How to Prepare For the Future 10 Pillars of Token Economy?By May 09, 2019 4 Min Read
Around 200 financial professionals and crypto pioneers gathered in “FutureX – Ten Pillars of the Token Economy” on 8 May 2019 held in St Regis Hotel, Hong Kong. The 10 Pillars of Token Economy are audit, developers, funds, institutions, insurance, legal, media, regulations, retail and token champion.
The one-day event commenced with the opening keynote from Clara Chiu, Head of Fintech Unit & Director of Licensing in HKSFC. Clara explained the latest regulation in security token offerings (STO), as well as regulation for virtual asset portfolio managers and trading platforms.
In the keynote “The role of insurance in the token economy”, Murray Wood, Head of Financial Specialties in Aon Asia illustrated the digital asset risks in insurance marketplace.
The keynote sessions continue after the buffet lunch in St Regis hotel. Murray Wood, Head of Financial Specialties in Aon Asia, first illustrated the key digital asset risks in the insurance marketplace. The key risks are perceived reputational risk, limited financial performance and loss history, and high financial projections and valuations.
Guide, Educate, Differentiate and Finalize. Murray illustrated the key to success in 4 steps.
He then used a 4-step approach to address the key digital asset risks:
1) Guide the negotiation process with insurers to secure optimal results in a limited marketplace;
2) Educate insurers to create a marketplace, and teach the insured how to access it;
3) Differentiate your tailored risk prospectus and insurance solution to your investors; and
4) Finalize insurance negotiations including lead insurer selection terms and conditions, contract language and financial details.
Usman Ahmad, CIO of BC Group, illustrated the importance of custodian solution following the recent Binance hack.
The topic of crypto custody is heated up again with the recent Binance hack. Usman Ahmad, CIO of BC Group highlighted the importance of custody services to connect investors and facilitate efficient deployment of capital. He noted that despite the growing losses in fraudulent activity, digital assets are appealing to institutional investors as digital asset funds recorded a 3x yoy growth to USD 14.4bn.
Usman highlighted the strong institutional demand in crypto despite exchange hacks in recent years.
Moderator and panelists (From left to right), Jame DiBiasio of Digfin, Irene Chu of KPMG, Henry Yu of L&Y Law Office and Urszula McCormack of King & Wood Mallesons
The future of STO was discussed under the panel “Overcoming barriers to the Token Economy and the emergence of Security Tokens”. Irene Chu, Head of New Economy in KPMG, mentioned the IFRS has released a tentative guideline on the holding of cryptocurrencies in March 2019, yet she thinks that this should be treated as a short term solution. Henry Yu, Partner of L&Y Law Office, highlighted that for a crypto exchange to be compliant, the major obstacle will be how the exchange participants are qualified as “professional investors” in regulator’s viewpoint.
Panelist and moderator (From left to right), Deniz Güven of Standard Chartered Virtual Bank, Ken Lo of ZhongAn, Peter Koo of Deloitte and Nisha Gopalan of Bloomberg.
Virtual banking is another interesting topic discussed in the event! Deniz Güven, CEO of Virtual Bank by Standard Chartered, highlighted that virtual banking is a differentiation of services instead of an asset class. He further revealed the huge potential of Chinese market, where the mobile banking penetration rate is 42% in China only, compared to the United States of 76%. In setting up a virtual banking division, Deniz believes this new division requires new culture to recruit talents with the right mindset to adopt with the ever-evolving risk and AML framework.
Ken Lo, Founding member of Zhong An International, indicated that the success of Amazon Go is a good reference of virtual banking to succeed in the future. Yet, he believes that education of the general public is required to raise their awareness and realize the benefits of virtual banking.
Peter Koo, Partner of Deloitte, brought up 4 key issues for virtual banking to solve before they can go viral:
1) Ensure personal data protection to comply with the Personal Data (Privacy) Ordinance;
2) Users can choose to opt-in or opt-out the virtual banking service anytime;
3) Virtual banks should have a recovery plan in case of security breaches; and
4) Virtual banks need to comply the requirement of insurance, trading and MPF services in future.
“FutureX – Ten Pillars of the Token Economy” ended with the networking drinks session in Cassio, Central.
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