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  • Speaker

    Angela leads Asia Pacific public policy and regulatory affairs for TRM Labs, a blockchain intelligence company that helps financial institutions, cryptocurrency businesses and public agencies detect and investigate crypto-related fraud and financial crime.
    A former regulator, Angela spent over a decade at the Monetary Authority of Singapore (MAS), where she was most recently Deputy Director in charge of licensing for payment service providers, overseeing the development and implementation of the licensing framework and the assessment of several hundred payments and digital asset license applications.

    Angela Ang
    Senior Policy Advisor at TRM Labs
  • Speaker

    Vince is Director of Digital Assets APAC at Eventus Systems, a leading global provider of multi-asset class trade surveillance and market risk solutions. Vince brings a multi-decade experience to this conversation, having held multiple roles focused on risk, operations, systems and product at the likes of Intercontinental Exchange, Nomura, Societe Generale, UBS, JP Morgan.

    Vince Turcotte
    Director of Digital Assets APAC at Eventus Systems
  • Host

    Seamus has extensive domain expertise in investment banking, wealth management, commodities and crypto markets that spans market structure, regulations and technology. He spent 20 years building and managing trading operations across all the global financial centres with JP Morgan, Deutsche Bank, Barclays and Bank of America Merrill Lynch.

    Seamus Donoghue
    Chief Growth Officer

Full transcript

*Disclaimer: The accuracy of this transcript is not guaranteed. This is not investment advice, and any opinions expressed here are the sole opinions of the individuals, not of the institutions they represent.


[00:00:09] Seamus: Hi. Welcome to the 39th episode of METACO Talks. For this episode, we’re discussing risk in institutional digital asset management context, with a focus on Asia Pac. For this, we’re joined by two esteemed guests, Angela Ang, who leads Asia Pac Public Policy and Regulatory Affairs for TRM Labs. It is a blockchain intelligence company that helps detect and investigate crypto related fraud and financial crime. She’s a former regulator. Angela spent over a decade at the MAS, where she was most recently the Deputy Director in charge of licensing for payment service providers. Needless to say, Angela has assessed several hundred applications for payments and digital assets service providers.

We also have with us Vince Turcotte, Director of Digital Assets APAC at Eventus Systems, which is a leading global provider of multi-asset class trade surveillance and market risk solutions. Vince brings a multi-decade experience to this conversation, having held multiple roles focused on risk operations systems and product, the likes of IEx, Nomura, Societe Generale, UBS, and JP Morgan.

Angela, Vince, welcome to METACO Talks.

We were just talking before the show started about the migration of TradFi to the digital asset space. It’s probably worth noting that Vince and I have known each other; it is the first time I’ve had this somebody on the show that I’ve known actually for 20 plus years, both in the TradFi space. It’s great to see that you’re also migrated into the space, Vince.

[00:01:41] Vince: I keep getting tagged with this multi-decade experience thing.

[00:01:46] Seamus: With it comes wisdom, so you can provide some guidance for how eventually we’ll get there. Listen, great to have you guys. Why don’t we jump into it? I just mentioned that I’ve known Vince for a while, but it’d be great to understand this is also one of the first times we’ve had two guests on, and we’re all live in Singapore. A few firsts here. It’d be great to understand, Vince and Angela, how you each know each other, and a bit of background about what TRM Labs and Aventis do, and your roles within those organizations.

[00:02:17] Angela: I can start it off. At the company level Eventus is one of the most valued partners with TRM Labs, and we’ve been working together for some time. But Vince and I personally, it’s a funny story, we met each other in a working group for market integrity responding to the last consultation put out by the MAS. I think that stacks very nicely into what TRM Labs and Eventus do, with TM Labs focusing more on the on-chain portion of analytics and intelligence.

The analogy I like to give in terms of explaining TRM is think of us as Google Maps for the blockchain. Unless you’re a specialist in topography, when you look at a satellite image of a landscape, it doesn’t make very much sense to you all. You see are a bunch of trees and buildings. But when you put that into Google Maps, it is able to enrich that satellite image with information on where specific buildings are and is able to map your point to point directions.

That’s what TRM does FOR the blockchain. We organize transaction data on the blockchain, which is publicly available to anyone, and then enrich that with data that we find off chain from proprietary as well as open source intelligence, to help our customers paint a picture of activity going on the blockchain. We have public and private sector clients that use this for different purposes: to fight fraud, financial crime, understand patterns of illicit findings, and conduct due diligence on counterparties as well. Over to you, Vince.

