This article was first published on Asia Tech Podcast.
The Asia Tech Podcast traveled to the Fintonia office in Singapore to have a chat with Adrian Chng, the Founder, and Chairman of Fintonia Group. We are starting to get used to these in-person recordings!
Some of the topics Adrian discussed included:
His background in the startup space and being involved in a large acquisition
Institutions getting more involved in bitcoin and cryptocurrency
The pathway to mass adoption of crypto
The necessity for more infrastructure to get built
Working together with regulators
Web 3.0 and the metaverse in the context of finance
Fintonia and where it fits in the big picture
Entry-level access to crypto products
Other titles we really considered for this episode:
You Can Reach People You Haven’t Reached Before
Back Then I Was Very Skeptical Too
If Everyone Thinks It’s Worth Something, It’s Worth Something
What Is It, and Is It Big Enough?
When It Bounced Back, We Bounced Back
This episode was produced by Isabelle Goh.
Read the best-effort transcript below (This technology is still not as good as they say it is…):
Michael Waitze 0:13 Hi, this is Michael Waitze and welcome back to the Asia Tech Podcast. I am literally sitting in the Fintonia Group offices with Adrian Chng. I tried. Yes, I do the best I can. The Founder and the Chairman of the Fintonia Group. Adrian, it’s awesome to be here. How are you doing?
Adrian Chng 0:30 I’m very well, thank you, Michael. It’s a great time to be in digital assets is a great time to be in finance, it’s great time to be in tech.
Michael Waitze 0:39 Is there ever a bad time to be in finance?
Adrian Chng 0:43 It's one of the oldest professions in the world.
Michael Waitze 0:46 So no, coupled with another one of the oldest professions in the world. But it is really great because there’s so much stuff going on in the finance world, right? When I look back on my career, I just think of all the sorts of transitions that we went through all of them were tech related, all of them. And when we built businesses, and we don’t have to spend a lot of time talking about this, we noticed that every time we put better tech in the P&L went up. Yeah, every single time. Go ahead.
Adrian Chng 1:09 Absolutely. Well, I think financial services generally, it’s all enabled by technology companies and financial markets. And what’s exciting is, when we talk about the blockchain technology, when we talk about crypto, is it is showing how there are some inefficiencies in financial services, and how this technology can address those. But I think with the blockchain and web 3.0, it’s more than just financial services that can be impacted.
Michael Waitze 1:39 Yeah, yeah. We’ll get to that in a second. Before we before we dig deeper into this, can we just get some of your background for our listeners for some context?
Adrian Chng 1:47 Sure. So I guess, I guess the first decade of my career was in in financial services. I was an investment banker with SBC, Warburg, and Merrill Lynch in the mergers and acquisitions team. And I lived through the dot com era where we did a lot of IPOs. And all of these great things. Were you based here? I was in Melbourne, Australia.
Michael Waitze 2:08 Okay. Okay. Well, cool. Go ahead.
Adrian Chng 2:09 Yeah. So I think that for the for the first decade, it was really investment banking, M&A, PE, VC type of transactions. And the second decade was really around tech. I was CEO of jobsdb.com and we had 1000 People across Southeast Asia, Hong Kong, and China. And we were all about improving the ability for job seekers to match with employers and vice versa. So I was really trying to shake up how employment markets worked as a marketplace. And that’s when I first came across technology and data and how that can improve people’s lives make things more efficient, as well as have a great user experience. And then from there, it’s really how I evolved into FinTech when I founded Fintonia Group. So in 2014, we had a billion dollar merger and exit with a Malaysian listed company. You're talking about Jobs DB.
Michael Waitze 3:04 Yeah, what was the company again? I forget. Jobstreet. jobs.street.com. Yeah, I remember. Yeah, yeah. So I think, you know, in the seed guys came in, yeah, and bought that. Sorry. Go ahead. That’s right.
Adrian Chng 3:13 So I think that was in employment. And then it was like a natural setting up Fintonia Group was like natural to go back into hey, combining financial services, technology and FinTech. And it’s from that focus on FinTech, that it evolved really into crypto digital assets, web 3.0.
Michael Waitze 3:33 But let’s let’s go through this for a second, right, because it’s kind of interesting. If people just see the Jobs DB thing right into the Jobstreet thing, right, that merchant stuff, they’ll think, well, but what does that have to do with finance? But if the first part of your career is M&A, PE, right, listing companies and stuff like that? That’s pure finance. It’s actually like at the top of the funnel of finance, yeah, in some way. Yeah. But Jobs DB, if what you say is right, is just all about using technology. So algorithms and data to match. Absolutely. And actually the combination of what you did in your first 10 years, and what you did in your second 10 years leads to FinTech, because it’s all the tech over here. Yeah. Which then you can apply to finance, right? Does that make sense?
