HK Blockchain Week 2020 - Panel: Digital Assets and Beyond: Infrastructure, Liquidity & Analysis

Hello and welcome everyone to Concord blockchain week, I am ready. Able truck event in investor relations manager at startup Network and an ambassador and lotion Association of Ukraine, really excited to join our blockchain. We can really excited as well as how our amazing panelists were joining me today. So please welcome. He's a strategist sto and info the block x, Microsoft, Xbox One system. Architect successful entrepreneur, guest, lecturer at Columbia University. A text to Angela Master speaker and author have I missed anything.

I know that's a that's a good summary. Thank you very much Maria. Happy to be here. It's a sweet technology company provided market-making solutions for digital asset exchanges and took an issue is to create a liquid and efficient market, Anson Cassandra as well leaking or it's a blockchain power dick shape to trade all assets with zero peace and issued one of the world's first security tokens tradable in the secondary Market. Previously, he was also a high-frequency Traders Market maker in the Foreign Exchange Market.

Research Market infrastructure, liquidity, UK Treasury and Alliance lunch at Manchester business school. And so has, fostered, 13, academic books Papers. Written two books. Go really impressive one. Interesting fact about that, he sounded one of the first watching companies in Switzerland and many people because of that told him, the prince of dinosaur. Is that correct on phone? That is correct and I take it as a big compliment, you know, especially when people see that I'm actually not the dinosaur age, but, you know, that's, you

know, the perks of being around for quite a few years. So hyper aware that the battery price in Alamo Creek the world as well, who is the VP of product strategy and Business Solutions and fire blocks in both traditional and Krista Focus financial institutions. Prior to fire blocks. Stephen was a senior manager, within the financial services practice strategy, and prior to that accident, stuff on the word as had a friend, a g and had a product business for a

novel Marcus. He considers his main business skills to communication, which is Helpful in day-to-day work and collaboration is the key to developing effective new product. Well. And how are you? But not the least, we have Thomas McKean, co-founder and CEO at Airborne Airborne exchange. He has over 35 years of experience working with commodities and derivatives exchanges across, u.s. Asia and Middle East on Exchange and Regulatory framework. He specializes in exchange-traded

uterus and how many changes brought it to obtain regulatory approval licensing. He's considered an expert in exchange architecture derivative and physical commodity product development. Most recently, he has been working on a best practice adoption of blockchain and distributed. Secretary zacian has a Chanel digital commodity Assets in his life lesson is persistence is to learn from your failures, reinvent yourself for your article and never stop learning. Welcome to Olmos

honestly. Really really, really nice to have you today. I'm really excited actually to discuss with you our topic today which is a digital assets and Beyond infrastructure, liquidity and Analysis. So into a digital asset, investor. Xrp, you know, for those people who are watching blocks and weed for the first time ever in our, in our case, one of the most exciting watching the waves in Hong Kong, please help me and categorize all the digital assets worth all those people. So we would so they would know exactly what did you go? What type of this blasted bread? The boys like to start.

Okay, yeah, I know thanks to you. I know Anton, I should wear in a conversation and then he was actually on the first people, to look at a carbon offset on an exchange of a three-week, a in Switzerland. So one of the, one of the interesting things is I come out of the traditional markets. I've got enough of your history when we actually used to trade on the trading floors and we wrote stuff down with pencils and we had erasers and you met trades. And we actually had paper

that the computer is now we don't have trading floors or paper, then Evolution. But looking at the digital assets face, when I started to look at it when I am and what I'm doing today is you really got two sides in the market. You got the purity of digital and that and that's the Bitcoin in this area man. And all the token economic models in the end of Payment Solutions on the other side of his utilization of the blockchain. And then, Fletcher architecture, sanitarium war or the the, the methodologies that you could represent assets digitally but actually have a back tasa and the end is a

real stream going to different ways on and The Regulators are very fine. Regulators are very focused on this is very digital, an intangible asset class. And I think when the markets are actually going to move or is he at the tangible class which even means it's. So there's going to be a lot of disruptive nature around the existing exchanges as well as New Market formation using these best practices. So it's it's it's really there. The very interconnected I guess is really the point of this isn't something that's dropped in from Mars. This is really an extension of existing system, but

