CZ Philippines Conversation: Maintaining the current state of the banking industry without adopting blockchain is probably the worst option

Editor | Wu Says Blockchain

Binance founder CZ discussed with Lito Villanueva, the founding chairman of the Philippine Fintech Alliance, at his first public event in the Philippines about how stablecoins and blockchain can significantly reduce transaction costs in cross-border remittance markets like the Philippines. He believes that every country should have its own local stablecoin to avoid excessive reliance on other countries' monetary systems for domestic economic activities. He stated that blockchain as a new monetary technology will not disappear, and the demand for faster payments and higher throughput driven by AI will continue to promote the development of digital finance. He acknowledged that he often viewed regulators as "obstructionists" in the past, but after starting to advise multiple governments, he gained a better understanding of the complexities of regulatory work. He advocates for open communication between entrepreneurs and regulators while promoting ASEAN to adopt a "regulatory passport" or mutual recognition mechanism for licenses.

What Changes Can Stablecoins Bring to Cross-Border Remittances in Southeast Asia?

Philippine Fintech Alliance founding chairman: Next, let's welcome CZ to the stage. This is also his first public appearance in the Philippines. Let's give a warm welcome to CZ. In fact, I have prepared some questions, and these questions have not been communicated or confirmed with CZ in advance. Because we hope this summit will be a discussion without taboos.

We do not want to ask only safe questions and receive safe answers. We want to delve into the core of the issues. Because ultimately, whether it is inclusive finance or digital finance, the core lies in transparency, accountability, and whether industry participants can establish trust with each other.

CZ: First of all, thank you very much for inviting me here. It is an honor to be here, and I am very happy. I have been to the Philippines a few times before, but I have never publicly attended an event here. So, it is indeed a great honor for me to speak in front of a live audience today. I am glad to be here. Additionally, I want to inform everyone that Binance Philippines should launch fiat services either today or tomorrow.

Moreover, Binance Philippines has already entered the regulatory sandbox in the Philippines and obtained the relevant licenses. A lot of work has been put in by the team to achieve this, and I want to thank you and all the partners for your help. I believe this actually puts the Philippines in a very advantageous position. So, I am really very happy to be here today.

Philippine Fintech Alliance founding chairman: Next, I have a few questions I would like to ask CZ. As I mentioned earlier, this is still a discussion without taboos.

I want to focus first on the entire ASEAN region. You once said that stablecoins could grow thousands of times in the future based on the current foundation. So, if this growth is more concentrated in emerging markets like ASEAN rather than in the US or Europe, what will it look like when it actually materializes?

For example, five years from now, in a small grocery store in Manila, a couple's shop; or a community grocery store in Indonesia; or even in remittance scenarios in Jakarta, what will it look like?

CZ: I think the most intuitive change is that we will see more efficient transactions. Transaction costs will be lower, speeds will be faster, confirmation times will be quicker, and settlements will be faster.

Especially in the Philippines, which is already a very important global cross-border remittance market. The current remittance costs are astonishingly high, one might even say absurdly high. By utilizing blockchain technology, we can significantly reduce these costs while greatly improving the speed of remittances and settlements.

Because we can achieve this, I believe that first, people will become wealthier as a result; secondly, business activities can proceed at a faster pace. Therefore, I believe that blockchain and stablecoins will ultimately improve every aspect of our financial lives.

Philippine Fintech Alliance founding chairman: Yes, because in terms of the Philippines alone, we ranked third globally in the scale of overseas remittances received last year. Just last year, the funds sent back home by overseas Filipino workers reached approximately $35 billion.

This can truly help overseas Filipinos, and of course, their families who remain in the country. Now there is another question regarding sovereignty and control. I think this is also a rather sensitive topic. You are currently advising multiple governments on national-level stablecoins and tokenized markets. So, if a country like the Philippines chooses to establish its own financial infrastructure instead of directly adopting a stablecoin pegged to the US dollar, what can it gain? At the same time, what might it unknowingly give up?

CZ: First of all, you mentioned the $35 billion remittance scale. If these remittances were using the current stablecoins and blockchain technology, then for the people of the Philippines, assuming there is $35 billion that needs to be transferred, they might currently have to pay about $5 billion to $10 billion in fees, right?