Adrian Chng 4:11 Absolutely. And you use data and and well, essentially, we combined technology and changes in consumer behavior, which is people more coming online. And then when you have that behavior of people looking for jobs living online, you get more data, which you can use to search and match. You can send job alerts for people who are then oh, I didn’t know there’s that this job that’s out there. And then they would match better. versus say, in the newspaper back in the day newspaper, you’ll have on a Saturday, you’ll have classifieds, exactly you and then you’ll have to you’ll have to look at it manually. There’s no alerts is no matching. So it was just an inefficiency, right. So this technology and data really helped. And we’ve seen that I guess in financial services, you can use data now. To make loans digital loans, you can assess people’s credit based on their digital footprint. Just another startup that I co-founded. So I definitely saw how technology and data made things more efficient. It allowed more people to come into the workforce and the jobs case and in for finance, it allowed people who are underserved. underbanked. You have 14,000 islands, Indonesia, 10,000 islands in Philippines, you can’t open a bank branch, right?
Michael Waitze 5:23 You shouldn’t open a bank branch in everyplace. It’s impossible.
Adrian Chng 5:27 It's impossible, it's too expensive, it makes no sense. And, but we have something called a mobile phone. So what’s interesting is now you can reach people that couldn’t be reached before, but then that goes to electronic money. And you think about okay, well, I have this electronic money, which is stored on the internet, right? Somewhere, and that’s if you can accept that somebody far away, can buy and sell things with their mobile phone with some electronic store of value. You quickly move into things like Bitcoin and stable coin and a few other things.
Michael Waitze 5:57 Yeah, but now we’re getting like deep into the bowels of finance, right? Yeah. And if there are 18,000 islands in Indonesia and 10,000 islands in the Philippines, a lot of those people on the islands mobile phone are not. They’re not watching MSNBC, they’re not watching the BBC., they’re not watching Bloomberg Television neither right. So they don’t know about finance. And I always want to ask, we can build incredible products, but at some level, we have to have literacy as well, right? Yes, even for digital assets, right? In other words, so many people are still using Bitcoin, the metaverse, you know, alt coins and all this stuff. We know what that means but we have to know what it means. Yeah, right. Because we were there. as things progressed into it. I mean, Bitcoin as a thing. It’s the natural progression into digital money and digital assets. But we know that because 25 years ago, you were doing M&A stuff right now. But for people that don’t know, how do you get them included as well?
Adrian Chng 6:48 Now, it’s interesting, because if you look at consumer, if you look at China, you look at people in the Philippines or Indonesia, they will trust perhaps Grab more when they use that to buy things because it works, then going to a bank, because they just never had that experience. And it’s like, hey do we use dial up modems? Did we use, you know, desktops? There are generations that don’t even use laptops and go straight to mobile. Right, right, right. So I think it becomes part of the consumer behavior that now. For example, if you whether it’s can’t remember the name of the company in the Philippines that use electronic money, and it works that have that trust versus say, a traditional bank in the Philippines or Indonesia, where they may not know it’s their grandparents generation. So I think the internet technology, crypto, and digital assets is much more acceptable for the younger generations, right? And rarely is they’re the ones are going to be the bigger and faster growing market.
Michael Waitze 7:48 I mean, they don’t they don’t trust regular money anyway. And it was weird, like I went to buy a cup of coffee while I was waiting for this conversation while I was waiting for you right to end your previous meeting, I walked into Flash, and everybody else who was there had already ordered. And everybody else was taking their phone and like scraping it across the thing and on the Nets thing to pay. And I’m sitting there with $5 of cash in my pocket thinking, can I buy coffee with the paper, right? Because the whole world is moving digital, and I was in a restaurant over the weekend on Club Street. They don’t take cash. Yeah, absolutely right. So it’s all moving into digital. Where would you say? So you founded Fintonia when?
Adrian Chng 8:26 2014
Michael Waitze 8:27 Oh, wow. So it’s been around for a while.
Adrian Chng 8:29 And then we formalized formalized it through a license from MAS in 2016.
Michael Waitze 8:37 What kind of license do you have from the Monetary Authority of Singapore.
Adrian Chng 8:39 We have a fund management license.
Michael Waitze 8:41 You do?
Adrian Chng 8:41 Yes.
Michael Waitze 8:42 How hard is it to get?
Adrian Chng 8:45 I mean, I can only talk from my experience back then I guess. We were qualified and it was, you know, relatively straightforward. MAS has always been a progressive regulator, in our view. Very much so and always quite user friendly so I have no complaints. I think regulators all around the world now, particularly when it comes to crypto are facing some challenges and I think they’re facing a huge demand. So I think the demand for licenses versus the perhaps the resourcing allocated is a challenge not just for MAS, but I think all regulators if you think about even now the crypto ecosystem market cap is over a trillion. 8 years ago, it was nothing, right? So it was never, when you’re small it’s never really on the radar of a government or regulator. What would it be
Michael Waitze 9:42 It felt so fringe. I mean, when I first heard about it in 2013 it felt so fringe to me. It didn’t even make any sense. I don’t think I was alone. I think a lot of people just went what is that? Yeah, but you’re right as it grows, it’s incumbent upon the regulator’s if they take themselves seriously to say, okay, let’s do some work on it. This is going to be part of the financial system going forward. But how do we make sense? And how do we protect people from getting all the bad things that happen potentially when things are unregulated, yeah?