[00:03:57] Vince: That’s a tough act to follow. I would say that as a person who really appreciates visual imaging, that’s one of the nicest features of your system. I was just talking to one of the exchanges here about it, and we’re a very visual system as well. For me seeing all the hops on a map, like Google Maps as you said, is really cool.

Anyway, I’m Vince Turcot. Angela and I met, she’s right, it’s a funny story, but she didn’t tell the whole story. We were working on this market consultation. She was on the beach having recently left MAS, and I was really glad to have a regulator on the panel and actually holding the pen because she speaks regulatory-is; it’s a different language. In the meantime, I had been speaking to Ari Redbord who works with Angela on a global basis for TRM, and we were going back and forth about developments in Asia and so on. He said, “Hey, have you ever met Angela?” “Yeah, if fact I’m actually working with her.” “Oh great, she’s joining.”

[00:05:06] Angela: He did not tell me that.

[00:05:12] Vince: But he wasn’t asking for a job reference; he had already signed, I think. But you can tease him about it next time.

Anyway, Eventus has been in the industry for about seven or eight years now. We started out working in the proprietary trading space. Our genesis story is one where our CEO, our founder Travis Schwab, was at RGM Advisors, which was at one point between 5 and 10% of the US equity market. As Seamus I’m sure you remember, the evolution of trading and prop trading, market making, high frequency trading, took place over a fairly short period of time and outpaced what compliance departments, compliance systems were able to keep up with. He needed badly to get a system in place that could monitor the activity of the firm on a global basis. He went and pulled developers off of the front desks and into the middle office to write the software that was able to keep up with all the different types of data sets that are involved, all the different types of trading styles, all the different exchange interfaces. That became the forerunner of what we have today, our flagship product, which is Validus.

We work across different asset classes. We see ourselves as a problem-solving firm. We were approached initially by Coinbase, that was our first client in the space. Coinbase being a very compliance proactive firm, they really are, they said, “Look, we anticipate the need for trade surveillance, how can we do this?” And at the time, nobody had even done something with eight decimal places in market surveillance. We designed the system to accommodate their needs, and then suddenly it just started blowing up. We found exchange after exchange needed to have the same coverage for monitoring the world off chain, which is where some of the cleverer perpetrators of money laundry have migrated to.

If you are clever, you can use any exchange as a Tumblr. You have to have a system in place at the exchange level that can monitor the activity of all the different accounts. There’s a number of famous stories of guys who have been caught after they’ve taken money away in a hack or in any type of exploit. But when they’ve tried to launder it on an exchange, that’s where they’ve been caught because our system picks up on an exchange environment, a ledger-based environment off chain, where TRM operates on chain. We work together because we’re both at that nexus of assets leaving the chain, moving off chain, and then cycling back into the world of blockchain. It is sort of a give and take.

I won’t show you today, but if you ever want to see a demo, we have all these really cool visual as well. We’ll get to that another time.

[00:08:17] Seamus: I’m looking forward to both demos, because I think the Google Maps of blockchain to me is definitely a very turn on description. It’s interesting because I think when you and I met, Vince, was probably around 1998-1999, and compliance was not the first port of call. In fact, I remember when I moved to Deutsche Bank in Singapore, we used them as, ‘guys figure out how to book this, we’re not too sure who the counterparty is, don’t have a booking system for it, please sort it out.’ Obviously now that’s not the last consideration, it’s the first consideration. That’s the context.

Maybe if we start with you, Vince, we’ve seen a lot of banks look to get in over the last couple of years in the crypto trading space. But we’ve also been in a bit of a, let’s say, crypto winner, post terror post FTX, and in context of Singapore 3AC. This has brought a lot of regulatory scrutiny, a lot of questions about governance in this space. What’s your view in terms of what regulated institutions have shifted their ambitions around getting into the trading capabilities in the space? Is there still demand? Are they still building? What’s your view on this?

[00:09:20] Vince: It is a really interesting area to talk about right now. I think you have to pull back the lens a little bit and not think just about banks, but think about the broader financial intermediary community.

One of my favorite examples, for instance, here in Hong Kong right now is that Interactive Brokers has teamed up with OSL and will be offering Crypto services to their retail client base. That’s the thing that’s going on right now. It’s one application that is in the middle of the crypto world, but if you pull back a little bit from crypto and then start talking about the world of digital assets, you can see things like the mortgage projects that are happening in I think it was Taipei Fubon Commercial Bank. The Taiwanese bank has just launched a mortgage project in Hong Kong to put mortgages on chain and to make sure that process of closing, which is so cumbersome in Hong Kong, and it’s not easy anywhere in Asia but in Hong Kong it’s really back in the Jurassic era, and make the technology moving into the traditional space completely streamlined. We see example after example of that.

