The evolution of digital finance is accelerating, and at its core lies a transformative idea: digital assets are the foundation of the next financial revolution. In a keynote speech at the Fifth Global Blockchain Summit in Shanghai, Yao Qian — former director of the People’s Bank of China Digital Currency Research Institute and current General Manager of China Securities Depository and Clearing Corporation — laid out a bold vision for how digital assets, cryptocurrency, and decentralized finance could reshape the global monetary system.
Yao emphasized that true digital assets must be native, information-rich, and fully digitized, not merely digital representations of physical documents. For instance, electronic invoices or digitized contracts aren’t inherently digital assets unless they carry complete transactional data — including logistics, tax records, and trade context — in an immutable, verifiable format.
This distinction is crucial. Only when assets are born digitally, with full traceability and self-verifiability, can they unlock new financial paradigms like self-sovereign finance (or "self-finance"), where individuals control their identities and assets directly, without relying on intermediaries.
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Why Digital Assets Are the Heart of Digital Finance
Traditional financial innovation — from online banking to AI-driven lending — has largely focused on improving distribution channels or enhancing data analytics. While valuable, these remain incremental upgrades within an old framework. As Yao Qian put it:
“These are still at the level of technique, not principle.”
True transformation begins with asset digitization: converting real-world value into native digital forms that are secure, divisible, transferable, and interoperable. When assets become digital by nature — such as tokenized invoices, supply chain records, or intellectual property rights — they gain intrinsic liquidity.
Unlike traditional securities, which require external validation and regulatory labeling to circulate, digital assets can function across multiple roles: as currency, collateral, investment vehicles, or even programmable payment instruments. This blurs the lines between money, securities, and commodities — creating fertile ground for fusion innovation.
For example, the U.S. Securities and Exchange Commission (SEC) has approved projects like BlockStack under frameworks that acknowledge digital assets as both functional tokens and potential securities. This hybrid nature challenges legacy classifications but opens doors to more efficient capital formation — especially for underserved sectors like small businesses.
Technology as the Engine of Asset Digitization
Yao highlighted that fintech = algorithms + data — a modern extension of Nicklaus Wirth’s classic equation: programs = algorithms + data structures. In this context, blockchain emerges not just as a ledger technology but as a trust machine capable of securing high-value data flows across institutional boundaries.
While the internet connected people and information, it failed to solve the problem of value transfer securely and efficiently. Data silos, duplication, and lack of provenance have long hindered cross-organizational collaboration. Blockchain changes this by enabling:
- Immutable record-keeping
- Transparent audit trails
- Peer-to-peer value exchange
- Automated enforcement via smart contracts
These capabilities allow previously illiquid assets — warehouse receipts, trade contracts, patents — to be tokenized and traded with minimal friction. More importantly, they enable end-to-end transparency in financial transactions, which is essential for credit assessment and risk management.
In supply chain finance, for example, SMEs often struggle to access funding because lenders cannot verify the authenticity of underlying transactions. By placing all relevant data — purchase orders, shipping logs, invoices — onto a distributed ledger, companies can create self-validating digital assets. Lenders gain real-time access to trustworthy information, reducing reliance on third-party guarantees or dominant corporate buyers.
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Self-Finance: Empowering Users Beyond Intermediaries
One of the most profound implications of digital asset technology is the rise of self-finance, characterized by three core principles:
- User-controlled digital identity
- Direct ownership and management of digital assets
- Peer-to-peer transactions without mandatory intermediaries
This model flips traditional finance on its head. Instead of depositing funds into bank accounts managed by institutions, users hold cryptographic keys that grant full control over their wealth. Transactions occur directly between parties, verified by consensus mechanisms rather than centralized clearinghouses.
Such autonomy doesn’t eliminate regulation — it redefines it. Regulatory oversight shifts from institution-based licensing to user-based permissioning, where access to financial activities depends on verified digital identities and programmable compliance rules.
Smart contracts play a pivotal role here. Once deployed, they execute automatically according to predefined logic — think of them as self-enforcing financial agreements. Regulators can ensure compliance by reviewing contract code before deployment or setting adjustable parameters (e.g., transaction limits, KYC thresholds) that govern behavior dynamically.