Adrian Chng 10:10 Exactly and I think and that’s, that has to be the job of the regulator. They can’t look at every single little fringe thing, but when it gets of a certain size and scale, then it becomes important.
Michael Waitze 10:20 Yeah. When it’s almost $2 trillion of market cap, somebody has to be paying some more attention. Yeah, yes. So if it was started in 2014, I mean, the FinTech world back then, almost 10 years ago. Yes, there’s so much different than it is today. Yes. So did you originally started as a digital asset group or?
Adrian Chng 10:37 No, we started off in FinTech as a FinTech venture capital firm. So we looked at a lot of, I guess, investi companies and that’s how we came across the crypto world. And back then it was just Bitcoin. So we saw a number of, in hindsight, great crypto companies. But we basically passed for the reasons that you mentioned, it was a little bit fringe in 2013, and 14, it was a little bit too niche. And back then it was the land of the anarchist and of the technology genius. It wasn’t really into the mainstream yet. But through that due diligence process, I dabbled in Bitcoin myself. And to be honest, you know, like in the dot com boom, 99% of the people, you’re kind of thinking, Who are these guys and girls? And is this really legitimate? Yeah. Are they all like, kind of like, let’s call it you know, you just don’t have a big boom, you always have you always attract people there who? Who trying to just make money?
Michael Waitze 11:35 Yeah look, we were talking about this a little bit offline, right? If at the beginning of anything, and there are 100 people, 98 of them are just going to be there to try to take money from people with no real benefit. The other two are super serious. And it’s hard to figure out look, I look at life has just this massive conversion problem, right. And you don’t know which ones are which. And to be fair, you were probably smart when back in 2014, when you said I don’t know, right? Like, you’d look back and say, Oh, shucks, I should have done this, that or the other thing. That’s the easy part. But now, like, are you still just a VC firm? No, right?
Adrian Chng 12:11 Yeah. So now we have a Bitcoin tracker fund. We are the first MAS regulated fund manager do that we have a private credit fund, where we lend US dollars secured against Bitcoin.
Michael Waitze 12:27 You lend USD against Bitcoins? It’s almost like a quanto trade.
Adrian Chng 12:32 Well, it’s great collateral in the sense that Bitcoin is Bitcoin. Yeah. I mean, it’s 24/7 365 days a year. You know, valuation is not a question is, there’s a market value. It’s portable, it’s global, you can trade it. I mean, the, the only downside is, is volatile. Right. Having said that volatility because we’re in financial markets can be essentially priced by the LTV and the trigger points for margin calls.
Michael Waitze 12:57 Well, I mean, the whole the idea, we don’t have to go back to Black Scholes but like there is a model around volatility and how to price that over time. And to be fair, if volatility is a cone that’s on its side, at some point, it’s going to, you can see what I’m doing right, it’s gonna come down here, and then it’ll just be volatile, just like everything else.
Adrian Chng 13:13 Bitcoin actually, volatility has been decreasing steadily since, since the beginning. It’s the only asset class where the total market cap has increased, and it was gone down, right. So it is getting, you know, if you extrapolate that, and you can never extrapolate, but you extrapolate that and the the thesis of Bitcoin as gold or digital store of value, then you could see a scenario where it gets larger and larger and market cap and, and lower, lower and volatility.
Michael Waitze 13:40 So who you’re lending money to, and I don’t mean the exact names, right, but what types of entities?
Adrian Chng 13:45 Typically three types of entities that would borrow, I mean, these are all existing BTC holders, one would be logical institutional market participants. So there are a lot of very sophisticated trading and institutional platforms out there that borrow or lend just like in traditional securities markets. There would be Bitcoin miners who by definition are long Bitcoin because they’re mining Bitcoin. And the best thing for them to do over the last decade has been proven is don’t sell your Bitcoin, lend it out, or borrow cash to pay your electricity.
Michael Waitze 14:22 Yeah, I mean, you’ve been basically I can say this, maybe you can’t, but you’ve been a complete idiot if you’ve used Bitcoin to buy something
Adrian Chng 14:28 Wasn’t the pizza guy, the pizza guy, 10,000 Bitcoins for two pizzas? I mean, we laugh now looking backwards. I mean, he was the first person so good on him to say, hey, I can actually use this but was a yeah, now looking back, you’ll say why did I do that?
Michael Waitze 14:42 But to be fair, he probably has more than 10,000 Bitcoins. Yeah. I don’t know who we don’t know. We can only hope. I can only hope because at least he got two pizzas anyway. So what’s the third?
Adrian Chng 14:52 And then the third would be corporates or entities that hold Bitcoin and sometimes they just need fit, because they want to buy a house. They want to buy a car well, they have needs or, I mean, some of that could be like protocol foundations and so on. So I think that, I mean, what this shows us is that there is now an increasing institutionalization with the market.