The overall theme that I see in this context is the world of traditional finance taking the technology that’s been developed in the world of crypto and bringing it into all the other asset markets that they operate in. It’s reducing friction in the back office.

I had a conversation yesterday with a good friend from my JP Morgan days, who has a system that is for settling FX in payment versus payment environment using a distributed ledger technology. If there’s no trade fails, if the trade doesn’t match, it atomizes, just like it would in the world of crypto. Moving money around on ledgers is hyper efficient. Imagine yourself in the world, you were a balance sheet manager when I first met you, and then if you could take your money and put it to work the same day, like you are XYZ Bank and I’m ABC Bank, we trade dollar/yen, you get your dollars, I get my yen, and before the window closes it’s back in the market. That’s where we’re at with the technology.

I think that’s the bigger theme when you look at how banks are adopting what we do. It isn’t necessarily crypto, and it isn’t necessarily tokenization, although tokenization plays a huge role as well. But it’s the broader adoption of distributed ledger technology and use of blockchain that’s really going to take us forward.

[00:11:59] Seamus: Okay. When the institutions are getting into this space, into crypto, what do you see as the main pillars for them to get started? You’ve talked a bit about trade surveillance, what does that mean? How does it work? Everybody’s been following the applications for ETFs, the SEC, and a lot of them have referenced the need for trade surveillance, and the likes of Coinbase has been cited a couple times.

[00:12:20] Vince: It’s a really interesting point. For any ETF, the underlying assets have to have an accurate mark in order for that ETF to be able to be considered legitimate. Using trade surveillance, you can spot any monkey business that happens around the close, for instance, any manipulation. There are tons of scandals over the years in traditional asset classes where a proprietary trading firm, for instance, got into it with one of the big exchange groups in the US. They were manipulating the price of oil around the clothes in order to suit their book, mostly an options book. They were moving prices around to suit the strikes that they had on.

That’s been going on forever. You look at the Libor scandal, it’s all about how you mark the book.

The use of surveillance in this context is to find a reliable reference price so that the ETFs that are under consideration by the SEC will have a mark that is fair and a mark that adequately protects the consumer from abuse. We’re the flavour of the day in Singapore too, because the MAS has pretty much said that surveillance is going to be a non-negotiable feature of how exchanges operate going forward. Hong Kong has even put in a rule that says you must use an external provider, because they don’t want to have to audit everybody’s surveillance software.

It is the kind of thing where people are trying to expect a more level playing field to what you would get in a traditional assets market. It’s even more interesting because of the fragmentations in liquidity, in the digital assets and in crypto. That’s just one more nuance. But what they want to be sure of is that there’s no market manipulation that allows certain players to take advantage of proprietary information, that might take money out of the retail investor’s pocket.

[00:14:15] Seamus: That’s very interesting. I’d like to shift a little bit. Vince mentioned MAS in some ways around their requirements there. Angela, you have a long background in Singapore MAS. I think we often point to MAS on a global basis as being one of the leading regulators in the space in terms of the embraced and encouraged innovation. You’ve had Project Guardian, you’ve had Project Orchid, you’ve had retail protection rules, licensing frameworks, approvals of those licenses. Often you can have licenses, but no approvals. I think Singapore seems to have their game together and it seems to be a place where banks feel they can build, or institutions feel they can build. The pace of innovation is pretty impressive, seen from the outside.

Can you comment a bit on seeing that from the inside and how that is perceived? Our institutions as well, how should they approach Singapore if they wanted to get involved in crypto?

[00:15:14] Angela: Thanks, Seamus. I can’t put it better than MAS Managing Director, Ravi Menon, in terms of summarizing Singapore’s approach to digital assets and blockchain: yes to digital asset innovation and no to cryptocurrency speculation. That’s a title of a speech that he made outlining MAS’ approach.

Just to break that down a little bit, when we talk about speculation, MAS is very conservative about speculative trading, especially by retail investors. They’ve been putting in place guardrails on that front. But on the institutional front, they’re considerably more laissez-faire. I think that’s been the guiding principle across MAS approach, not just to digital assets, is that sophisticated investors can assess the risk themselves.

One example is the prohibition on provision of lending and staking services by licensed digital asset businesses in Singapore. They’re only banned from providing such services to retail clients going forward. For the institutional front, they’re still able to provide that. MAS’ approach is that yes, if you’re institutional, you have the capabilities to make your own assessment on whether this is the right thing to include in your portfolio.

With this backdrop, one thing that we did see in the market is we’ve seen some players in the market pivot or expand their focus to the institutional market as MAS has tightened retail access. I would say this is because for institutional models, it is a very welcoming market. From a commercial perspective, Singapore is also an established financial centre, and MAS is actively growing the institutional space, for example wealth management, family offices, and so on. From a regulatory perspective, there is a fair bit of latitude in terms of dealing with institutional market.