This approach supports both innovation and safety. It allows open participation while enabling precise, real-time supervision — a significant improvement over today’s reactive audit systems.
Rethinking Money: From Digital M0 to Mn
Yao challenged the common assumption that central bank digital currencies (CBDCs) should merely replicate physical cash in digital form (i.e., digital M0). Instead, he proposed a broader vision:
“Cryptocurrency has the potential to become real money — not just digital cash, but potentially a higher-tier currency: Mn.”
While most CBDC experiments today focus on retail payments (M0), the real opportunity may lie in digitizing higher layers of money, such as M1 (demand deposits), M2 (savings), or even M3+ aggregates. Digitizing these broader monetary forms could unlock unprecedented efficiency in credit creation, cross-border flows, and macroeconomic policy implementation.
Moreover, existing payment infrastructures like SWIFT are slow and costly. A well-designed central bank crypto-currency (CBCC) — built on decentralized consensus and cryptographic security — could enable instant, low-cost international settlements without relying on correspondent banking networks.
As Yao noted:
“CBCC empowers users to manage their own money directly, bypassing intermediaries and opening a new frontier in global payments.”
And beyond technical upgrades, future digital currencies must address structural flaws in the current system — including dollar dominance and financial exclusion. The goal isn’t just digitization; it’s monetary evolution.
Regulatory Innovation in a Digital Age
With great innovation comes great regulatory challenge. Traditional models centered on licensed institutions and account-based monitoring are ill-suited for decentralized ecosystems.
Yao proposed two key shifts:
- From institution licensing to user authorization: Regulators would define permissible activities based on user identity and jurisdiction, using cryptographic tools to enforce boundaries without compromising privacy.
- From process audits to smart contract oversight: Regulators would review and approve algorithmic logic before deployment, ensuring compliance is coded into the system itself.
These approaches align with the principles of regulatory technology (RegTech) — using data and automation to make supervision faster, cheaper, and more effective.
Crucially, digital systems offer greater controllability, not less. Every transaction leaves a verifiable trail; every rule can be encoded. The risk isn’t chaos — it’s overregulation stifling innovation.
Frequently Asked Questions (FAQ)
Q: What makes a true digital asset different from a regular electronic file?
A: A true digital asset is natively digital, contains full contextual data (like trade history and ownership rights), and is secured through cryptography or blockchain to ensure authenticity, traceability, and immutability.
Q: Can cryptocurrency really function as real money?
A: Yes — especially if backed by stable value mechanisms (like reserve assets or algorithmic stabilization). When combined with wide acceptance and programmable features, crypto can serve as a legitimate medium of exchange and store of value.
Q: How does self-finance work without banks?
A: Through decentralized networks where users control their own identities and funds via private keys. Smart contracts automate lending, trading, and settlement — reducing the need for traditional intermediaries while maintaining security.
Q: Is CBDC the same as cryptocurrency?
A: Not necessarily. Most CBDCs are centralized digital versions of fiat money (like digital yuan). Cryptocurrency refers broadly to decentralized or distributed ledger-based currencies. However, a CBCC (Central Bank Crypto-Currency) could blend central oversight with decentralized technology.
Q: Will asset digitization make financial markets more inclusive?
A: Absolutely. By lowering entry barriers and enabling transparent credit assessment, digitized assets allow SMEs and individuals to access financing without relying on large institutions or collateral-heavy systems.
Q: How can regulators oversee decentralized finance safely?
A: By shifting focus from institutions to code and user permissions. Regulators can mandate pre-audit of smart contracts, implement kill switches for rogue protocols, and use real-time data analytics for proactive monitoring.
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Final Thoughts: Toward an Open, Shared Financial Future
Digital assets represent more than a technological upgrade — they signify a philosophical shift toward financial inclusion, user empowerment, and systemic resilience. By leveraging blockchain, cryptography, and smart contracts, we can build a financial ecosystem that is not only more efficient but also more equitable.
As Yao Qian concluded, “Digital finance will be simpler, faster, borderless, open, and respectful of user autonomy.” The journey has just begun — and the destination is nothing short of a reinvented global economy.
Core Keywords:
digital assets, cryptocurrency as money, asset digitization, self-finance, CBDC innovation, blockchain in finance, smart contract regulation