With these technologies, we might be able to reduce the transaction fees to almost zero. For the people of the Philippines, this would mean a tremendous cost saving. As for digital financial infrastructure, there are two different issues here. The first is the relationship between privately issued stablecoins and state-issued or state-supported stablecoins, such as whether private stablecoins would undermine a country's monetary sovereignty, etc.

I believe that at this stage, it is more important for entrepreneurs to launch different stablecoins, and there may even be multiple stablecoins coexisting at the same time, so that we can truly test how they operate in reality. Of course, we always welcome government-issued or state-supported stablecoins. These stablecoins usually have stronger authority and are safer, etc.

But I believe that different stablecoins will ultimately serve different purposes. In a newly emerging market, the existence of one stablecoin does not weaken the power of another stablecoin. Because this is still an underdeveloped market, competition does not weaken you; instead, it can allow the entire market to expand faster and further. You can establish the market more quickly and try different product models, etc. As for stablecoins themselves, I believe it is very important for a market to have excellent local stablecoins.

Why Must the Philippines Have Its Own Local Stablecoin?

CZ: For every country, when we migrate the financial system from what is called TradFi, or traditional financial systems, to digital financial systems, you would want your national currency to become the dominant currency used by your people, ideally even usable by people from abroad. This can promote local economic development and enhance a country's influence and control.

Philippine Fintech Alliance founding chairman: So, the emergence of a stablecoin like PHPX, supported by local banks in the Philippines…

CZ: This is absolutely necessary. For me, this is not even an option. The Philippines needs to have its own local stablecoin, and ideally more than one, and a stablecoin like PHPX is absolutely necessary. PHPX is a stablecoin project supported by several banks in the Philippines, backed by the Philippine peso.

Otherwise, you would be giving up a lot of benefits. Simply put, you are allowing your country's economic activities and transactions to operate on someone else's monetary system, which is not something I would recommend.

Philippine Fintech Alliance founding chairman: Yes. Because according to what you just said, the current remittance service fee is about 5% to 7%, right? And now you mean that this cost can actually be reduced to zero?

CZ: Zero. Yes, the cost of conducting such transactions is, in my view, already close to zero. From my perspective, I would suggest reducing the transaction fees for most stablecoin transactions to basically zero in the early stages. This is the best way to promote this new technology and the best way to encourage user adoption.

Moreover, from an infrastructure cost perspective, the actual costs are really very low. For most blockchains, the cost of stablecoin transactions is already very low, at least on the BNB Chain, it can be close to zero.

Philippine Fintech Alliance founding chairman: I believe that most Filipinos, and even our regulators, usually care about one issue, which is security, right? If cross-border transfers and other transactions can really achieve zero fees or service fees low enough to be negligible, then at the same time, a very important prerequisite is that it must be secure and reliable enough. Can the relevant projects or platforms guarantee such security?

CZ: Okay, this is actually a very important and insightful question. We do need to be cautious about the idea of "completely free." If a business is completely free, meaning it has no revenue, then there will be a fundamental sustainability issue. And in such cases, you might even become the "product."

However, in today's business environment, you can offer certain services for free while generating revenue through other businesses, right? When you can create a lot of value for users, just taking a small portion from it is enough to support a very sustainable business model.

For example, in the ecosystem that Binance participates in, the platform can collect fees from traders, and this revenue is already sufficient to support many other services for free.

This is actually very similar to the internet. For instance, many of the Google services we use today are free, and even the clock on our phones synchronizes with the time service provided by Google, which is also a free service.

But Google can generate enough revenue through other businesses, such as search engines and advertising. Therefore, providing many services for free is not a problem in itself. I believe this will become an important form of many new business models in the future.

Today, the technological costs required to run a financial system are significantly decreasing, especially when using blockchain technology. And a blockchain itself can provide many different types of financial services. So I believe that the costs of most basic transactions should be close to zero.

What is the Biggest Obstacle to the Popularization of Stablecoins?

Philippine Fintech Alliance founding chairman: Good, continuing from your earlier discussion about free models or "Freemium" models. We know that currently about half of the population in ASEAN is underbanked or completely unbanked.

Using stablecoins typically requires a smartphone, internet connection, and a certain level of financial literacy to make people willing to trust digital wallets instead of hiding cash under their mattresses. Among these three factors, which one is the hardest obstacle to overcome? Are we underestimating the difficulty of this issue?