Overall, it is quite welcoming and more flexible and relaxed from an institutional standpoint.

[00:17:19] Seamus: I mentioned things like Project Guardian or Orchid, which is the purpose-based money. What’s the purpose? What goal does MAS have in terms of launching these projects? What are they looking to achieve?

[00:17:25] Angela: Coming back to my point on institutional models, I think that’s the other aspect of MAS engaging on the institutional side, is in terms of innovation. I think projects like Guardian, Orchid, are very much reflective of MAS’ – obviously I’m a little bit biased, but I think many would agree with – approach of sitting at the cutting edge of innovation.

[00:18:00] Seamus: Maybe touch a little bit as well on what those projects are. Sorry to interrupt.

[00:18:04] Angela: Okay. How much time do we have, Seamus?

[00:18:07] Seamus: A brief summary, I would say.

[00:18:08] Angela: Okay. Project Guardian very much focuses more on asset tokenization use cases. It started off in more the security space, and now they’re expanding use cases as recently announced just last month to a variety of use cases in wealth management and bonds and so on. That I think very much sets nicely with what Vince talked about earlier in terms of TradFi engaging in the space, in terms of use cases for real world assets beyond crypto necessarily.

Purpose bound money is a very interesting one. The central thesis of this project is very much reflective on of MAS’ collaborative partnership with the industry, because the focus is on interoperability. The central thesis of purpose bond money is as a technical model for various types of digital currencies. Central bank digital currencies as well as private digital currencies like tokenized deposits and potentially well-regulated stable coins, to coexist in a space and be interoperable with each other.

In terms of the motivations, it’s very much what Ravi Menon said in his speech, that MAS does see potential in the power of blockchain technology and therefore they’ve decided to engage with it in terms of exploring use cases. The use cases and the approach to this innovation piece of the puzzle is very much reflective of their collaborative open approach, where there’s a belief in interoperability and diversity.

[00:19:40] Seamus: That’s a very succinct and very good explanation. Thank you.

[00:19:45] Vince: I can’t not say this, I love Guardian, I talk about it all the time. Whenever I’m outside of Asia and I’m at a seminar, it’s one of the first things I bring up. To me it is DeFi in a gated community with grownups. I believe that is one of the fundamental facts; it’s going to be the future of finance. It is frictionless trading in a well – you can’t say regulated yet, but it’s in a well guarded space. I think that’s going to work wonders for the industry.

[00:20:23] Seamus: Yeah, we’ve talked a little bit about evolution of the space. There’s no question banks have gone from seeing DeFi as a threat, and through projects like Project Guardian you can see how they can embrace this technology and leverage it in the future.

Angela, you talked about how welcoming Singapore is, how innovative MAS has been, how they’ve defined certain frameworks and regs. What are the challenges that potentially institutions have when they come to Singapore in complying with MAS requirements? There’s still a regulator and there’s still rules; what are the challenges they face when they’re setting up here?

[00:20:56] Angela: Depends on who you’re asking. But I think if we are talking about the recent slew of requirements that are coming out of the MAS, and the whole digital asset regulatory framework that has been in place since 2020 and evolving, broadly speaking the requirements do represent raising of the bar. Why is this? If we look at it, crypto is a very young sector. Its history effectively dates back to 2009, and it was unregulated for much of that.

It’s much that I would say everyone was wilfully ignoring the need for controls. But I think it was perhaps an issue of awareness and understanding as well. As regulation starts to hit the crypto sector, there’s a season of adjustment, there’s a season of growing pains, wthey have to raise the bar in terms of controls and processes to start to comply with these new requirements. But from talking to folks in the market, generally the sentiment is that people recognize that this is the direction of travel globally and this is the right way to go in terms of building trust and good governance industry.

People are committed to investing, not just in Singapore, but globally in terms of raising the bar from regulatory governance and control standpoint.

[00:22:19] Seamus: Very good points. Putting that in the context you mentioned globally, maybe narrow it down to the AsiaPac region, how do you see Singapore’s posture comparing with other major jurisdictions in the region? Hong Kong is becoming much more topical in the space. When it seemed like you couldn’t do any crypto, now crypto’s the theme. It’d be great to get your perspective on some of the key differentiators in the region.

[00:22:41] Angela: Generally we are very fortunate here in Asia Pacific because the overarching tone, and not just in digital assets, but more generally, is very collaborative, where regulators do recognize the need to balance risk management, consumer protection, and innovation and growth. But at the same time, Asia is very diverse. We’re talking about many different markets.

