Podcasts Ground Floor Consensus GFC020: Crypto currency and the Evolution of Financial Services (w/ Michael Wu)

Episode Summary

Oct 12 2021 . 51 MIN

GFC020: Crypto currency and the Evolution of Financial Services (w/ Michael Wu)

“It’s easier to predict the future further along than the near future.” Michael Wu, founder and CEO of Amber Group, joins Ash Bennington to share his journey in the cryptocurrency space. He shares how he started Amber Group, discussing their services and client base, and he then goes on to explain the Asian perception of cryptocurrencies, crypto regulations in China, and what he sees as the future of crypto. Recorded in July 2021.

Show Notes


“It’s easier to predict the future further along than the near future.” Michael Wu, founder and CEO of Amber Group, joins Ash Bennington to share his journey in the cryptocurrency space. He shares how he started Amber Group, discussing their services and client base, and he then goes on to explain the Asian perception of cryptocurrencies, crypto regulations in China, and what he sees as the future of crypto. Recorded in July 2021.


In this Episode:

  1. Michel Wu shares about his experience with cryptocurrencies.
  2. He elaborates about the services provided at the Amber group.
  3. He shares his views on strategic window for the crypto industry and about the risks too.
  4. He shares his Asian view of cryptocurrency and compares it with US customer's view.
  5. He tells about what is it that his clients are looking for and how do they service their needs when there are so many other shops springing up who want to do exactly that?
  6. He shares his views on where the regulations are in China and about the policies.
  7. He tells about what might be the landscape look like in the cryptocurrency world after 1/3/5 years and how it's going to evolve.



NOTE: Following transcript is generated using AI. Minor errors might be present



Welcome to The Real vision Podcast Network.



Welcome to ground floor consensus. I'm your host Ash Bennington. Welcome to Episode 20, cryptocurrency and the evolution of financial services with Michael Wu, founder and CEO of Amber group. On this episode, Michael and I discuss how technology is changing traditional financial services, what it means today and what it means for tomorrow. We also discuss the view of the crypto ecosystem from Asia. All that and more on this episode of ground floor consensus. Michael, welcome to ground floor consensus.



Thanks a lot, Ash. Thank you for having me.



Well, it's really a pleasure to have you here. We're going to talk about Amber and a whole lot more. But before we get into what you're doing today, tell us a little bit about your journey into the crypto space, a bit about your background and how you got to where you are right now.



Thank you, happy to share. So for me, you know, I always had this kind of mixture of both finance and tech background since my early early school days. So since high school, I was a programmer. And you know, in college, I was double majoring in economics and computer science at Dartmouth. So very naturally, you know, finance has an attack have been kind of my thing. You know, after college, I started my career as a trader on Wall Street was Goldman and moved on to Morgan Stanley, where I was a FX and rates trader. That's where also you know, I met a lot of my co founders today I am a group how exactly I got into crypto, it was kind of an interesting backstory. So while I was still in college, I took a class about computer security, where you know, Bitcoin, at the time, I think was like 2012 or 2011 was over, it was still very early days for Bitcoin and, you know, it was one of the Assign extended readings for me in college. So I read about it, I was like, it was a cool idea. But you know, unfortunately, I didn't really draw upon that. And you're, you know, later when I became a trader at the bank. But you know, later on when I was a trader at Morgan Stanley, you know, I was trading FX and very naturally, at the time, you know, Bitcoin was more positioned as a alternative way of payment or an alternative to the fiat currencies. So, as an FX trader, it was kind of became my job, especially, you know, in 2014 2015, when it started to get more traction, it kind of became my job to study about it. And I was still the bank. So my co founder in the microphone of the TianTian colander, and I actually was sitting next to each other on the trading floor. And we were looking at our looking at the Bitcoin prices, and we'll be like, we shall get involved. And because we were the bank, the only thing we were able to trade compliantly at a time, we're actually Greece skills, trust product, the GBTC. So turned out we will actually want the very, very early on, I guess, traders, a buyer seeing GBTC I remember I placed the order through the internal employee trading desk of Morgan Stanley and the execution trader in New York or last me What was this? He I've never seen anyone else traded that ticker until that point. So you know, we started to really get involved there was crypto since then. And in 2017, when we kind of really started our startup It was also you know, the year when Bitcoin etherum ICO rally when one in front of the public stage and that was also when you know, we fell very naturally. At the time as quon traders as you know, FinTech entrepreneurs, it just felt very natural to be involved in crypto and very quickly, we decided to pivot our efforts fully into crypto.



