Original Wanxiang Blockchain Wanxiang Blockchain

October 23, 2025 22:33 Shanghai

On October 23, the 11th Global Blockchain Summit hosted by Wanxiang Blockchain Laboratory successfully concluded. At the meeting, Wanxiang Holdings Vice Chairman and Executive Director, Chairman of Wanxiang Blockchain, and Chairman and CEO of HashKey Group, Xiao Feng, delivered the closing speech (Blockchain: New Financial Infrastructure). The following is a summary based on the on-site notes, with slight edits that do not affect the original meaning.

The content I shared today is (Blockchain: New Financial Infrastructure). I would like to summarize how the blockchain distributed ledger has evolved step by step since the birth of Bitcoin's blockchain in 2009, and how it is about to reconstruct the infrastructure of the financial market.

To understand this evolution process, one may need to start from the Bitcoin white paper. The Bitcoin blockchain white paper was born in 2009 (Bitcoin, a peer-to-peer electronic cash system). Satoshi Nakamoto aimed to create not just a system for sending digital currency, but a new payment clearing and settlement system.

We know that cash has characteristics from the perspective of payment, clearing, and settlement. First, it's point-to-point: cash payments are point-to-point payments between Party A and Party B, and cash payments are payment is settlement, without the need for intermediary links, nor any clearing stages. Cash payments are 'payment is settlement', while settling each transaction— you give money, others give goods, and both are settled.

However, cash payments have their disadvantages, namely the inability to complete remote payments and the inconvenience of making large payments. The electronic cash system created by Satoshi Nakamoto retains the advantages of cash, such as 'payment is settlement, and settling each transaction,' while overcoming the disadvantages of cash payments. Therefore, Bitcoin can not only achieve remote payments but also supports large payments.

In addition to Bitcoin, Satoshi Nakamoto also created a new payment clearing system. Given the various drawbacks of cash payments, electronic currency has emerged, making the payment, clearing, and settlement processes more complex—ensuring consistency, integrity, accuracy, and finality in payments remotely requires the involvement of intermediaries, leading to central registration, central custody, central counterparty trading, and central clearing.

Under the existing banking account system, we first need to swipe a card (payment), after which the PoS machine contacts the account-holding bank to confirm that there is money in the account and holds the money, which is called clearing; finally, the money enters the merchant's account from our account, which is called settlement. Payment, clearing, and settlement are divided into three steps, which is much more complicated than cash payments. In achieving a cashless currency system, this must be done to ensure the finality, consistency, and accuracy of payments.

From the evolution of the U.S. financial infrastructure, financial infrastructure has always been in a process of continuous evolution. Before the 1960s, the U.S. was still in the era of physical stocks/paper stocks. As trading volumes increased, problems in clearing and settlement gradually emerged. By the 1970s, the U.S. stock market erupted into a 'paper crisis': as transaction volumes continued to grow, the speed of clearing could not keep up with the pace of trading, and after transactions, vehicles could often be seen shuttling back and forth on Wall Street, transporting stock certificates from Morgan Stanley to Goldman Sachs, and then from Goldman Sachs to J.P. Morgan. This was because different clients purchased stocks from other securities company clients, and physical stocks had to be settled through physical transportation. Later, severe clearing delays occurred, causing the NYSE to frequently close on Fridays. Why? Because a day was needed to complete the stock settlements for the entire week.

Thus, the industry decided to establish a central custody company to concentrate all stocks under one roof. Although physical stocks still need to be transported, it is merely a transfer between different rooms, significantly improving settlement efficiency.

Later, central registration, central custody, and central clearing systems emerged. In 1999, the DTCC (Depository Trust & Clearing Corporation) was established, which could meet the trading volume demands of the U.S. stock market and achieve 100% clearing and settlement on the same day.

Starting in 2025, the U.S. will begin reconstructing a brand new payment and settlement system based on distributed ledgers, adopting a point-to-point model, with fewer links, higher efficiency, and lower costs, essentially built on blockchain technology. In essence, blockchain is a new type of financial infrastructure, and the definition of financial infrastructure pertains to the entire set of arrangements regarding transactions, clearing, and settlements.

What is the difference between old and new financial infrastructures?

The old system, which is the financial infrastructure we are currently operating, adopts a model of central registration, central custody, central counterparty trading, and central clearing, while the new financial infrastructure based on blockchain distributed ledgers achieves point-to-point payment is settlement and transaction is settlement. This is why all digital asset exchanges worldwide can easily operate 24/7, while stock exchanges cannot.

