Yifan He: The Architect Behind China's Blockchain Service Network and the Future of Digital Banking

When most of the world thinks about China's relationship with cryptocurrency, the immediate association is the 2021 ban on crypto trading and mining. But beneath the surface, a sophisticated blockchain infrastructure has been quietly evolving, designed to comply with Chinese regulations while maintaining the technological benefits of distributed ledger technology. At the center of this development is Yifan He, CEO of Red Date Technology, who has spent years architecting what may become the blueprint for blockchain adoption in regulated financial systems worldwide.

In a recent conversation with Sri Misra on the alpha un# podcast, he revealed the intricate details of how China's Blockchain Service Network (BSN) operates, his vision for tokenized banking systems, and why he believes there's a 50% chance China will lift its crypto ban through a Hong Kong-based infrastructure model.

The Man Behind the Network

Yifan He's journey into blockchain infrastructure began with a fundamental challenge: how to provide developers in China access to blockchain technology without violating the country's strict cryptocurrency regulations. As the CEO of Red Date Technology, He has positioned himself as one of the key architects of China's blockchain future, working directly with government agencies and major telecommunications companies to build compliant infrastructure.

His approach has been methodical and strategic. Rather than fighting against Chinese regulations, He chose to work within them, creating systems that capture the benefits of blockchain technology while eliminating the elements that concern regulators most: speculative trading and capital flight.

Understanding the Blockchain Service Network

The BSN represents one of the most ambitious blockchain infrastructure projects globally, though it operates largely outside international attention due to its China-focused scope. He explains the BSN as "a network of blockchains" rather than a single chain, comprising 12 different blockchain environments that developers can access through a single user account.

Technical Architecture and Scale

The numbers behind BSN reveal the scale of this infrastructure project:

• 2,500+ enterprise users currently utilize the network

• 200 data centers across China host BSN nodes

• 12 distinct blockchain environments including converted versions of Ethereum, EOS, Cosmos, and Polygon

• 5 validator entities control the network, including China Mobile and government agencies

• Transaction costs as low as 0.2 cents USD per transaction

"Think about BSN as very close to public chain but fully in compliance with Chinese regulation," He explains. The system removes cryptocurrency requirements, instead using fiat money for gas fees through integrated payment wallets.

The Regulatory Compliance Model

What makes BSN unique is its "open permission" model. Unlike traditional permissioned blockchains that restrict access, BSN allows anyone to read data and deploy applications without KYC requirements. However, when users want to write data to the chains, they must complete know-your-customer verification procedures.

This design creates what He describes as a "Hedera or BNB" style system - publicly accessible but with controlled validation. The architecture supports anonymous reading while maintaining regulatory oversight for data writing, striking a balance between openness and compliance.

Real-World Applications: Beyond the Hype

While much blockchain discussion focuses on speculative applications, BSN hosts practical enterprise solutions that demonstrate the technology's utility in regulated environments.

China's National Digital Identity System

One of BSN's most significant applications is China's Real DID system, which represents a paradigm shift in digital identity verification. The system leverages blockchain technology to create privacy-preserving identity verification that benefits both users and service providers.

"When you go to a website, you can do a simple anonymous key writing," He explains. "You just give them your DID address, then send the login or registration with your private key signature. The website goes to BSN to verify with the public key put there issued by the government."

This creates a zero-knowledge-style verification system where businesses can confirm a user is a Chinese citizen with no criminal record without learning their actual identity. The government issues the DID after one-time verification, but subsequent authentications happen without government involvement, providing privacy for users and reducing verification costs for businesses.

Enterprise and SME Adoption

The BSN ecosystem has attracted diverse applications across industries:

Digital Asset Authentication: Companies like diamond retailers create NFTs for high-value items, providing authenticity verification and ownership tracking. Wedding rings receive DIDs that serve as both gifts and security measures for resale verification.