Michael Waitze 15:14 Yeah, I’m I was gonna ask you, was it five or six years ago, Jamie Dimon famously said like, this is all a scam. Yeah. No, I didn’t when he said it. It was almost like when Steve Jobs said nobody wants to watch video on their iPod. Yeah, you knew what they were doing. He was like, all that meant was we’re not ready for it yet. Yeah. But when we are ready, everybody’s gonna want to watch video on the iPod, which is the same way as Jamie Dimon saying, We haven’t heard enough people to stuff our Bitcoin desk at our crypto desk yet, but when we do, don’t worry, we’ll go in huge. Is that fair?
Adrian Chng 15:43 Yeah, I think it’s ended up like I said, back then I was very skeptical, too. Yeah, part of it was looking at who was involved. Right, right, right. What I’ve seen is some very good friends of mine, who I read who are very professional, and and peers in the industry move in. And these people are serious, very, very, very serious, institutional professional people. So I remember maybe five years ago, when I had a good friend move in, I think, what is this? I used to think this was kind of like crap, and there should dig out where that Bitcoin I had is, and so on. And the more you look into it, and the more it becomes more professional, it’s kind of like a self fulfilling prophecy, right? Particularly Bitcoin, if it’s accepted as a store of value, then it becomes a store of value. And if everyone thinks it’s worth something, then it becomes worth something. So it’s like gold, gold, you know, corporate finance M&A guy, gold has no discount to forecast future cash flows, right? But people do use it though, right? People use it as a store of value.
Michael Waitze 16:39 But also for jewelry and stuff like that.
Adrian Chng 16:40 Maybe like 20 doesn’t make it any more valuable 20 to 30%. The rest is store value, right? And the same with Bitcoin, maybe 20 to 30%, 20% of Bitcoins use in the Lightning Network of El Salvador for transactions by PayPal by and others, but a lot of it’s also as a store of value. And that’s when I began to look in. Again, I think, if I look back, the crowd that was involved in the early days has fundamentally changed. Along with the increased institutionalization of the asset class
Michael Waitze 17:13 Or the holding, still too concentrated. Do you know what I mean? Yeah, because I have this theory, right? Like I watch Bitcoin trade, and I come off a trading desk, right? Yeah, traded tons of different products., and it feels to me like sometimes there’s this selling going on, to lower the price. And as fear enters the market, people can, the people that sold it can buy more. Look, because that’s why this isn’t like to me, it’s almost like an illiquid stock, and I’ve been killed by illiquid stocks more than once right. So I know the way this works. But if you’re an owner of something that’s illiquid, relatively, and you’re you’re a concentrated owner, you can move the price around. And I feel like sometimes it’s a little too concentrated still. What do you think? Do you know what I mean?
Adrian Chng 17:58 Yeah, I think, I think is an early stage institutional asset. Unlike gold, I still think is at the early mass adoption phase, but we’re still super early. Yeah, exactly. So it’s still early enough for you to accumulate.
Michael Waitze 18:15 But I think it’s fair to say that it’s concentrated. But but the real answer is, yeah, it is concentrated, I think. But it’s not always going to be. And the idea is, the more people that get involved, the less concentrated it can be almost by definition, at least it should be now the difference between Bitcoin I think, as a thing, and the way it’s mined, right. And the way that whole system works, the way that whole blockchain works is that there’s only a limited a finite number of Bitcoins that can be mined. That’s right, right. And sure there’s a finite amount of gold, but we’re not close to the end of it, right?
Adrian Chng 18:47 While theoretically gold where the marginal cost and prices is not really finite, was in Bitcoin is programmatically finite. Yeah, and it can’t change it. Yeah, it’s highly, it’s very difficult to change and the incentive system, that’s what the beauty of the system, right, it’s built, the people that would have to agree to change it don’t want to, they’ll just blow themselves up. Why would you devalue all your holdings? Yeah, so I think it’s a beauty of the system that it’s designed, so that it’s very difficult to change. And the people who could change it, even if you can get 51% of them to agree, why never do it makes no sense. Just blow themselves up.
Michael Waitze 19:22 What does it take though to get? So you’ve been in this for a while now right? And there’s got to be a sense for you a little bit of validation, right? As JP Morgan was saying this Goldman Sachs moves, and you’re sitting there going, yeah I mean, because as you said, you looked at the early adopters and you thought, I don’t know if I trust all these guys and gals. And then as they became more trustworthy, and you join that that group, then the big institutions come in as well. Now you feel like okay, validated now, what do we do, right? But what is the next step to get people to real mass adoption? Do you know what I mean? Because you can have a Metamask wallet, but like, yeah your uncle is not going to do that is he?
Adrian Chng 19:58 Yeah. So I mean, I think we’re always gonna have the let’s call it the crypto natives that are that are always there. Sure if we’re talking about mass adoption, reality is this needs to come out more into the mainstream. And unfortunately or fortunately, depending on your view, it needs to be regulated, right? It does some look like that look like financial markets, let’s call it that, yeah should be regulated and I think that will drive institutionalization. Because at the moment, you want to talk to a bank and you say, hey I like to open an account and I’m in digital assets. It’s like, which weapon are you shipping?