it's a stomach shift. Nnn use cases for digital assets. Regulators are still up in the air. I think they either were afraid of Bitcoin or trying to understand bitch, going or where all the related you nosey. Pre and post Ico metrics. But now you got a new stream of use case that are really kind of trading markets. So the digital asset when asset-backed token or come out of the station, space thing is really where were where we're headed? Regulators haven't gotten it yet? That's for sure. I think I was

just coming up with some new announcements in the last day or so. So interesting Evolution going forward. Since you mention actually, there are new regulations, Lor are coming in Hong Kong, so I can sleep as well. What are your thoughts on that? I don't think they wanted a competition and you've got existing. You've got very extraordinary, existing exchange, especially in Hong Kong, Hong Kong exchanges & Clearing Corporation. Basically has a monopoly. I need to see is a regulator is very strong supporter of that a lot of value in a very

good regulatory infrastructure. I think the biggest challenge for them is it has been there's actually been deregulated otcmarkets out of evolved outside of that in Hong Kong very successfully and their biggest fear. Now is really cross-border penetration with mainland China. On some very sophisticated, a fraudulent you not to use word fraud but I definitely outside of the the regulatory metric and potential relay fatf financing is really the pressure. That's being brought down from the top to to regulate these

industries or not allow them to Expand from their current roles into the digital space and use case. So it's just a tightening up. Muscles business is actually still in the gold gold business. And how cold is going from traditional physical flows into digital flows. Close that loophole. Blink your eyes if I might compliment. A little bit. So if you follow things like Carlotta, Perez cell theory on technology technology innovation in financial markets,

typically you have the technology Wafers and regulation follows in a lot of what happened with crypto. I eat, I feel like I spent years of my life building one system setting was straight down at the time. We were sort of on The Cutting Edge of things that that that we didn't know how, how they could be regulated by The Regulators, you know, eventually caught up to it. I think it given that cryptus all-digital is Hope program and related brand new asset class adopting assistant regulation to to this new asset class. It is

far from trivia. And I think that's a lot of the struggle that you're saying and out of fear, like Thomas was saying, a lot of times Regulators have been able to have been trying to anticipate things, that they don't even understand Tryon and typically, history teaches us that, you know, technology should come first. You need to let us break a few things and then probably later after I if she tried to override your legs are too soon, then you start doing things that don't make any sense. Who what actor? Who wanted to drop in

sink when you start to look at it, right? When we get with The Regulators like the governance structure around. He's on a regulated exchanges or something that a lot of people don't really understand, right? If you look at the other example, with what happened with, okay, or The Exchange in Canada, the idea that basically you have retail investors, you know, that can access these Exchange Street. I said, hold funds are write in a journal basis is also for a lot of retail investors acting as a general custodian, given the complexity in a lot of ways of holding your own digital asset.

There's a lot of systemic risks with with the site with this concept, right? That basically there is a single point of failure and as you think about like the governance structure around, no regulated exchanges. This idea that basically one person or a group of people can represent a systemic failure from the governance and kind of a custody of assets is something that doesn't exist, right? So as we start to just kind of Transport the framework by which they can, Regulate these institutions. They're, they're learning more about it in there, seeing these examples that now kind of

bring a bit of fear as a regulator of, you know, it's something really does go wrong. Is a regulator would be accountable and responsible for your kind of managing the systemic risk writing. So you seem them kind of propagate the regulations that you see on traditional exchanges on down to, you know, a lot of these unregulated exchanges. If you start to look at you, no exchanges in Germany, for example, that are looking at more, regulator product, really. The Regulators are giving them the freedom to kind of Explorer and innovate, right? They're not know you look at Stockton what

they're doing with tokenize assets, which reports of what they're thinking about doing. There's so many other and a regulated exchanges that in the traditional Market. Given the government's infrastructure that exists at those exchanges are being allowed to innovate, right? Because they understand, you know, the model write the governance model there and now they're thinking about the things at the edges. How do we think about though? Death of chance Rae Jensen, and all these other kind of core components that as you start to implement digital assets, Right? Kind of Night Shift,

