Reported by Echo from MetaEra. Original article is here

Currency stability, global regulation, and market capitalization growth are the hottest topics in the stablecoin world this year. However, in the evolving stablecoin market, users are increasingly concerned about: Can stablecoins break through cryptocurrency limitations as market demands change? Will the usability and liquidity of stablecoins be affected by changes in regulatory environments around the world?

To find answers, MetaEra had an in-depth conversation with Raymond Yuan, founder of WSPN, to discuss several topics including “Stablecoin 1.0 vs. 2.0,” “Stablecoin License Application,” and “The Role of Stablecoins in the PayFi Ecosystem.”

Here’s the full interview:

MetaEra: You’ve introduced the new concepts of Stablecoin 1.0 and 2.0. In your opinion, what are the most significant innovations and improvements in Stablecoin 2.0 compared to 1.0?

Raymond: I believe the most notable advancement of Stablecoin 2.0 over 1.0 lies in product development and user experience. Looking back at the 1.0 era, while USDT and USDC (especially USDT) have existed for nearly a decade, most non-crypto users today have only heard of them but never actually used them. The current phenomenon with Stablecoin 1.0 is that the degree of productization is not high, most of them do not have their own wallets, nor do they have their own apps. That is to say, the application scenarios of Stablecoin 1.0 are mainly limited to the field of cryptocurrency. We believe stablecoins should play a more important role in future payment systems. Stablecoin 2.0 aims for global asset allocation, covering broader scenarios like U.S. stocks and daily consumption such as flight and hotel bookings, transitioning from “electronic payments” to “digital payments.”

MetaEra: WSPN recently completed a $30 million seed round. Congratulations to you and the WSPN team. Could you please share what you think is the most attractive thing about WSPN to investors?

Raymond: Thank you, we feel fortunate to have received such support in our early stages. We’ve secured investments from 6 renowned VCs, 2 strategic investors, and several exchanges. Throughout the interaction with investors, the feedback we received was:

First, we’ve built a sufficiently strong team. Beyond my background with CTH, our team comprises industry veterans from leading institutions including Paxos, BUSD, Visa, Alipay, and UnionPay. This diverse team composition creates synergies through complementary expertise and leverages individual strengths. I have full confidence in our team.

Second, it’s about our understanding of stablecoin’s medium to long-term development and our clear vision for its future. Our goal isn’t to compete with other existing stablecoins in the current $200 billion market, but rather to work with industry peers to expand market boundaries, expanding the stablecoin market capitalization from $200 billion to $2 trillion or even $20 trillion. This is our collective goal for the next 5–10 years. Our strategy is founded on market expansion principles, that is, seeking market expansion and growth rather than competing for existing market share.

Third, it’s our relentless pursuit of product excellence and user experience, along with our emphasis on diverse use cases. Many of our investors come from traditional payment sectors and firmly believe that payment technology evolves with underlying technological progress. They believe payment systems undergo a major technological upgrade approximately every decade. Our dedication to product and user experience, along with our focus on broader use cases, aligns perfectly with their investment philosophy. This is one of the reasons we were able to win them over.

MetaEra: WSPN has launched its first stablecoin WUSD and plans to launch a euro stablecoin WEUR. Could you introduce the design and issuance mechanism of WUSD, and how it ensures stability?

Raymond: WUSD is a fiat-collateralized stablecoin, pegged 1:1 with real-world fiat currency. This means that to issue 1 WUSD, we must deposit an equivalent of 1 USD as reserves in designated custodian banks. Only after completing this step are we authorized to mint and distribute the corresponding amount of stablecoins. This mechanism is a distinctive feature of WUSD, similar to how other fiat-collateralized stablecoins like USDC operate.