Michael Waitze 20:36 Which drug are you selling?
Adrian Chng 20:37 Exactly, yeah. Let’s see who can race to shut you down your bank account as quick as possible, right. Yeah.
Michael Waitze 20:43 Yeah. And it’s it’s been hard over the last 10 years anyway, even just for regular people to open a bank account because of all of the laws around money laundering, KYC, and all that other stuff, right? Yeah and crypto just makes it harder. Sorry. Go ahead.
Adrian Chng 20:58 Yeah and it’s also just the unknown, right, we don’t really understand what it is the last time and it’s moved so fast. Like even today, 12 months ago, we can do so much more than we could even two years ago. So it just moves so fast. So if you’re on the outside, and you’re either in the traditional financial services, you may still be thinking, hey this is the realm of the drug dealer and weapons smuggler. And you say, hey yeah, but Goldman’s now is doing NDFs or Roche y Zed, you know. So it is mainstream acceptance will have to be a combination of education of, I guess, traditional institutions and regulators. And then for the industry also to make that bridge. And that’s kind of where we are at at Fintonia. Yeah.
Michael Waitze 21:43 We are close right? Can I just say this, though? There is precedent for this. I think you and I are both old enough to remember when the internet itself, yes, was just a place where drug dealers and arms dealers and you know,
Adrian Chng 21:54 So many quotes can be used the internet, the only people use the internet are people that are drug dealers and doing nefarious activities are the same like deja vu, right?
Michael Waitze 22:02 But that’s what I mean, right? So we know where it’s going. And I’m thinking, as you’re talking, I’m trying to figure out what made the internet mainstream. Right, I remember what I said to my mom and dad, right? Because I was at Morgan Stanley at the time, and I was just using email, I was doing all this stuff. I was searching for keywords before, like financial releases. So I could see like what the Fed was going to do and try to not front run it, but understand beforehand, right? And I remember telling my mom, you’ve got to get an AOL mail account. And she was like, why I’ll just send you something. Do you know what I mean? Yeah, I’m just trying to figure out what it was that made that mainstream in what’s it’s going to take to make digital currencies mainstream.
Adrian Chng 22:40 There was a combination of things, if I think about it, first of all, is that the infrastructure had to improve. So like, in the late 90s, you know, we all talked about mobile commerce, it was impossible to buy anything online. It was slow. It was horrible. But now there’s no question that people buy things on their mobile, right? Constantly. Yeah. So it could be the same for the metaverse, right? Maybe not now. But soon. But if I recall, ultimately, it was a better consumer experience, and efficiency. So if I think of just my example, in drops, if you go and go to a traditional newspaper, back, then you probably had to pay back then $1,506 Singapore dollars for an ad, which maybe you get 300 words, comes out on a Saturday, in if say, it’s in Hong Kong or Singapore, maybe you’re getting a million people look at it, more likely, you’re gonna get 200,000 people look at it, right. And particularly your ad, who knows, so that it’s $1,500, you get 300 words, or you can come to us and we will charge you well, at the start free, or maybe $50, you can get essentially unlimited number of words, you can put in keywords that people can search and match with, and you there for a month, and you get whatever it was, we will get whatever, you know, 2 million visits a week, right? And then we can also send emails to people. And we can who can who can refine by job function by location, whole bunch of things. So the search match experience was better, it’s more efficient. Yeah and that just fundamentally improved the experience for both sides. And that drove everything. So even when there was a downturn in 2009, when the whole world went to recession, and there’s all these problems when it bounced back, we bounced back but the newspapers never recovered. And it’s fundamentally about value efficiency and experience.
Michael Waitze 24:28 So you make a super good point. And again, while you’re talking, I’m thinking the automobile, right? Yeah, it was also and I think your whole point about a better consumer experience, a better customer experience is key here. And let’s use the automobiles an example. Besides the fact that it was ridiculously expensive when it first came out. You had to crank that thing. Nobody wants to do that. Right and you already had a horse, so why would you switch? But as soon as cars became cheap enough, easy enough to build right and efficient after using there was a gas stations everywhere. And you could literally turn a key or press a button to use it. Everybody wanted one. So that makes sense. Yeah. And I think you’re right. I think the crypto world is going to have to go get to a point where having a wallet and doing all the things that it takes to use crypto is just going to have to be as seamless as it is to just have your mobile phone and just use it like normal. Yeah, yeah, that’s what it’s gonna take, I think for sure.
Adrian Chng 25:20 And I think this is the and this is where we see ourselves in Fintona. We are the bridge between the traditional, let’s call it traditional financial ecosystem, and the crypto native ecosystem, we really understand both and we’re trying to bring it together, because they need to coexist. But you can talk about fundamental experience if you wanted to transfer money from Singapore to the Philippines, right? And it’s only $150 right? Maybe 40 to 50% will be taken out in costs, and middlemen, and so on, right. And this is not a criticism of traditional financial institutions.
