing shift from Web2 consumers to Web3 creators in Asia provides 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 held in Tokyo on July 25-26.

Will Fee: You joined Circle from Google in Hong Kong this April, having previously served as the Asia Economic Policy Lead in the Obama administration. How do you view the transition into the digital asset industry?

Yam Ki Chan: I've learned a lot. It's a very vibrant industry, as you can see at WebX. From all the various meetings I've attended since joining, the whole community is very excited. This is still a very emerging industry, and I think it largely relies on the ecosystem working together. We all want to see this ecosystem function. We all want to see it thrive. And we are all working to improve transparency, consumer protection, and the overall stability of the industry.

Fee: Circle's Global Policy VP Corey Then stated in a previous interview that U.S. regulatory scrutiny will have a long-term positive impact on the development of the digital asset industry. Do you agree with this view?

Chan: Absolutely. Before all this, I was a cryptocurrency skeptic. I was a traditional finance (TradFi) person. My first job after college was at an investment bank in Silicon Valley. It was 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 many reasonable doubts from people outside the cryptocurrency industry, genuinely wanting to know and question—what can this thing do? And the industry hasn't helped itself; over the past 12-18 months, we've seen a lot of bad behavior from various participants.

Now, the industry is clearing out the bad actors, and policymakers are coming in and really setting some clearer rules about how they want to see this industry operate. I think policymakers have been hesitant in the past because they weren't sure if this was going to be a reality or a passing fad. We have now seen several cycles in the cryptocurrency industry, and with each turning point, its equilibrium state grows a little larger. We also see traditional financial companies seriously exploring this space, such as Citadel Securities supporting a decentralized exchange and BlackRock applying for a Bitcoin exchange-traded fund.

So we are seeing a turning point, with bad actors being cleared out and traditional financial institutions starting to have products in this space that you can see and touch. Then, we believe the last piece of the puzzle we are about to see is the shift from the speculative phase of digital assets to the practical phase, and legislation and policy will only help facilitate that shift.

Fee: When you joined Circle, you were quoted as believing that the company's role as a stablecoin issuer and Web3 developer is 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, especially as it is very applicable to Asia. The trade-to-GDP ratio in Asian economies is higher than in the U.S. or Europe (when excluding intra-European trade) because it is a currency system. Therefore, Asian businesses are actually paying a higher proportion of their income in costs.

This not only affects their costs but also their settlement times. In Asia, many companies operate across different countries in the region. You might be a company based in Osaka, while your customers are 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 you pay them in Vietnamese Dong or Thai Baht. All these transactions are expensive for the average Asian business. It’s not the same if you are producing in Germany and selling to France or producing in Oklahoma and selling to Colorado. So these costs do impact businesses here disproportionately.

Another aspect is trade financing. The Asian Development Bank estimates a $500 billion financing gap in Asia. These businesses want to export but can't because they can't find financing. That could be working capital, loans, insurance, or any other type of financing they need to produce goods and move them overseas before receiving payment. So stablecoins can be a way to help fill part of that gap.

Another aspect relates to cross-border remittances. In Asia, there are many migrant workers. They have to pay to send money back home and face high transaction costs of about 5.9% per transaction (averaging $200 remittance). Therefore, we believe stablecoins are a digital-native way to help reduce transaction costs, shorten settlement times, and make users safer. This is not only through full reserves, transparency, and regulation but also through existing on users' mobile phones, which are now ubiquitous in Asia and around the world.

You no longer need to take money to the bank and wait in line, hoping not to get robbed and that the bank has liquidity to transfer the money to your family on the other side of the world. Now, I can just click a few buttons to send money home. So that’s really exciting.

Will Fee: Given the regulatory stalemate in the U.S., there is a notion that Web3 companies might choose to leave the West—especially the U.S.—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 two contradictory things to be true. So yes, it is happening. No, it isn't, because at the end of the day, the U.S. is still a very important and vibrant market. It is a large market, but it lacks regulatory clarity. But it is moving towards that. There is legislation on Capitol Hill 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 step back and look at the development of the internet, the evolution of Web1 and Web2 was primarily driven by U.S. companies, which then expanded their products overseas. Asia is the consumer. So Google created a search engine, and they put it online. Anyone could use it. It wasn't until the latter half of Web2 that three things converged to make Asian creation possible, and Asia became a creator.

These three things are cheap and powerful smartphones, affordable and accessible broadband (high bandwidth), and the third very important part is the emergence of developers. The region benefits from a predominantly young population that grew up with the internet and instinctively understands that this is their global opportunity. This has driven them to start building.

There are countless companies across Asia that have not yet become global companies but are certainly regional players and leaders in their respective countries. Interestingly, as we look toward Web3, these companies and policymakers are saying, wait a minute, we have the opportunity to leapfrog other regions and really take the lead here. The question becomes how to leverage the talent we have, the open-source technology, and the evolving market size to truly build our own so that we are not just consumers but also creators and technology owners?

I think due to this mindset, Asian countries have been leading the efforts to establish new rules for the industry. More coordination will be needed. But they are ready. They want to be prepared to go there, especially once the U.S. has greater clarity. But even in the absence of that, they will do their best to support industry growth.