Well, let me ask you something. What was it that made you really passionate about the crypto experience you know, for people who don't know your background, you're a guy who would have been successful and just about anything, you know, He graduated from Dartmouth with honors studying economics, Oxford University, Goldman Sachs, trader FX and rates at Morgan Stanley, you could have done anything you wanted in the financial world, you had a very bright career in front of you What made you think particularly as early as 2017, this is something that I really want to invest my life fully in.



Thank you ash, actually, it's, it's a wonderful question, because it kind of ties back to, you know, why we decided to do a startup of the first place. So, in, like you said, you know, when we were in the band, you know, we had a good career ahead of us, you know, you know, we were performing at a bank, in fact, you know, right after investment banks, I became one probably, you know, one of the youngest, you know, serious hedge fund PM's in Asia, but, you know, it just wasn't satisfy, you know, because we felt, you know, the financial industry was not innovating, or iterating. Very fast. Meanwhile, you know, you had, you know, the internet industry, the e commerce, you know, all the other tab, the evolving day by day. And remember, at the time, we were already, my co founders, and I will already other kind of the frontier of financial innovations already was, you know, the top tier investment banks, but we still fell, you know, since we're not, I mean, the work, we're busy, but, you know, since we're not evolving fast, or, you know, there wasn't a lot of innovations, and we fell, you know, we already in the, you know, 21st century, and that, you know, tech is rapidly disrupting everything, you know, finance, will, will no doubt, be the next so, in very early on, we set our mind to be, you know, FinTech entrepreneurs, because we felt, the financial industry, the financial services, how, how the financial services were done, should be completely re innovated and re thought of, with, with, with the evolution of technology. So even before we decided to go fully in, you know, that was our idea. And then crypto just happened. And it's still the early days, right? So, you know, there was still a lot of scams, you know, a lot of fluffy stuff. But, you know, after really looking into the technology, you know, and timing was interesting. So in 2017, we got involved in crypto, but it wasn't until, you know, I think it was, during the, during the first quarter of 2018, or market started to turn south, when all the ICO bubbles start started to pop, we actually, you know, really had the time, I think, you know, as always, you know, ever bear market really gives you more time to look into online technology and look into the industry and an infrastructure. That was when we realized that, okay, actually, you know, this technology, the way how, you know, crypto really does, finance is exactly how we imagine that, you know, our industry should be evolved with technology. Right? It was, you know, it was open source, you know, it was global, you know, it has the nature of being borderless, frictionless, seamless all the things we felt, you know, just like how traditional business were disrupted by e commerce, and therefore achieved the network effect and scalability. We thought that was exactly what crypto can do to to financial industries. And that was when we made up our mind, okay, this is exactly the field. We want to devote ourselves to want to commit our future career saying to you know, to be FinTech entrepreneurs.



Yeah. You must have had some guys on the desk, look at you and say, Michael, are you crazy? What are you doing, you're leaving to start a FinTech company. You could stay right here and have an incredibly successful career. But you see something coming, you see what the future looks like, you know, it's it's interesting. It's always so interesting to me, to see people who have technology backgrounds, it's always kind of a very organic transition. But for people who have these traditional finance backgrounds like you did, I worked in a bank when I was in my 20s. To make that jump. It's always an interesting leap of faith, conceptual shift to go and say, we're gonna do something different. So now it's, I guess, the end of 2017. You're about to spin up Amber's group. You talked a little about what you thought the possibilities were. Specifically, as you left Morgan Stanley, what were you thinking? What were the goals? And what did you see the opportunity set being