One common thread I would highlight is a focus on consumer protection. This is true not just in Asia but globally. It’s very much expected post FTX. Perhaps I can just deep dive a little bit into some of the key markets here in Asia Pacific. You mentioned Hong Kong. It is similar to Singapore in a way, where it is very welcoming, very supportive in terms of posture, in terms of engaging the industry. But they’re also not lowering the bar, both in speech and in substance. I think one of their senior execs recently said that if you want lax regulations, then you should go and set up in another crypto hub. It’s not to say that just because I want to attract crypto businesses I’m going to lower the bar.

When you look at the regulations that have come up, these are very strict regulations, very much on pine. In some cases even more strict than Singapore. One example is the cold storage requirements where they required 98% of customer assets to be stored in onshore code wallets. This is the highest in the world, followed closely by Japan at 95%, and Singapore has recently said that they’re going to keep that number around 90%. The rationale for that was to allow businesses a bit of flexibility and liquidity in terms of responding to withdrawal needs and the like.

I think they are very similar. We can talk a little bit more about the differences between Singapore and Hong Kong, but I think in the approach is fairly similar.

There are a couple of other interesting markets that I’d like to spotlight. One is Japan, a first mover in digital assets, like the home to a lot of the early activity in crypto. From there, Japan benefited from having very stringent regulation even before FTX, because they learned from the early failures that deeply affected their market, like Mt. Gox and Coincheck. The JFSA in Japan have a pretty long track record of regulating the sector, and they do understand it very well.

Even after FTX the bar for regulation continues to be very high. Japan is also pushing for strict crypto regulation at the G7 level. But at the same time, they’re also pursuing this narrative around web 3.0 growth, with support from the ruling party that has formed a web 3.0 project team led by the member Parliament, Akihisa Shiozaki. They released a white paper recently titled Japan Is Back Again, talking about how perhaps Japan could be the first market to spring out of the crypto winter. There were some interesting ideas in the white paper. I think one of the ones that stood out to me was thinking about governance structure for Dows that was analogous to an LLC structure. There was a very interesting concept it showed, that they were trying to think ahead of the curve. That’s Japan.

Two more markets that I would like to talk about, South Korea. There is a little bit of a similar narrative to Japan in the sense that they have also stepped up in regulation and they’re quite stringent on their front. But at the same time, there is a bit of a narrative around supporting growth in the Metaverse and Web 3.0 as well. They finally passed the first of three big legislations around digital assets, that I think is part of the current president’s promise to overhaul crypto regulation in the country. The themes are not surprising; things like investor protection and tackling market abuse. But at the same time they, they are supporting the growth of Metaverse. They have grants and hubs that they’re setting up in the country.

They’re also trying to help clean up the sector by clamping down illicit crypto. The Korean police have actually quadrupled their spending on crypto monitoring and tools and training. Yeah, quite a lot going on in both the enforcement regulation as well as market development side in Korea.

The last one I would like to touch on is Australia, where they’re still in the process of developing their landmark dedicated digital asset legislative framework. There they’re headed in the direction of parking crypto under the umbrella of the existing Australian Financial Services Licensing Regime, which is an umbrella regime overseen by ASIC for a wide variety of financial services. I think there, we have to wait and see. Personally, I’m all for not reinventing the wheel where it makes sense. But at the same time, I think there’s a hope in the industry that some aspects of that regulatory framework will take into account unique characteristics of blockchain technology. For example, when you’re looking at a wallet address versus a bank account, yes, you want due diligence on both, but the tools and the processes will look quite different.

From my explanation of these four markets, we do see common themes where there’s a lot of movement on regulation. There’s a concern on consumer protection, but also the narrative on growth and innovation as well. For anyone who is interested, I did spend three months this year covering 15 Asia Pacific markets to post on LinkedIn, on the digital asset developments across the region. It’s super interesting. But I think those are the broad teams that we see across this very diverse region. Thank you.

[00:28:43] Vince: I love your posts. They always have a food theme to them. Whatever country you’re in is what you’re eating.

I noticed that you struggled a little bit with the BIS today, so you used chocolate covered potato chips.

[00:28:59] Angela: Yeah, I always struggle when it’s international metaphors, when it’s not so country specific. But yes, crypto and food is what I talk about, paying homage to the national hobby of Singaporeans, which is eating and talking. We are either eating or talking about food. I think that works very well in Asia. Come for the food and stay for the policy updates.

[00:29:22] Seamus: That’s very good. The link should be in our show notes afterwards. If not please reach out and we can connect you. But I think that the mosaic, or let’s say the variety of different foods, sounds like it’s very much reflected in the mosaic of different regulatory environments.