Michael Waitze 25:53 I’ll criticize it because it’s not that expensive to send the money. They’re just taking a VIG on you. That’s unnecessary. But that’s me talking not you. But to be fair, you can see a theory of gas prices go up and down to right. Yes, for excessive usage. Go ahead.
Adrian Chng 26:06 So I think, but some of them, you just think about fundamental technology. I run tech companies, we use micro services, we use the cloud. And it’s very difficult. I mean, there are still financial institutions using technology from the 70s. Yeah, right. Yeah, batch processing. But now if you go, if you’re a consumer and say, I want to go to grab, I want to Uber, I want to book it now I want to transfer using my GrabPay to you, etc. And it’s instantaneous. You know, there are many times even today where I say, hey I have to my credit card, I have to put some money in or something or increase the limit, then I have to ring the bank. And I have to manually change it because it’s not instantaneous. And it’s because of the legacy systems and the inefficiency. That’s that’s built in. And also to be fair to the institutions, It’s also the regulator, in terms of the standards, there is no there’s not the price for failure, or having a mistake is so high. That the benefit of innovation, right? Particularly if you’re not the owner, if you’re a large company, and you’re an employee, you know, making a mistake could end you. But so making no mistakes is how you progress. Yeah, but it’s a large,
Michael Waitze 27:13 It’s a terrible, it’s a terrible way to progress. And we’ve both been there right. So we both know that, do you think at some level, and I think this happens, I think everything’s cyclical, right at some point. But do you think now we’re at a point where the technology and the uses of those technologies is moving so fast that it’s hard for the regulators to keep up? And if if that is true, and even if it isn’t true? How do you guys work together with the regulators right? In other words, if you’re a regulated company, if you have an MAS license, that’s super cool. But as the industry what you operate changes, the things that that license allows you to do has to expand as well, right, even if it’s not written into the letter of the law. So what kind of relationship do you and companies like yours have with the regulator’s where you sit down, monthly, quarterly, whatever, and say, you know, we kind of need to be able to do this thing too.
Adrian Chng 28:01 Well, I think the fortunate thing, and it is fortunate here in Singapore is the regulator is keen to engage with the industry. And I’ll say that is a broad description, not just in the crypto industry, but whether it’s fund management and so on. And one thing I’d say about Singapore and the regulators we deal with is they are open minded, and I think they willing to learn and also understand what the reality is we all learning at the same time. The point though, right? what existed now didn’t exist 12 months ago, no, right? I mean, NFTs came out of nowhere in terms of the scale again, it was fringe, it was always there. But how quickly it became large, caught everybody. You know, why surprise. And if you’re a regulator or government, you can’t put resources in everything. You don’t know what,
Michael Waitze 28:53 Because everything goes like this. And then some stuff goes like this and just flat lines but most of new stuff goes, I think I want a piece of that. And then it goes down a lot. I mean, this is this is the Gartner Hype Cycle, right? Yes, exactly. So it goes up like this. And then it always goes down to the the depths of discontentment or whatever, but the real stuff, that’s good. And actually, to be fair Linux did the same thing. Just slowly but surely creeps up higher. Again, the stuff that was meaningless just goes to the right. Exactly. Crypto is not going away. It may not even be in the same format that it is today. But it’s never going away. And you’re right. The government doesn’t know when this stuff starts. Yeah, what on what to focus, right. Yeah. Yeah, that’s a fair comment. Because I don’t think a lot of people say this. Yeah.
Adrian Chng 29:34 Yeah. And I think when you’re in the trenches, and it moves so fast, you can be frustrated. And that’s, that’s not not surprising, but I think as the industry matures, so for example, I’m the web 3.0 committee here and the SFA, which engages with MAS. So I think all regulators around the world now are looking to engage and understand and I think that’s can only be a good thing for them, mass adoption.
Michael Waitze 30:00 Can you talk to me a little bit about because you said this at the beginning of the conversation, I didn’t touch on it at all. I want to talk about web3. And the metaverse in the context of finance. Yeah. And just get your view on where you think this is going and why it matters.
Adrian Chng 30:16 So if I think about that, when I ran the tech company, right, with Jobs DB, I had my own product team, I had my own tech team, I had job seekers come to our website, and look for jobs, I had employers come. So the employers created the content, i.e. the job ads, you know, and then the users kind of came in and look for the jobs and gave information and answered quizzes and whatever. But I was the builder of the platform with my investors, right. And so the person who captured that value was me. But then I also had to hire the product, the tech and do the digital marketing, and so on. So I built the platform. And the users, you know, didn’t get any value out of it other than finding a job in the employers, right? Web 3.0 is evolving so fast. But because you now issue tokens to the community, then more people benefit, right from the success of your ecosystem. And what that means is in my context is rather than me having to hire product and tech people, the community of developers comes on board, because they didn’t send it to build the platform more because they have the token. So the the spoils, or the rewards of the platform are shared between the developers, while the community who weren’t actually like in Etherium have a lot of developers now, right, they’re developing decentralized apps on top so so you can actually get a different type of network effect by having a community involved. So you’re going to have a whole bunch more of developers building stuff on your platform, you’re going to have in the case of creators, so if people at the moment, if you’re on Tik Tok, or Instagram, you’re not getting that much on Spotify as the artist.
