In the latest episode of StraitsX Sessions, Tianwei Liu, CEO and Co-Founder of StraitsX and Group Deputy CEO of Fazz, sits down with Asia Tech Podcast for Episode 338.
During the discussion, Tianwei explores how blockchain technology transforms payments and finance, sharing his journey from building automated payment systems to founding a company focused on solving financial challenges with blockchain.
He highlights blockchain's programmability and interoperability, enabling instant settlements and smart contract customisation, which reduces delays and costs, particularly in cross-border payments. Offering a glimpse into the future of finance, the discussion centres around the potential of stablecoin-powered and blockchain-based payment infrastructure that can transform the financial landscape.
Asia Tech Podcast is a fintech series that shares insights and innovations across Asia’s tech and venture capital sectors. Hosted by Michael Waitze, the podcast network has one of the largest and fastest-growing listener bases, reaching across 170 countries.
Catch the key takeaways from Tianwei’s conversation with Asia Tech Podcast here.
Tianwei Liu, StraitsX: In our early days, we served e-commerce companies, crowdfunding campaigns, and FinTechs. Today, they are still big segments. On the other hand, blockchain companies - we’re talking about cryptocurrency exchanges here. They need to have a way to connect to the retail industry by receiving bank payments. If you offload your cryptocurrency, then you need to send it back to your bank account. So that was the genesis. If you understand how the blockchain works, they (blockchain companies) need something that’s natively working on the blockchain itself.
… All payments traditionally are done in two flows. There’s a communication layer which we connect via TCPIP. When you are making a payment, transactions have to be communicated in real-time, so that the merchant will be able to give you your goods and services immediately. But then there’s a second part flow, which is a settlement. A settlement usually happens offline, and it can be 2-3 days or even a week later…. That’s how traditional payment works.
But if you bring on the paradigm of blockchain payment, this changes because on our blockchain side, especially with stablecoins, a payment itself is both a communication and a settlement. So that’s the game changer part first that we noticed in this settlement and part of this whole story. …It’s a back-end innovation and a big part of this is - does the user want to know (the back-end process)? The end of the day here is “The problem that end-users have is always at the heart of what we think. We think that the settlement delay that now can be instant is a big value-add from the existing system that we’re working on, especially for cross-border use cases. Can you imagine using your credit card from your home country to buy coffee in another country? The transaction delay in terms of communication and settlement exposes you to FX risk, which makes the merchant need to mark up the transaction. That’s why the FX rate is not that great because there might be a 0.5% FX fluctuation rate between the time that you confirm the payment versus the time the money gets settled on the merchants’ side.
So that’s the first part of why we think the blockchain and stablecoins will help to change some of the payment infrastructures. Another part, which is very true to our heart, is the programmability and the decentralised nature of the blockchain itself which introduced a lot more capabilities. A lot of things that were difficult to do previously can now be programmed on the chain… The interoperability nature of blockchain also makes it extremely powerful, which aligns with the things I was talking about.
When we started StraitsX, we were targeting a more niche area of Web3 space’s appliances. These folks on the blockchain side will need a lot more ability for them to interact with the blockchain. They will likely need a product that’s natively issued on the blockchain itself. That’s where stablecoins come in. Giving them the ability to program becomes a huge part of the business. But I think the next phase is that these (Web2 and Web3 spaces) should come together. Ultimately, we see all this blockchain as a back-end innovation. We shouldn’t be thinking about trying to educate everyone about what is a stablecoin and blockchain. Because most of these users - like my parents- just want to know “How do I pay? Can I just scan and move on?”
….So this is where we are trying to shift the narrative that Web3 and StraitsX is going to be focusing on, which is payment. We’re currently working this year with the likes of Ant and Grab. This project has been ongoing for 2 years. It started in 2022 during the Singapore FinTech Festival where we worked with MAS under the umbrella of Project Orchid under the concept of Purpose Bound Money. We were doing this to help them (MAS) showcase a real-world use case of programmable money where people were able to interact with this so-called “Digital Blockchain Money”.
So the first Genesis iteration of that was simply giving 40,000 participants of the FinTech festival digital vouchers to their Web3 wallet. They can then use the vouchers to pay for goods and services at around 20 outlets at the convention hall. Through this, we demonstrated the programmable nature of this (digital money). These vouchers are backed with XSGD and have expiration dates. Beyond the expiration date, it will just stop working. So there’s no concern about AML raised on that itself. And they were very useful with very specific use cases. You can only use this at the convention hall.
So that was the start of it. Over the years, things have evolved whereby we partnered up with Grab last year. Grab users in Singapore were able to create a Web3 wallet and use it to purchase vouchers at a discounted rate. They can use these vouchers to shop at about 200 outlets across Singapore. This includes popular outlets, like KOI Bubble Tea and JUMBO Seafood. So these are things that the end users are very used to.