Everybody’s familiar with obviously DBS, they launched Digital Exchange. It’s one of our clients, but I think landmark wise it’s also one of the first times I’ve seen a bank launch an exchange. I think they’ve been very public about their expansion towards Hong Kong and seeking regulatory approval.

It sounds like there’s competition, there’s collaboration you described, but how do you think they’ll approach this, working between MAS and HKMA? Will they have to start completely from scratch? Will it create different, as you said, different bars of strictness? How do you want to describe that to the new dual master regulators?

[00:30:23] Angela: I would say the answer is a bit nuanced. I think on one hand, definitely, especially when it comes to supervising large financial institutions like DBS Bank, there is significant cross-border supervisory collaboration.

Especially when it comes to large banks of a global regional footprint like DBS, regulators often organize regular what we call supervisory colleges, which are usually hosted by the home regulators. The different regulators come together to basically exchange notes.

But at the same time, jurisdictional supervision and licensing procedures are very much independent. While supervisors of course may check in with each other as part of their due diligence, applicants are definitely expected to treat each application as separate, and to provide comprehensive information according to each regulator’s expectation.

That said, I would say it’s not completely starting from scratch. Sorry Vince, one more thought. Hold that thought. It’s not completely starting from scratch because it always helps to have a track record of operating a particular business line in another jurisdiction on a few levels. Firstly, you are able to offer information on your compliance program and experience that’s not just theoretical. The regulators then have a real reference point as to the setup and potential risks of your businesses and how you manage it. You yourself, as a financial institution, have a better understanding of what are the risks having dealt with them in real time.

In that sense, I would say it’s not completely starting from scratch as well.

[00:32:01] Vince: It is interesting in a lot of sense. First of all DBS Bank has never been regulated by the SFC. It’s certainly been regulated by the HKMA. All the crypto exchanges are being licensed under the SFC.

I speak to a number of people at both the Singapore and the Hong Kong organizations, and they’re a completely separate company. They’ll be treated that way by the regulators as well. We have a number of firms that have exchanges in other venues that are setting up in Hong Kong, but we also have a number of really interesting case studies, for instance, securities firms. I mentioned one earlier, but there are several that are setting up a digital assets platform here in order to be able to offer that out to their client base in traditional assets. We’re seeing that in Japan as well, by the way. Each of the different large exchange groups are having to either close their existing international operations and start from scratch with a brand new platform, and one of the largest as you guys are well aware is just on that, or they’re having to purchase an existing license of another firm that’s been established in Japan for quite some time.

We did a fair amount of work with the JFSA early in the year, and they’re an interesting group of people. The surveillance in Japan is usually done by a separate entity called the SESC. They’re very serious. They’re part of JFSA, but they don’t report to anybody there. They report directly to a government ministry, which is very unusual. That’s how seriously they take it. But because these assets are not really securities, JFSA is having to start from the ground up and rebuild their thinking around how to surveil and how to monitor activity. It’s the same in a couple of other jurisdictions.

What’s interesting about Hong Kong, and I think reflective of Singapore as well, is that they’ve done everything that they can to co-opt digital assets, crypto into the same regulatory architecture that existed for other asset classes. That’s really the smartest way that they could do it, rather than having to reinvent the wheel for a new asset class. They’ve done things like with the AML guidance that has been written and rewritten several times, they’ve gone and inserted a separate chapter just for digital assets rather than writing a new set of AML guidelines specifically for digital..

The whole process in Hong Kong was a function of SFC quite rightly saying we’re not going to regulate this until we’re legally authorized to, then the LegCo passing the rules, the new AML Act. Then SFC and HKMA get together and they issue joint circulars so that the regulators are in lockstep. It’s been a really smart, progressive process, and it’s not finished yet. People when they look at this, this is not a finished product, but this is the next step on the road. I think within the next couple of years you’ll see a change in how they’re going to regulate derivatives. They punted on that in the initial response, but they promised us another piece of the response this year on it. They’re going to reissue the joint circular with HKMA on how they cover intermediaries, and so on.

Singapore also, there’s something to be said for being first mover and there’s something to be said for being circumspect, and then issuing your guidance skills. My take on it is they’re focusing on closing the gap between what was initially offered in the PSA for crypto licensing, and what was offered under SFA for registered market operators and the rest of the crowd. They’re closing some of the gaps there between those two regulatory regimes, recognizing that it’s probably smarter. This is again just my opinion, but it’s probably smarter to view crypto as just another asset class in a larger ecosystem of financial products.

