Dec 14, 2023

DigiFT has received authorization from Monetary Authority of Singapore (MAS) to operate collective investment schemes and secondary-market trading, according to Henry Zhang, CEO of the Singapore-based digital assets exchange.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Welcome back to first mover decentralized Exchange, DGFT recently won regulatory approval from the Monetary Authority of Singapore and just the first exchange with an automatic market making mechanism to have been admitted to the fintech regulatory sandbox in Singapore. Joining us now to discuss is the GFT CEO Henry, Jang Henry. Welcome to the show. Thank you for having me. Well, congratulations on becoming licensed in Singapore. Every time we talk about these licenses, we want to know how long it took, how many resources did it take from your end to talk us through that process? Yeah. Um Thank you for congratulate us on the uh licensing part. We think it's very important to mind. Um um We have uh went through two stage stage one, as you mentioned, we because it's a very innovative solution uh first time in the industry. So we be through the so called the regulatory sandbox, um which means we are allowed to do real transactions, but with a limited scope just to test run for a certain time. So this uh regulatory sandbox uh took 18 months now, we graduate from the sandbox successfully. Uh That's why I called, we received a formal license. So two stage 18 months in the sandbox. So you uh you, you have an AM M uh auto automatic ma market maker. How did the uh regulators approach this? And, and what kind of o obviously what it requires a lot of uh knowledge, I guess on their part, if you will, I I in terms of the coding and, and, and, and what have you, did they have any uh oversight? What, what was their, what was their uh issue? Did they have any issues with it at all? And, and what did they say? Yeah. Um this is a very important question. Um I would say from the regulated perspective, MS in Singapore, for example, they look at because we try to be in the marketplace, so-called exchange. So whatever technology we use and others use regulator will look at is this technology can be applied to ensure transparent, fair and orderly of the trading on, on the marketplace. So when we say we use AM M for example, as a key features in this uh so-called innovative solution, we need to demonstrate um using AM M and others can still achieve the purpose of fair, transparent, fair and orderly or even better, more efficient and more cost effective. So these three key points and, and, and how did they, how, how did they kind of get into it, if you will uh what was the process? Because it is such a unique. Uh It, it is such a unique uh method, I guess for regulators uh that they, that they often don't regulate that kind of a thing. So uh what sort of uh so how did they even approach this? Yeah. Um I would say this kind of uh financial industry, including the uh the marketplaces, so-called exchanges along the last decades, always evolving. Using the new technology, for example, starting from the uh paper based trading, then go to the current stage is mostly electronic based trading. Then with the new technology coming in, then we can trade on the uh so-called public Blockchain, more decentralized, some technologies can be applied which brings in unprecedented values. Uh And then from the regulated perspective, like MS, for example, they always keep in a very open minded, open mind to the new things coming out. Um Of course, when the new things come out, nobody can claim we understand it thoroughly. That's why we need to put into the technology into a solution into a computer solution to make it a regulative compliant. Now, for example, as an exchange, how can we still be transparent uh fair and orderly? Um Now we say this Blockchain based technology can really not only satisfy those criterias can also be better. That's what we call the next generation technology. For example, the information on the public Blockchain is much more transparent and immutable. Uh not only the market operator like us, we can provide on see the data and provide the data um third party including the regulator. They can also go to the uh so-called the public Blockchain to download the data which substantially reduce the chance for the people to manipulate in the market. So this is the as in a bilateral process, both side when our side is our job is need to present clearly, how does it work and what type of value creations and what type of control should be there? And of course, what kind of risks and the regulator perspective, they need to keep an open minded which they do uh and also work with say a you should improve this one and you you are OK with in this part. So it's in a very bilateral interactive process. Henry, you just mentioned some decentralized elements. I know DGFT describes itself as a decentralized exchange, how decentralized are you and how much decentralization are regulators looking for? And on the other hand, maybe how much centralization are they looking for in order to give licenses like this out or, or to approve licenses like this? Yeah, uh Jennifer, someone refer us to like a decentralized exchange. Uh But I just want to bring the balance a little bit is we don't just call ourselves is like AD X or decentralized exchange because the definition of so called the decentralized exchange is clearly undefined so people may have different interpretations. So just simply using decentralized exchange, probably confusing. Uh Another point is when we see we apply decentralized technologies, for example, uh peer to peer settlement. Uh for example, am M and for, for example, self custodian of uh investors assets, these are very decentralized features which does not exist before we have this technology. But on the other side, we also heavily use so called centralized technologies and the best practices to combine together make like an uh a new version of uh marketplace. Uh That's also how we have a little bit of view is like a centralized and decentralized technology. They are complement to each other, they are not mutually exclusive. So sometimes an exchange is something between so-called the web 2.0 and the 3.0. It's a spectrum. We may be more like a 2.7. Uh Some uh current mainstream exchange is more like a 2.02 0.12 0.2. Henry, you haven't heard web 2.7 yet. You heard it here. First, I want to get your perspective. You can call the 2.5. Yeah. Yeah, two point I like 2.7 better. I don't know, Lawrence. What do you think? More precise, more precise, precise, we like that a lot better here. How about 2.63? We'll, we'll almost Yeah, kind of get a little closer. We want to uh get your perspective on the banking sector in Asia. Given your background, you previously led Citibank for China. How do you think banks uh in the Asia Pacific region are going to adopt or interact with crypto as we move into 2024? Yeah. Uh I did spend quite decent long time with the so-called the traditional finance, right? Or well established finance, people went see their traditional finance or traditional banks, sort of a little bit uh kind of a negative which means conservative. But I would say, you know, financial industry, including the banking and the capital markets, right? It's always in the, in in the history and early adopter, one of the early adopters to use new technologies from the past like a telecommunication technology, internet technology, computing technology, blah, blah uh banking industry is always an early adopter and active adopter. So this time coming in so called uh uh Blockchain based technology, there's no doubt and then not be surprised as financial industry will look at it and they will use it as one of the pioneers. But since that these well established firms that big, they have transactions every day. It is reasonable to take a prudent and uh phrased approach. But that said in the last 12 months, especially last 12 months since we are coming to the end of 2023. Uh in the last 12 months, we do see so-called web, two established institutions are expediting the the steps to embracing the new technology. Um not only one firm, many firms, not only one product, there may be multiple use cases. So given this trajectory, I'm very uh positive and uh I'm pretty positive and comfortable to see next year will be, we will see more adoptions, more institutional so-called engagements. And I also personally also hope this thing can be expedited because this new technology does have unprecedented value creations, Henry, we're going to have to leave it there. Thank you so much for joining the show and giving us some insight into how you obtained that license there in Singapore. Uh And we hope you have a Happy New Year. Thank you. Same to you. Same to you too. Happy New Year. Thank you. That was DGFT CEO Henry Jang.

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