Chain News Exclusive Interview with National Chengchi University’s Hsieh Minghua: Taiwan’s Stablecoins, 4 Things to Learn from Japan

National Chengchi University Professor Hsieh Ming-Hua led a financial delegation to Japan to study the development of stablecoins and RWA. He pointed out that Taiwan is facing the loss of high-value clients due to a lack of related capabilities, and suggested learning from Japan’s experience in taxation, issuance qualifications, limits, and public blockchain technology.

As Taiwan’s “Virtual Asset Service Law” draft enters the Legislative Yuan and the financial industry actively prepares, Professor Hsieh Ming-Hua of the Department of Risk Management and Insurance at NCCU, and Chairman of the Taiwan Asia-Pacific Regulatory Technology Association, led a Taiwanese financial industry delegation to Tokyo in April. They visited institutions such as Nomura Securities and SBI to observe Japan’s progress in stablecoins and real-world asset tokenization (RWA).

The blockchain news team interviewed Hsieh Ming-Hua on what Taiwan can learn from Japan, and his views on deposit tokens, central bank digital currencies (CBDC), and the interest-bearing nature of stablecoins.

Photo source: Blockchain News. Professor Hsieh Ming-Hua of NCCU interviewed by Blockchain News.

Why take Taiwan’s financial industry to Japan: Two high-value clients are leaving banks

Hsieh Ming-Hua is familiar with both the cryptocurrency circle and traditional finance. He said the initial intention of leading the delegation was to integrate resources and talents from both sides, and to promote exchange and cooperation through themed visits.

He pointed out that Taiwanese financial institutions are under dual pressure: on one hand, corporate clients who need to receive stablecoins may transfer their business to banks in Hong Kong or Singapore; on the other hand, high-net-worth clients (especially family offices) are increasing their digital asset holdings in their investment portfolios.

“The proportion of digital assets among these clients is increasing. If banks cannot accommodate these assets, they will lose the more profitable clients.” Hsieh Ming-Hua observed that Taiwanese financial institutions generally lack blockchain talent, but local Blockchain-as-a-Service (BaaS) providers are quite mature. Therefore, he hopes to facilitate cooperation between banks and tech companies to build Taiwan’s competitiveness.

Four things Taiwan should learn from Japan: Taxation, issuance qualifications, limits, and public chains

Regarding Japan’s experience, Hsieh Ming-Hua summarized four areas Taiwan can learn from.

First is taxation. Japan previously classified cryptocurrency gains as miscellaneous income, with a top rate of 55%. Recently, they plan to adjust this to a maximum of 20%, aligning with stocks. Hsieh Ming-Hua believes this is a positive signal for the market, and Taiwan can adopt a moderate approach in tax policy, setting a reasonable rate of around 20% to avoid directly harming the crypto market.

Second is issuance qualifications. Japan does not restrict stablecoin issuance to only banks. He believes that allowing fintech companies to issue first can create a “trout effect”: “It’s not easy for banks to eliminate their existing practices on their own; they may still need external fintech firms to issue, which will create the trout effect.”

Third is risk management. Japan manages risk through limits on amounts, such as JPYC’s 1 million yen cap. Hsieh Ming-Hua suggests Taiwan could consider similar measures, starting with a limit of 200,000 to 300k TWD, then gradually opening up.

Fourth is technological approach. Taiwan currently favors development on private blockchains, but he advocates adopting public chains directly, as connecting to public chains is essential for global integration.

• Related report: LDP proposes five major policies including crypto ETFs and stablecoins! Calls on finance minister: On-chain finance is a national strategy

Limitations of deposit tokens and the positioning of CBDC: Understanding from JPMorgan

Recently, there has been much discussion about “deposit tokens,” but Hsieh Ming-Hua believes they have fundamental limitations. Deposit tokens are essentially bank liabilities to depositors, and their legal status varies across banks, making cross-bank liquidity difficult. Using JPMorgan as an example: JPM Coin’s trading volume seems large, but it accounts for less than 1% of the global stablecoin market. Ultimately, JPMorgan also realized the need to integrate with public chains.

“If banks want to create deposit tokens, just look at JPMorgan—you think you’re bigger than them? They will also have to cooperate with public chains in the end.” As for CBDC, Hsieh Ming-Hua believes it will not replace stablecoins; rather, they are complementary: CBDC is suitable for primary markets, such as wholesale settlement between the central bank and commercial banks during bond issuance; for secondary market circulation and applications, stablecoins are still necessary.

• Related report: JPMorgan’s JPM Coin to launch on Canton Chain! Complete issuance and redemption by year-end, enabling real-time settlement

Should stablecoins earn interest? Like cash, they shouldn’t earn interest; if you want interest, use tokenized money market funds

Regarding whether stablecoins should earn interest, Hsieh Ming-Hua believes it’s reasonable for stablecoins not to generate interest, just like cash does not earn interest. Those seeking interest can convert idle stablecoins into “tokenized money market funds,” which aligns with current financial logic.

“You can’t expect a piece of paper to generate interest; if you want interest, convert idle stablecoins into tokenized money market funds—this is fully legal.” He also pointed out that this trend is pushing banks to improve efficiency. JPMorgan, for example, has shortened interest calculation units from “days” to “minutes,” returning the interest from delayed settlements to corporate clients.

Where do Japan and Taiwan differ: Japan promotes with government, industry, and academia working together; Taiwan has only two or three players involved

Compared to Japanese participants, Hsieh Ming-Hua observed that Japanese financial institutions are more resourceful and proactive in pushing forward, whereas Taiwan’s large financial institutions tend to be more conservative and wait-and-see. Japanese regulators also show high importance, even reorganizing agencies and establishing new departments to address cryptocurrency and stablecoin issues.

“If regulators also encourage, traditional financial institutions will be more motivated. Currently, only two or three local players are really involved; most others are just observing, waiting to see if others succeed before following.” During his trip to Japan, two things impressed him most: one was the Financial Services Agency (FSA)’s internal restructuring to adapt to new trends; the other was the tangible progress of Japan’s stablecoin ecosystem.

He admits that in the past, most news about Japanese stablecoins was negative, but after on-the-ground observation, he found that led by SBI Group, the entire ecosystem is quite complete, and he remains optimistic about future market potential. He compares the evolution of digital assets to communication technology from 3G, 4G to 5G—an irreversible trend: “If there’s a better way, why stay with the old?”

Photo source: Taiwan Asia-Pacific Regulatory Technology Association. The delegation from Taiwan visiting Deloitte Japan, led by Hsieh Ming-Hua (front row, center).

• This article is reprinted with permission from: Blockchain News
• Original title: NCCU Professor Hsieh Ming-Hua: Four Things to Learn from Japan About Stablecoins, and JPMorgan’s Deposit Token First
• Original author: Elponcrab