How about now?

Oh, yeah. I can hear you now.

Sorry for being literally a couple minutes late.

No problem.

Yes, so we just started recording. Leo and Alex, please feel free to…Let’s start. Yeah.

OK.

Let me say a word of hello and then I’ll turn it over to Leo. I don’t know if you remember me. Five years ago, I brought Vitalik over to your apartment.

Yes, I remember that.

We’ve been doing well in the meantime, and we appreciate your time to hear about this new project that Leo’s taking. Over to you.

Excellent. Now, Vitalk is my fellow board member at RadicalxChange. Thank you for precipitating this collaboration.

Yeah, please.

Yeah, Audrey. I also want to thank you for your time and I’ll try to be quick. I know you’re busy, but I wanted to give you an update on something Alex and I have been working on, and also get your advice on how we can handle this a little more effectively and if you have any other suggestions for us.

As you know, I used to run BlackRock here. I come from the very traditional finance world. Why am I working with Alex? Well, the key reason is that Alex and I both want to see Taiwan modernized more quickly. We want to see Taiwan be on the cutting edge of finance instead of sometimes I feel we’re kind of on the back foot.

In this regard, Alex and I had been working on a stable coin for Taiwan an NT dollars stablecoin. As you know, cryptocurrency in a lot of ways is the forefront of the financial industry, but it hasn’t been really become mainstream.

The big reason is because there’s a lot of things that happened in the crypto world that the mainstream financial industries can’t accept. It struck us that the link between the two is a stablecoin and you’ve seen this in the United States with the USDT and USDC.

It’s already becoming much more mainstream as a payment tool, as a tool for settlement, and we think Taiwan can benefit from this as well. We started on this process and in fact, we plan to launch this next year. We’ve done a lot of work in terms of making sure that the design we use is as transparent and as conservative as possible.

Our version of a stablecoin is where the customer will give us one NT dollar, we will take that and put it in the bank in a guaranteed account so that it is truly one-to-one back by currency. Not like, even some of the stablecoins you see in the US who been buying commercial paper and other things.

By the way, we believe that those approaches are going to be regulated by the Fed very soon. End of this year or next year, they will require them to act more like banks and keep larger cash reverse. In Taiwan, we planned it back through that one-to-one with the dollar.

OK, so that makes a local bank digital currency?

Correct. What then happens MyCoin already has the platform to do this itself, but in our approach, we don’t think that that’s the right way to do it. We want to get other people who will use it onto this platform. This is not a money-making scheme.

We won’t make a lot of money from this. We’ve run the financials, it’s not a money-making scheme. Our hope is to open up a whole ecosystem with this Taiwan stablecoin. To do that we’ve already started talking to potential users.

We’ve talked to people in the online payment platform, they’re very interested. I’m not going to mention any company names, but they’re large players on the online payment platform. We’ve talked to large credit card companies here, also very interested.

We’ve talked to large banks here, who could act as custodian banks, very interested. We’ve talked to large tech companies, who will use this as a settlement tool for their supply chain, also interested.

We’ve also talked to companies that are doing similar types of things in Asia, because if we can link this with other cryptocurrencies, other stablecoins within Asia, it will become even more widely used and will be away for Taiwan to really broaden its commercial influence.

Because this area is currently unregulated or I should say despite that we still have gone to the FSC. We’ve talked to them, Brenda Hu and got her view on things. From their perspective they said, “We want to make sure that there’s no laws covering this right now. We confirmed that there’s not and we don’t believe there are.”

We want them to be advised of what we’re doing, informed of what we’re doing, and while it doesn’t touch them in the legal way, we want them to be supportive of what we’re doing. Believe we have that and we promise to keep them updated as we go along, as we get closer to launching.

The stage we’re at now is, we’re getting together this founders group of each of these different sectors that I just mentioned and I hope with their support that we found this and launch it and start using it early next year.