In Thailand they’ve done the same thing. In our world of surveillance, they simply co-opted the market regulations and rules from how they monitor securities markets into the way that they’re going to monitor crypto.

We’re in active contact with all these regulators as they go through these iterations. That I think has probably been the single hallmark of how this process is evolving, is that crypto is being brought into the tent. It’s becoming another asset class that BlackRock and Goldman and Fidelity and everybody else are starting to participate in, and it should be regulated the same way. Angela, what is it, the same risks, same regulations that we’re looking at?

[00:37:00] Angela: Yeah, same risk, same activities, same regulations.

[00:37:05] Seamus: I think that’s the key point. This is no longer an experiment, it’s here to stay. Large institutions are coming in, the institutions recognize the new risks and have to comply with the same standards that they would have otherwise to comply with.

[00:37:19] Vince: What I love about what you guys do, Seamus, is you sit at that nexus of helping institutions to be able to adopt the new asset class, the new tokenization that’s so prevalent in the markets, as well as crypto should they choose to be engaged in that. It’s that bridge that we need to cross in order to legitimize the asset class across all the financial services industry.

I genuinely believe, and I know people get a little unhappy when I say this, but I genuinely believe that in two years we won’t be talking about TradFi, we won’t be talking about crypto, we’ll be just talking about the financial services sector as things be continue to harmonize. The revolution is over, we won. Convincing people that are at either end of that spectrum, if that’s the case, the DGens all want to do away with central banks and the no-coins on the other side believe it’s not a real thing, but we’re sitting in the middle and we’re watching it happen as a general convergence in the industry.

[00:38:24] Seamus: Thank you. I totally agree with all the comments. Thank you, Vince, and thanks Angela. From both of you, given the broad regional experience you guys have, if you don’t want to necessarily to just pitch your own jurisdiction where you are, but you’ve had perspective on the rest of them, if a firm is looking to set up a regional headquarters from outside the region and want to get exposure to digital assets, what would be the right jurisdiction to be placed in? Both from a perspective of getting a license, but also tapping into in demand? You need, it’s great to have a license, but there’s nothing happening there.

[00:39:04] Vince: It’s a he said, she said.

[00:39:06] Angela: Let’s keep it peaceful. I think there is really no one-size-fits-all answer. It’s not a zero-sub game where it’s Voldemort versus Harry Potter, and one shall not live while the other survives. It’s not a case where there’s only one financial hub that must prevail in the region. But having said that, I think within Asia Pacific, unsurprisingly the two places that you get a lot of attention are Singapore and Hong Kong, because they are established financial centres across a myriad of asset classes. I think depending on your business objectives, one might make more sense than the other. This is where we can get a bit into the he said, she said.

I think a common unifying theme across these two markets is that both have regulators that listen and engage with the industry. There is a collaborative approach to policy making. There’s a desire to understand practical issues in terms of implementation. They may not always agree and they may not always take the industry feedback, but they are listening.

Going in into the differences, I would say Singapore as a market is primarily pan-Asian. I think from that perspective it’s a hub for international capital. As I said earlier, Singapore is a little hawkish on retail, and frankly so is Hong Kong. As they should be really, because one of the mandates of regulators is to protect consumers. But they’re more relaxed on institutional. Singapore is also supportive of digital asset innovation. The regulator themselves are actively engaging in this, as we talked about Orchid and Guardian earlier. Singapore is also a thought leader in a variety of use cases in crypto and beyond.

There’s very much that space experiment and even partnership with the regulator to experiment on a wide variety of use cases for blockchain and digital assets.

Coming back to my earlier point on institutional, with Singapore actively developing itself as a hub for institutional investors, that also pairs well with the development of institutional business models in digital assets.

Over to you, Vince. Talk about Hong Kong.

[00:41:19] Vince: I’m not going to argue with anything you just said. I think that it does depend on the full focus of your business.

I would start out by saying that last week in a webinar I was on, Elizabeth Wong, who’s Head of Licensing and FinTech here for the SFC said something that I thought was rather surprising. She said, “People have asked us why you have to get a Type 1 and a Type 7 license, which are securities licenses, as well as get your crypto license.” She said, “The first answer is the most obvious one, is that the courts may one day decide that these are all securities and should be strictly under a securities machine. We want everybody to be ready if that is the case.”

But what other people don’t realize, and this is the second aspect of it, is that right now if you are a licensed Type 1, Type 7, you can go out and be a stock broker. You can go out and do a whole lot of other things from your crypto platform, that you may not have prepared yourself to be in another jurisdiction. There’s nothing stopping these guys from getting a Type 3 and being a futures brokers either when Hong Kong EX launches its much-awaited crypto contracts. There are lots of things that you can do with that same platform.