To be very honest back, then, you know, they'll probably wasn't that much thinking into the outcome, you know, we were just starting our startup. So it was more about the direction we were going, we didn't really know where we were going. At the time, we just knew this was something we really wanted to do, we felt, you know, it was also the right thing to do, to really, you know, to really rethink and re innovate and innovate, you know, how financial services should be done was blockchain was crypto, in many ways, it was just natural for us to do services, because of our background. We were at the sell side, you know, we were servicing a lot of the largest traditional institutions, family offices, high net worth individuals with their traditional assets of a bank. Now moving into crypto, we felt you know, they needed the exactly same kind of services, the same grade of institutional level services with crypto. And that's what got us going very early in 2017. And 2018. You know, we provided those same services to the institutions to the, to the big guys, like we did while we were at Morgan Stanley or Goldman. Um, but you know, very quickly again, you know, I think the technology background in us, the tech DNA in the team was very crucial, because very quickly, we realized, okay, you know, this was this is meant to be done, you know, in a more automatic automated way, in more of a product lead kind of fashion. And that's why we did and, you know, we built the platform from there to initially it was really to automate a lot of our services and to offer them to more people. But over time, we just felt in a wisdom platform, right, it was a lot more natural to to service to integrate all the service now we pride our animal group as an integrated crypto finance provider. And also it was a lot easier to get user feedbacks that way in a more systematic and automatic way. And you know, really to innovate our products according



Yeah. So let's talk a little bit about those services. So for people who don't know just the basics Amber group is based in Hong Kong where you are now you have an incredible view behind you through the window which people can't see because it's a podcast, but I assure you it's a gorgeous view of the city and I think the harbor and you know, obviously people many here in the US are heard of Amber for the first time when you guys recently raised I guess it was last month about $100 million dollars at a $1 billion valuation enterprise for the company. Tell us a little bit about what those services are that you offer right now.



Sure. So we offer pretty much everything under the sun we will say in terms of crypto finance, you know if you need to from simple things, if you need to buy and sell crypto was via currencies or if you need to trade between them, we provide that if we need a more advanced execution services such as you know t wap v wap. You know, these are based at the time or volume weighted average price executions, or if you have, you know, if you need to execute them according to certain rules, we can do that for you. If you have crypto already and you want to park them for interest you know, we offer very appealing both floating and fixed interest to our customers. So you know, if you just park crypto with us, right you can withdraw them within 24 hours and you still get you know, 3% to 4% with your kryptos and our stable coins and if you have a specific tenor, you want to lock them up longer it could be you know, 190 days or you know, 312 days any days you pick you know, you get a much higher term interest from us and moreover, you know, there are more and more innovative structure products that we offer on the platform to fulfill all kinds of, you know, customized or you know, customized needs or all kinds of investment views. Let's say you know you're willing to buy bitcoin but maybe not at the current level, but a discount will have something for you where you know, it's essentially a option link the structure that you either striking lower to buy your Bitcoin at a discount, or get a higher funding rate, or things like you know, you can park your stable coins with us to enjoy, you know, a very high potentially very high interest rate depends on market movements, or our You know, you get your principal back was no loss. So we have a lot of all kinds of these pipelines of new, innovative structural products on the platform as well. And lastly, you know, you can take a loan with us as with your crypto portfolio as collateral, and you can even spend against that, you know, without court offering with payment functions, you can send a red packet, which essentially, you know, is interesting Asian way of payments to your friends in crypto format, at, you know, instantly and in a very cheap, convenient fashion. So pretty much everything in related to finance, you know, we want to provide the kind of services in the crypto scope, which we think is not only in the most natural, efficient, and seamless way, but also, you know, eventually we think that's an asset class that eventually covers all asset classes.



Yeah. So before we dig into that, I want to talk a little bit about the lending and yield side of the equation. So for investors out there traditional investors who may be scratching their head saying how are you offering three and 400 basis points overnight are close to overnight federal funds rate target between zero and 25% effective federal funds rate 10 basis points, how are you guys offering 30x? That and what are the risks?



