Host: Alex, Research Partner at Mint Ventures

Guest: Minda, Founder of dForce

Recording Date: March 14, 2025

Disclaimer: The content discussed in this podcast does not represent the views of the institutions of the guests, and the projects mentioned do not constitute any investment advice.

Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we continuously question and deeply think, clarifying facts, exploring realities, and seeking consensus in the WEB3 world. We aim to clarify the logic behind hot topics, provide insights that penetrate the events themselves, and introduce diverse perspectives.

Alex: In this episode, we will follow up on a crypto narrative that was highly discussed a few years ago, then gradually cooled down, but has recently heated up again: STO, or Security Token Offerings, especially the tokenization of U.S. stocks. Today, we have a guest with rich experience in both traditional finance and DeFi, and he is also an old friend of our program—Mr. Minda. Please say hello to everyone, Mr. Minda.

Minda: Hello everyone, I am very happy to be back at Mint Ventures to discuss the topic of STO and security tokenization.

The Background of Coinbase Stock Tokenization

Alex: The resurgence of STO as an old narrative is mainly due to a statement from Coinbase's CEO and CFO last week, indicating that they plan to restart the work on tokenizing Coinbase stock. I believe you have also noticed this news. Based on the information you have, could you outline the background of Coinbase stock tokenization, including some key details?

Minda: Actually, the topic of Coinbase tokenization was not raised this year; I remember it was mentioned back in 2020. However, due to the harsh regulatory environment for the crypto space and the subsequent lawsuit against Coinbase by the SEC, I recall that Brian mentioned this concept after 2020, but it was not implemented. At the time of Coinbase's IPO, there was still debate in the community about whether to go public or issue tokens, as it was originally a crypto exchange. There were controversies about whether it should issue tokens directly on-chain. This topic was brought up again in January this year when Jesse, the head of Base, suggested considering deploying Coinbase's tokens on the Base chain. Then in February, the SEC dropped its lawsuit against Coinbase, which I believe reflects the new U.S. government's friendly attitude towards crypto. This was echoed by both the CFO and CEO, who mentioned that they want to tokenize the stock on Base. Looking at the timeline, I think it is very significant. After Trump took office, the new government's attitude towards crypto, including the Crypto Summit, which Coinbase's CEO also attended, indicates a shift. Therefore, we can see that when the regulatory environment changes, it is very understandable for the largest exchange in the U.S. to take such action, as the timing aligns well.

The Value Proposition of Stock Tokenization

Alex: In your view, if we consider STO or stock tokenization as a product, what are its main value propositions? Do you think it presents a relatively organic value proposition? If a large number of U.S. stock assets are tokenized, what kind of chemical reactions might occur with current DeFi products?

Minda: Yes, the topic of stock tokenization is not new; it has been mentioned in the past two cycles. I remember that STO was discussed as early as 2017. The reason this topic has resurfaced now is due to several factors. On one hand, we can see that while the crypto space has stagnated due to regulatory reasons, there has been significant progress in blockchain applications in traditional finance on Wall Street. From a traditional finance perspective, institutions are recognizing the benefits of tokenization. For example, JP Morgan has processed many interbank settlement systems through tokenization. This essentially saves banks a lot of settlement time. Even within the same bank, cross-state or cross-country settlements can take days or even a week. However, using blockchain allows for immediate settlements. The direct benefit is that the capital is less tied up, significantly reducing capital costs, so traditional financial institutions can see where the advantages lie.

When we look at the entire stock tokenization process, if we talk purely about funding channels, it certainly transforms a single market into a global market. This involves a blend of both permissioned and permissionless systems. However, there are many conflicting elements because traditional securities regulation follows a territorial principle. The U.S. market has its own set of regulations, while the Chinese market has its own, and each region adheres to its own territorial principles. But when we connect to the crypto public chain market, how to handle this territorial principle presents a significant conflict. This is why tokenizing stocks can be seen as a way to break down barriers. How can capital from the free world enter a stock market regulated by territorial principles? There are many conflicts here. However, for companies doing STOs and for stock exchanges, at least this entire funding channel transforms from a regional market into a global market, which is a crucial point for most STO companies to consider.

