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Exclusive: Can Onchain Custodian Fill Fidelity's Gap in Crypto Custody?

Exclusive interview with Alexandre Kech: Part 2

While wall street giant Fidelity tapped into the crypto custodial space, can Onchain Custodian survive under the fierce competition? Alexandre Kech, CEO of Onchain Custodian, believes that they can fill Fidelity’s gap in the crypto custodial market! He also explains how the surging demand in BTC futures and crypto collateral can present substantial business opportunities for crypto custodians.

Onchain Custodian has been researching and experimenting on the security of private keys. According to your research, how can Onchain Custodian provide a more efficient and secure custodian solution?

The objective of this research and development on different solutions for storing private keys is to effectively evolve the platform as technology evolves as well. We always want our platform to be the most secure, flexible, and agile. R&D activities help us to decide how our next version should look like. There will, for sure, be a version three, four, or five in the future.

In terms of competitive positioning, traditional Wall Street giants are also tapping into the custodial market for crypto, such as Fidelity. How does Onchain Custodian compare with them? Does Onchain Custodian target different customers compared to Fidelity, or are you direct competitors?

I don’t think we are direct competitors at this stage. I would be immodest to think that we can compete with Fidelity. I think we are targeting a different customer base. Fidelity and other traditional players will build the types of services to support who they have as customers today – traditional asset managers and hedge funds, who are not comfortable to invest in certain types of crypto assets and want to have a traditional player helping them with custody.

We are targeting customers familiar with the crypto world because they are crypto players themselves, such as exchanges.

In the long run, there will be some collaborations between traditional custodians and crypto custodians like us. In the future, we will collaborate and build solutions together to serve different types of customers.

Recently, the interest of Bitcoin futures has hit an all-time high in the Chicago Mercantile Exchange (CME) in June. What opportunities are present for Onchain Custodian in this regard?

Those types of futures products are based on an underlying asset that is not traded, whereas futures contracts are traded. Financial products backed by crypto are probably how the market will develop in the future. There will an increase in derivative products based on cryptocurrencies or based on a basket of tokens traded on exchanges or OTC. Those derivatives will have to be efficiently backed by those cryptos, and the way to back those crypto futures products is to have proper custody of those assets. I think it is just a natural evolution of the crypto space to start with the asset itself and then evolve to derivative products around those assets.

Regarding your partnership with BabelFinance, a company offering loans collateralized by the Bitcoin deposit – what are the challenges in providing custodian solutions for this platform?

This collaboration with BabelFinance is to enable the ability to loan USDT for their customers. For example, in exchange for collateral in Bitcoin that we, Onchain Custodian will take custody over. It brings transparency to their customers with the fact that their collateral is effectively held by a third-party custodian, and BabelFinance does not have access to that collateral unless they agree to it or there is the default at one point. What we can bring here is transparency and neutrality in the process again.

With this BabelFinance and Onchain Custodian collaboration, we will also be able to offer our customers the ability to access financial products around crypto via BabelFinance. For example, they will be able to earn interests out of lending crypto to BabelFinance or to borrow crypto if they need so to cover a short position that they have in exchange.

In Singapore, which trust licenses have Onchain Custodian secured and what are the challenges involved? Does Onchain Custodian already have a trust license in other jurisdictions?

In Singapore, there is no need for a license on digital assets such as crypto and utility tokens because it is a non-regulated asset at this stage. That is why we chose Singapore as it has open-minded regulations; they will not regulate if they do not have the need to do so.

However, as we also want to play a role in the security token space, we are currently preparing for a CMS license or capital markets service license for custody in Singapore. It is required for security tokens as it is the evolution of our business—crypto, utility tokens, and then security tokens. There is also a new regulation in Singapore around payments that includes crypto as a means of payment that will come at the end of the year. Depending on what we facilitate as transactions, we could fall under that regulation, so we might need to also apply for that license as well.

My current question mark is whether, with my status in Singapore, we are allowed to operate and take custody of assets from a Hong Kong fund or a Thai fund, for example. That is something we all need to figure out. Custody of cryptocurrencies is still at its early stage.

Singapore’s Central Bank Raises Alarm About a Bitcoin Scam

Singapore’s Central Bank has announced that a website instigating fake claims to woo Singaporean investors is operational. Notably, this financial regulator has called out its activities as investors are prompted to purchase Bitcoin.