Sure. So this is a wonderful question, because it gets us to, you know, what, I think is a strategic window for the crypto industry and for, you know, the, I still think crypto early. So therefore, for all the early participants of crypto, I think there's still a structural yield pickup opportunity with crypto, right? Because right now, the two, the two worlds, the feared worlds or the traditional finance, worlds and worlds are not fully connected yet. What does that mean is, you know, you will have, you know, you will have a lot of potential borrowers, for Say Fia capital, right, as they're working capital, or as you know, capital they need to spend about all they have is crypto, or mostly in crypto or even, you know, crypto mining machines, right? So, let's say if you are a crypto miner, right, you have a lot of mining operations, right, they cost the Fia money to buy and, you know, they cost electricity bills, which we need to pay with fear. But on the on the, that's, you know, essentially your liability, but on the asset side, you know, all you have is more and more bitcoins, unless you want to sell those bitcoins, which a lot of the long term holders do not want, right, you need to find a way to finance your operations. While they do they come to a firm like Amber group, right, they put say $1.5 million of Bitcoin claros with us, and they take out $1 stable home loan from us on 1 million, and they need to pay us an interest of say, seven or 8%. You know, so right away, where, you know, if the two systems are connected, they can go to a bank, and you know, the bank will look at the asset and be like, you know, I'm happy to extend you loans or, you know, we're happy to extend your working capital, you know, close to you know, whatever, you know, the label Plus, you know, whatever the credit spread, they see instead, you know, traditional financial institutions that cannot, because they do not yet have the ability to act, assess, you know, the values and, you know, to manage the risk, or was quipped. Now, back to your question, what are the risks? Right? Of course, because it is overcloud? Or is the nature and this is just one example of, you know, how this kind of financing happens, you're always dealing with liquidity risk of the underlying asset, right? So, in the case, in the example I just gave, right, if Bitcoin does, you know, 10, bitcoin price does take a lot, then, you know, we need to be able to manage the risk, we need to be able to margin call, we need to be able to liquidate the collateral for the loan payment, if necessary. And all of that, you know, takes a lot of very, what we call crypto native kind of infrastructure and setup, you need to have the, we need to do that we need to aggregate the best liquidity in the world, we need to you know, really understand how crypto liquidity is and the you know, be able to ask access the liquidity to be able to evaluate our portfolio be able to manage the risk when liquidity is the most cost and volatility is the largest.



Yeah. So let's talk a little bit about where your clients are in the world. Give us a little bit of a sense about where your clients currently are domiciled where they live, and how the nature of the business that you do?



sure so actually, you know our claim this is very diverse, and in different sub category, you know, actually, the primary geographical locations are quite different. You know, if you look at your, you know, really the hedge fund side, right, the hedge funds or VCs and all of that a lot of these guys are in us, let's just because, you know, most of the most of the hedge funds, I guess, you know, operate out of the US, most of the VCs operate out of US, and, you know, they're also in the most active participation into crypto from hedge funds, and, and VCs from the US, right, but then you moved to the family offices or high networks category, actually, then, you know, it became kind of very global, but Asia plays a really big role. There's just a lot of wealth in Asia, a lot of, you know, families made their wealth in, you know, either manufacturing, real estate, and a lot more in over the past 20 years in tech and investing. And they over the, you know, I guess, especially from 2020, you know, all these, you know, large family offices or these high net worth individuals in Asia, they realize, okay, we need some allocation into this crypto assets, at a minimum, as a hedge to the fear we are holding on to the assets we are holding. So we are servicing a lot of these, these high numbers, hedge fund customers in Asia as well. Now moving on to global retail customers, since the launch of our product suite, which actually is only about nine months ago, actually, the platform is very well received among global customers, you know, from Asia, to Europe, to Latin America, to, to, you know, to Southeast Asia, you know, even even Africa everywhere. So, you know, on that side, you know, we are global company, and the offering is over the internet, there are also a lot of, you know, a lot of you know, internet based co ELLs, you know, social media companies that reach out to us to really promote our products for us, and therefore, you know, we have a very diverse, you know, retail customer base there.



Yeah, I'm curious, you know, what is the Asian view of cryptocurrency? I'm sure there isn't a single unified Asian view of of this or anything else. But, you know, we here in the US have this perception that in Asia, the world is moving very quickly, in terms of digitization, in terms of electronic payment rails, in terms of the ability to do things that we're doing here in the US on paper, what is the general perception or many of the some of the key differences might be a better way to approach it, between the way we think about cryptocurrency in the US and the way across Asia, the different ways that people view it?



