Telegram AMA 1
August 3, 2025
Last updated
August 3, 2025
Last updated
SERCAN : Hey Matrix family! Welcome, everyone!
Today, we’ve gathered here to talk about a very important topic: Stablecoins and Hong Kong’s brand new regulatory framework.
As you all know, at Matrix AI Network, we aim to be pioneers not just in technology, but also in regulatory compliance and global strategy.
This AMA is a great opportunity not only to explore stablecoin technologies, but also to understand how Matrix is positioning itself even stronger in light of the new Hong Kong regulations that will go live on August 1, 2025.🇭🇰
And today, we’re joined by a very special guest; Matrix’s Chief Marketing & Technology Officer, @Eric_Choy ❤️
It’s been a while since our last Telegram AMA, so this one’s long overdue, and we’re excited to dive in!
Together with Eric, we’ll take a deep dive into the world of stablecoins—what they are, how they work, why they matter, and most importantly, what’s about to change in Hong Kong starting August 1st.
So, if you’re ready, let’s get started..💪
MATRIX CMTO ERIC : Ready.
SERCAN : Eric, I can already feel your excitement and energy..
MATRIX CMTO ERIC : haha, i am
SERCAN : I’ll kick things off with the first question and hand it over to Eric…
Let’s begin with the most basic one..
MATRIX CMTO ERIC : We all know Bitcoin. Its most famous feature is its price. Like a roller coaster—$80K yesterday, $100K today, maybe $120K tomorrow.
Traders might love that volatility, but if you wanted to pay for a coffee, here’s the problem: this morning it costs 30 units of BTC, this afternoon you check, and that coffee is worth 100 units now. Huge loss.
Would you want to pay like that? Would a shop want to accept it? Definitely not.
So what now? Someone thought: Can we have a digital currency on blockchain that’s fast, global, but price stable—just like the dollar? And so stablecoins were born.
A stablecoin is a digital currency designed to maintain a stable value. Its core selling point is stability.
They are called "digital dollars" because their value is pegged (or "anchored") to the US dollar (typically 1 stablecoin = $1 USD). They operate on blockchain technology, enabling fast, global transfers, just like Bitcoin or other cryptocurrencies, but with stable value.
Stablecoin and Bitcoin are fundamentally different from Bitcoin because Bitcoin is a decentralized, volatile cryptocurrency designed as a store of value or speculative asset, while stablecoins are specifically designed to be a stable medium of exchange and unit of account within the crypto ecosystem and beyond, achieving this stability through various mechanisms (like holding reserves).
that is my answer to the question. End
SERCAN : Thanks for the comprehensive answer Eric. Very descriptive and clear. 🙌
Yes, especially for newcomers to crypto, hearing stablecoins referred to as "digital dollars" can definitely be misleading. But as Eric just explained, the term is more about describing their function.
As community, we should start viewing stablecoins as a bridge technology something that connects traditional finance with the world of digital assets.
Let’s move on to the next question!
MATRIX CMTO ERIC : Good question.
Stability is achieved through a mechanism called "pegging." The issuer promises that 1 stablecoin = $1 USD. You give them $1 USD, they issue you 1 stablecoin. You give them back the stablecoin, they give you $1 USD.
The guarantee of redemption depends on the type of stablecoin and its backing mechanism. For the most common type (fiat-collateralized), the issuer holds reserves (cash or cash equivalents) equal to the number of stablecoins in circulation. Redemption relies on the issuer's solvency and commitment.
Post-2024 regulations like the US CLARITY Act mandate that fiat-collateralized stablecoins maintain 100% high-quality reserves (cash or short-term US Treasuries), provide real-time reserve disclosures, and grant users redemption priority in case of issuer bankruptcy. Regulators and licensing requirements enforce this.
End of my answer. There are DEEPER meaning to Stablecoin on a global political and financial level though.
SERCAN : This explanation was really important, thanks Eric.🙏
Because sometimes I get questions within the community like, “Why is 1 USDT always equal to 1 USD?” In other words, people are curious whether it’s truly backed by something.