CZ: I think we have indeed underestimated its difficulty to some extent. On the technical side, for example, smartphones and internet connections are already basically in place, which is the relatively easy part. The more difficult part is financial education and financial literacy.

These two aspects are related; on one hand, there is education, and on the other hand, whether the product itself is user-friendly enough. Today, when using blockchain technology, you still need to deal with wallet addresses, and these addresses are usually a string of random characters, which humans are not good at handling.

So, we either need to make the products much simpler, or we need to invest more effort in educating users, and in fact, both things must be done. The issue is not just that the product needs to become simpler; it is also that schools today basically do not teach financial literacy. For example, I posted something on X yesterday and found that many people do not even know what "DCA" means, which is Dollar-Cost Averaging, right? This is actually a very convoluted term, and I don't even know why it is called that; I think the name is even a bit silly.

But the reality is that many people do not even understand these very basic concepts. And this knowledge is crucial for understanding financial investments, identifying and avoiding scams, judging whether a product is good, or whether an investment is worth participating in. So, we are not really teaching enough financial literacy in schools, at least not to the extent that it should be. I believe there is still a lot of room for improvement in education.

But education is not just a responsibility that the government should bear; every industry participant and every individual needs to be involved. We need to work together to promote the continuous improvement of financial literacy in society.

Philippine Fintech Alliance founding chairman: I completely agree. Because even among industry participants, and when we collaborate with regulators like the BSP (Bangko Sentral ng Pilipinas) and SEC (Securities and Exchange Commission), financial education and financial literacy are always one of the most important topics, even among competitors.

If there is one thing that everyone in the industry agrees on, it is that we must ensure that all customers are adequately protected, and consumer protection should always be a top priority. So I believe that regardless of what this platform or program ultimately provides for Filipinos, security is absolutely non-negotiable.

Returning to the topic of overseas Filipino workers. Overseas Filipinos contribute significantly to the Philippine economy, with their remittances accounting for about 10% of the country's GDP. As I mentioned earlier, they sent back approximately $35 billion to the Philippines last year. However, a large portion of that is actually eaten up by fees, usually ranging from 5% to 7%, and sometimes even reaching 10%.

So, if you were to build a stablecoin payment infrastructure for this specific cross-border remittance channel—I'm saying "now" because you just mentioned that the relevant products might be launched today or tomorrow—what are the things you absolutely would not compromise on? Is it speed, cost, or security?

CZ: I think all these factors are important, but the most important might be cost. First of all, we need to bring down the costs because that is the change users can feel most directly.

However, using blockchain technology will also significantly speed things up. For example, using Binance Pay, if you transfer money to a relative or family member, it can now basically be done instantly, and the fee is zero. This means that transferring money through Binance Pay incurs almost no fees.

Even if you choose to transfer on-chain, for example, using a self-custodied wallet like Trust Wallet or other wallets, the fees are also very low, far below what traditional cross-border remittance service providers charge today.

So I believe that cost is the top priority and should be the first thing to be reduced. But before that, there is a very important issue, which is security. For any cryptocurrency or Web3 product, security must be ensured. The blockchain itself is usually quite secure; what really needs to be ensured is the security of the platforms and service providers offering the relevant services.

On this basis, the speed issue is actually already largely resolved. Blockchain transfers are already much faster, so there is not much that needs further improvement in this regard. Additionally, whether the product is user-friendly enough is also very important.

Who Should Bear Responsibility for the Wrong Decisions Made by AI Agents?

Philippine Fintech Alliance founding chairman: I have read some of your articles and posts, and you have predicted that AI agents will autonomously execute transactions on-chain, and as you just mentioned, this may happen in the coming months.

So, when an autonomous AI agent executes a wrong transaction or is deceived by a scammer, from a legal and moral responsibility standpoint, who should be held accountable for that transaction? Is it the user, the developer, or the protocol itself?

CZ: This is indeed a tricky question. First of all, I am not a lawyer, and the laws vary from country to country. I believe that there is currently no absolute right or wrong rule regarding this issue, as it is still a very new field, and we need to explore further.