right? Until you need adapter framework, slightly to meet kind of the technological advancements. That these tokens then offer. So you know it they are going to take some time to get it, right. But I think they have a ton of a fiduciary duty on the retail side to make sure that your money that comes into. That system is State guard, it and is kept in a way that doesn't necessarily propagate wrist down to the end retail investor. The only thing I'll tell you like We would definitely how I just really should talk about the regular regulatory Clarity, it would be a different topic

and in what's a take a lot of a lot of time, but I was like, we still go back to the analysis of the glasses because it's our fault for topic new topic today. Still coming back to he's as I know that you are using AI artificial intelligence for your sperm analysis, Soul digital assets, and please quickly. So who are into the blog? Add us as we use more data science on machine learning to try to extrapolate inside from cryptoassets. Both retail audience, as well as we have barely subsisting. We're working on fairly sophisticated thing. So, I got machine, learning driven, Quan

strategies. And I'm think I died when many And ask around at the creek to the crypto space. The fascinating thing about this challenge today into the Blockhouse over a hundred clients under under institutional side and Thomas is a dozen of corn from the front or side including many of the names that you would recognize Mark a cop bitstamp on another soda. Fascinating thing about this challenge is that crypto is a completely digital asset class. So, a large

percentage of what happened in any trip to transaction is disabled and in some shape or form, not directly by. This is manifested somehow, iron, blocks and record sound and other things. And then it just happened at TimeWise crypto coin site with D, at the mainstream adoption of a machine learning and deep learning technologies that were not their research results in. Yeah, it is, but about the technology was not possible before. So you're saying that Revolution happening on the AI front. That is that is that is changing Capital markets and

then you have completely native digital asset class. So that the combination of the two is fascinating. So, what week we try to apply techniques at what Google, Microsoft, Uber Netflix, linked in these guys are doing, would try to apply those techniques to massive data, sets of where is blocks and data, order books, derivatives alternative data like Twitter telegram, extrapolating side about this new asset class that set of democratize. The playing field in crypto is the first asset class in which the most sophisticated

confronted the most mediocre retail investor could have access to the same type of information because his old car is sold out there and at the same time, You have the opportunity of remarking anything side, portfolio analytics and thinks I died that hasn't changed in decades, right? We're still using the same stupid metrics that we have been using since the 90s and you have a brand new data sets in front of you, that could help, you reminding all those pills. I deleted on phone

have something to add here but where will drop to the other to the other question? I can see you happy. I'm happy to just, you know, provide a bit of mine. Put, and since I'm the crypto dinosaur, let me know. Take you on, on this new journey in history. How things evolved from suspected how people classified as digital assets, Yeah. Now we're going to back to mmi to make a statement stating that Sheetz if you're put in any point of time and do an analysis, very typical for people, for

humans, actually to do SUB Town analysis. And then they actually think that the infrastructure the market structure evolves shop down as well, which is usually not the case. And I'll I mentioned that because I can bring you back in history. Actually 2016, actually, when I actually got involved in digital ask about it was actually very interesting that every digital asset was actually a crypto-currency. It had its own blood connection. It was very standard actually that everything you was taught you that she had to do in Brockton. Of course, some people are bit more creative than the others

and that was a lot of force, but everything was a cryptocurrency action and only later on when people realize, well actually we can create a digital asset, the doesn't have its own blockchain button, be on another option. Then, people start thinking about different kind of type of people maybe don't recall about the first. Ico or crowdfunding happened in 2013 which was called the mega coin. Don't know if it's called actually only later that you should text her. So, this is actually the first time when people realize why don't you actually wrap or base tokens in a different

direction? And then I started thinking about it. It's actually a utility token because it kind of does something. When a particular block, she knows it isn't how things are going and I'll coming back. So you know, we understand, okay, we have the cryptocurrency security tokens came about and it's very interesting because you mentioned I should as far as I know, one of the first security. And I remember what I say, what does your coil do? How do you mine it? And I will tell them, you don't mind if

its shares of a company. You don't mind shares of a company, but I'm just trying to get it straight to you. That usually, this Evolution happens not The way we actually anticipated normal yet. So today, we know. Okay. There are no security token. Security tokens are being split in two payments or utility tokens and you have kind of different category of security do, you know, we're going to be late today when you do a top-down analysis, now then supposed Market

making Solutions, so they tell me you're an exchange member and I told him, no, we're not in exchange. Remember the reason to exchange your members on digital asset exchanges because everybody has direct me to look at me. The same old is very weird. Why should everybody has an access to the marketplace in traditional world? You cannot have a client. Are Singapore. Train training, or get someone out of Switzerland. Just doesn't happen either be traded in Switzerland. Early trade in Singapore and a few years ago actually.