The situation with Coinbase is quite different from other general stock tokenizations because Coinbase itself is an exchange. In fact, Coinbase's stock can be compared to Binance's BNB. BNB is a very good example of tokenized stock, while Coinbase is purely a stock of an exchange. However, we can see that BNB has far more utility than Coinbase. From a traditional stock perspective, Coinbase represents shareholder equity, a shareholder certificate. But we see that BNB can be used to offset transaction fees, receive airdrops, and has various functions. Therefore, I believe the greatest significance of Coinbase issuing stock lies not merely in tokenizing a stock on-chain but in empowering traditional stocks. I see it as a movement to expand rights. Previously, it was just a shareholder certificate; now, for example, if Coinbase tokenizes your stock and places it on the Base chain, and in the future, Base allows you to use Coinbase stock as collateral for staking, validating nodes, or paying gas fees, then the stock is no longer just a shareholder certificate but something with utility.

If we expand the Coinbase case to others, such as Disney or Netflix, holding a tokenized stock of Disney could provide discounts on tickets. Why can't this be done traditionally? Because in traditional finance, it is too complicated to do this without tokenization; connecting all these systems is very difficult. But we can imagine that if Disney tokenizes its stock, in the future, users holding its stock could directly use the token to buy tickets at a discount or even have some preferential treatment. Or for Netflix, subscriptions could be based on your stock staking; for example, the more stocks you stake, the more subscription fees you could be exempted from. For instance, tokenizing a coal mining company may not show much practical value. However, companies like Coinbase, Netflix, and Disney inherently have a lot of interaction with users at the product level, and I believe their stock tokenization has a great potential to transform stocks from mere shareholder certificates into utility tokens. This is, in my opinion, a crucial point where STO integrates with the crypto space, rather than just turning it into a stock and placing it on-chain. This brings us back to the earlier point: it may be to expand the funding pool from a regional to a global market. However, we now know that the U.S. already accounts for a significant portion of global financing. What does adding this market on-chain mean? It may not mean much. This is why you see many STO tokens trading on-chain have not had much trading volume in past cycles, as the traditional market has already met the investment needs of most capital-seeking individuals.

Alex: The concept of stock empowerment you just mentioned is quite novel and makes a lot of sense. Following this topic, you mentioned that JP Morgan has improved capital efficiency after adopting a blockchain settlement system. I have a technical question: JP Morgan is likely using a system similar to a consortium chain. What specific technical designs can enhance its capital efficiency or system operation efficiency? I have always been quite curious about this.

Minda: As we know, banks are considered dinosaurs in the tech world. Many of the traditional backend systems in banks are decades-old technologies. Of course, I think it makes sense for financial institutions to maintain this conservative approach to technology. First, it involves money, so older, more proven technologies may be more important for the security of the banking system than improving capital efficiency. Even within the same bank, settlements and clearances between different systems can involve many issues, and it becomes even more complicated across countries. For example, JP Morgan, in the U.S. and the U.K., each country has different capital regulations, and it requires using Swift or other external settlement systems, not just internal banking systems. Settlements between branches of a bank in different countries can also experience delays due to different regulatory issues. For instance, JP Morgan's interbank settlements, when expanded to a consortium chain, have already seen domestic banks like China Merchants Bank and several core banks in the Pearl River Delta region form a supply chain alliance a few years ago to use blockchain systems for settlements. The complexity increases between different banks, as each bank's system design is different. The benefit of blockchain is that it uses a single ledger, which maintains consistency across all states, eliminating the need for each bank's different backend systems to match. This is why we see such good applications in finance; traditional finance can see that blockchain design can essentially replace existing banking infrastructure. This is also why stablecoins gained rapid adoption once they emerged. Of course, this started from grassroots growth, and in the end, banks and U.S. regulators closely monitored stablecoins. Traditional finance can clearly see that blockchain offers significant advantages over traditional interbank settlements.

U.S. Stocks on-chain and Interaction with DeFi

Alex: Understood. If a large number of U.S. stock assets are tokenized, what kind of interactions might occur with our existing DeFi projects? Are you optimistic about this, or do you think it is important for the development of the industry?