That's that's a very interesting question. Because Firstly, like you said, I guess there's no unified view of Asia, because, you know, it's actually, you know, a very diverse market. If you go region, by region, I think the views start to diverge a bit. But generally speaking, comparing to, you know, I guess, the US customers, US institutions, I think, that Asian, let me put it this way, you know, crypto in 2017 and 2018, were actually dominated by Asian players, especially, you know, the Asian retail participants. And therefore, you know, it was a very, also a very speculative market back then, even more so than now. I actually think, you know, now, crypto crypto finance, have both have a lot more solid foundations and real user cases, versus back in 2017 2018, was still early, and in speculations were was probably, you know, one of the largest applications back then, and the very dominant one. So, you know, I think a lot of the Asian users, Asian customers, both already in crypto and even, you know, the ones outside of crypto still kind of have that perception of our crypto from 2017 2018. They think, you know, it's quite speculative. It's volatile, and you know, some of the skepticisms of Asian users against crypto come from, you know, that stage of the market where you know, they probably either have read about it or even have someone around them that lost a lot of money in 2017 2018 crypto bubbles. Now, of course, you know, I think the US or you know, I think the West if if we can generalize, the perception of crypto kind of was, you know, the latest wave was reinforced in 2021 all the big institutions, money managers, Companies, you know, famous business people, you know, start to openly allocate to bitcoins and crypto as an asset class. Right? That was, of course, you know, that was, of course, followed by a lot of what we think sophisticated money in Asia, right. Therefore, you know, I think right now the family offices or the high net worth individuals, they kind of have a very similar perception about crypto, as you know, the investors, but the everyday retails due to the 2017 2018 experience they've experienced or the people around them have experience or due to, you know, a lot of you know, the government's stance, the regulator's stance against crypto, you know, I think the average person in Asia, probably still more or less, have some concerns and skepticisms, about crypto due to, you know, what they saw in 2017 2018?



Yeah, we're going to touch on that in a moment, as well as the regulatory view. But you talk about this perception, this shared perception being very similar among high net worth individuals in Asia, as well as in, for example, North America and Europe. What is that perception? How do you see it more generally?



Sure. So I think, by this point, I would confidently say, the basic narratives of Bitcoin as a as an alternative asset allocation, as a storage of value as digital gold is widely accepted among that group of customers. I remember in 2019, we will go to you know, a lot of those family offices high net worth individuals will invite us to talk to them in 2018 2019, we're trying to pitch them businesses, but it was not that straightforward, as as you were saying to explain, you know, what is Bitcoin? why they should invest in Bitcoin? You know, I think it was also due to the the history of sovereign Bitcoin started, the white paper was a peer to peer payment system, right? by you know, it wasn't To be honest, Bitcoin wasn't that it hadn't been that successful as a payment method itself, but you know, become very successful as, as digital gold or as a storage of value. In 2019, when we were trying to explain this particular narrative, Bitcoin is digital gold, you know, some investors get it, got it, some, you know, was still, you know, skeptical about it. But, you know, from 2020, you know, I think, you know, that has become quite standard. So, now, at least, you know, all the I think all the high net worth, or institutional investors are accepted that Bitcoin is, as an asset class, you know, definitely deserves an allocation. And the basic use case, in a way for Bitcoin is, you know, like, digital gold or storage of value. Now, from there, I actually think, you know, the, the family offices, the institutional investors in Asia and in the West, you know, after understanding or at least accepting that as a baseline. Now, they actually will have the curiosity to learn more about other crypto, or you know, what other user cases of crypto finance, and the conversation just becomes a lot easier than we can explain what is ethereum? And what is DeFi? What are the other forms of crypto assets? What are dollar stable coins? Or, you know, similarly, how our traditional assets map into the crypto world in this kind of form? And no, it's suddenly all become explainable with that basic foundation. And, you know, versus, you know, I guess, you know, to just two or three years ago, when that basic narrative wasn't accepted about Bitcoin, you know, then you didn't really have a starting point for the conversation. And, you know, really, for them to be interesting. Learn more about other crypto assets.



Yeah, yeah. Let me ask you this. Obviously, this is a space that is growing dramatically. You have competitors coming into this space. Obviously, this is a place where people want to play financial services for an immensely quickly growing industry, with very, very sophisticated and wealthy clients and in these global financial institutions and high net worth individuals. How do you compete? Another way of asking that question might be, what is it that your clients are looking for and how do you service their needs when there are so many other shops springing up who want to do exactly that?