What does the trade happen? A regulator ask. You actually asked me and I told him well, Detroit actually happens in the clouds, you know? And actually in this Digital World what you don't really have physical borders but again this is Justin Bieber straight and actually get this evolution of All Digital assets infrastructure as well which is the point of a discussion actually involves a lot different in lots of counterintuitive, then you could actually do. I chop down an hour? And I think that's kind of the point. I'm trying to make it to Steven. Actually meant mention that we need to have

the flexibility to explore to find the right models. But many times, these mortals will not be intuitive Regulators in the frame of that they operate now. And then they asked you, how are you not going to change member? But because I thought that actually anybody remember you have to explain to them the context and educate them and then hopefully they see the same big vision and the big opportunity like we all do here. Yeah, it quick, quick Point their two complimentary I think about a year-and-a-half ago. I was very high, probably polish or

60 papers related to security tokens and Fisher. And I think most of those turn out to be wrong because this place hasn't really evolved such as fast as we all wanted to buy one of the ideas that that we explore the time that I'm tumbling brought me back to it with the way his argument is that. So if in one side, you have a completely digital asset class, all programmable. I don't the other side. You have regulations from the the last century, right? Trying to trying to catch up a way to see all this Disease, Association,

faucets and things like that. It's just a way to make regulation programmable. So, in some way of you say, we have to have laws and regulations that apply in the, in the, in the known digits. In the Physical world. But maybe there is a program about representation of those so I guess we make assets the. We make accounting programmable maybe it's regulation is programmable to undine you have a way like you see what securitize is going with the DS protocol and things like that of embedding. Certain certain regulatory constraints at the at the protocol level. And I are there is son of that. That

is very end ideas. Very meritorious, right? To start and bedding. Different regulation, construct of the blocks in level in the form of a smart contact. I could be in force across the bar. Yeah, I agree with you fully on that and actually trying to do that. When we sat down with The Regulators for, for creating a commodity, a side back token, they scratch their head because we, we weren't, we actually didn't fit into any of the little squares. They thought we were going to be in STO, but we're not, we're not a security. You were were a commodity, so we

actually got a very light touch from regulatory standpoint. On the product construct, a very heavy-handed touched on how you do clearing settlement, do you risk? Your default fund methodologies and everything. We said, well, here's our smart contract, we embedded regulatory Frameworks to to avoid fundamentally, and actually made it easy for The Regulators cuz we wanted to have good best practices are there? Still asking us to explain it, it's entertaining at times but anyway, I wear which one to be trying to bring the best of old school in to the

new school and combine them through through the technology. That's for sure. Actually, one of the trance I would say that I heard like throughout all of this years after of course we're not already when I'm talking about the digitized acid. So what are the trends, everything will be digitized and theoretically it seems like it is possible and it will be actually hopefully done in the year. But probably in this case is the regulatory framework is actually the Bhangra of the drawback for this. Can you say like they were saying like in

10 years, every everything will be digitized and still a lot of companies. Now we're trying to provide infrastructure to make really the assets to help the company's to digitize there. So tell tell us more. How's the oldest boy is frozen to this that Isis and where do we see the space where liquidity year? Yeah, I mean I guess I can sleep really quickly just to to a couple things and I mean I think if you start to really engage with financial institutions at the moment right there, still trying to understand the business cases behind digitization,

right? Right. If you look at only, when I was a consultant, everyone was starting to shift things towards the cloud is, starting his shifting into Ledger's. They're moving from paper. I mean, that that's a process that was taking place, like, two years ago, right? Two or three years ago bugs, were just starting to shift things from you. No paper, base models, and and distributed, you know, sequel databases into cloud-based infrastructure, that can be shared geographically across a different business units. They're still working on that Journey today. And so, you know,