There remains one concern. The FSC also asked us to speak to the Central Bank, and of course we would, and we’re going to do that. We also believe that the Central Bank of Taiwan won’t be particularly concerned because there’s no FX issue. There is no foreign exchange issue. There’s no currency issue.

We’re not creating new money. We’re taking their NT dollars and putting them in the bank. From our perspective, the Central Bank we believe will also have no comment. I’m not sure if they’ll be supportive, but at least we expect them to have no comment.

That’s where we are right now, in a nutshell. I was mostly wondering if you have any advice, if you see any road bumps that we might have to deal with. Is there any way we can get more support from various government bodies in Taiwan to move this forward? Just your thoughts on it more than anything and we felt it was very important given your background to be aware of what we’re doing.

Certainly. Thank you for the very succinct introduction and registration our social innovation platform. You’re one of the very few, if not the only that sells your product for exactly one Taiwan dollar. [laughs] Because it’s one TWDC for one Taiwan dollar.

I would like to ask a couple things. First that you declared on the social innovation platform that you plan to accept zero percent of income from government grants. That is to say, you’re not actively seeking to be a CBDC software vendor or any sort of Central-Bank-related business. Is that correct?

Correct. This is a private initiative. The reason for that is, when you look at the way the world is going, in terms of this, you see central planned economies like China launching their own renminbi and basically to the exclusion of everything else. They’re able to do that there.

Where you look at democracies, it’s a lot more difficult to do that because if our Central Bank issued a stablecoin, especially at this stage, it would impact our existing private financial industry.

Because why do you need private banks if you have a Central Bank issuing this? One day that may happen, but you need companies like us to take the first step and get the ball rolling.

Sure, but the point I was making was that, you both do not foresee Central Bank in the next couple of years, rolling out your de facto competitor that renders this venture… a premature optimization, so to speak.

Also, you do not think that you would want to, for example, use Taiwan as a lab for some technology and then sell exclusively to the Central Banks in the more authoritarian regimes, correct?

Go ahead, Alex.

That’s correct on both counts, Audrey. First of, which is we’re not seeking to become a service provider to our Central Bank to provide this relevant technology. Secondly and more broadly, we don’t think outside of, again, quite special entities like the People’s Bank of China on mainland China.

This CBDC approach would work for Taiwan for the simple reason that we perhaps don’t have the sufficient economic cloud, especially internationally, to bring the significant economic partners along. A CBDC for domestic consumption is less meaningful than any something for cross-border trade.

Our approach, again this sort of private sector stablecoin approach, we kind of squares that circle, right? It maximally preserves the domestic commercial banking infrastructure. We do not bypass the commercial banks while surfing the cross-border rules.

Sure. I was just wondering whether you want to expand outside of that very well-defined niche, and as I’m hearing is: Not for the moment.

Quite honestly, if we wait for central banks to do this, Taiwan will be on the back foot again, and we don’t want to see that.

Acknowledged. The other thing that you declare publicly on the social innovation platform is that you plan to reinvest 10 percent of your net profit to the pro-social public good projects.

I wonder where does those earnings come from, if you’re not running consultation service to the Central Bank and if you’re 100 percent backed by new Taiwan dollars in traditional banks, instead of interests, what’s your profit model for doing this?

The profit model is mostly a sustainability model. In other words, as I said, when you run the numbers here, this doesn’t make a huge amount of money. Especially, if you use a guarantee account in Taiwan, you don’t get any interest.

Exactly. That’s what I was referring to.

The way we’re going to get money to operate this is to charge a gas fee. If… sorry, go ahead.

Let me help you out with this. There is a redemption and minting fee. When the Taiwan dollar initially comes in and…

So you charge at exchange…

That’s right. There is that fee, but unlike most other stablecoins out there, we’re going to have an additional fee for when on-chain transfer happens. We will charge natively in TWDC instead of, let’s say, in Ether. That is our main revenue stream.

Now, the recognition is that as this grows and succeeds, that there will be fewer redemptions back into Taiwan dollar. That revenue stream will be constant or even decline over time.