I think you know, this industry is still very young. So you know, I actually think more entrance or more new commerce into the industry is great for the industry. I'm personally very welcoming to you know, all the traditional No institutions, I want to get into crypto, I always cheers on those news. And, um, and also, you know, any, anyone who want to become a crypto entrepreneur, like ourselves in the space, I think I highly encourage anyone to do so. But at the same time, you know, I think, you know, the more, I guess, more established or the, the more well known players in the industry, or have their unique differentiations by this point, right. And for us, it's always been, you know, our ability to provide what we think was integrated. The other is, you know, institutional grade, crypto financial services to our customers. As I mentioned, you know, we started servicing the biggest guys and they also tend to be the pickiest or the most demanding guys in terms of services quality, right? I mean, they are not, you know, on the speculator retails we saw in 2017 2018, where, you know, if you give them a lot of leverage, you give them a high vol assets and let them go nuts. Now, they actually need more sophisticated services, they want to know, okay, know, how do I, how do I receive, you know, the best pricing? How do I need receiving a very continuous services that's always at the highest standards? How do I get pretty much all my needs field at one place? Right, and all of these are not easy to do, you know, the way we've done it is we started with services first, rather than products, right? We actually do client by client, with all these customers first, and, you know, figure out what exactly they need, and oftentimes, you know, customize products for exactly what they need, right, we still have a fairly large 24 X 7, what we call VIP desk, or voice services. That's where, you know, our guys in Asia, in North America, actually talk to, you know, the end customers and figure out what exactly do they need? And how do we structure the product to fulfill exactly what the customer needs, we actually started in that way, which I think is very different from almost all the other crypto finance platforms where, you know, they started as a platform, they started by providing standardized products to everyone and see what works, what not so, but nowadays, we also have the platform where you know, things are more automated and standardized, but because of that DNA of ours, as in our ability to, to, to understand, you know, different or, you know, unique investment needs, or you know, customer needs, and to really structure solutions to them is quite different. We pride ourselves in the ability to innovate these kind of products for our end customers. And now what we are doing is we are bringing that kind of products, right, which I think is already tested and appreciated by these largest and most picky customers to a broader customer base through our platform. Secondly, you know, to do so, right, I think besides the tech and the ability to you know, understand customers a customer needs, there needs to be a lot of financial activity, expertise, especially risk management capabilities associated with it, because if you think about it, to provide, you know, either the best aggregated liquidity to provide the best yield, to provide the structure products, right? inherently, you have to have the ability to source liquidity and the deal was at risk. And it's not that easy to do. So, in a fast changing and still young industry of crypto, right you have to be able to interact with all kinds of platforms, centralized exchanges, no matter how big they look like today, they're essentially just a private company with a private website, they have their own you know, server issues, they have their own different API standards, you have to deal with all these technology problems and then you know, then adds into is you know, the booming DeFi space you are dealing with, you know, protocols governed by nobody, essentially right or you know, are governed by the community and iterated by the community, you have to really have the ability to you know, look into the code base to answer the risk to understand you know, the how to interact with these protocols and how to integrate them into your product offering so therefore, you know, this is something a company like Amber group, which goes from the back end to the front end, has a natural edge in versus You know, I think a lot of the new entrants, they see the opportunity, they see the cost our needs, right, they will come into the space and start with the front end, which I think is probably the right strategy, they will start with, you know, interact with the customer first, you know, provide the businesses and services to them without worrying about, okay, how do I build a whole have the backend risk management, or you know, the financial side of things myself, right. And they will come to us therefore, and you know, they have many of them have come to us for our expertise to provide these liquidity to provide these products to provide these yields through, you know, their front end platform as well, as well as our own platform.



Yeah. Something you mentioned earlier that I wanted to get back to was this notion of regulation in China. Here, it seems in the US, we read these headlines once every three months, China bans cryptocurrency, obviously, a very, kind of broad take on this, give us a bit of an overview of as we record here in July of 2021, where the regulations are in China, because sometimes it's it's very difficult for us here in the West in the US to understand and get a sense of really, what the policy is.



I think, you know, like you said, all these headlines are always very sensational. Chinese friends, crypto, you know, for the, for the how many times, right,