I think both AI developers and users certainly need to bear some responsibility. As a user, you must set some safety boundaries. Given the current level of technological maturity, you certainly should not entrust all your life savings to an AI agent to control. You should start by giving it a small amount of money to trade on your behalf. This way, even if you lose some funds, it is within a range you can bear, which is a responsibility that users need to take.

I believe everyone should be responsible for their actions. Choosing to use AI is your own decision, and developers also have a responsibility to ensure that the product works as advertised.

Today, we can still see AI experiencing "hallucinations." After all, this is still a new product, and it is still relatively easy to mislead or deceive, and it cannot operate 100% normally in all situations. So there are indeed these issues at present, but I believe these problems will gradually be resolved.

There may be some losses in this process, and some people may be harmed as a result. But overall, when using any new technology, the best risk control method is actually to control the scale of funds, right? You should not hand over a large sum of money that you cannot afford to lose to an AI agent. So at the beginning, you can give it a few hundred dollars to help you buy plane tickets, book hotels, or conduct some transactions, but the key is to control the scale of funds.

How Can Ordinary Users Avoid Crypto Scams in the AI Era?

Philippine Fintech Alliance founding chairman: AI is being exploited by scammers and fraudsters, and in fact, these scammers are often two or three steps ahead of the entire industry, right? So the question is, how do we now protect ordinary consumers? They may not have the ability to judge what is real and what is fake. Especially for Filipinos living in remote or rural areas, even those living in cities may find it difficult to determine whether a piece of information is true or false.

In the Philippines, we have a term called "budol," which refers to deceiving someone into believing and participating in something that is not real. So I want to ask, what practical advice do you have for ordinary consumers to help them avoid being scammed? For example, when faced with online scammers and various investment pitches, how should ordinary people identify these scams?

CZ: This topic is actually very deep, so let me start with a few more macro-level points. First, rely on common sense, right? If something sounds too good to be true, it probably is not. The most common and exaggerated examples are easily recognizable; for instance, if someone tells you, "If you give me 1 Bitcoin, I will give you back 10 Bitcoins." This kind of thing does not happen, right? Just applying basic common sense, you know it is unreasonable.

So the first point is common sense. At the same time, continuously learning and improving your understanding is also very important. Of course, more complex scams have emerged now. So before investing, you must truly understand what you are investing in. There are also situations that are more difficult to judge, such as when you invest in a project, purchase its tokens, and the project later fails, causing the token price to drop; this kind of thing can happen.

Therefore, unless you are very sure about what you are doing and know how to handle the worst-case scenario, do not put all your funds into a single project. Speaking of the worst-case scenario, I usually advise all investors to ask themselves one question: "What is the worst-case scenario?" Generally speaking, it is to assume that this thing eventually goes to zero; what impact would that have on my life?

You need to keep asking yourself this question. This is very important in investment and risk management. In terms of preventing scams, besides the users themselves, platforms can actually do a lot as well. In fact, AI itself can also help in this regard.

As far as I know, Binance has already utilized AI for such risk identification. For example, when you try to transfer crypto assets to a new address, especially one known to be associated with scams, the system often blocks the transaction. Of course, it cannot be 100% accurate, but in many cases, it can indeed intercept.

I believe Trust Wallet also has similar functions that scan for illegal transactions and high-risk addresses on-chain. If you attempt to transfer to one of those addresses, even if that address is not listed on any compliance sanction list, the wallet may still block your transaction based on risk assessment. Similar on-chain malicious address identification and interception mechanisms have been used by wallets to reduce scam risks.

Of course, these technologies also cannot achieve 100% accuracy. As you just mentioned, this is essentially a cat-and-mouse game. Scammers will constantly find ways to bypass and deceive the defenses established by developers, and developers need to keep chasing. So it can never be perfect, but overall, it is continuously improving.

In the long run, I believe the positive uses of AI will ultimately outweigh its negative uses. Any technology, during its development, will eventually produce more positive impacts than negative ones. But we are still in a very early stage. Crypto is still early, and AI is also early, so there are indeed many risks at present, but at the same time, there are many positive forces pushing these technologies forward.

Has the Crypto Industry Misjudged Regulators on Any Issue?