Minda: I believe that for the infrastructure of DeFi, the key point is that we see that most of the assets supporting DeFi projects, such as those involved in DEXs, lending, and stablecoins, are still primarily native assets from the crypto space, like ETH and BTC. Trading and meme assets also belong to the crypto ecosystem. So, for the entire DeFi infrastructure, it essentially depends on what kind of upper-layer assets are available. As for the downstream DeFi infrastructure, this is definitely a benefit. For example, after stablecoins entered the market, we saw not only stablecoins but also the tokenization of government bonds, which is currently the largest scale of STO. We can see that the achievements in government bond tokenization this cycle are very significant, including projects like MakerDAO and Ondo putting everything on-chain. Government bond tokenization has brought a large amount of so-called income-generating assets to DeFi protocols, including many pools in Pendo and Uniswap that are now income-generating asset pools. In terms of liquidity, RWA (Real World Asset) stablecoins and RWA assets provide very important liquidity for the entire DeFi ecosystem. Therefore, we can imagine that further tokenization of stocks would have similar benefits, as the entire DeFi infrastructure is now well-established, whether in AMM form, order book form, or perpetual contract form; all the bridges are already built. After the DeFi summer, the infrastructure has basically been laid out and has been tested over time. All the bridges and DeFi protocols have gone through numerous hacking incidents, so the entire DeFi infrastructure layer has, to some extent, solidified. When I say solidified, I mean in terms of technology. The benefit of this solidification is that security has been tested. From the DeFi summer to now, there have been nearly $10-20 billion in losses due to hacks. Therefore, this part of the DeFi infrastructure is in a ready state. Thus, when it comes to integrating STOs and stock assets, there is no need to rebuild these assets. This is a crucial issue because the distribution channels and infrastructure are already in place; we just need new assets to come in. This is different from banks or traditional institutions, which would need to rebuild the public chain and DeFi systems to push these assets, which is a significant challenge. So, looking at this cycle, the entire crypto narrative, such as Bitcoin ETFs and the tokenization of government bonds, has already entered the traditional financial view. If stocks come in, it would be best if the infrastructure could be directly utilized. This would provide more assets for trading and better liquidity for all underlying DeFi protocols, which is certainly beneficial.

Does STO Align with U.S. National Interests?

Alex: From a broader perspective, if STOs become compliant and are widely adopted, for U.S. listed companies, such as those you just mentioned, like Disney and Netflix, which have close relationships with consumers, they might gain many incremental benefits through the empowerment of stock rights. Do you think U.S. listed companies would have a strong interest in the concept of STO? And does this align with the long-term national interests of the U.S.?

Minda: I think we need to look at different types of companies overall, as not every company is suitable for issuing tokens on-chain, nor will they necessarily attract everyone's interest. For example, in the early days, many DeFi and CeFi projects issued some stock tokenization tokens, and they often chose tech stocks like Tesla because they knew there was overlap between the investors in these stocks and crypto investors. You wouldn't choose coal or industrial stocks because they don't overlap with the crypto space. Therefore, I believe that companies with overlap with crypto users, such as AI companies, would definitely benefit from expanding their capital pool and audience.

From the U.S. perspective, the alignment with U.S. interests is now very clear. For instance, the most important regulatory focus in the U.S. right now is the stablecoin legislation because it reinforces the dominance of the dollar. For STOs, as the largest stock market globally, tokenization would significantly reduce costs for U.S. financial enterprises. For example, various shareholder voting and dividends in traditional finance require substantial backend support, which is costly. So from a cost perspective, it can replace many outdated infrastructures. Additionally, treating U.S. stocks like dollar stablecoins would also expand the influence of U.S. stocks globally. From this standpoint, it completely aligns with U.S. interests. Of course, this may not align with the interests of some financial enterprises in the U.S., as stablecoins could potentially undermine many traditional banking businesses. After the tokenization of U.S. stocks, the leading companies may not necessarily be traditional firms; traditional brokerage firms might be eliminated because many intermediaries are unnecessary on-chain, allowing for direct operations once integrated with DeFi. Therefore, this could lead to significant changes in the structure of the U.S. stock market. This is why advancing this matter is not straightforward, as it will affect many different players in the existing interest chain.