Understanding this mechanism forms the foundation of trust in stablecoins.. It helps us see that price stability isn’t magic, it’s a result of design and reserve structure.
Now let’s take a closer look at the different types of stablecoins. Not all stablecoins working the same way, there are some significant differences between them.
These differences aren’t just about technology; they play a major role in terms of trust and reliability as well.
MATRIX CMTO ERIC :
There are three major types:
First one is Fiat-Collateralized: Backed 1:1 by reserves (cash & short-term govt bonds like US Treasuries).
Examples: USDT (Tether), USDC (Circle).
Most mainstream and reliable, especially under new regulations mandating transparency and full reserves.
Second one is Crypto-Collateralized: Backed by excess crypto assets (e.g., $150 ETH locked to issue $100 stablecoin).
Example: DAI.
Decentralized but less efficient, higher risk due to crypto volatility, unsuitable for mass payments.
The third type is Algorithmic: Relies solely on algorithms/smart contracts to control supply/demand.
Example: TerraUSD (UST) – famously collapsed in 2022 ($40B lost), proving unsustainable without real asset backing.
As of 2025, over 95% of the $2.4 trillion in global stablecoin volume comes from fiat-backed coins. They’re favored by regulators and institutions because their reserves can be audited, and they offer fast redemption with minimal price deviation.
Hong Kong’s upcoming regulations only support fiat-backed models. That is my answer. thanks Sercan
SERCAN : Thanks for the reply Eric. I remember that in the past we had a platform called APEX, a decentralized protocol based on our technology that supported the issuance of multiple algorithmic stablecoins. Those were the days…
MATRIX CMTO ERIC : yes, tnat it is risky in a sense. that is why we did not further proceed for the best intetest of all
SERCAN : We all remember how algorithmic stablecoins faced issues in the past. That’s why it was so important to understand why fiat-backed models are considered more secure.
Having covered the basics of stablecoins, now let’s take a closer look at two of the most well-known examples in this space: USDT and USDC…
MATRIX CMTO ERIC : Think of them like a currency exchange counter—only digital.
When you give a stablecoin issuer (like Tether or Circle) $1, they issue 1 USDT or 1 USDC to your wallet.
That dollar is then stored in a reserve—either as cash or in low-risk instruments like U.S. Treasury bills.
When you want to cash out, you send the stablecoin back, and they destroy the token and return the $1 to you.
The idea is simple: every coin must be backed 1:1. The backing is periodically disclosed and, in Hong Kong and the U.S., subject to regulatory audits. What makes it powerful is scale.
For example, Tether has issued over $150 billion in USDT, and earns interest on those reserves.
Generating $13 billion in profits in 2024 with just 150 employees. That’s more profit per person than Apple or Google.
But can you 100% trust they’ve actually got the money? A few years ago, this was the biggest market doubt
Tether got criticized for opaque reserves and even fined. But note: since 2024, that has completely changed. Why? Because of the Stablecoin Act.
What did the U.S. Stablecoin Act mandate? It’s probably the world’s most important regulation in this area right now.
It demands 100% high quality reserves (cash or short term Treasuries), prohibits investing in high risk assets, requires real time disclosures of reserves so users always know exactly what’s stored.
It also enforces priority redemption rights—if the issuer goes bankrupt, reserves go to users first. If you want to issue a stablecoin, you must have a federal or state license.
just these couple days ago. US has passed three bills.
In short, the U.S. manages stablecoins even more strictly than small banks. The aim is simple: end the rogue market and turn stablecoins into transparent, compliant financial tools.
The EU is even more cautious—it forbids paying interest on stablecoins (to prevent shadow banking), limits transaction size, and enforces strict AML rules.
Hong Kong’s stablecoin regulation? Very smart: sandbox pilots first, real time monitoring, licensing, reserve transparency, AML compliance. The focus is on Hong Kong dollar and offshore RMB stablecoins to serve cross border trade.
end of my answer.