Philippine Fintech Alliance founding chairman: You have experienced the complete cycle of this industry—from early, almost unregulated rapid growth, to guilty pleas, and then later receiving pardons. Based on your current experiences and understanding, is there any issue regarding the crypto industry where regulators were right, but the entrepreneurs present often dismissed them too quickly?

CZ: This is a very interesting question and indeed quite tricky. I think many entrepreneurs have this idea; at least I did in the past. I used to see regulators as "obstructionists," thinking they wanted to stop everything and say "no" to everything. But now, as I have interacted more with regulators, I have gradually realized that their job is really difficult. Fundamentally, their goals are actually aligned with those of entrepreneurs.

We all want to protect our users, right? We all want to protect consumers. It is just that we are in different positions. Entrepreneurs usually want to solve these problems with technology, while regulators face challenges where they often need to balance many different demands. They certainly want to protect consumers, but they also have their political careers to consider. Moreover, the environment they are in often leans towards maintaining the status quo, so any change is difficult.

For example, I just flew over from Hong Kong. Previously, I communicated with some people from the Hong Kong Securities and Futures Commission (SFC). They told me that some of the rules for securities regulation in Hong Kong were established in 1974, and since then, the wording has hardly changed; their main job is to continuously interpret these rules. This is very different from how the tech industry operates. Moreover, people often do not dare to easily interpret old rules in a new way because once you propose a new interpretation, you may face backlash.

So, for regulators, how to gradually improve regulation over time is actually a very difficult job. Therefore, industry participants and regulators need to work together. This is also something I did not truly understand when I was a tech entrepreneur in the past. Even five years ago, my thinking was still very simple: a new technology emerges, and it will certainly bring some risks; we are doing everything we can to protect users, and the technology itself will continue to evolve at a very fast pace.

But from the regulator's perspective, this is actually very difficult. Now I advise many governments and have started to try to think from their perspective. After truly putting myself in their shoes, you realize that this is indeed a very challenging job.

There is no perfect solution, nor is there a one-size-fits-all solution to all problems. We can only make small adjustments and iterations continuously, moving forward bit by bit. So my advice to entrepreneurs is: yes, we need a bit more patience.

Philippine Fintech Alliance founding chairman: Yes, patience is a virtue. From your experience, this has been fully reflected. Next, I want to talk about the issue of "trust," which is also one of the key topics we hope to discuss today.

Last year, Southeast Asia lost hundreds of billions of dollars due to various scam networks, a significant portion of which was related to cryptocurrencies. So how should we distinguish the truly valuable applications of stablecoins from the reputational damage that the scam economy brings to the entire crypto industry? After all, some actual scam incidents do damage the image and credibility of such technologies and related projects.

CZ: First of all, if we look at the data, the proportion of illegal activities involved in cryptocurrency transactions is about 100 times lower than that in traditional finance. I remember that only about 0.0014% of cryptocurrency transactions are related to illegal activities.

Philippine Fintech Alliance founding chairman: Compared to traditional finance?

CZ: Traditional finance is about 2% to 5%. That is to say, in the traditional banking system, which we usually refer to as the fiat currency system, about 2% to 5% of transactions are related to illegal activities. This is a very large number. Moreover, the scale of the traditional financial system itself is much larger, so the amount corresponding to that 2% to 5% could reach trillions of dollars. In contrast, the entire cryptocurrency market is about $2 trillion, with only about 0.0014% related to illegal transactions.

So the first point is that the data is actually very clear: the proportion of illegal transactions in cryptocurrency is far lower than in traditional finance, and there are several reasons behind this. Cryptocurrencies are actually too transparent. Cryptocurrency transactions are very easy to trace, and all transactions are permanently recorded on a public ledger. It is "pseudo-anonymous," meaning that to some extent it has anonymity, but when combined with the KYC information of large centralized exchanges, the flow of funds on the entire blockchain can basically be traced.

Moreover, law enforcement agencies are now increasingly understanding how to cooperate with large crypto platforms. Binance even has a dedicated financial intelligence training team that provides training to global law enforcement agencies on how to track transactions and analyze on-chain transactions correctly.

At least when I was still in charge of Binance, this type of training was one of the most popular programs, and I believe it still is. However, this data is rarely reported. The relevant figures usually come from third-party organizations, such as on-chain analysis companies, and these tools are widely used by law enforcement agencies. So the data has already made it very clear; it is just that very few people actually discuss this data.