Why? Because the settlement models of the two are different: the old system uses a 'netting' model, while the new blockchain financial infrastructure uses a 'settling each transaction' model, so there is no need to stop at a specific point in time to clear previous accounts, nor to net and then settle. This is a major distinction between the two systems.

We all know that the U.S. capital market is engaged in competition over the method of trading tokenized stocks. Coinbase submitted a complete set of tokenized stock trading plans to the SEC. In this plan, traditional central registration, central custody, central trading, and central clearing links have been eliminated. If Coinbase's plan is adopted, half of the people on Wall Street will be unemployed.

Wall Street is certainly reluctant to accept this reality. Institutions on Wall Street, represented by Nasdaq, submitted a proposal to the SEC for a tokenized stock trading framework a month ago, retaining the DTCC I just mentioned. Currently, DTCC is responsible for clearing stocks, bonds, and funds, but according to Nasdaq's proposal, DTCC will also take on the function of token clearing in the future, which means Nasdaq's plan retains the jobs of most Wall Street institutions.

Now this challenge has been handed over to the SEC. It is expected that the SEC will make a ruling in the first half of next year to decide which plan to adopt for allowing commercial institutions to trade tokenized stocks, possibly Coinbase's plan, or Nasdaq's plan, or even allowing both plans to pilot simultaneously, or possibly merging the two plans into a compromise solution.

The core differences between these two financial infrastructures are mainly reflected in several aspects:

1. Settlement mechanism. The old system required multiple intermediaries to complete settlements, while the new system achieves transaction settlement and payment settlement simultaneously.

2. The essence of architecture. The old system required centralized registration and custody institutions, while the new system completes registration on a distributed ledger, eliminating the need for registration, custody, and settlement institutions.

3. Trust mechanism. Traditional financial infrastructure requires strong centralized institutions for trust endorsement, while distributed ledgers rely on consensus algorithms and cryptography to establish trust mechanisms.

4. Risk characteristics. Centralized institutions are prone to single points of failure, while decentralized institutions significantly reduce this risk, but they also introduce new challenges like smart contract risks and digital wallet risks.

5. Service coverage. Traditional financial institutions are constrained and limited by judicial jurisdictions or centralized systems, while distributed ledgers can operate across time, regions, spaces, subjects, and institutions, which is the core difference between the two.

From this perspective, all of Trump's actions since taking office can be understood as fundamentally aiming to change the infrastructure of the U.S. financial market. From congressional legislation to the president issuing a 166-page document on ensuring U.S. leadership in digital financial technology, to the SEC chairman's repeated statements that the SEC will establish an innovation exemption mechanism, safe harbor plan, and whitelist for all crypto innovations, all these indicate that this is not the president's personal action, but a unified action by the U.S. legislative body, government executive departments, industry enforcement agencies, and regulatory bodies—moving the U.S. financial market from off-chain to on-chain, allowing the U.S. financial system to operate on-chain. This is also the essence expressed in the SEC's speeches about changing financial infrastructure. Perhaps in five to ten years, buying U.S. stocks will no longer mean buying shares but buying equity tokens of a certain U.S. company—this possibility is very large.

The SEC chairman has mentioned examples of 'technology changing industries' in several speeches. He said that in the past few decades, the mediums for recording audio in human society have undergone three iterations: the earliest was vinyl records, evolving to tapes in the mid-20th century, and entering this century, it has transformed into digital media, where everyone can store audio on their phones. He also mentioned that the three technological iterations of audio recording have completely restructured the global music industry, and distributed ledgers will similarly restructure the U.S. financial system.

This example is very good. He also said a sentence, 'If it can be tokenized, it will be tokenized': everything that can be tokenized will eventually be tokenized. This sentence is the source of 'everything is on-chain, everything can be tokenized, everything can be traded', and is the basis for Coinbase to build the Super APP.

The above represents the views expressed by the SEC in several speeches. I have summarized them to prove that what the U.S. is doing is reconstructing the entire financial infrastructure.

What will reconstruction bring? Reconstruction will bring a shift from 'digital native' to 'digital twin'. Before such a reconstruction took place, Satoshi Nakamoto invented blockchain, and Ethereum enhanced, optimized, and enriched blockchain and distributed ledger technology. We created digital native entities like Bitcoin and Ethereum from 0 to 1 on distributed ledgers. Digital native entities have been operating for 15 years now, and we can view it as a massive social engineering experiment, which has proven that blockchain distributed ledgers, digital wallets, and smart contracts are all valuable. Traditional finance or digital twins have taken over the results of this experiment and begun moving the entire financial market system on-chain, onto a new financial infrastructure, with fewer links, higher efficiency, and lower costs.