However, as usage on-chain grows, then we can enjoy growing revenues as well. That’s the portion of income that we would like to donate as you mentioned.

So between two TWDC accounts, there is still a money transfer fee going on?

That’s correct. We realize that because at first we just wanted to buy the entry and exit point. We realized as this becomes more successful, people won’t be exiting and then the company won’t have any money to sustain itself.

Yes. That was my question.

By adding this… by creating a gas fee which is normal in any financial system, when you transfer money there’s always a fee associated.

Let’s just quantify the fee, Audrey. It’s one basis point. It’s on the low end. If you compare it to credit card discount rates, one percent and their FX spreads three to five percent. One basis coin is in the realm of reason.

Sure. I don’t dispute that. I was saying that because it’s not traditionally seen as an interbank clearing service. You’re talking about clearing between two accounts. It’s a new model.

It’s a new model. Again, this is not the model that most existing stablecoins employ, but there is a go-back token from Paxos that does also have some similar fee…

OK. Makes sense.

When you’re using ether coin anyway when you transfer, you have to pay their fee. That’s already taken off. By adding one bit more, that we will take off we can afford to operate and it will be viable.

As I said, this is not a money-making venture. The money-making venture and the opportunity is for the people who will use this to simplify their business, to simplify their payment structures, to simplify their settlement, and to also create a whole other ethos.

If you look at all the stuff going on with non-fungible tokens and stuff like that. We want to build that side, the industry in Taiwan in it, and a stablecoin about that.

I see that. The other thing I want to ask is what’s your underlying infrastructure, or running it off an existing public chain, like the rollups?

Yes. We have the technology infrastructure because of our many years of operation exchange. We intend to use a public chain such as etherium as a base layer.

As you know, it’s quite expensive to pay gas and ether these days. There are layer-two solutions like Polygon that will bore the per-transaction cost. That’s the type of public infrastructure we intend to use.

You’re committed to Polygon or you’re just using Polygon as an example?

As one example. For many reasons, Ethereum remains an attractive choice as layer one. Polygon and similar layer two solutions are more practical for day-to-day use.

You’re free to switch roll up solutions, as long as the layer one is Ethereum, is what I’m hearing?

It could be other layer ones, Al mentioned Solana as a possibility.

What about the governance part of it? All those different layer twos introduced its own governance equations, beyond what the existing layer one infrastructure. How do you pick the underlying governance? This is like asking where to incorporate. What’s your criteria?

If you’re intimating that layer two solutions are less than final and therefore less transaction in layer one, that’s true. It’s always that balance of finding a sufficiently low-cost solution, which often times on a per transaction basis comes from some degree of centrality with the safety that is afforded by D centrality.

That we have to lean on our expert opinion of operating many years in this space. I offered up Polygon as one viable example. As time progresses, we will not necessarily be exclusive of Polygon.

We’ll start with the Ethereum because it is the most well established. All these other alternatives are also developing and we hope that they will develop in ways that they give enough that we can move in that direction, is what this is all…This industry remains in transition.

That’s what I mean. Polygon itself I believe is also deepening its ZK offers, and there are of course optimistic rollups to consider. The kind of decision of what your stablecoin will basically bet on will be a very interesting early question that could affect your viability because that’s potentially a single point of failure.

The other parts, you took a very conservative design. The risk is undefiable. It’s probably already quantified. This particular layer to government issue is less easy to quantify.

That’s true now.

Audrey, the other thing I should mention, in terms of our own governments because it’s quite important. As you probably know that MyCoin is the only company that has fulfilled the AML/KYC requirements set out by the FSC, and we believe that that is also critical.

When we launch this, of course, we will make sure that this entity also fulfills those requirements, because I think that, as you mentioned, security is always the one key concern with cryptocurrency. The second is always AML/KYC. In light of keeping the highest standards is that we will make sure that we maintain those standards required by the FSC.

OK. I don’t have any other questions. Obviously, you’ve already thought it out very well.

Do you have any advice for us, these will be the Central Bank or otherwise?