when they then start to the Explorer, what does it mean to make everything? Digital is real question in terms of, what is the business up with that? We're going to kind of Yoshi from going towards this digital landscape, right? What is the impacts of my? Business. How did the shape my risk in operations? How's the trade shape? My my current no business opportunities. And and then is it really worth it right in and you basically as you start to really date that the first question that comes up, I think the second pieces are boxes and infrastructure company. So we focus on your secure

digital asset infrastructure. Providing that for both the custody tokenization issuance excetera when we engage with Regulators. There's just even a fundamental question of. How do you do what you do? And what is the impact of? We don't understand how to regulate you as a technology company, right? You know what you would say that you do. Let's look at F is right? And they provide core banking technology to Banks. Ledger's, if something goes wrong there, I think a few months ago, your wife is an outage at, cause problems at, I think Signature Bank in the United States in the few other

Banks. Corn fundamental not regulated where you start to see regulation is happening with SSC with m. Yes, we're even providers are technology providers. Like ourselves are kind of in the crosshairs of Regulation by virtue of just engaging in the digital space right into. There's a lot of real question. There's a lot of real and certainly before you and say everything is going digital and turns of how The Regulators want things to go digital write how they look at technology applications in the space and the movement of those technology applications Regulators talking about cold

storage and multisig, for example, where an MPC provider, right? There's a lack of understanding even there. So I do think that there is eventually a business case for streamline and optimizing as as folks have to look at yo-yo, their balance sheets, as folks have to look at operational implications than and basically you don't cause and their business digital does make sense, right? The distribution of information how that works the settlement efficiencies and all those things. Make a lot of sense, right? But the ability for the regulator to catch up to the technology and The Innovation and

Call jebus outpacing that regulation, you know. It is something that I think will be a hindrance to real digitization of everything within the next five years, right? I think you're going to see certain markets where it really make sense. For example, private placement at banks, that makes a lot of sense to digitize has completely in favor before, it's very difficult to manage or the question becomes while our us treasury's. Really going to get, right? Are you know, signature, Bond issuances going to get, choked on a scale Fiat, right? How serious is going to work with like

with large financial institutions? What is that mean? So I think there's still a little bit of I don't see it happening like do do everything in the next five years. I think I'm going to be Pockets where Regulators can understand understand the technology that will kind of Empower enable that and then kind of innovate from there gradually over time. But do you agree that for example, one of the last reports by World economic Forum that 10% of GDP will be on blockchain by 2027. Is it like are we going there or is it like very bright in this case prediction of core cast

You want to go ahead? Some don't know. Go ahead and go ahead. Yes, I'm happy too. I'm happy to be the provocative person and say absolutely not 10% that you have a hundred percent of assets, digitized, and employed my food. In this case, like we have like, I think to control Victoria pinion Sunday. I'm happy, you know it, but I really think that maybe, you know, the timeline of seven years a bit aggressive, you know, but basically, if I just going to reflect, you know, 10 years ago. People talked about the internet, they said, while, you know,

why should everything be digit? Why should every piece of information be digital? And today we're having a panel fully digital. None of us, has you in the same room? I mean, told me you no good colleges in Singapore. And you know some kind of like you to take that as a reference you would say okay maybe everything every digital asset that makes sense will be digitized and I kind of like made out of the state of my babies to sit on your time. Horizons is a bit aggressive. But, you know, I think you're definitely getting there, and that's why you have, you no service providers and you can

start your players. Like, five blocks, you don't like your car, but instead of food food, putting this building blocks in our ecosystems together, such a year that we achieve decision. No. But I can also very much agree. With the statement said, I was just nodding my head all the time. He's like, what you all want to achieve is actually be deployed technology. Vehicle is employed. A piece of the infrastructure is very important to understand that from a company perspectives, actually that being highly regulated and I'll just his mouth maybe also controversial to say, being highly regulate.