But I think that, of course, every time, you know, these news came out, and there are new policy thing, evolvement, I guess, you know, updates. But, you know, a lot of what was announced over the past two months, two to three months, I guess, in a woman that knew, right, I mean, since September 2017, the Chinese regulators, many made it very clear, you know, they do not want companies to transact, to provide a crypto financial services to Chinese retail customers, you know, they made it quite clear back then, right? I mean, they've kind of tolerated some behaviors, because, you know, I think if you are regulated in China, you have to understand, you know, since our sins are large and complicated with any industry, because of the large size of the economy, the large size of the population, so therefore, you know, they gave some grace period window to a lot of those activities and even, you know, some leeway as to you know, how companies can handle those. But, you know, the stance was very clear, especially a sensitive point that was against the local fiat currency, the renminbi, you know, I think that has always been a very clear red light after September 2017, that, you know, any critical company or even, you know, individuals for that matter, shouldn't provide, you know, essentially, your only be fear on off ramp for crypto in China. I mean, that's just against countries, FX control policy, and all of that all of those regulate existing regulation rules, not even specifically about crypto. Now move on to 2021 this year, right. I think in over the past four years, after that regulatory announcement, 2017 some activities were stopped, but some activities were resumed, I mean, it's just been a while, and then the market got active again. And suddenly, you have a lot of those Chinese crypto companies that started to provide what they shouldn't provide, again, right, and with how heated the market is, and you know, is regulated, and the thing about regulators globally, is they always care about, you know, two things. One is, you know, AML or associated, you know, how funds flow and you know, how they are controlled and regulated, and secondly, protecting read everyday retail investors, right. And if you look at the first half of this season, the market was very heated, or there were a lot of, you know, all kinds of new wave of ICO's coming out all the zoo coins, right. And, and, and all that. And, you know, I mean, it was very clear, a lot of retailers, were going to get hurt, right? All you know, by the time those announcements come out, you know, some retailers already got hurt, right, with all speculative activities and leverage. So, you know, it was very natural to me that, you know, in a way, the regulators in China, they basically reinforced the tone they put out in 2017. But, you know, took a step further to make it even more restrictive and clear about it. Now, there are also other elements to take into consideration such as the launch of its own China's own digital currency, the digital Yuan or TCP, right. And also, you know, there's also the mining side of the things, which, you know, also, I guess, was a trigger. There was a restaurant regulators I think, you know, there were definitely a lot of different concerns. Going carbon. Neutral is definitely a big one for China, because of, you know, the whole geopolitical situation. And for the regulators, you know, this is an industry they already didn't like, right for various reasons and industry, they already felt, you know, that didn't obey their regular regulations are put out in 2017 Plus, you know, the mining side of things, which, you know, is correlated to, to, you know, all the all the all the carbon neutral F, which is against all the carbon neutral efforts, China's repair of serious about, you know, when it put all of these together, right, and we that's why we saw a very harsh stance against both crypto trading and crypto mining from the Chinese regulators.



Yeah. You know, one of the things that you said a number of times earlier in this conversation was this idea, which I totally agree with you about is how early how new this space is. So you have been an entrepreneur now for almost four years. As you look ahead, as you look to the future, what do you see the next 1-3-5 years looking like, in this space? How are you thinking it's going to evolve? And what might the landscape look like in the cryptocurrency world? If we were to get into a time machine? And come back in 2026?



I think, you know, this is a wonderful question. I mean, as now No, you know, as someone who runs a crypto startup, and you know, I think, you know, we were fairly large and diversified by this point, we have, you know, almost 400 people globally, and, you know, we have, you know, various services, I have to think about this, the strategic plan or the vision every day? My honest answer is, you know, I think it's probably easier to predict the future further along than the near term futures.



That's fascinating. So essentially, what you're saying is the path to how we get there, it looks a little uncertain. But you have a very clear view of where this is going to land, say, five years in the future? What does that look like? What's the vision? And how do you see it?