But this year, you will see this evolving to the next stage itself where it’s no longer going to be a trial. We have partnered with both Grab and Ant International. It allows Alipay+, a network of e-wallet players across this region (APAC), starting with Alipay in China and Hong Kong, and Touch and Go in Malaysia. The users of all these wallets - when they come to Singapore, they will be able to walk up to any Grab merchants, scan the GrabPay QR code, and pay using their native e-wallets as though they are making normal payments back in their home countries.
Tianwei Liu, StraitsX: So from the app itself, they will be seeing the real-time FX Rate in the native currency. If they are from China, the rates will be CNY to SGD. If they are from Malaysia, they will see the rate from MYR to SGD. From the users’ perspective, they will know that they are just paying in their local currency at the exchange rate that they can immediately attest to. Once they confirm, payments are completed. And then on the merchant side, in the case of Grab merchants, this is Grab Pay. They don’t understand anything about Ali and blockchain. They don’t care. Their EDC will just show up that GrabPay - let’s say $5 is received in real-time. They will then give the coffee or food. So that is the experience that we are trying to bring more mainstream. The whole flow we just talked about is a payment flow that you and I are very used to.
If you look at the statistics, digitisation is happening at a tremendous pace in this part of the world (APAC) compared to other regions. With the big push of COVID-19, about 46% of the population is already online. So they are used to paying with a digital wallet in their native currency. A lot of people are very used to scanning and paying. But what is happening right now? They’re now able to do this cross-border. Behind the scenes, this is where the stablecoins and the FX and real-time settlement will magically happen. What they (users) do not know is - after the confirmation on the Ali side, XSGD, a stablecoin that issued by StraitsX, will be sent from the operating wallet of AliPay to the merchant wallet in real-time. This will help with faster settlement and lock in the FX rate immediately… Of course, all AML control, again, is already baked into the smart contract. That will be taken care of, but it (blockchain) enables the interoperability which enables all the wallet operators to come in and do this. On top of that, the third point, they can build in the programmability part of this. All these digital vouchers and discounts can be baked into this smart contract that allows that to happen as well.
Tianwei Liu, StraitsX: Fast forward to these days, more regulations are coming up to make sure this is properly addressed. But actually, it does not change much. I think in a recent discussion that in last year’s FinTech festival MAS were very forward-looking. I liked the way that they distill things down for a lot of laymen to see what they call the Web2 vs the Web3 world. There are 3 types of money in traditional finance. Firstly, there’s the central bank money. It is money used between banks, right? Only the banks can get access to central bank money to allow for settlement between banks. Secondly, there is private bank money. When you have a bank account with DBS or UOB, they (private banks) are individually creating their money supply because they do fractional lending. So these are private or reserve banking, They are private bank money that belongs to the individual bank. And finally, there’s a third pool that we’re all used to, which is E-money. E-money wallets or wallet operators like us have been a big part of this whole digitalisation of the last 10 years. The concept is that you put the money in the bank. It’s fully guaranteed by a bank, and I will give you a digital version of that, and you can use it on the E-Wallet. So you see these three pools of different money types.
In the Web3 world, there is going to be a mirror of that. You’re going to start seeing them (MAS) talking about wholesale CBDC, which is a 1:1 mapping of the central bank money. This is digitising that onto the blockchain. It’s something that is going to be available only for banks and maybe countries for cross-border, country-to-country settlement. In the case of private bank money, the version you’re going to start hearing more about is tokenised bank deposits. The individual banks will be minting their token. As an example, JP Morgan started to have JP Morgan coin. So there will be a mirror of that as well. And then there comes the third class, which is - E-money players like us now are going to be well-regulated e-money stablecoin issuers under the licensing regime that MAS has granted us for issuing well-regulated stablecoin out of Singapore. That, of course, brings about more responsibility.
As you can see, this is how things in the regulation have been evolving over the last few years. We see a mirror and its heart is the same thing…. At the crux of it, is this so-called blockchain or Web3 innovation- If we distil it down, it’s a tech improvement. For all tech improvements over the years, the magic is when all the technology disappears. The majority of the end-users will never need to know how it works. They just need to understand that the user experience must be superior with faster settlement and lower prices. That’s it.
At the back end, that will be something that developers would be more interested in. The way they will be looking at it is “How is this allowing them to be able to innovate faster, innovate cheaper and fail cheaper?” That’s the way that we should be looking at it. It’s just like- how the internet brings around a whole rise of new ways of doing things and how computing has changed that again. Do any of us know how cloud computing works? We don’t need (to know) that, but we are using it without knowing it. That’s how we see this thing will evolve in that direction.
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