WUSD’s operating mechanism covers multiple aspects. On one hand, it will continue to be closely tied to digital currency trading, expected to circulate on all major cryptocurrency exchanges in the future. Beyond this, we hope to apply WUSD to a wider range of fields, particularly in cross-border payments and real payment scenarios, such as bulk trade transactions and other areas with practical application needs, to drive the adoption of stablecoins in real-world payment scenarios. Additionally, we’re closely monitoring the market dynamics of euro stablecoins,observing the gradual growth of its market share. Europe has a relatively mature and friendly regulatory environment, and we expect that once the regulatory framework and ecosystem are fully in place, stablecoins in other currencies will also usher in growth opportunities. But for now, our focus remains on the US dollar stablecoin WUSD.

MetaEra: WSPN has consistently prioritized compliance in the stablecoin sector, adhering to the principle of “no operation without licenses” , which is well known in the industry. The company is actively applying for or has already obtained relevant licenses in multiple countries and regions globally, including the United States, the Netherlands, and other countries and regions in Asia. In this process, is there any difference between the application process for stablecoin business and that for exchanges? Are there any regional differences or interesting findings in the application process in various countries and regions that you can share with us?

Raymond: I believe stablecoins are currently facing a tremendous opportunity. Leading financial jurisdictions, including the U.S., Europe, Hong Kong, and Singapore, have either implemented or are developing comprehensive stablecoin regulatory frameworks. As one of the first applicants, we are actively applying for these corresponding stablecoin or payment licenses so that our business can operate within a sound compliance framework.

My understanding is that the core of a stablecoin license lies in ensuring the legality and compliance of the source of funds, and how to safely custody these reserve assets to ensure that they are under safe custody and supervision. At the same time, it is also necessary to ensure that bankruptcy isolation can be achieved between the reserve assets and the issuing management company, that is, even if the issuing entity encounters financial difficulties, it will not affect the safety of customer funds. This is the framework we have been working on improving over the past few years.

Finally, regarding transparency, how we introduce credible audit institutions and third-party institutions to provide asset certification and corresponding information disclosure mechanisms is crucial for all users. Users need to have a clear understanding of how reserve assets are custodied and used, which is an important component of stablecoin management.

As for exchanges, since they’re not within our business scope, we might not be in a position to comment. However, it is certain that the nature of the two businesses is very different, and they will correspond to different regulatory authorities and different license categories in terms of supervision.

MetaEra: Has WSPN encountered any regional differences or interesting discoveries during the application process in various countries and regions that you could share?

Raymond: This is a very good question. We recognized early on that to achieve our ambitious vision of global stablecoin adoption, we must achieve compliance and establish operations in multiple regions around the world. This inevitably leads to varying requirements due to different regulatory frameworks in each jurisdiction. Therefore, how to complete this process with higher efficiency and lower cost is a question we have been exploring.

We are implementing an AI-driven regulatory compliance framework — a compliance system designed to automatically adapt to different regulatory requirements around the world. The system is divided into three key parts:

First, we prioritize compliance requirements from all regulatory regions globally, ensuring our business meets these basic compliance standards.

Second, we’ll leverage AI’s automatic learning capabilities to track real-time changes and trends in each region’s regulations, as well as their focus areas.

Furthermore, we will leverage AI to conduct comprehensive on-chain data analysis, so that our own internal compliance management can go beyond supervision. We have set higher compliance requirements for ourselves internally, and can prevent many risks in advance and achieve more comprehensive risk management.

Through this AI-driven compliance system, we can more efficiently and cost-effectively address global regulatory challenges, ensuring compliance and robust operations worldwide.

MetaEra: The PayFi concept has been trending recently, and WSPN has joined the Conflux PayFi ecosystem. Could you share what role WSPN stablecoin will play in this ecosystem and its potential impact?

Raymond: As a stablecoin issuer, it’s important to maintain a relatively neutral role, and we need to be multi-chain compatible. We have also been paying attention to the development of Conflux. We believe that Conflux itself has the technical characteristics of high security and high throughput, which is very suitable for financial activities such as stablecoins that require large volume, high speed, and high security.