So, so in five years time, right, I think, you know, hopefully, within five years time or longest, I think it will take maybe 10 years, is, you know, I think the background is we're moving into into a more and more digital world, right? Many people even use the term metaverse to describe the world that we are already living in. Right, I understand it has a slightly different meaning, but I think you know, it's a it's a good term to apply here as well. And and in that kind of world it becomes very natural crypto finance is the right way to do all kinds of financial services because everything becomes data and for data to become assets, you know, the ownership, the trainer ability, the pricing and all of these needs to be done and you know, blockchain or crypto has proven to be the best way to deal with this kind of assets. Alright, so, in 5 to 10 years time, I think you know, everything from you know, physical assets to digital assets, and all of that will become crypto assets. So, crypto assets will become a lot broader than what we talked about today it will be a lot more than Bitcoin a theorem I think Bitcoin a theorem will most likely still be around and still be very important assets. But you know, crypto will go a lot beyond all the traditional assets we see fear currencies, equities, bonds, securities fonts and all of that will easily be tokenized into crypto assets and all our new forms of assets right, I think you know, ours and clutch balls are turning into NF T's but you know, I think more interesting to me at least the more interesting assets I you know, contents, right user behavior, right and and you know, essentially our, our personal identity and all of these in the digital world, our data, a set of data and they should be transformed into assets they have because they have value, they should be prized, they should be you know, be able to be made into other financial products and you should be able to have ownership You should be happy to have utility separated with them and you know, process differently or you know, packaging two different products and utilize differently and they are also assets. So, your crypto bank account hopefully with was amber right should have all these assets in it. They should have, you know, your digital, your kryptos, your, your all kinds of Fiat, your, your securities, your personal activity assets, your your the contents you generated, you know, either intentionally or unintentionally, you're all of these right, and also hands over hybrid of synthetic assets made from, you know, a mixture of these should be in your crypto bank account. And these are your portfolio, your net worth comes from there to be able to spend very freely against that, you know, they are always in a product intervention, naturally happening with all these asset classes, where's your portfolio and how you interact with others, you know, it should all be done in a very seamless way, you don't need to be, you know, you, I mean, the, the barrier for for this kind of activity for any user would be even a lot lower than someone who who need to learn how to use an exchange or use a wallet, it'll be even more seamless, right? A lot of times you just, it's like how, you know, how my, how my four year old knows how to use iphone or iPad, it'd be just like that, right. And at the same time, you know, I think, on the second point there as crypto assets broader, and as crypto financial covers pretty much all the financial activities, right? The it, I actually think, you know, decentralization and centralization, it's never been binary, but you know, the skill will be even more broad, right, because, you know, there will be people who still render, you know, the self custody element for convenience or, you know, for trusting others, to take better care of their activities and assets for essentially delegating that ability or that trust to others, right. And there also will be more and more a much larger percentage of people that say, you know, the technology is there, the experiences Easy enough that I want to handle all these myself. So therefore, I think decentralized finance, or you know, decentralized, activities will be really big, because the barrier will be lowered and experience would be better. And therefore, you know, a lot of people will easily say, Okay, I can actually take care of my own finance my own assets this way, because it's actually easy. It's no longer hard, right? So I think, once we get there, right, there's no more crypto finance versus traditional finance. I mean, I don't know if it will still be called crypto finance, or would just be called finance in the new digital world. But I think, you know, we will enter into that kind of world. And just like how Now we take it for granted, right? ecommerce, we take it for granted, right? We think, you know, that's what internet is for is supposed to give me things, right? And then, you know, I pay with things and they give me services products, just like that, right? But like, if you look back, right, before, really, ecommerce takes over, right? That's not how people think about internet, or how people you must think about commerce, they'll think of commerce, you actually need to go to a specific place versus location go to specific people, for certain goods and services, right. But you know, with the internet, with e commerce, you know, essentially what it does is it takes out that middle layer, it takes out all the constraints, it, it crushes the margin, and therefore gives the end user a much better and the cheaper product, and therefore achieve scalability. Same thing will happen with finance, right? You takes out that middle layer, right? You take out all these constraints. In the end, the end customer gets a better product and the cheaper product. But you know, as a provider, you get scalability and network effects. Right? So I think that's the future. Fear, I'm very confident Actually, I'm fairly certain about in, you know, 5 to 10 years time. Now, how do we get there next year? You know, I think, you know, some of that will happen the after some of that will happen. The order the timing, that's the hardest part, actually, you know, what I described was, you know, the easy part, it's very clear to me, and this is what we are, you know, all nothing all 400 people Amber's are working towards, right, but like, what do we do strategically tomorrow? And what do we prioritize next month or next quarter or next year? is always a hard question for me as a CEO.



Yeah, that is a fascinating question. But you really paint this picture of a brave new world of the merger, the union between traditional finance banking, financial services, and these digital assets. And it's been such a pleasure to have you here with us on the podcast today to talk about it. You started early Hong Kong time I stayed late New York time, it was well worth it. Great to have you on the show.



Thanks a lot, Ash really, really appreciate You're having me on the show as well. It's been a joy.



Michael, thanks again for joining us. Thanks for listening everyone.



Thanks for listening. If you enjoyed this episode, we hope you subscribe to the podcast, share with others post about it on social media, or leave a rating and review. To catch all the latest from real vision. You can follow us on Instagram at real vision TV and on Twitter at real vision. That's all for this episode. See you next time.



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Ash Bennington

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