Alex: This brings me to a question I had earlier. You mentioned the impact of stablecoins on the U.S., and the dollar's scope and application scenarios have received substantial support. However, it seems that Europe and other countries are not very proactive in promoting stablecoins. For instance, there hasn't been much action regarding euro stablecoins or yen stablecoins. China has also been trying to expand its reach, seeking more settlement scenarios, but has not pushed for a yuan stablecoin. Are they not aware of this? Why is there not as much enthusiasm in this area as there is for the dollar?

Minda: To be honest, regarding dollar stablecoins, I wouldn't be so optimistic if it weren't for Trump taking office. Moreover, you will find that after Trump took office, the U.S. did not aim to promote a national dollar token; instead, Trump issued an executive order prohibiting the U.S. from issuing so-called dollar tokens. Currently, what the U.S. is promoting are actually private sector tokens, such as those that banks or exchanges can issue, but the U.S. federal government does not allow issuance. Of course, there are concerns about excessive government power. However, we see that the EU is expected to launch its stablecoin this year. The EU stablecoin is actually different from the dollar stablecoin. The main stablecoins being promoted in the U.S. are from the private sector—companies, banks, and exchanges—rather than from government entities. The significant difference between the EU's approach and the U.S. is that the euro, dollar, and yen are all freely convertible. From this perspective, promoting a freely convertible stablecoin has clear benefits for them. But China is quite unique because it is not freely convertible. Therefore, there are conflicting points; creating a freely flowing, permissionless stablecoin, like USDT, is largely permissionless, but it would severely conflict with currency controls. This is why promoting such a thing in China is quite awkward. If the stablecoin comes with various restrictions and returns to the limitations of fiat currency, it may not have much potential for application. The digital yuan in China is actually not much different from the current wallets, so its adoption is slow. This is closely related to the country's monetary system. For the EU and the U.S., which have freely circulating currencies, the key issue is how to promote it. Is it primarily driven by the private sector, as in the U.S., with the government not intervening? Or is it like the EU, where the EU itself directly issues the digital euro? However, for China and other countries with currency controls, this will create significant conflicts with foreign exchange controls and monetary management goals, and these conflicts are not easy to resolve. If a digital national currency is issued with strict KYC and circulation restrictions, which can be tracked, no one would choose this method, as it would be no different from traditional payments, leading to significant conflicts between objectives.

Obstacles to Stock Tokenization

Alex: Understood. Indeed, after the digital yuan was introduced domestically, not many people are using it, and its promotion is slow. Now, back to the topic of STOs. After Coinbase announced its plan to restart tokenization, a Swiss RWA service provider, Backed, quickly issued its own tokenized version of Coin on Base. However, recent data shows that trading volume is low, and there are serious decoupling issues. As you mentioned, not all stocks are suitable for tokenization. Besides the type of stock companies, what are the main factors that hinder the tokenization of such stock products?

Minda: I think there are quite a few factors. Issuing a stock is actually similar to issuing other tokens or stablecoins; the issuer is very important. For example, if Coinbase's stock token were issued by JP Morgan or Bank of America instead of Backed Finance, it might be different. I believe the biggest issue for issuers is that when I buy your token, who is behind it when I want to redeem it? Can it be redeemed? Issuing such tokens is similar to when FTX issued Tesla tokens using a German brokerage. The commitment of third-party institutions to the issuer to redeem the underlying tokens is a crucial issue. There is also the issue of decoupling; theoretically, if there are enough market makers supporting it, allowing market makers to redeem the underlying tokens, severe decoupling is unlikely to occur. Just like why stablecoins can maintain a dollar value, because there are many minting agents and market makers with channels to Coinbase and Tether to redeem it back to a dollar. The reason for decoupling may be due to insufficient market makers, weak liquidity, or unimpeded redemption channels, making it impossible to redeem the underlying stocks in a timely manner. If Coinbase itself proposed to tokenize its token, the credibility would be stronger. Regarding the empowerment of stock tokens, this is something only Coinbase can do; others cannot. For example, allowing Coin to stake or pay gas on the Base chain is not something Backed Finance can handle. This aspect definitely requires new attempts in token empowerment. In crypto, many players can already buy U.S. stocks through offshore accounts; this is not a high barrier. Therefore, purely trying to attract crypto users to buy is quite challenging. This is also why, over the past few years, different tokens have tried, including the synthetic stock tokens we have created, but the demand has not been significant. The reason is that if it is merely a capital pool for crypto users to buy U.S. stocks, the demand will not be as large as imagined.