That’s why we chose Conflux as our ecosystem partner and deployed our stablecoin smart contracts on Conflux, actively promoting our stablecoin’s use across the entire Conflux ecosystem. Based on the industry’s development experience over the past decade, the success of a public chain is inseparable from the circulation of payment tools such as stablecoins. Once these payment tools develop and grow within the public chain ecosystem, they will inevitably bring about increased transaction volume and on-chain transfer volume. Additionally, it greatly facilitates other developers on the chain to expand their applications, as they no longer need to issue their own stablecoins. If a public chain’s ecosystem has a high-quality stablecoin that’s widely accepted, it can automatically execute in other applications because, being on the same ledger, it will automatically integrate with the stablecoin, thereby developing their own ecosystem. This is our expectation for the future of Conflux. We hope to work with the Conflux Foundation and all developers in the Conflux ecosystem to develop and grow the Conflux public chain ecosystem.

MetaEra: WSPN has invited a former Visa president to join as a board director. We have seen many executives with rich experience in the international payment field join in the past six months. How does this echo WSPN’s strategic layout?

Raymond: WSPN stands for Worldwide Stablecoin Payment Network. Our understanding is that stablecoin plays the role of a tool, but our ultimate goal is to realize the function of a payment network, that is, to use stablecoin as a tool for circulation. The ultimate goal is to facilitate the transformation from traditional electronic payments to blockchain-based digital payments and establish a more efficient, lower-cost, and more secure global payment network system.

Therefore, we urgently need talents with global operational experience to join our team. As a world-leading card organization and clearing and settlement institution, we look forward to drawing on the rich experience of Visa’s executive team and learning how to surpass Visa and existing systems in multiple aspects. This is our original intention to invite them to join.

At the same time, we are also very grateful for the trust of many senior financial professionals in the early stage. They are willing to bring their resources, network, and years of accumulated experience and knowledge to our platform to help the platform grow and develop.

MetaEra: You mentioned that stablecoin success depends on the prosperity of the entire ecosystem. What specific plans and actions will CTH Group take in building this ecosystem?

Raymond: Besides payments, CTH also has an investment branch, Fundamental Labs, which has invested in over 200 companies since 2016, including some exchanges, leading infrastructure and a large number of middleware and applications that are currently doing very well. In the future, Fundamental Labs will focus on the two fields of Crypto payment and AI.

For stablecoins specifically, Fundamental Labs will focus on investing in upstream and downstream companies in the stablecoin industry chain. For example, as mentioned earlier, many startups provide fiat off-ramping services for stablecoins, while some startups provide digital banking, digital wallets, and other types of services for stablecoins — these will be investment priorities in the future. We hope to create more cooperation opportunities with other ecosystem startups and innovative enterprises through investment and collaboration. I often say that the realization of a grand vision does not depend on the efforts of one company alone, but on a joint effort, on some outstanding entrepreneurs and entrepreneurs with an innovative spirit, who work together in the same direction, and then finally everyone realizes their vision together.

In this process, as a company that has been deeply involved in this industry for many years, CTH hopes to be able to support other entrepreneurial enterprises in the ecosystem and be able to carry out various forms of cooperation with them to jointly promote the early realization of the vision.

MetaEra: What challenges do you think Stablecoin 2.0 will face in promoting the transformation of the global financial system, and how is WSPN prepared to meet these challenges?

Raymond: I believe challenges and opportunities coexist. The first challenge is that traditional financial institutions need time to learn and understand this emerging field of stablecoins, which is no small challenge. However, we can see that major financial institutions, including Standard Chartered and JPMorgan, have already taken action. They’re either using stablecoins for interbank transfers or collaborating with other stablecoin institutions in the market. We have also partnered with several well-known banks. So, while challenges exist, the difficulty of these challenges is gradually decreasing over time and with deeper collaboration.

Another challenge lies in regulation. A positive trend is that the U.S., Europe, Hong Kong, and Singapore have successively drafted and issued their own stablecoin regulatory bills, clarifying regulatory boundaries and specific content. This will facilitate the establishment of a comprehensive regulatory framework, which is beneficial for the industry’s long-term development and growth.