The Monetary Authority of Singapore (MAS) has been pivotal in showcasing the website’s fabricated declarations about Bitcoin investment linked to Goh Chok Tong, the nation’s former prime minister.

According to the Monetary Authority of Singapore, the website requires a minimum deposit of $250 from investors. This amount is channeled to a supposed initiative known as Bitcoin Loophole that runs investors’ trades.

Singapore’s Central Bank has warned prospective investors to be afraid of the website. Additionally, it has stipulated that any comments linked to Goh on the site are utterly fabricated. The MAS has reminded people to be careful of fraudulent websites that entice them using fake celebrity endorsements. It asserts that this is a well-orchestrated move to make investors part with their funds.

Bitcoin Loophole is not new to controversy. Previously, it was in the limelight based on its scam procedures. In June 2019, its ads were hindered by Facebook after a celebrity endorsement rip-off was run. Specifically, it showcased the Crown Prince of Abu Dhabi called Sheikh Mohamed bin Zayed. The operators had promised prospective investors that their net returns would be $13,000 daily from an up-front investment of $272 or 1,000 dirhams.

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Singaporean Company Launches World’s First Blockchain-Enabled Carbon Trading Exchange

AirCarbon Pte, a Singaporean exempt private company, has established the first-ever blockchain-powered carbon trading exchange (CTX) that will permit corporate buyers and airlines to sell and purchase tokens subsidized by carbon offset credits. This is based on the approval of the International Civil Aviation Organization.

According to Bloomberg, the company has appealed to the Monetary Authority of Singapore (MAS) to be given a valid market operator license as its objective is to have the carbon trading exchange entirely operational in 2020.

It is projected that some credits to trade will be generated after the exchange finances the registration costs of various carbon-mitigation projects free of charge.

CTX usually offers spot exchanges in many worldwide environmental commodity markets, such as water and renewable energy certificates. Expressly, it provides a bridge between potential investors and project developers, as well as an end-to-end solution for selling and buying credits.

It also utilizes a distinctive technical IT infrastructure that is founded on cloud computing. Blockchain is, therefore, deemed fit in propelling CTX as it will instigate immutability and transparency.

As reported by Blockchain.News on Oct. 18, CIMB Bank Singapore and iTrust successfully finished their first trade financing transaction. It was founded on iTrust’s functional Blockchain and Internet of Things (IoT) structure.

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Crypto Leaders Discuss Libra, China's CBDC and a Cashless Future at the Singapore Fintech Festival

The Singapore Fintech Festival gathered even more blockchain professionals on Day 2 of the event, kicking off with representatives of tech giants including Intel, Microsoft, and Nasdaq sharing insights on navigating the impending economic slowdown and global uncertainty regarding the global access to data.

A noteworthy panel followed on the topic of “defining the future of digital currency,” joined by Christian Catalini, co-creator of Libra and Head Economist of Calibra, Mu Changchun, Director-General of the Digital Currency Institute of the People’s Bank of China, HE Serey Chea, from the National Bank of Cambodia and Umar Farooq, Head of Blockchain at J.P. Morgan Chase & Co.

Catalini explained that in the current economic tensions, although tech has been around for 30 years, 1.7 billion people are still unbanked. He mentioned that some of the average charges for sending a remittance are around 7%; by using blockchain technology, a lot of issues can be solved for real people.

Mu further explained China’s development of its central bank digital currency (CBDC) and claimed that one of its goals is for financial inclusion for the people who live in the remote and rural areas in China. He stated that China is “not aiming to keep information on the general public,” but rather to create a cash-light society while “preparing for anything bad happening” in the financial ecosystem.

Chea introduced the Bakong Project by Cambodia’s national bank, while highlighting that mobile phone penetration has been huge in Cambodia, with subscriptions over 20 million in the country – the biggest challenge they are currently working on is bringing the mobile payments and the traditional banks together. Having explored with Hyperledger, the central banks could issue a wallet to everyone to use and download, while the banks and payments services could get access to tokenized fiat, and then issue it to the end-users. Consumers can then withdraw digitized fiat to their own wallets.

Pepo Founder Presents First DApp to be Approved by Apple

During the second day of the BlockShow Asia 2019 being held in Singapore, Jason Goldberg, Pepo founder, and CEO noted that they are among the most prominent DApps globally. Expressly, Pepo comprises of 15,000 users, as well as at least 45,000 peer-to-peer transactions.