Alex: Understood. So, assuming Coinbase eventually officially launches a product like STO, what institutions would need to be involved in the structure of this product, besides Coinbase itself?

Minda: I think the first requirement is to have a market-making team, but it doesn't necessarily have to be a market maker designated by Coinbase. As long as Coinbase provides a good channel for stock and token exchanges, there will naturally be market makers willing to provide liquidity. This is similar to the minting and redemption channels for stablecoins; this must be in place. Besides that, there is also the issue of liquidity depth. For example, Backed Finance operates pools on Aerodrome, which may not price as efficiently as an order book unless the pool is very deep. Therefore, different DEX support is needed, and official liquidity support should be provided. Relying solely on third parties is quite challenging. I think for Coinbase, it should establish a certain connection with the Base chain. Most people who engage with Base hope to have token upside in the future. If they can be tied together, Coinbase would become the only exchange token that has both the advantages of a listed company and the crypto space, which would be a very interesting play, but this requires Coinbase to design other aspects, not just simply putting stocks on the platform.

Alex: Assuming their own stock issuance is successful, do you think they could attract other U.S. listed companies, like Strategy or Tesla, to issue their officially authorized STOs on Base? What is the likelihood of that?

Minda: Theoretically, issuing stocks does not require the consent of these companies. This structure is somewhat similar to stablecoins; for instance, when you issue a dollar stablecoin, you don't need the Federal Reserve's approval; as long as the bank has dollar deposits, it can issue a certificate. So theoretically, as long as it complies with U.S. regulatory requirements, these so-called token issuances do not need the authorization of the stock companies themselves. However, the product design may differ, depending on whether your product only allows KYC users to purchase or if it is fully fractionalized, allowing everyone else to buy. For Coinbase's token, there should be no KYC requirements, and it should be possible to buy directly on-chain. If it can be achieved that non-permissioned users can purchase without KYC, it would definitely attract many companies, as it would create a new liquidity pool. However, this also depends on regulatory issues, and I feel that this matter is still not clear. For example, there were T-bill tokens issued that built pools on Curve, but only whitelisted users were allowed to purchase because it was entirely a Security Token. So my understanding is that stock tokens on-chain are Security Tokens and should not allow many people to purchase. Therefore, there will be many specific issues when it comes to implementation. If only KYC users are allowed to purchase, the audience will be limited, and it may compete for traffic with those using traditional channels, like Futu, which would turn into a competition for existing customers rather than an incremental market. This is currently the issue that stock tokens face in their go-to-market strategy.

Alex: How is the purchasing authority designed for the Buidl token issued by BlackRock?

Minda: It also requires KYC. The distribution strategy for Buidl is not aimed at retail investors but at those who are involved in DeFi protocols, where there can be an account that has undergone KYC. After purchasing, it can be passed on to users. Buidl itself targets companies or institutions, focusing on businesses, whether you are developing DeFi protocols or other financial products on-chain. I only distribute to KYC users like you, and how you distribute it to other retail investors after synthesizing it is someone else's problem. I actually think it resembles the current minting model of stablecoins, which is aimed at minting agents, with a hierarchical distribution rather than directly facing retail investors. This model is relatively reasonable.

Factors Driving the STO Trend and Market Performance Expectations

Alex: Understood. We just discussed the concept of STOs, which actually had projects like Polymath trying to promote it back in 2017 but did not succeed. Now many project teams and industry players are refocusing on this track. Aside from the regulatory policy shift after Trump took office, are there other demands or new factors that have led to renewed attention in this field recently? And do you see potential for its market performance in the next one to three years?