Michael Waitze 32:03 I mean, YouTube is like the biggest, it’s like the biggest ripoff in the whole world, you’d have 25 million people interacting with your thing. And YouTube has taken most of that money, right?
Adrian Chng 32:11 Yes. So in the new web 3.0, that shared between the YouTube example the creator of the content, the owner and developer of the platform, the people who are working to develop the platform, and the user also shares because the way the token economy is shared, and that is something kind of difficult to understand, and is new, because and that’s where it links into finance, because you took a typical finance view of your regulator go home, no, no, no. Now, now, it’s kind of like this economic reward from this, you know, and, but, but how do we make sure the retail people is not a scam, right? So I think, as the industry matures, all of these, let’s call it less viable models will be washed out, there will be some impact of that. But the real businesses that are using the new token economics, creating value for the community, and the community, adding back value, I think these are new businesses, it cannot just be one company with all the products and tech building everything. Because now we say, Hey, we got a Facebook oligopoly, go to Google and Apple, Apple, Amazon, etc, etc, etc.
Michael Waitze 33:18 But they’re gonna try. We’ve already seen Facebook doing this. And I’m very publicly out there saying, I think they’re gonna fail on the metaverse because they want to, we can argue about it all you want. But I think they’re gonna fail, because I don’t think it has I think once people understand, right, what the value of themselves I talk about self sovereign data all the time, yes, once once people understand, wait a second, I’m my data is valuable, I actually can get some value. I’m not giving it to you for free. Yeah, I’m just not going to do it. Because there’s nothing else I do in my life for free. So why would I give that thing for free to? And if there’s a mechanism and a platform and a way to monetize that for me? I’m gonna do that instead. Yes. Right. That’s that is what’s gonna have. Adrian Chng 34:02 Fundamentally different business model. And I think it’s just very different for incumbent institutions who are already successful and profitable in a certain way. Michael Waitze 34:10 Yeah, they are so afraid they’re so we’re afraid, right? That’s why Facebook is just a proxy again, for the rest of these other big tech companies, right. But at some point they want to do they do want to create this kind of walled garden around their thing. And that’s been super successful up until now. But there’s been no way to tokenize into fractionalize everything and to give ownership to you or to him or to her at the same level, we tried this right in the stock market. But it’s different because the stock itself doesn’t give you any incentive to participate. Right, that tokenization then gives you benefits as well, right? We talked about fractional ownership of everything. But in real estate, if I own a piece of resort, I can actually use it. The resort I mean, yeah, so there are benefits that come with it. Yeah, exactly. That’s different. Yeah. Adrian Chng 34:58 So this is different. Exactly. how this plays out? I mean, I don’t know, I don’t know, either, but you want to be involved in it, don’t you? Exactly. And this is what I tell people, you know, hey, this all dodgy, is is all fraud and saying, look, 99% of the internet boom was kind of crap and BS. Yeah. But how do you tell the difference? The only ways to be in it. And when you’re in it, you begin to say, okay, that that person or that thing is just a scam, right? That doesn’t make any sense to me. But real, real companies, real economic benefits will come out of this technology that I’m sure will form I don’t know.
Michael Waitze 35:36 So again, let’s just go back into history. If you follow, at least in the United States, right, if you know what the origin is, of even all of the professional sports leagues, right, they started as carnival acts. Mostly they were traveling carnival teams, like the New York Yankees, the Boston Braves, whatever they were they were traveling carnival teams. But now nobody would say it’s not a big business, nor a viable business right. And I think you’re right, you have to be in it to understand it. And you can sit on the sidelines and say, This is a scam, that’s great. And you won’t get you won’t lose any money. But you’ll also miss all of the upside as well. And I’m not saying you have to bet like everything on red number nine here. But you have no right to comment. I think if you’re not involved now, I think you and I benefit of permanence because of our age as well.
Adrian Chng 36:24 We’re all prisoners of our own experience. And I was like, I was skeptical, but then I realized that hey, you know, I live the internet, IPO a bunch of companies, I thought were crap. But then I actually ended up running a tech company that made money and had real stuff. So I said, Hey, is this really different this time? Like I said, I had some, some friends that I really admire, go into it. And I thought, okay, I should actually try and understand. Yeah, is this what is it? And is this big enough? And I think in life, got to pick some big trends, and is this a big trend massive? And yes, it’s complicated. Yes, there are some people that you think, hey who are they? But it’s really changing quickly,
Michael Waitze 37:02 can we get back to where Fintona fits into all of this, right?