The media usually prefers to adopt a narrative that as long as an illegal transaction involves cryptocurrency, it will be described as "a problem with cryptocurrency." But if an illegal transaction involves a bank, the dollar, or other fiat currencies, people usually do not say it is a problem with the bank or the currency itself; they just think that some criminals used these tools.

So I believe we must distinguish between wrongdoers and the currency itself or the technology itself. Many people are using these new technologies to do very valuable things, and of course, there will be some wrongdoers using the same tools, but that does not mean the tools themselves are bad. We must separate these two things. Overall, the proportion of illegal transactions in cryptocurrency is far lower than in traditional finance.

National Stablecoins vs. Private Stablecoins: Who Has the Advantage?

Philippine Fintech Alliance founding chairman: Further extending your earlier point, the real problem is not the technology itself, but those who use the technology for evil, right?

Next, I want to turn to another interesting topic, which is the competition with sovereign currencies. If a state-issued stablecoin and a privately issued stablecoin are both technically excellent, what ultimately determines where people are willing to put their savings? Is it technology, the issuer, or completely different factors?

CZ: I believe that for most ordinary people, they actually do not care too much about who issued it and will not be particularly concerned about the underlying technology. What they really care about is whether the product is easy to use, whether the fees are low enough, and whether the transfer speed is fast enough, right?

So if a national-level institution issues a stablecoin that is very easy to use and has low fees, people will adopt it very quickly. For any company I hold shares in or invest in, I would encourage them to support this stablecoin as soon as possible.

Private issuers usually need to put in more effort to build trust. People will ask, "This is a new company; how much does it have on its balance sheet? How long has it been operating?" So for private enterprises, building trust often takes time. But at the same time, private enterprises usually have more capability to offer lower fees and more user-friendly products. Therefore, I believe that if a state-issued stablecoin can also achieve these, then typically, the state-issued version will prevail.

However, in reality, state-issued products often come with many restrictions, and these restrictions usually limit the actual use of the product. So theoretically, there is no reason why a state-issued stablecoin cannot be as good as a privately issued stablecoin in terms of usability and low fees.

For most ordinary users, even if a stablecoin is issued by a private enterprise, people actually do not overly focus on who is behind it. For example, Tether is already very large; it is a private company, and under the current circumstances, it does not have comprehensive licenses anywhere. But because it is large enough and has been around for many years, people think, "It is already this big; many people are using it." This scale and long-term operation itself will also create trust.

So I believe that most people do not really care too much about who is behind it; what they really want is low fees and ease of use.

Can a "Regulatory Passport" Lower the Bar for Crypto Companies Entering New Markets?

Philippine Fintech Alliance founding chairman: We just heard discussions about the ASEAN Digital Economy Framework Agreement (DEFA), which is the first of its kind in the region. Now, ASEAN is trying to establish interoperable digital infrastructure among 10 different regulatory systems. After all, each country has its own regulatory bodies and regulatory systems. So, can this coordination issue be solved through technology? Or does it ultimately require a political will that technology cannot replace?

CZ: I believe this is mainly a political issue. Technology is actually very simple, and the technologies used by different countries are essentially the same. At least for me, because I come from a technical and developer background, I think this is far from a technical problem.

The real difficulty lies in how to get different countries to agree to adopt the same framework, which requires political will. Each country has its own issues to resolve. Some countries have no foreign exchange controls, while others do; some countries have higher tax rates, while others have lower; some countries want to attract entrepreneurs and businesses by providing incentives, while others do not; some countries prefer to protect existing industries and systems.

Some countries are more conservative, while others are more open and aggressive. So the real challenge is how to coordinate these different interests. This is not a technical issue but more of a policy issue.

Moreover, the relationships between different countries are also complex. It is certainly great if 10 countries can cooperate, but sometimes there is also competition among these countries. Of course, this is a healthy competition. Everyone wants to do better than other countries and hopes their economic growth rate exceeds that of their neighbors, which is actually a good thing. So there is also some positive internal competition among countries.

But returning to the question itself, getting multiple countries to join the same framework is indeed a very good initiative. This would make the work of entrepreneurs and business operators much easier, and it would be the same for ordinary consumers. If everywhere applies the same framework, everyone only needs to understand one set of rules instead of facing completely different regulatory requirements from each country, it would be much simpler.