Minda: In fact, stock tokens are even older than 2017. Back in 2017 and 2018, including the last DeFi cycle, projects like Synthetix's synthetic assets and Luna's Mirror project were also involved, and we issued four or five tokens, only to find that the trading volume was poor. We analyzed that it might be an issue with the synthetic asset model, as Synthetix had a very high over-collateralization rate and low capital efficiency. Later, FTX also tried some Tesla stocks, and the trading volume was also average. I think the core issue is that before the DeFi Summer in 2022, we observed the structure of the crypto market and saw what types of players were involved. Most people had a slogan: "long crypto, short the world." Many entered crypto because it was a sector with particularly obvious asymmetric returns, especially in the early days, where the upside was very high. Therefore, those entering this market looked down on traditional market participants, dismissing real estate, commodities, and stocks. Selling stocks in this group is like selling ice in Antarctica. It's not that there is little demand for stocks, but rather that the audience is simply not right. However, this year has seen several important turning points. One is that after the Bitcoin ETF was launched last year and the Ethereum ETF followed, traditional financial capital has poured into crypto for allocation. Additionally, on-chain, we see that the two major stablecoins have a minting volume of about $230 billion to $240 billion, but the funds that are genuinely playing in DeFi are only a few hundred billion. Most of the people here are our friends, many of whom have no concept of crypto and simply hold stablecoins as if they were dollars. So I say that the market structure has changed significantly; previously, most participants were crypto-native, but now a large portion of people entering the crypto space are simply holding stablecoins. These individuals may have transitioned from traditional finance and definitely have a demand for stocks. Traditional account opening channels are very smooth, but I believe that if there is a trading market for U.S. stocks on-chain that allows everyone to easily buy with stablecoins, this demand could easily replace traditional methods like those of Interactive Brokers, which involve many issues such as converting RMB to USD and then to the exchange, along with bank account opening problems we encounter in reality. If there is such a trading market for U.S. stocks on-chain, I believe there is still demand. The reason why people feel this demand will emerge in the next three to five years is that the market structure has changed; it is different from the market structure six years ago, which was entirely composed of crypto-native individuals. Now, there are more and more non-crypto users. They may not even care about memes, BTC, or ETH; they simply treat stablecoins as dollars. If you provide them with a traditional asset, these individuals are very familiar with buying stocks in traditional markets, and this allocation demand still exists. Moreover, it is indeed much more convenient on-chain than in exchanges. The only point is that the entire infrastructure for U.S. stocks is not that well-developed; for example, we don't have many token options, and the slippage is quite high. Therefore, I think the tokenization of U.S. stocks may still be in the stage similar to DeFi in 2017 or 2018, not yet reaching the DeFi Summer phase. I am actually quite optimistic about this; I believe that within three to five years, there should be a relatively substantial market emerging. However, the premise is that these assets can be issued. The current issue is whether U.S. stock assets can be issued compliantly; everyone is still trying. For instance, Coinbase is still exploring this, so I believe that as long as there is a compliant framework that allows for issuance on-chain, this market can take off.

Beneficiaries of the STO Wave

Alex: Looking at the long term, assuming this market can take off and there is a compliant framework allowing them to issue, which sectors or companies do you think could benefit from the wave of STOs? Is it DeFi, Layer 1, Layer 2, or specific RWA projects?