SERCAN : We see that Hong Kong has a regulatory framework that is different from the EU and Europe, and in some respects even more advanced. 🇭🇰
As Eric explained, the transparent management of these reserves directly impacts the trustworthiness of stablecoins. This is exactly where regulations come into play. Thanks for the clear explanation.🙌
Eric, so far we’ve talked about stablecoin regulations and policy frameworks. But let’s shift gears for a moment and talk about the economics behind it.
MATRIX CMTO ERIC : Giants enter for market share, ecosystem control, and the potential of blockchain-based finance. Their primary revenue source is surprisingly simple: earning interest on the reserves.
Issuers hold billions in user deposits (the reserves backing the stablecoins). They invest these reserves in safe, liquid assets like US Treasuries and overnight repos. Even a modest interest rate (e.g., 4%) on a massive reserve base (e.g., $150B+) generates enormous profits.
Example (Tether/USDT): Held ~$150B reserves in 2024. Estimated 4% yield = ~$6B interest income. Combined with other low-risk yields, Tether reported $13B profit in 2024 with only ~150 employees (massive per-employee profit).
Secret:
● Zero-cost liabilities: Users pay to get stablecoins; issuers pay no interest to users.
● Risk-free yield: Invest reserves in ultrasafe assets.
● Massive scale: Billions generating compounding interest.
Regulation legitimizes this model, potentially enabling even larger scale. It's highly profitable, but calling it the "easiest money printer" overlooks operational/regulatory costs and risks.
The U.S. Stablecoin Act mandates stablecoins hold only high-quality assets like cash or short-term U.S. debt, provide real-time reserve audits, and prioritize user redemption.
The EU adds limits on interest and transaction volumes to prevent shadow banking.
Regulations bring legitimacy, reduce systemic risk, and increase user trust, expanding the market.
These rules reduce fraud and strengthen public trust, making the stablecoin model more legitimate—and potentially more profitable at scale.
Calling it money printer? think about conventional fiscal system. the CBDC issue fiat currency. Now with stablecoin, this rights has been given to those huge enterprises. This is super very important shift.
just these couple days, the US passed teh bill of anti-cbdc with CBDC being put aside on this matter. end of my answer.
SERCAN : I think mainland China is continuing its work on the digital yuan, but the mainland is supporting the stablecoin process through Hong Kong.
That’s a crucial insight, Eric. It’s clear that stablecoins aren’t just about innovation or regulation they’re a major financial opportunity with huge profit potential.
MATRIX CMTO ERIC : Digial yuan is for DOmestic use. Stablecoin of RMB is another strategy. very deep
SERCAN : Absolutely yes. This helps us understand why so many giants are rushing in, and why Matrix’s role in providing solid infrastructure is more important than ever.
Thanks for shedding light on this! 🙏
Cryptocurrency isn’t just about technology… It can be a true financial lifeline, especially for people struggling with high inflation and who don’t trust their local currency.
MATRIX CMTO ERIC : SPot on. Stablecoins are already making a real impact in places like Turkey, Argentina, and Nigeria.
In Turkey, where inflation has exceeded 50%, the Turkish lira has lost much of its purchasing power. People increasingly turn to stablecoins like USDT to preserve their savings, avoid bank restrictions, and send money abroad without devaluation.
you have the first person feeling and observation on this.
For people living in countries with weak currencies, stablecoins offer a backdoor to dollar stability—without needing a U.S. bank account
And in Hong Kong’s case, offering regulated offshore RMB or HKD stablecoins could serve Southeast Asia’s small businesses and migrant workers in similar ways—providing faster, cheaper, and more reliable payments than the traditional banking system.
And in the crypto world itself, stablecoins are the engine of DeFi (decentralized finance)—they’re used in lending, borrowing, derivatives, and more.
In 2024, stablecoin on-chain settlement volume exceeded both Visa and Mastercard.
It is already one of the world’s biggest payment systems—without banks, credit cards, or intermediaries. end of my sharing
SERCAN : That’s a great point, Eric. In my country, Turkey, we’re dealing with very high inflation. The Turkish lira has lost a significant portion of its purchasing power. As a result, many people here are in crypto to protect their savings and use USDT to buy MAN, for example.