Data Sharing Networks: Large corporations use BSN to share public data across subsidiary networks, replacing expensive centralized systems with blockchain-based solutions that eliminate the need for complex API integrations.

Supply Chain Applications: Various enterprises leverage the network for traceability and authenticity verification, particularly for high-value goods where provenance matters.

Cost Structure and Accessibility

BSN's pricing model reflects its infrastructure positioning rather than speculative investment. Monthly fees can be as low as 20 RMB (approximately $3 USD), with individual transactions costing 2-3 RMB cents (0.2-0.3 USD cents). This pricing structure makes blockchain technology accessible to small and medium enterprises that couldn't justify traditional enterprise blockchain costs.

The Stablecoin Strategy: Hong Kong as the Testing Ground

While China maintains its cryptocurrency ban domestically, He's company is actively involved in Hong Kong's emerging stablecoin regulation, which launched in August 2024. This involvement signals a strategic approach to digital currency development that could influence mainland China's future policies.

Hong Kong Dollar Stablecoin Ecosystem

Red Date Technology serves as the primary technology supplier for multiple stablecoin issuers preparing for Hong Kong Monetary Authority (HKMA) licensing. He notes that "three dozen large corporations" have applied for stablecoin licenses, indicating significant institutional interest.

All Hong Kong-based stablecoins will launch on public blockchains rather than permissioned systems, marking a clear distinction from BSN's approach. This strategy allows Chinese companies to gain experience with public blockchain deployment while maintaining regulatory compliance through Hong Kong's framework.

The RMB Stablecoin Question

He believes the Hong Kong stablecoin regulation serves as a testing ground for broader Chinese digital currency strategy. "If we want RMB to be strong, we also need to issue RMB backed stablecoin," he explains, noting how U.S. stablecoin legislation explicitly aims to strengthen dollar circulation globally.

The timeline for RMB-backed stablecoins remains uncertain, but He expects Hong Kong's experience will inform mainland China's approach. Success in Hong Kong could pave the way for offshore RMB stablecoins under similar regulatory frameworks.

UDPN: Reimagining Banking Infrastructure

Beyond BSN and stablecoins, He is involved in developing the Universal Digital Payments Network (UDPN), a consortium project aimed at creating token-based banking systems. Importantly, He emphasizes that UDPN "has nothing to do with China" - it's a seven-entity consortium including European companies, banks, and Middle Eastern organizations.

The Vision for Token-Based Banking

He describes UDPN as representing the "third generation of banking systems":

1. First Generation: Paper-based record keeping

2. Second Generation: Centralized digital databases

3. Third Generation: Decentralized token-based account management

"We believe every single bank will have a token-based account management system," He explains. This vision positions blockchain technology as the foundation for future banking infrastructure, giving users partial control over their funds while maintaining banking oversight.

Addressing Banking System Limitations

Current banking systems place customer funds on bank balance sheets, legally making them bank property. Customers access their money through bank permission, and banks can freeze accounts or restrict access. Token-based systems would give users cryptographic keys, requiring their participation in fund movements.

"Without your permission, they cannot move your money," He explains. "Right now in bank accounts, they can do whatever they want."

UDPN has been in pre-production testing for over six months, with dozens of banks and several central banks participating. The system requires significant banking infrastructure upgrades, which He estimates will take approximately one year to complete.

Interbank Settlement Infrastructure

UDPN serves as an interbank messaging network for token-based systems, similar to how SWIFT connects traditional bank accounts. As banks develop their own tokenized deposit systems on various blockchain platforms, UDPN provides the infrastructure for cross-bank token swaps, payments, and foreign exchange.

"We are not competing with SWIFT, we are in parallel," He clarifies. "They handle fiat money. We handle tokens."

The Digital Cash Vision

He's ultimate vision extends beyond current banking systems to what he calls "digitalized cash" - a system that preserves cash's beneficial properties while enabling digital functionality.