Well, I think Central Bank is looking for a future scenario where the existing TWD is, in some use cases, perceived as less legitimate than a potential CBDC. Through multi-year research, they currently… I don’t think they did discover any scenario that fits the description that I just mentioned. TWD is pretty legitimate. I think it’s one of the, if not the, strongest currencies in Asia right now and in various different scenarios.

I agree with your assessment that the Central Bank is not looking for in the next year or the year afterwards to, suddenly, bet on CBDC. Precisely, because there’s no compelling scenario.

Since you’re a pioneering venture, the possibility is that through your work you will actually reveal such scenarios to the Central Bank, which they were not initially aware of, because entirely new markets, entirely new exchange modes. You mentioned NFT and things like that could be created, because it’s not part of the central banks to support nonfungible new Taiwan dollars.

For these scenarios, they may be interested to learn about your findings, but I don’t think you’re in any way at this moment a competitive stakeholder vis a vis the central banks, so I don’t have any particular advice. I think they will listen to your findings with interest, but as you to have not a proven scenario where you’re equally or more legitimate than new Taiwan dollars, I think it would simply be a meet and greet.

OK. That’s what we’re hoping for as well, and of course, we fully want to cooperate with the Central Bank, do any questions they have, and any concerns they have and as well with all regularities.

Although we are pioneers, the one thing Alex and I believe is that this eventually will be the future, so if we’re part of moving in that direction, who knows where it ends up, but certainly government involvement and government legitimacy eventually is important.

Audrey, allow me to perhaps conclude on a somewhat ethereal note. I mean to take up where you left off with the Taiwan dollar being a very strong and legitimate currency, I fully agree. It’s that with existing foreign exchange methods that the scope for Taiwan dollar and its influence is relatively limited.

We believe that TWDC offers a venue for Taiwan dollars influence to literally spread globally while taking care of the central banks’ primary concerns around money creation or the lack thereof and, of course, the empty money laundering aspect.

We may be thinking, I may be thinking of this a bit too simply, but I really do believe this is the best of both worlds.

We have an open-ended possibilities around NFTs decentralized finance, etc., that is very difficult to entertain with the current infrastructure. While at the same time on the macro-prudential concern that the central bank and the financial regulator has, we think we’re paying very close attention and taking care of those concerns.

Let me ask a clarifying question. Say if I have a Easy Wallet account. It’s already assigned an interbank code in Taiwan, which is 390 or something.

Theoretically, in practice now, I can just wire money from my traditional bank accounts into the EasyWallets by simply doing a regular FISC transfer.

Now, you mentioned it’s backed by a central bank, accredited bank, or financial service. When I wire my new Taiwan dollars and mint some Taiwan dollar tokens, now, what would that feel? What would the experience be to the citizen? Will you have to declare your own interbank code?

I’ll let Ming Chen answer that. You feel free to go in Chinese.

It’s a happy problem, I have to say. If we’re creating value for the consumer in such a way that we encounter some knocks and bruises along the way, I’m happy to do that.

OK. It probably will happen if you’re successful. It’s a happy problem to have.

Leo, anything else that you wanted to discuss?

No, I think the main, as I said, is just getting Audrey an update. I think we’ve talked to many people in the industry as well as different regulators to make sure people are aware of what we’re doing. We want to be completely transparent, and talking to Audrey also for her advice.

Thank you, Audrey. I wasn’t expecting to hear anything about ZK-Rollups and Optimism from one of our government ministers, but here we are.

Well, I’m really happy that we’re still working on the same problem, and Taiwan’s democratic experiments benefit a lot from, for example, Glen Weyl’s innovations beings tries out on Gitcoin and so on, and then we adopt those ideas in our democratic governance as well. It’s a research and development relationship.

Yep, and we’re just taking that and applying it to certain avenues of daily life here in Taiwan.

Excellent. Good luck.

Thank you.

Thank you so much.

Thank you. Live long and prosper.

Bye-bye.

Thank you.