According to Cointelegraph, one of Pepo’s significant objectives entails altering how content is created for the crypto community. The firm attributes its success to nearly four years of research, as well as giving the crypto community a listening ear about their needs and preferences.

Goldberg noted: “We are already among the biggest DApps in the world. We are now number 12, and we aim to reach the top really soon.”

He also acknowledged that it was instrumental for Pepo to be the first DApp to be ascertained by Apple Pay.

Goldberg stipulated: “We are the first DApp approved by Apple Pay, so people can buy our tokens using this payment method, among others, of course.”

Notably, Pepo permits its users to upload short videos through a profitable mechanism, whereby their followers are allowed to pay them tips in the form of tokens utilizing the built-in wallet. The tokens can also be used in the marketplace, for instance, buying Apple, Amazon, and store gift cards.

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The Future of the Financial Sector Will Rely on Blockchain, Says Singapore’s Fintech Chief

Sopnendu Mohanty, the Chief Fintech Officer of the Monetary Authority of Singapore (MAS), spoke at a panel at Blockshow Asia 2019 held at the Marina Bay Sands Expo and Convention Centre last week. In his panel on the topic of, “all that fintech with a layer of blockchain,” he explains the MAS’ role for blockchain adoption in Singapore and Asia. Mohanty said:

“Billions of the future of the financial sector relies on this whole shift from a physical to a digital world. Because there are certain financial stability implications, if you’re going with the right technology, but you don’t understand the relevance of the new technology, you may actually not have a lot of customers in the whole space. How to get to the right space is a big part of our effort.”

The Chief Fintech Officer further explained that the regulator’s job is to be relevant to the people they serve and to be meaningful to the community and be responsible for showing that the financial services are relevant to the way it is designed today, as it can be designed for the future.

The MAS’ approach has been very different from a lot of global central banks. Mohanty commented: “I will say that we have been very different in our strategy. We have been very experimental in our approach, and we have been highly inclusive in taking new ideas.”

Two major projects to look out for in Singapore

The first major project was the Singapore Blockchain Ecosystem Report, in which the MAS collaborated with ConsenSys, Tribe Accelerator and Infocomm Media Development Authority (IMDA), and Temasek for the first joint public-private review of the local blockchain ecosystem.

The second is Project Ubin, which was announced first at the Singapore Fintech Festival the same week. Project Ubin started in 2016 and has entered stage 5, and Mohanty believes that what the regulator has learned and, in his view, “blockchain is going to be the future architecture of our financial sector, it has to be.”

“I say that with a lot of risks because if you look at the digital world, there are three big positives: face-less, presence-less and people-less,” explained Mohanty. He stated that these are the good factors in the online world that we are currently dealing with. “But there’s one negative thing, which is trust-less. It was almost counterproductive to this whole positive thing, and the only platform that can get customers to trust in the blockchain world.”

Those who are investing their money and time on blockchain, “don’t lose hope”

He further added: “If we don’t invest in this technology [blockchain], we will lose focus and discipline in trust. I think we have a problem unless there’s a better thing that comes in the near future, but that’s the genesis of trust.” Mohanty explained that the MAS took it on its financial payment system as a use case to drive this concept.

The results of the experiment concluded that blockchain would be very useful in the cross-border payment system, as well as the trade finance space.

By 2020, the MAS is expected as the year of huge production lines for blockchain. By 2020, Mohanty said that the MAS would get to one product grade case in the blockchain space. Mohanty directed at those who were investing their money and time on blockchain and said, “don’t lose hope.”

The only regulator that took this whole thing seriously

Regarding Xi Jinping’s recent announcement for encouragement in the blockchain space, Mohanty commented: “I think there’s no bigger announcement vigorous endorsement for the world of blockchain what presence is happening since China announced [the news], I think everybody in China is talking about blockchain.”

Redirecting the focus back to Singapore’s regulatory environment, Mohanty claimed: “People don’t realize in Singapore, especially we put a huge bet on this technology three years ago, but everybody in the world was dismissing blockchain as a hype, you know we are the only regulator and institution, that took this whole thing seriously.”

BCB Blockchain Collaborates with Philippine Government to Support Local Startups

During the 3rd National Technology Business Incubator Summit, BCB Blockchain, a Singapore-based technology firm agreed to join hands with the government of the Philippines to support the development of local startups through creating smart city projects and applications making use of their funds and blockchain protocol.