Cash as the Ideal Money

"Cash is the best money in the world," He argues, highlighting its key properties:

• Anonymous and decentralized

• No intermediary control

• Instant settlement

• Complete user ownership

• No one can prevent transactions

Cash's limitations - transportation costs, storage expenses, and geographic restrictions - led to banking system development. But these solutions came with trade-offs: lost user control and privacy.

The 20-30 Year Outlook

He envisions a future where digital cash combines traditional cash benefits with network functionality. Users would manage their money efficiently without banks serving as custodians, with commercial banks evolving into investment-focused institutions competing on returns rather than custody services.

This transition requires global infrastructure that no single entity controls, which He acknowledges won't happen within 10 years due to technological limitations.

China's Crypto Future: The 50% Prediction

Despite China's current cryptocurrency ban, He believes there's a 50% chance the country will create regulated crypto access through existing infrastructure.

The Capital Control Context

China's crypto ban primarily stems from capital control concerns rather than technology opposition. Cryptocurrency provided an uncontrolled mechanism for moving money out of China, undermining the government's financial oversight capabilities.

"In China, the term money laundering is not laundering illegal money. It's laundering money out of the country," He explains.

The Hong Kong Stock Connect Model

China already operates a system allowing mainland investors to trade Hong Kong stocks through mainland brokers using RMB, eliminating capital flow concerns. He proposes extending this model to cryptocurrency through regulated Hong Kong exchanges.

"If China opens up the stock connect, becomes crypto connect, so you can open crypto wallets with those regulated exchanges inside China and buy and sell with RMB," He suggests.

This approach would solve capital control issues while providing investment access to approximately 200 million Chinese stock traders. Implementation could happen within three months using existing infrastructure.

Shifting Government Attitudes

He notes softening government attitudes toward cryptocurrency over the past six months, citing public leadership discussions and Shanghai government conferences focusing on crypto topics. The shift appears tied to Trump administration policies bringing cryptocurrency into mainstream American finance.

"When they are friendly, China also kind of begins to switch," He observes.

The stablecoin strategy particularly motivates Chinese government interest, as currency competition requires adopting new technologies to compete with USD-backed stablecoins.

Global Implications and Industry Impact

Yifan He's work through Red Date Technology, BSN, and UDPN consortium participation provides insights into how major economies might approach blockchain adoption while maintaining regulatory control.

The Institutional Adoption Path

He firmly believes blockchain's mainstream adoption will come through institutional implementation rather than grassroots user adoption. Drawing parallels to computer adoption in banking, he argues that central bank and government acceptance drives commercial bank participation, which then enables consumer access.

"If you really want to push this, talk to central banks. Change their attitude... and the financial legislations. That's what can force commercial banks to adopt new technology or even cryptos."

Balancing Innovation and Regulation

BSN's success demonstrates that blockchain technology can provide significant benefits within strict regulatory frameworks. By removing speculative elements while maintaining technological advantages, the system creates a template for other jurisdictions considering blockchain infrastructure.

The approach has enabled practical applications serving real business needs rather than speculative trading, suggesting a path for blockchain maturation beyond cryptocurrency markets.

Looking Forward: The Infrastructure Race

As governments worldwide grapple with digital currency strategy and blockchain regulation, Yifan He's work provides a case study in pragmatic blockchain development. His simultaneous involvement in China's domestic infrastructure (BSN), Hong Kong's international stablecoin ecosystem, and global banking transformation (UDPN) positions him uniquely to influence how traditional finance evolves.

The next few years will test whether China's measured approach through regulated infrastructure proves more sustainable than fully open cryptocurrency markets. Success could influence other major economies considering similar frameworks, while failure might reinforce arguments for completely open blockchain systems.

Regardless of the outcome, He's work demonstrates that blockchain technology's future likely lies not in replacing traditional financial systems overnight, but in providing infrastructure that makes those systems more efficient, transparent, and user-controlled while maintaining necessary regulatory oversight.