Adrian Chng 37:05 So we essentially, again, we are that bridge between traditional finance and I guess the crypto natives. So we have these two, the Bitcoin Physical Fund and private credit fund. And these are let’s call it entry products for people new to crypto. So if you’re, so we service the new the new, the new to the ocean, right? We have the sea out there, and there’s a whole bunch of people on the beach, right? These products get you into the water. Okay, yeah. And then, and we go all the way to the deep end. So so we have, let’s call it entry level to crypto, right, the two products, we can also service existing crypto holders, because there’s a lot of problems trying to off-ramp into banks, there’s a lot of problems like trying to pass your crypto to your estate, or something happens to you. There’s a lot of problems with execution across 1000 different exchanges. So if you’re a professional investor, we say come to us, and we can help you solve that. And then for the so we can help that second bunch of existing crypto holders. And then for the crypto natives, the tokens, the foundations, they also have a lot of challenges. They’re often very good at tech, but maybe not so good at financial risk management. So in some senses, what’s happened in the market, if you’re a foundation, you typically have your token, your native token and a lot of eth right? If you had a lot of eth, right, this year, your treasury assets are down tremendously, right? So so that’s where we can help them as a licensed fund manager as well to give them financial strategies, as well as help them with, you know, it’s an OTC market. There’s like counterparties, everywhere. Everywhere. So it’s not like I go to New York Stock Exchange to do one trade. Here. There are multiple exchanges, physical derivative, there are multiple market makers, you have to onboard with banks, custodians. So all of that takes time. And if you want to move fast, at least we’re regulated and we’ve on boarded with all of these.
Michael Waitze 38:57 And are you building your own tech platform as well?
Adrian Chng 39:00 I wouldn’t say we’re building our own tech platform, because a lot of a lot of the things we’re talking about whether it’s order management systems, whether that’s kind of like portfolio risk and so on actually exist. You know, it’s a little bit different if you’re if you’re facing retail, yeah, and it’s gonna be different animal. Yes, yeah. So I think it’s a little bit different. So we can do the spectrum of the of the entry level, though, let’s call it the intermediate. And then the advanced and the advanced have various problems, whether it’s tax, fiat on and off ramp, hedging trying to earn a return if you if you have a token, and you’re promising people 5% And you’ve got a whole bunch of treasure reserves, well, you better be able to do that. Obviously, there’s the underlying use of the token. But there are there are other financial tools on top of what you use as product and tech.
Michael Waitze 39:44 If I come back here in like three years, what’s the difference? Do you know what I mean? For Fintona.
Adrian Chng 39:50 For Fintonia? Wow.
Michael Waitze 39:53 Well, I know it’s hard to say I know it’s hard to say right but but you’re planning for the future. Because if you ask me for my business like and a different business for sure, but where I think I’m going to be in three years. I don’t know if it’s going to be a straight line to get there. I don’t know if I’m going to get there, but I’m aiming for something, right? What are you aiming for?
Adrian Chng 40:11 Well, I think we will have geographic expansion, we’ll probably announce something soon.
Michael Waitze 40:16 Nobody can yet nobody can see that smirk on your face. But go ahead.
Adrian Chng 40:18 But I think that that’s one because I think they’re hubs growing all around the world, I think the other thing would be, we’re going to definitely have more products and capabilities, okay. And one of my dreams would be, you know, from my FinTech days, doing digital lending and consumer finance, you know, it was all about how can we help people come into the financial service system? How can we make it more efficient. And a dream, for me would be how to link, I guess, the crypto world with some of the everyday people on the street, helping improve financial inclusion. And there’s a lot of initiatives, great smart people, whether that’s trying to use stable coins, whether they’re trying to do different kinds of, you know, essentially decentralized finance, lending pools and savings pools. Unfortunately, or fortunately, financial services, the economics of how that how this business works, hasn’t changed in 2000 years. So I get that then as well. What’s the technology that can actually make it more efficient? And then where are the risks of using that technology? But that’s really in the retail space. That’s not our focus right now. I guess we’re very institutionalized more of a B2B regulated platform. But you know, I can, I would love to see the technology mature. And there’s a lot of great founders out there who are trying to build that and helping them somehow and getting involved. That’ll be, you know, a dream because we talked about Southeast Asia, we talk about Philippines 100, 10 million people, right. Credit card penetration, 5%. Same in Indonesia, whatever, 280 million people, same thing. So this whole region outside of Singapore, of Bangkok, right, a lot of people don’t have a living in the cash economy. And the reality is, that’s not efficient, and therefore they’re excluded.
Michael Waitze 42:06 Yeah, from the financial system at large. Okay, we are going to come back in maybe six months or a year and find out what the future looks like when you’re in the future. I really want to thank you for doing this. It’s been amazing for me to come into the office and do it. It’s such a different experience. Right? We talked originally about doing it remotely, and I’m like, I’m coming to Singapore. Yeah, I’m bringing my stuff with me. I want to do this face to face. Adrian Chng, the Founder and Chairman of Fintonia Group. Thank you so much for doing this.
Adrian Chng 42:32 Thank you
Transcribed by https://otter.ai