I think another differentiator is in the interplay between the banking sectors and the two markets. Hong Kong has a much stricter and much more prescribed capital requirement. When you go to the bank in Hong Kong with your approval and principle, you will have gotten it because you can prove assets for 12 months expenses in the bank on an ongoing basis, vetted monthly. You will have proven that you have paid up share capital of X, you have total capital of Y, and so on. As a banker, I would look at that and say that’s a pretty good account, I can open that. In Singapore, the requirement is $500,000 regardless of whether you have 3 billion in deposits or you have nothing in deposits.

The interplay between the rest of the financial sector and the crypto sector, I think is a little bit better harmonized in Hong Kong.

What’s interesting in Singapore to me though, and Angela touched on it and we spoke about it earlier, is the government sponsorship of the projects and the government’s willingness to help you develop, and their openness to new projects and thought leadership. Singapore is very progressive when it comes to providing that lattice for the growth of an industry. It is the world’s famous petri dish experiment. Singapore is wonderful at growing new things and trying new things, and they’ve been that way throughout their history. Hong Kong is a much more mercantile economy. It’s eat what you kill. Although that’s not quite fair, there are lots of government sponsoring projects here as well, there are access to the sandboxes and so on.

But what’s cool, and again Angela touched on it, is that both regulators have been wide open to listening to the market. I used to tell people years ago when we were having the same discussion about where to base a critical mass at a bank that I was on a management committee at, we’d talk about this and we’d say that Singapore was more of a top-down regulatory environment where the government would pretty much tell you what to do, but Hong Kong was more of a bottom-up where the market would approach the regulator. I think that this process of adopting digital assets has levelled that playing field. I’ve been pleasantly surprised by both regulators working on consultative committees, the one that I’ve worked one with Angela in Singapore and the ones I’ve worked on here with the SFC, where they are open, they want to ask questions, they want to listen to the industry. Both regulators have really impressed me in that regard.

Both of them are in mid process. We’re not done yet. This is only the current iteration. As we keep moving down this road, I think within two years both regulators will continue to advance the cause of digital assets.

The last thing I would say, if I were opening an exchange where I was going to tokenized assets, where I really wasn’t going to look at crypto, I was just going to try and take advantage of the tokenization trends, I might choose Singapore over Hong Kong because the structure under the SFA and the Capital Markets Act and so on is something that is really by the numbers. It’s pretty simple. If I were going to open a straight up crypto exchange today, I would probably choose Hong Kong. But by the end of the year, that may not be true, because as I said, both of the regulators are continuing to move forward in a very progressive way. Really impressive.

[00:46:10] Seamus: You guys have both painted a very positive story for both. I think in the context where people operate in the US and they’re not too sure what they can do, it’s very enlightening and positive here. It’s very different this side.

Listen, we’re running outta time. It’s been a very interesting discussion, thanks both for joining. To wrap up, it’d be great to maybe a brief where people can connect with you guys next, and if there’s anything they can expect out of either one of you or TRM Labs/Eventus together. Anything that you can give away?

[00:46:46] Vince: I’d certainly love people to reach out if they want to learn more about market surveillance. We do a great deal of education in that space. That goes across asset classes. This conversation has been all about digital and crypto, but we work across asset classes. Come and see us on the website, find me on LinkedIn. My email is We’d love to have an opportunity to connect. Angela?

[00:47:18] Angela: Similarly, very happy to connect. Anyone who wants to chat about APAC crypto policy, hit me up on LinkedIn. From a TRM Labs perspective, we’re definitely putting out a great slew of content. We’ve just put out our illicit crypto ecosystem report that talks about how bitcoin dominance is a thing of the past, in illicit finance. There are a bunch of exciting TRM talks coming your way on a wide variety of topics, different locations. We’ve just dropped one on tokenization in the US, did a short one in Thailand, and shortly sneak preview we will be talking about the travel rule at North Korean Crypto hack really soon as well.

For those of us who are interested in APAC, we will also be doing more APAC regional content, so watch this space. Follow TRM Labs on LinkedIn, or, and definitely subscribe to our weekly roundup.

[00:48:11] Seamus: Perfect. Angela, Vince, thanks. Thanks for agreeing to be on METACO Talks, another good episode.

[00:48:16] Angela: My pleasure.

[00:48:17] Seamus: It’s been my pleasure as well, and I’m sure all the guests enjoyed it. Thanks everyone for tuning in. we’ll announce when the recording and the transcript will be available, as usual on and your favourite podcast channels.

In the meantime, please follow us on LinkedIn and Twitter, and leave a review, let us know your feedback. See you next time. Thank you.