Furthermore, there’s the ongoing challenge of maintaining effective dialogue between regulators and market participants in the short term, listen to the voices of the market, and how to avoid harming innovation while regulating the industry. I think this is a common topic. We are willing to work together with all regulators to maintain open and transparent communication, enhance mutual understanding, and accelerate the entire learning process, so that supervision can be closer to the market, and the industry can better understand the original intention of supervision.

Besides challenges, I’d also like to discuss opportunities. The growth opportunities that stablecoins bring to the global economy are actually enormous.

In our current financial system, according to incomplete statistics, approximately 1.7 billion adults remain unbanked. Even for those who have bank accounts, the types of financial services they can access are very limited.

To advance global financial integration and facilitate rapid growth in the digital economy, it is a problem that must be solved to include more people in the financial system. That is to say, we must achieve financial inclusion, giving everyone the opportunity and channels to access financial services, enabling more people to have access to better financial services — this is a huge opportunity for stablecoins.

Additionally, another opportunity comes from machine-to-machine transactions in the future AI era. We anticipate that machine-initiated transactions will dominate future payment flows, where both transaction initiators and recipients are automated systems. The existing financial system cannot support this type of transaction, but this will account for over 50% of transactions in the entire economy in the future. This is a huge incremental market, and we hope our stablecoins can well serve these emerging automated machine trading and transfer scenarios.

MetaEra: In your prediction, how will the future stablecoin market impact global investment trends? Can you share your insights?

Raymond: The current stablecoin market cap is approximately $200 billion. Regarding stablecoin growth, I personally predict it will reach $1 trillion within the next three years and exceed $10 trillion within five years.

As for how stablecoin growth will impact financial transactions and capital markets, here are my views:

Stablecoin growth facilitates the construction of a unified global financial market. Currently, stock markets and many other financial transactions operate in relatively isolated regional markets. For instance, U.S. stocks, China A-shares, Hong Kong stocks, London stocks, and the Tokyo Exchange — most stock and asset trading is confined to specific regions. This creates inefficiencies for long-term institutional investors, high-net-worth individuals, and those pursuing global asset allocation. Their investments are forcibly divided across different regions, requiring multiple platforms simultaneously, resulting in increased operational costs and market friction. We hope stablecoin growth will expedite the formation of a unified trading market where stocks, oil, commodity futures, precious metals, and even forex can be traded on a single platform.

After introducing stablecoins, we envision trading becoming a 24/7 global peer-to-peer operation, transforming fragmented regional markets into a unified global market. Market operations would transition from limited trading windows to continuous 24/7 global accessibility.

MetaEra: Hong Kong has launched its HKD stablecoin with multiple institutions participating in its development. How do you view the competition between Hong Kong and Singapore in the Web3 era, and who do you think will become Asia’s center for the decentralized Web 3.0 sector?

Raymond: I believe one of Web3’s most important principles is decentralization, so I don’t think Web3 will have an absolute center, whether in Asia or globally. A more ideal architecture is seeing Web3 active across multiple cities, as we currently observe with Hong Kong and Singapore being very active Web3 nodes. Additionally, New York, London, Berlin, Lisbon, Dubai, and San Francisco are joining this list. I believe this represents a more ideal structure. In an optimal framework, multiple nodes should remain active simultaneously rather than having a single center.

As for the perceived competition between Hong Kong and Singapore as financial hubs, I view it as fundamentally healthy. Both are trying to maintain a balance — achieving effective and sufficient regulation while avoiding harm to innovation and ensuring adequate development space for emerging industries. I think this is what both regions aim to achieve. They’re competing while learning from each other, and I believe this healthy competition promotes mutual improvement. Ultimately, they will provide smarter and more effective regulatory solutions for the industry, which is very beneficial for its long-term development.

MetaEra: Recent market hot topics have focused on the United States. Previously, WSPN’s US CEO expressed hope for accelerated U.S. regulatory progress. As the global regulatory landscape becomes clearer, could you summarize WSPN’s stance or message in one sentence?

Raymond: In this era of regulation, what we all need to understand is that regulation always progresses in parallel with industry development — regulation is not innovation’s opponent, but rather a responsible partner. This reflects our fundamental perspective on regulatory development.