Minda: I think the best reference is to look at stablecoins because stablecoins are essentially the largest asset class of RWA, tokenizing dollar certificates. In this sector, the biggest beneficiaries will definitely be the asset issuers. When I say asset issuers, I don't mean companies like Tesla or Disney, but rather the parties that actually issue their stock tokens. Because whether it is stocks or stablecoins, the most important thing is the network effect of liquidity, and achieving a liquidity network effect is very difficult to replace. I think this point is crucial. So if someone can really tokenize QQQ or the Nasdaq index, which has the largest trading volume, and put it on-chain, and the tokens themselves form a liquidity network effect, like USDT, it will become indispensable. In this case, they will definitely be the biggest beneficiaries. Because underneath stablecoins, there are many things that can be done with stock tokenization, such as financing and margin trading with the underlying tokens, and they can also collect fees from the issuers. There are many business models that can be established, but I believe the biggest beneficiaries should be those issuers, especially those who can quickly scale. We can see that whether it is ETFs or some money market funds, the market share is usually dominated by the first issuer. For example, if you look at the market share of Bitcoin ETFs, the major players now will still be the same in three to five years. The pie continues to expand, but the proportion will not change; it may even increase. The network effect is very evident. Because once stock tokenization is issued on-chain, many companies will re-synthesize, just like in DeFi. Just like USDT and USDC, there are a large number of DeFi products synthesized on top of them. This creates a very solid moat. Therefore, I believe that the issuers of the tokens will benefit the most.

Alex: Assuming these issuers have many assets to issue, which chain do you think they would prioritize? Would it be a reputable chain like Ethereum, which has a so-called legitimacy, or a more performant chain like Solana or Base?

Minda: I think the Playbook is already there; it's about learning from USDT and issuing it on any chain. This is the most typical example. The story of USDT is particularly interesting because it was originally issued by Bitfinex, but having an exchange issue a stablecoin that is accepted by other exchanges is particularly difficult. This is also why, after the DeFi Summer, Binance, OKX, and Huobi all issued their own stablecoins, but they do not recognize each other. However, USDT happened to exist when there were no other alternatives in the market, so everyone accepted it, and it created a network effect. Tokenization of stocks is the same; I believe that wherever there is demand, that is where it should be issued, just like in the early days of USDT. As long as there is demand, it should be issued, and the company can allocate inventory uniformly. I do not think any chain has a unique advantage at the RWA asset level. The reason USDT is issued more on Ethereum is simply due to high demand, nothing more; it is not because Ethereum has any special advantages at the application level. For stablecoin issuers, the market is large enough, and the DeFi protocols are substantial enough to accommodate more funds. I think this is something that asset issuers may need to consider. The market is large enough; just issue it.

How to View the Current Policy Environment in the Crypto Industry

Alex: Understood. Most of our previous discussion focused on STOs, and we also mentioned a significant policy shift towards increasing compliance possibilities. In fact, it has been almost three months since we last discussed crypto policy. During this time, many things have happened, such as Trump issuing a coin, the Trump family launching the World Liberty project to purchase various crypto assets, and Trump signing the so-called BTC Strategic Reserve Executive Order. There have also been some negative news, with many states' Bitcoin reserve plans failing to pass legislation, about four or five states were unable to succeed. Some voices suggest that most of the crypto industry policies promised before Trump took office have been fulfilled, and there may not be many subsequent benefits. What is your view on the current policy environment in the crypto industry? Are there any key events to look forward to or closely monitor in the future?