In fact, if you observe the financial regulatory rules of different countries, you will find that they are very similar to each other. Whether it is securities regulation, currency regulation, or banking regulation, the basic rules of each country actually have a lot in common. Therefore, there is not much need for each country to establish a completely different financial regulatory framework from scratch, as these frameworks are very similar.

Additionally, when I provide advice to various governments, I also strongly encourage them to adopt a "regulatory passport" or mutual recognition mechanism for licenses. If a company has already obtained a license in a reputable jurisdiction with a credible regulatory body, then other countries should allow that company to enter the local market based on the existing license, without needing to go through the same approval process all over again.

However, different countries still have varying degrees of regulatory openness; some are more proactive and open, while others are more conservative. So we are still in the process of making progress in this regard.

Philippine Fintech Alliance founding chairman: You just mentioned the "regulatory passport," which is great. In fact, we are also promoting similar mechanisms. Besides the "regulatory passport," I would also call it "license portability."

As you mentioned, whether within ASEAN or outside of it, many fintech companies have already obtained formal licenses from their respective national or regional regulatory bodies and wish to enter the Philippines or other ASEAN markets. For example, in the Philippines, there are already many fintech companies that are invested in or controlled by overseas private institutions.

So, according to your earlier point, if we can establish a "regulatory passport" or what I call a "license portability" mechanism that allows these companies to enter the local market more smoothly, would this also serve as an important driving force to attract more foreign investment into the Philippines?

CZ: Absolutely. For example, when one country recognizes a license issued by another jurisdiction, it is essentially automatically introducing businesses that have already been approved by the other regulatory body. Because the other regulatory body has already conducted due diligence on these companies.

Of course, you can still conduct your own due diligence and still require companies to submit various information. "License mutual recognition" does not mean it has to be 100% automatically approved. You can require companies to go through a specific application process, but this process should be much simpler compared to applying for a completely new license from scratch. For example, Binance has about 25 licenses globally. In the trading platform industry, Binance is one of the companies with the most regulatory licenses globally, even compared to banks. Many banks do not have 25 different licenses from various jurisdictions worldwide.

Moreover, some of these licenses come from very reputable regulatory jurisdictions, such as the Abu Dhabi Global Market (ADGM). If you recognize the ADGM license, then there are many other platforms under ADGM that have also obtained licenses. As long as these licenses are allowed to enter the local market through the "regulatory passport" mechanism, many of these companies can quickly come here to conduct business. And as more companies enter, competition itself is one of the best protections for consumers. Consumers can benefit from lower fees, better services, better liquidity, and also access safer platforms.

So this mechanism has many advantages. However, from a political perspective, for many politicians, promoting such reforms is often more challenging.

Philippine Fintech Alliance founding chairman: Not to mention the high compliance costs. It is easy to imagine that if we could establish such a mechanism—indeed, I hope to further present this idea to the government and our regulatory bodies—especially now that we have the ASEAN Digital Economy Framework Agreement (DEFA), if we can continue to push this work and allow the Philippines to adopt some form of "regulatory passport" or what we call "license portability," then undoubtedly, this will help attract more foreign investment into the Philippines and further promote economic development.

CZ: On this point, at least from my relatively simple understanding, it may actually be safer from a political perspective. Because when you allow a license from another jurisdiction to enter your country through the "regulatory passport" mechanism, you can actually say that we are, to some extent, relying on the regulatory work that another regulatory body has already completed.

Moreover, different regulatory bodies can share rules and learn from each other's regulatory frameworks, effectively allowing them to "copy each other's homework," ultimately forming a common framework. This approach is usually safer.

Philippine Fintech Alliance founding chairman: So now I want to look towards our good friend Sopnendu Mohanty. He previously served as the Chief Fintech Officer of the Monetary Authority of Singapore (MAS) for a long time, and MAS can be said to be the "gold standard" among regulatory bodies in the ASEAN region.

So I want to ask, can we work with GFTN to promote the "regulatory passport" or what we now call "license portability"? Can you give us a positive answer right now?

If Stablecoins Do Not Achieve Widespread Adoption, What Is the Most Likely Reason for Their Failure?