Through the signing of a memorandum of agreement (MOA) with the Philippine Council for Industry, Energy, and Emerging Technology Research and Development (PCIEETRD), the firm sealed their agreement. Following this, Dr. Enrico C. Paringit, Executive Director, PCIEERD – DOST, had wished that:

“This partnership will ignite the next wave of applications and innovations for the development of sustainable and smart cities.”

The report, published on Nov. 23, noted that BCB Blockchain firm has also entered partnerships with a number of universities and startups which include: Adamson University, Holy Angel University, De La Salle University Manila,Far Eastern University, Technological Institute of the Philippines, Batangas State University, Caraga State University, Mindanao State University – Iligan Institute of Technology, Siliman University, QBO Innovation hub, Technological University of the Philippines – Visayas, and University of Southeastern Philippines,

Speaking about the partnerships, Douglas Gan, Chief Executive Officer, BCB Blockchain said;

“By providing DOST, universities and TBIs the resources and technical knowledge that BCB Blockchain has, we expect them to deepen their competencies in the area of designing and developing applications and projects for smart cities. We will guide and provide them the access to hands-on workshops, funding, materials, events and technical support.”

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Tezos SEA Collaborates With Singaporean Government-Backed Platform to Launch a Training Program for Tezos Developers

Tezos Southeast Asia (TSA), a non-profit-oriented arm of Tezos, has entered into a partnership with Tribe, a Singapore government-backed blockchain platform for the sole aim of launching a training program for Tezos’ developers which is expected to start in the first quarter of next year.

The president of TSA, Caleb Kow, was reported to say that the said training will make the fosters developers as it will ultimately make the sharing of information possible to novices.

“By enabling trainers with a good knowledge of Tezos blockchain technology, they will be able to amplify the impact in their respective teams through the continual transfer and sharing of knowledge to new learners,” said Kow.

With this collaboration, Tezos Southeast Asia (TSA), as a dedicated promoter of Tezos blockchain, will succeed in attracting more developers who will have the potential to utilize Tezos blockchain solutions to meet the real-world applications.

The main focus of the training program will be on the technical knowledge of Tezos blockchain, and it will help the developers to get knowledge and abilities to create blockchain applications on Tezos that will help to provide solutions to the real-world problems. The training will be structured in such a way that the initial developers will have to pass across their knowledge to their students.

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Intercontinental Exchange Plans to Launch Bakkt Bitcoin USD Cash Settled Monthly Futures

Singaporean Intercontinental Exchange (ICE) announced its plan to launch the Bakkt Bitcoin (USD) Cash Settled Monthly Futures, the first well-regulated futures platform for cryptocurrencies, on Dec. 9. The International Exchange operates top exchange platforms and clearinghouses. It also provides data and renders listing services for tokens/coins.

Per the new contract, the Bakkt Bitcoin (USD) Cash Settled Monthly Futures will be made live on ICE Singapore and will also be cleared by ICE Clear, in Singapore as well. Both platforms are under the regulation of the Monetary Authority of Singapore (MAS).

Lucas Schmeddes, President & COO of ICE Futures and Clear Singapore, expressed his view about the new contract saying that it has the potential to Asian and global investors an effective and efficient way to make a profit from bitcoin trading by offering a reliable, stable, secure and compliant atmosphere through leveraging ICE markets.

“Our new cash-settled futures contract will offer investors in Asia and around the world a convenient, capital-efficient way to gain or hedge exposure in bitcoin markets. Building off the success of our deliverable futures contract, the cash-settled futures will leverage ICE’s regulated, globally-accessible market to offer a safe, secure, and compliant environment for the trading of bitcoin,” said Schmeddes.

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PwC Singapore's Venture Hub, on the Investment Sentiment of Blockchain Startups

November has been a busy month for FinTech and the blockchain industry in Singapore. The Singapore FinTech Festival (SFF) and the Singapore Week of Innovation and TeCHnology (SWITCH) held 11 – 15 Nov gathered over 60,000 participants from 140 countries to foster the development of FinTech in Singapore. The Monetary Authority of Singapore (MAS) also announced key initiatives such as the joint development of FinTech Research Platform connecting investors and FinTech startups.

We arranged an interview with Lim Shu Ning, Director in PwC Singapore’s Venture Hub specializing in Blockchain during the SFF, which Shu Ning shared with us the investment sentiment of Singaporean blockchain startups and the state of enterprise blockchain adoption in Singapore.

