Domestic giants pouring into the cryptocurrency ecosystem

I saw two pieces of news over the weekend:

One is that Tencent is in talks to invest in a cryptocurrency company.

It is reported that the well-known market maker Wintermute is negotiating to raise funds from Tencent and other investors. Although the details of the transaction have not been disclosed, if the deal is successful, Wintermute will raise between $200 million and $300 million from investors like Tencent.

The second is that JD.com is entering the ecosystem of stablecoins in Hong Kong.

In March of this year, the Hong Kong Monetary Authority announced the launch of a "sandbox" program for stablecoin issuers. On July 18, the Monetary Authority announced the first batch of three participating institutions in the "sandbox," one of which, named "JD Coin Chain Technology (Hong Kong) Limited," has attracted a lot of attention. Everyone believes that this company has deep connections with JD.com.

However, I have a question about the "stablecoin" here: is it an ERC-20 token issued on the Ethereum ecosystem or a coin issued on a consortium chain?

If it is issued on a consortium chain, then it is not very meaningful. If it is issued on the Ethereum ecosystem, then it is indeed very promising.

In the following article, I assume that this stablecoin is an ERC-20 token issued on the Ethereum ecosystem.

The businesses involved in these two pieces of news are not difficult to understand.

Many players in the industry know Wintermute, which has a major business of providing liquidity to exchanges.

From a business perspective, this type of business is a necessity in the ecosystem, and the business logic and profit model are very clear, so the uncertainty is relatively controllable.

From the perspective of the entire cryptocurrency ecosystem, it is a capital-intensive niche track, and entering this track requires a certain amount of capital.

Such tracks are very suitable for giants to enter. Therefore, it is not difficult to understand why Tencent is investing in leading companies in this track.

JD.com's entry into stablecoins surprised me a bit, mainly because we have rarely heard JD.com's name in the cryptocurrency ecosystem in recent years. But upon reflection, since JD.com has BaiTiao, it indicates that it still has certain ambitions in the financial sector.

However, in recent years, the lessons learned from Ant Financial in the traditional financial sector may have made JD.com cautious about its ambitions and subsequent plans in this area, forcing it to shift its focus and vision to other fields outside traditional finance. The cryptocurrency ecosystem, with its inherent financial attributes, thus becomes a logical destination for JD.com's next move.

Seeing these two pieces of news, I have a few thoughts:

First, the major internet companies in China have already reached a point where they cannot compete further domestically, so expanding into other fields, especially the cryptocurrency ecosystem, is likely an inevitable choice for every major company.

Among the other fields that are currently showing certain trends and rapidly rising, I see only two: one is artificial intelligence, and the other is cryptocurrency assets.

Given the interference of geopolitical factors, it is likely very difficult for China's internet giants to enter the field of artificial intelligence. Even if they do, due to technical limitations, they may find it hard to establish their own ecosystem and position within it.

In contrast, the cryptocurrency ecosystem is still relatively early-stage, and no country or region has established insurmountable barriers yet. Therefore, China's major companies entering this ecosystem will likely not be significantly affected by geopolitical factors.

Take Tencent's investment in Wintermute as an example; if Wintermute were an artificial intelligence company, it probably wouldn't even dare to seek Tencent's investment. Because it is a cryptocurrency company, it does not have this concern.

Second, in recent years, the attitude of domestic giants towards the cryptocurrency ecosystem has mainly been one of observation, but there will likely be many substantial actions in the next steps.

In the past two years, when I participated in cryptocurrency ecosystem events in Hong Kong, I often saw representatives from Ant Financial and Tencent. However, they mostly participated as audience members in various events and rarely presented their own projects as project parties. Perhaps at that time, they had not yet found their positioning and entry point in the ecosystem.

But now, the actions of Tencent and JD.com indicate that the giants are gradually starting to test the waters in this field. I believe this trend will only strengthen.

Third, I am more looking forward to Hong Kong's development and influence in the cryptocurrency ecosystem.

Comparing the actions of Tencent and JD.com, I feel that JD.com's layout has a more far-reaching impact because JD.com is laying the foundation of the entire cryptocurrency ecosystem: stablecoins.

Although I do not like centralized stablecoins, we cannot deny that centralized stablecoins may be a better choice for most users.

In terms of issuing stablecoins, I believe Hong Kong has no issues.

Because the Hong Kong dollar itself can be seen as a "stablecoin" pegged to the US dollar. Hong Kong has already accumulated enough experience in this regard, and issuing stablecoins for the cryptocurrency ecosystem only requires clarifying some regulatory issues. With the Hong Kong government's current strong push for the cryptocurrency ecosystem, these issues are unlikely to be long-term obstacles.

Once Hong Kong achieves strong regulatory implementation in the area of stablecoins, I believe that at least in terms of capital inflow and outflow, Hong Kong will have its unique advantages.

What does this mean for us as individual users?

I believe the most important thing is that we should focus on how to leverage Hong Kong's advantages in this area to facilitate our transactions and capital flows within this ecosystem.