We know that J.P. Morgan has its own JP Coin and has established 8 core nodes globally. Suppose you make a cross-border remittance within the J.P. Morgan system, for instance, from New York to Hong Kong, through the traditional banking account system, via SWIFT and agent banks, the final arrival time could take more than a day; if remitting from Africa, it could even exceed a week, and a fee of 3% needs to be paid. However, initiating a remittance from New York J.P. Morgan to Hong Kong J.P. Morgan's account only takes 2 minutes because the remittance becomes a token as soon as it is initiated, and when the money arrives in Hong Kong, it is converted into U.S. dollars, which represents the new financial market infrastructure and also the digital twin.

Digital twins began in 2024, and RWA also belongs to digital twins. In fact, the U.S. is addressing this from two aspects:

1. Tokenization of the funding side. Currency tokenization and funding tokenization have three models:

1. Stablecoins. Stablecoins are essentially the tokenization of funds or currency.

2. Deposit tokenization represented by J.P. Morgan. Last year, HSBC launched a pilot for deposit tokenization in Hong Kong. The Hong Kong Monetary Authority has also specifically established a regulatory sandbox for bank deposit tokenization, and various institutions are experimenting. Deposit tokenization is also the tokenization of funds or currency.

3. Central Bank Digital Currency. The digital yuan also tokenizes currency and funds. Whether it is central bank digital currency, deposit tokenization, or stablecoins, the ultimate goal is to tokenize currency/funds. The tokenization of funds/currency is an irreversible trend. As for which model will eventually take a larger share, it is still unclear and difficult to judge.

2. Asset tokenization. Starting in 2024, institutions such as BlackRock, Fidelity, and Franklin Templeton have successively tokenized different types of funds, such as money market funds, U.S. dollar bond funds, stock funds, etc. Once the asset-side tokenization reaches a certain scale, a chain-based financial market system based on new financial infrastructure will have essentially been completed. In the next 3 to 5 years, we are likely to see a chain-based financial market system gradually take shape and achieve a closed loop.

Blockchain, as an emerging financial market infrastructure, is gradually replacing the existing traditional financial infrastructure.

So, what are the benefits of currency tokenization? Looking at the history of currency development, the credit attributes of currency can basically be summarized into three types:

(1) Natural attribute currency. In the period before fiat currency emerged, items such as shells, gold, silver, and copper coins derived their credit endorsement from their natural attributes. These materials are products of nature, which humans have refined and processed, endowing them with currency attributes, hence termed natural attribute currency.

(2) Legal attribute currency. Since the Treaty of Westphalia in 1774 in Europe, sovereign states have started to emerge, and through legislation, certain currencies have been designated as their legal currency or sovereign currency, such as the U.S. dollar and the renminbi. The credit of these currencies can be seen as derived from law, thus belonging to legal attribute currency.

(3) Technological attribute currency. Bitcoin is a currency formed under the empowerment of a complete set of digital technologies. Distributed ledgers, digital wallets, cryptography, and consensus algorithms are the digital technologies that enable it, allowing it to become a form of currency recognized by more and more people. We refer to this type of currency formed under technological empowerment as technological attribute currency.

The credit attributes of currency are nothing more than these three types.

Tokenized currency is the only currency in the history of human currency that possesses dual attributes.

Tokenized currency, before becoming a token, is itself a form of fiat currency and thus possesses legal attributes, having legal endorsement. For example, a U.S. dollar stablecoin is first a U.S. dollar, possessing legal attributes. When it is minted as a stablecoin on the blockchain, it obtains the technical attributes endowed by blockchain, cryptography, consensus algorithms, digital wallets, etc. Therefore, it is a currency with dual attributes. Compared to single attribute currency, dual attribute currency is technically more advanced, representing the latest form of currency development.

Not long ago, Ray Dalio, the retired founder of Bridgewater Associates, stated in an interview that he believes the ultimate currency in the world is gold, and only gold can be called real currency, while fiat currencies such as the U.S. dollar, pound, euro, and yen are essentially debts based on national credit, fundamentally still a form of debt relying on credit issuance.