Can you give us an overview of the Blockchain team in PwC Venture Hub? What is the scope of services that the team provides?

PwC Singapore’s Venture Hub adopts a one-stop shop approach to providing solutions, services and collaborating with motivated entrepreneurs, venture capitalists, incubators and accelerators within the venture ecosystem to help them expand into their key markets.

Our team focuses on fast-growing Tech startups including blockchain companies, using our expertise and experience to help founders grow their businesses. We work closely with the companies on areas such as fundraising, strategy, branding and M&A, IPO/ICO advisory to audit & regulatory compliance, legal & tax services and governance advisory.

What are the key pain points faced by blockchain startups in Singapore? What are some of the best advice you can give to these startups?

Blockchain is clearly a large part of what the Singapore Government sees to be an important and innovation-filled future for Singapore’s financial sector. Despite being a potential game-changer, there are also clear emerging doubts.

One particular concern is cost and efficiency. Given that the amount of resources and money spent, some perceive that substantial progress has not yet been achieved. Of the various use cases we see in the market, a large number may be still at the ideation stage, some might be in the developmental stage but not many are widely adopted or see the widespread application.

This leads to another pain-point which is to identify the right ecosystem partners. The value of blockchain is maximized when partners in the ecosystems work together and operating on a common chain. Currently, we see different organizations in the same industry sector developing many different chains and this is detrimental to the growth of blockchain. That being said, we do see potential interoperability across different blockchain solutions which help to harness efficiency for the ecosystems.

Blockchain companies should focus on creating solutions to solve real business problems through the trust that the blockchain brings, to ensure their products are viable and scalable. Blockchain technology is not the solution to everything, the right application to the right problem statement is the key.

Are there challenges to find the right talent for the fintech/ blockchain industry? What initiatives have been done to tackle talent shortages?

As with any new technology, blockchain is relatively new and will continue to evolve. At the moment, we note that there is indeed a limited supply of people with developed skills in this space. On the other hand, the demand for qualified talent is increasing and costly. And this is particularly challenging here due to Singapore’s relatively small population size.

Singapore has the potential to become an Asian Blockchain Hub with its blockchain-friendly regulations and government support in nurturing blockchain development. With the government’s support, we believe that Singapore will continue to attract and groom the right talent in the near future.

How would you describe the enterprise blockchain adoption in Singapore and what are the interesting use cases in blockchain there?

In PwC’s Global Blockchain Survey 2018, we noted that 46% of enterprise blockchain adoption resides in the Financial Services industry, 12% in the Industrial products and manufacturing, 12% in Energy and utilities, 11% in Healthcare. Other segments include government, retail and consumer sectors. This trend is quite in line with what we observe in Singapore as well.

Some of the interesting blockchain use cases we see include (just to name a few):

– Digital identity: Blockchain to create an auditable source of personal identity information shared and verified across multiple organizations. This also empowers users (like us) to have control over our digital identity and personal information.

– Supply Chain visibility: Blockchain eases the existing pain points of buyers, sellers and various parties across the supply chain. Some of the track & trace blockchain solutions we have seen allow traditional businesses to digitize their traditional products include food products into traceable digital assets to tackle some of the key issues in global trade including food safety and wastage.

– Record keeping: Blockchain provides a method for collectively recording and notarizing any type of data. This could include education records and certificates, healthcare records and more.

– Provenance: Blockchain offers an immutable and irreversible source of information that tracks true ownership as well as the authenticity of a product. We see more relevance for this application in the retail luxury products sector and high-value collectibles.

How would you describe the market sentiment on investing in Singaporean blockchain startups in terms of M&A deals and fundraising?

Market sentiment into investing in Singaporean blockchain startups is picking up. Previously investment was mainly in the form of token sales which are more speculative in nature. However as the market matures, sophisticated investors, as well as corporates, entered the fray seeing the potential of adding blockchain technology to traditional business or seeing the potential blockchain technology brought to different industries. Investment is now into the equity of the startup itself rather via a token sale.

Through our partnership with Tribe accelerator, we have seen first hand the kind of solutions that corporates are on the look-out for and that they have invested in. While most investments in startups are focused on taking a stake, we may see a growing number of M&A buyouts as these startups grow and as their solutions become more concrete.

We also note that investors are more keen to invest in blockchain startups with specific industry-focused solutions and where they are combining with other technologies such as IoT and AI; rather than blockchain developer companies.