Minda: My feelings about this matter are quite mixed. Indeed, from a policy perspective, many favorable factors have emerged, and the degree of these benefits and the speed of implementation have far exceeded my expectations. In terms of policy, Bitcoin is being viewed as a reserve asset for the United States. We know that U.S. reserves can be divided into several categories, one being commodities with practical value, and the other being financial assets like gold. Therefore, elevating it to such a level, both in terms of execution speed and the height of the definition, I think has reached a very high level. Moreover, many other assets have also been included in the so-called stockpile. So, there are indeed many favorable policies. However, the downside lies in some operational methods. For example, if Trump had not issued a coin and there were no actions taken by World Liberty Finance, I might have had a more positive overall view. Due to Trump's coin issuance, including the MELANIA coin, it seems that there is a Meme conspiracy group operating behind it. World Liberty Finance has recently been seeking cooperation in the crypto space, and I learned that major project parties have been contacted for coin exchange transactions, meaning you buy their coin, and they buy yours. Additionally, there are discussions about whether to invest in exchanges. This series of events makes me feel uneasy. Because crypto has always been anti-fragile, it has looked down upon governments or regimes. The rise of crypto does not rely on any regime's support; this wild growth is the core of its anti-fragility. But now it seems that everything has been hijacked by the Trump family. Imagine what will happen four years from now? Moreover, Trump has some public resources being used for private gain, and he is too deeply tied to his family. If the Democrats come back to power, the revenge will be particularly fierce. It is especially important to note that most of Trump's actions are implemented through Executive Orders (EOs), which can be easily revoked by a new government. Just like Trump revoked over 100 EOs from the Biden era. Therefore, the key in the next four years is to see how many EO-type policies can be formally embedded into the U.S. legislative framework. If these policies can ultimately become laws, approved by Congress and state legislatures, forming a legal framework, then there is no need to worry about them being easily revoked. We need to see how many of these things can be solidified in the next four years. When these measures are too deeply tied to Trump's personal interests, once the Democrats come to power, crypto may become a very negative thing that gets suppressed, which is a point I am very concerned about. Moreover, think about it; all these things seem to blur the line between private gain and public power. If you are a Democrat, attacking him would be as easy as targeting all his transactions. He issues coins, engages in DeFi, and conducts these subsequent transactions, all of which are particularly easy to attack. In this case, if the Democrats come to power, crypto could become an important weapon to attack Trump or his family. In that case, will there still be positive legislation? That would be very difficult. Therefore, I think the market has also realized that while the policy aspect is indeed good, these are all superficial; how many can ultimately land at the legal level and solidify as part of the system? These are too deeply tied to his family and have become a form of private interest. For example, there were rumors that the Crypto Summit could sell tickets for $1 million, which is ridiculous not only in the U.S. but also in developing countries. You notice that many OGs in the crypto space have also stopped speaking out; they do not want to express whether this situation is good or bad, as it is really unclear. It depends on how many of these things can ultimately land at the legal level. Of course, there are also some people in the crypto space who believe that they should cater to Trump and his family's needs and do whatever they want, but what about three to five years from now? Attacks have already begun; the U.S. Democrats have started investigating Trump's coin issuance, so I think it is a very complex emotion.

Alex: Perhaps everyone originally thought that Trump's push for this was a significant benefit, a major policy benefit. However, when he started issuing coins and proposed including ADA, SOL, and XRP as national reserves like Bitcoin, the seriousness of this matter was completely undermined.

Minda: Yes, it was completely undermined. Initially, we thought it was genuinely a national policy to make the U.S. part of the so-called Capital of Crypto. However, we suddenly discovered that all operations belonged to private interests, turning into a pursuit of personal gain, which distorted the original intent. I think the biggest turning point in the market was after Trump and Melania issued coins, along with the subsequent Libra coin issuance and the exposure of the so-called conspiracy group manipulation. You see the entire market starting to decline; that was a turning point. People began to feel confused about whether this was being used as a private tool or if it was genuinely a policy being implemented. The market consensus clearly shows divergence.

Alex: Yes, many people had hoped for a federal Bitcoin reserve bill, but after so much chaos in January, it became difficult for most states' reserve bills to pass in February.

Minda: The meme tokens issued by Trump, including World Liberty Finance, have recently been rumored to be acquiring exchange tokens. These private transactions and the conflict with public power have led to many opposing voices during the promotion of the bill. Is this serving the nation or individuals? Another contrasting case is Tesla. Tesla's stock has dropped about 50% from its peak because people believe Tesla is too closely tied to Musk. The volatility of Tesla reflects the volatility of Trump's policies, and Tesla's shareholders are certainly not happy about it. Some people are dissatisfied with Trump's policies in Ukraine and are unwilling to buy Tesla stock. I think being overly tied to political figures is not good, which is also why many people currently have negative feelings; it is because of the close ties to Trump’s family.

Alex: Especially since Trump is already in his second term and will not be in office much longer, at most just over three more years.

Minda: Even if other Republicans come to power afterward, they may not implement these policies in the same way. To be honest, even after being in crypto for so many years, I find it difficult to discern whether these measures are for private gain or public good; I feel they are not entirely for the public good.

Alex: Alright, today we discussed STOs and many policy-related topics. Thank you, Minda, for your participation, and I hope to invite you again next time. Thank you.

Minda: No problem, thank you.

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