In regions like Latin America, Africa, and even my own country, Türkiye, stablecoins have become a digital lifeline.
At Matrix team, we have always stood by innovation. But innovation becomes sustainable when it is supported by regulatory compliance. And that brings us to Hong Kong’s new regulation.🇭🇰
MATRIX CMTO ERIC : Policy Statement 2.0 in May, and the stablecoin ordiance will take effect starting from 1 August, 2025
Under the new framework, stablecoin issuers must:
Hold 100% high-quality reserves
Guarantee next-day redemption
Meet capital and transparency requirements
Pass fit-and-proper tests on governance, AML, and operations
exactly because of that and looking at our own strength, we have the positioning stated in the paper published earlier.
It’s a sandbox-to-license pipeline, meaning firms can test before going live. Companies like JD Tech and Ant Group are already testing HKD stablecoins in Phase 2 of the regulatory sandbox.
This isn’t just compliance—it’s positioning Hong Kong as the Asia hub for regulated stablecoin finance.
if you read and think over, you will arrive at the same concludion. evertyone to his strength and help each other. End of my sharing.
SERCAN : This date is truly a milestone! Starting August 1st, things become official. I can say that Matrix operating within this legal framework puts us several steps ahead of other projects.💯
MATRIX CMTO ERIC : Our Full version report on RWA is also on hte same day
SERCAN : One of the most common questions I hear in the Matrix community is: “Exactly what rules are coming, and how will they affect us?”
MATRIX CMTO ERIC : The rules are not so much relevant to us, but it is the attitude from govenment that matters. affect us? yes definitely. it gives us huge opportunity as a local tech provider
the highlights, i think i shared above, and let me repeat here
1:1 reserve requirement in cash or near-cash assets
Redemption within one business day
No interest payments allowed (to avoid bank-like risk-taking)
Ongoing audits and reporting
Investor protection, AML, and transparency mandates
This turns stablecoins into regulated financial products, not speculative tokens.
Hong Kong is building the foundation for real-world adoption — from tokenized assets to trade finance. It’s one of the few jurisdictions offering clear compliance + innovation runway, attracting firms like JD, Ant Group to test stablecoin pilots. End of my sharing
SERCAN : An open, transparent, and license-based framework is being established.
For Matrix, this environment will provide a significant advantage in developing sustainable and compliant products, as well as in making our network the preferred choice for SMEs. 😎
MATRIX CMTO ERIC : yes, we had a summary on Matrix 1.0 and 2.0, from there, you know our chain performance. not to mention our other products for compliance.
SERCAN : One of the key points of the regulation is answering the question: “Who can issue stablecoins?”
MATRIX CMTO ERIC : Only companies that meet licensing standards can issue.
That includes:
Capital adequacy (with base capital requirements)
Robust reserve management systems
Transparent operations and audits
AML/CFT compliance and internal controls
This means only financially sound, transparent, and well-governed players will qualify. you see this is not our strength, and that is again why the positioning listed in the Paper
It filters out risky or underregulated issuers and opens space for serious institutions — whether fintechs or banks — to operate in a regulated environment, launching stablecoins for use in real-world payments, trade, or tokenized finance. end of my thoughts. wow, it is already one hour
SERCAN : yes, Time flies. There's so much good information that I didn't even notice. What’s striking here is that not everyone will be able to issue stablecoins.
There will be strict oversight. The regulatory framework paves the way for players who build secure and transparent structures.
MATRIX CMTO ERIC : it will be NO and should not be and market not need that many types
SERCAN : For projects like Matrix, which have long focused on infrastructure and regulatory compliance, this is not a barrier but rather a significant advantage. Thanks for the explanation. ❤️
MATRIX CMTO ERIC : The Hong Kong Monetary Authority HKMA oversees issuance, reserves, redemption, and payment use cases. If a stablecoin touches banking or settlement, the HKMA is in charge.
The Securities and Futures Commission SFC regulates trading platforms, token custody, and investment structures involving stablecoins.