Philippine Fintech Alliance founding chairman: Now for my last question, I want to talk about your current role in the industry. As you mentioned, you have now become an advisor to multiple governments and have started to enter the rooms where these rules are actually made. So, when you sit on the side of regulatory policymakers, does this change your view on how crypto entrepreneurs should interact with regulators in the future?

Additionally, there is one last follow-up question regarding the risks you genuinely worry about. If your judgment is wrong, and stablecoins and tokenized finance do not develop on a large scale as you predicted, what is the most likely reason? I am not asking about the most optimistic scenario, but rather what you genuinely fear the failure path to be.

CZ: There are actually several different questions here. The first one we have already discussed to some extent. I believe that for any entrepreneur, they should communicate with regulators as openly as possible. But the problem is that the situations in different countries are not the same. Some countries are easier, while others are much more difficult. Especially in large countries, regulators are usually very busy and have too many issues to deal with, and the regulatory system itself is very large. Therefore, it is very difficult to give every entrepreneur the opportunity to communicate directly with regulators, especially when many entrepreneurs are running small startups.

When your business reaches a certain scale, regulators will naturally be willing to communicate with you. But for early-stage entrepreneurs, this is indeed more challenging. So there is a certain communication gap; the communication channels between both sides are not always completely smooth. But I believe what entrepreneurs can do is to maintain transparency as much as possible while also being patient.

Patience is actually something I personally lack. But if I were to give advice to other entrepreneurs, I would say that as long as your business involves any regulated area, you must have a certain level of patience. Fortunately for me, or for those of us who have been in this industry for a long time, the blockchain industry is not going away. AI is indeed very hot right now, but blockchain will not disappear either. Humanity will always need currency, and blockchain is a new monetary technology.

This brings us back to your question about predictions: what if we are wrong about stablecoins? Stablecoins are actually just one area of the blockchain industry, right? We may not necessarily need stablecoins in their current form in the future. For example, if central bank digital currencies are very easy to use and integrate into systems, then in the future, different forms of stablecoins or other digital currency forms may emerge.

Of course, there is also an extreme situation where the entire development of digital finance ultimately stagnates, and we continue to use the banking system, maintaining the current state of the banking industry without adopting blockchain. This would probably be the worst-case scenario. If that happens, it means we can only continue to stay where we are. For instance, regarding the previously mentioned $35 billion in cross-border remittances, we might still have to pay $5 billion to $10 billion in fees for that.

And many people in the Philippines have experience with cross-border remittances. If you have ever done international transfers, you know that the process is slow and very troublesome, especially when the amounts are larger. If blockchain and digital finance do not develop, then we can only continue to accept this status quo.

But I believe the probability of this happening is very low. Innovation will continue to occur, and AI itself will also demand faster payment speeds and higher payment throughput. So I believe innovation will continue to push forward. From the perspective of the entire industry, I think the risks are actually low; this industry will continue to develop.

However, when it comes to individual projects, the situation is different. Different platforms will face different risks. For example, just in the past week, we have seen two or three centralized exchanges shut down, right? And now we may be at the bottom of this crypto winter.

Philippine Fintech Alliance founding chairman: Are we at the bottom of the crypto winter now?

CZ: I hope so. No one knows, right? But I really hope we are close to the bottom now. If we look at it from the perspective of individual projects, companies, or tokens, there may still be many different risks. Even a certain stablecoin issued by different countries may face its own different risks.

But I do believe that every country should, and even must, have its own stablecoin to support and promote the development of its digital finance and local economic activities.

Philippine Fintech Alliance founding chairman: Thank you once again for answering these questions so candidly today, and thank you for sitting in this "hot seat" to accept our inquiries. I hope you do not regret coming here and do not regret answering these difficult and sometimes sharp questions.

But undoubtedly, many practitioners in the Philippine fintech industry present here have been hoping to find answers to these questions. We want to ensure that whether it is this business, this platform, or this technology, as you said, what we advocate is always "technology for good." At the same time, we also need to work hard to eliminate or at least minimize the presence of wrongdoers, right?

So this is the very meaning of our gathering here today. We need to work together to form a consensus and maintain unity in promoting consumer protection. Once again, thank you, CZ, for bringing such an inspiring discussion. Let us once again give him a round of applause. Thank you.