Constrains, you tell me openly say, the moment you become a bank, or you build, something you get your evaluation, she goes down, because whatever you have in mind to do the before you're not going to be able to do it. So easily bought the key for success is regulation because all of us here have to be highly highly regulated and the boy amazing service in amazing technology for this Vision you know that I set hundred percent everything that's imaginable will be digitized is going to happen to have a cheap massive success

when he's regulation and how to marry the two together. I think that you know, what will actually differentiate success success stories from Also, I would like to proceed East Tawas. This of Krypton her kids, they were here because they weren't against the regulations. Now we still understand it for the crypto to enter Mass adoption was still a lot of regular. We need you. We relation Educate The Regulators and the balance between allowing you to grow and be entrepreneurial or or push the boundaries of of, of the Market's architecture to the same time. So does

drag people out of not out of the darkness to just go home on speed it up, I believe in very short of going to be digital the one the strong points for me. When I first looked at blockchain is back in 2013 and I got to look at blockchain relative to gold and how you can take gold basically from source to a refined product involved and ownership and it has always been about you. No good gold, bad gold, where they coming from. Is it money laundering? Gold is it? Or is it just a

cold? You're buying actually gold. That kind of stuff. You can create that proof on a blockchain and I distributed Ledger Navasota someone when we can do this with traditional markets architecture. So I thought I saw it to look at a relative's Commodities Commodities exchange world like a c, m e r. N i e soar with a London of European markets. Those are silos in a very specific products but their price has an implication across Global you. So if you're looking at the price of corn in Chicago or soybean in in Dalian China it's not

just enough to see the impact is global global and Ben trade Finance everything. But they're all very not connected. Somebody produces a price and DeLeon and a bank in Chung Chang in a 3,000 kilometres away, takes it as they're marked and market price for their farmers and their transportation industry. What the connection is not performing, using a lot of disconnections inquire, so that's an extreme example. But in in digital world you can connect every single part of the life cycle of an underline product or an asset as well as

all the digital ownership from a producer, from a minor in terms of gold all the way to the refinery and every subsequent movement of that product. After that, I sell it to the floor of the people on this page right now we can see if you spit all daisy chain connected, the current market architecture that we trade, the financial Market architecture is not connected like that, actually you've got So you use when you take a dollar and I go spend it on Queens Road in Hong Kong. As soon as that. At least my hand and goes to

another person. If the change of the chain of of ownership, the chain of of transference is gone. Cuz I don't know where that dollar goes after that, right. Yes, it is for us to have that traceability in the digital world from regulatory perspective and capable to do it. I would like to only thing. We just how we need almost to the only question. What do you think what will happen in digital assets space in 2021 quick question, quick. Answer it. And then we will

Anthem, please quickly. Yes. So first it was a pleasure to be part of the panel with some of the pioneers and I hopefully very soon dinosaurs of the crippled as well. And the my side of what, you know, seeing what's happening behind the scenes in the digital AstroWorld, the quality of the infrastructure is being deployed, you know, in the last year's and going forward, I am very optimistic about the next amazing bull rally that will have in the digital assets, but this time, it would be bigger because you will have the infrastructure to onboard institutional investors

actually because that was not the case in 2017. We do not have the infrastructure. Everybody wants to, I'm bored. Really, really, because I will have that because of the quality of the infrastructure in the next will rally, which makes me very upset Mystic, and very bullish on our industry. And I see that you are going to get closer to that vision of everything being digitized, but you challenged me a little bit. So this is my final messenger. Very quickly only 2021 I'm actually going to disagree with Anton about this. I think I'm looking at the

data, we analyze crypto Market. We think there has been a lot of episodes this year. Might prevent some, I make institutions very concerned about the plenty of capital into cryptoheros in in, in the next hour in the next 12 months. What, I think for 2021, I'll be looking for some movement particular defied, that are pushing really, really pushing their level of innovation in there in the space and it's real and their material. And they're challenging conventional wisdom. And I think that's the type of Market that could really take diesel assets to to the next level

door older Santa Fe Sand Dollar, but but I think they find it with the momentum behind it. For the next year is is particularly interesting. I mean I think I think the payment space is going to be really interesting right in the emergence of basically globalized movement of Fiat currencies in a pretty efficient way. And what folks are are going to be able to do that with? That would feel tickly Brian and other providers that are starting to emerge in the space, that basically will enable more efficient Fiat movement. And and what that really will do to drive a digital adoption at the at

the lowest levels down the chain. So I think that's going to be a really interesting thing to watch him and how that infrastructure of Lost. Thomas, I just realized I think CBD. Seas are going to be the next thing. I'm probably still banging around most of the world and I think the central bank's other that's going to be there at the option if they get that. Right. Everything else will fall in line? Thanks. Thanks.