The Financial Services and Treasury Bureau FSTB acts as the policy anchor, aligning the regulatory vision across departments, as outlined in the Policy Statement 2.0.
This shared model reflects Hong Kong’s principle of “same risk, same regulation”—treating stablecoins like financial products, not just tech experiments. that is my sharing
SERCAN : HKMA’s active involvement aligns perfectly with Matrix’s role as an infrastructure provider. This means that players like us can now operate on a much more solid legal foundation.
Now we need to take a broader perspective because it’s not just about stablecoin regulations. Hong Kong’s overall approach to digital assets is also remarkably forward-thinking.
MATRIX CMTO ERIC : "LEAP" is the government’s strategic framework to grow its digital asset ecosystem
L – Legal and regulatory clarity: Set clear, enforceable laws (like the stablecoin regime)
E – Expand tokenization: Encourage tokenized bonds, ETFs, and real-world asset platforms
A – Advancing User Case: Support public-private pilots like cross-border logistics and trade
P – People and partnership
it’s a roadmap to modernize finance, attract talent, and make Hong Kong a top-tier hub for regulated digital assets.
Already, tokenized bond issuance has hit $7B, and next is stablecoin-powered trade finance. that is my answer
E –this is relevant to us. for details, you can refer to the Paper . thanks Sercan
SERCAN : I'm excited because the events in Hong Kong directly affect MATRIX. Especially considering that the bamboo tree is now growing... 🎍
Thanks for the explanation, Eric. 🙌
LEAP is more than just a regulatory plan; it’s a vision for the gradual and secure integration of digital assets. Matrix aligning with this vision gives us a strong strategic position.
Now moving on to the final question.. So let’s wrap up with a broader view. We’ve talked in detail about Hong Kong’s steps in the stablecoin space. But it would be incomplete to look at them in isolation.
MATRIX CMTO ERIC : I shared regulations from US and Europe, and allow me not to repeat, which you all know me well. that said, i would like to reitertate Hong Kong’s approach is unique
● It permits HKD and RMB stablecoins, building Asia-focused financial rails
● It uses a sandbox-to-license model for gradual onboarding
● It emphasizes cross-border use like logistics, e-commerce, and regional payroll
● It aligns with international standards while tailoring rules to local strengths
This makes Hong Kong one of the first jurisdictions with a working, business-friendly stablecoin framework that supports both domestic and offshore market goals. that is my sharing to the last question. thanks for much
SERCAN : I think Eric’s point here was crystal clear: Hong Kong is not lagging behind on the contrary, it’s adopting a much more agile and entrepreneurial approach. And that perfectly explains why Matrix has positioned itself here.💪
MATRIX CMTO ERIC : I hope you know Stablecoin better from a strategic angle, not just a tool. and I also hope that you know what is happenning in Hong KOng, where Matrix is based in, and therefore align on the positioning of Matrix in this big wave
SERCAN : Today, we tackled a truly important topic: the future of stablecoins, Hong Kong’s regulatory strategy, and Matrix’s position in this evolving landscape...
These new regulations won’t just shape Matrix’s path, they will help define the future of the entire ecosystem.
At Matrix AI Network team, we are confidently advancing at the intersection of technology, regulation, and vision. This is where it all begins an exciting new chapter for MATRIX. 😎
Eric, on behalf of the entire community, thank you for your in-depth insights and for taking the time to share your knowledge with us today.🙏 @Eric_Choy
Under your leadership, Matrix is not only a tech-driven project but also one that stands out on the global stage with a solid strategic vision.
Hearing this vision directly from you inspires our community and strengthens our belief in the road ahead. We’re grateful to have you with us!❤️
Alright Matrixians,
That wraps up Part One of our AMA series.There’s still so much more to talk about, and we’ll continue the conversation soon. Thanks for your engagement, patience, and energy. Don’t forget to send us your questions for the next AMA session! We will reward the selected questions. You can leave your questions here by tagging me.
MATRIX CMTO ERIC : it is 1.5 hours. Cheers for now and enjoy the rest of your day.
SERCAN : Thanks Eric, now it's time to relax and digest this wonderfully informative conversation.