[Investment Panel] TheFuture Of Money &Change in investment with panel at KBW2019

[Music] great good afternoon everyone will everyone get seated my name is Jehan Shu and thank you to Bryan and the whole define team and Gable for having us we're excited to be talking about investment I know it's a subject that keeps everybody on the edge of their seats I know it does for us but of course you know we're doing this kind of conversation in somewhat with the somewhat of a cloud over us the price of Bitcoin and the entire crypto market has been quite depressed for the the last kind of week with some severe kind of a downdraft a little bit of you know Sun peeking through the clouds this morning we'll see if it lasts but it really does raise a whole lot of questions about the future of investments the future of crypto and I guess what our purpose today is to really shed a little bit of light on how we as investors and these seas are looking at the space and where we see it going and what the opportunities potentially are for other investors and also other startups so without further ado what I'm going to do is just ask everybody to just go down the line we're not going to spend a whole lot of time on you know kind of background etc we're gonna be really quick and please tell me who you are what is your fun and what does it do what does it focus on and then if you don't mind name your last public investment my name is Lester Klaus and I'm one of the founding partners of 1kx we're early-stage token Network investors so we actually invest exclusively in open source software networks that are tokenized we don't want anything that has a traditional business model and we're based in Berlin and the last investment we did is Nixle nexus mutual it's a mutual insurance on ethereum where you can buy cover against the risk of smart contracts failing and I think that's something we really need I love that because we invested in that - nice hi my name is Steve from block tower capital we are crypto hedge fund based in New York we invest in both kokin and liquor equity investments previously I work for Goldman Sachs for eight years in tokyo and singapore latest investment we did is i can name the projects but we invested in one gaming projects out of south korea my name is Tom Lee I'm the co-founder of fun strat we are not a hedge fund or an investment fund we provide research advisory services to mutual funds and hedge funds we have 150 clients in 16 countries so in terms of our last public investment we have none our firm does not invest my name is Jerry Niang I am founded founding chairman for Hong Kong blockchain Association everybody is so scared that by Hong Kong largest forward but I guarantee your safety there for sure I'm also running my own family office which focused in Tolkien and I'm the human partner and founding partner for thr capital T gos I found which i has investigated in fin tag related production technologies such as t0 virtual bank like G rack and also color stocks yo Hong Kong great so and just on my side kinetic we are a Hong kong-based fund where one of the earlier funds in Asia we've invested in over you know 120 projects from equity to tokens and we have an equity fund where our last public investment was securitized a security token issuance exchange actually issuance platform led by mu F G and Santander so let's jump into it I think the most kind of pressing question on many people's minds is what is going on with the market and where do you see it going in the next 6 to 12 months so Tom I'm going to start with you because you know you're you know often quoted and very well regarded in terms of your analysis so what is your what's your view I think the next six to 12 months is actually going to be really positive for for digital assets in crypto a lot of it I think really depends on what happens with bitcoins so I think if any of you guys in crypto think Bitcoin doesn't matter you have to remember it is really one of the centerpieces of sort of bringing traditional retail money and in in institutions into the digital assets market and I think there's a lot of good things happening I mean you know the most important next year is that happening but something that I think that was positive that just happened was really the SEC action around cos because it ended up proving to be not a death blow to the project and I think it I would say looks a lot like a somewhat regulatory friendly move and you know if you ask me maybe the biggest risk in the next 12 months I think the white house remains the single biggest threat to Bitcoin because you know they've clearly shown antagonism towards Bitcoin but you know if it's an election if it's gonna help Trump in 2020 I think there's a possibility he would be in Bitcoin but at the moment it's obviously not really central to his 2020 reelection well who knows I mean Trump and Bitcoin could could have the reverse effect no such thing as bad press Steve what do you think I mean you're on the hedge fund side you guys are trading actively like how are you seeing the kind of market from an activity standpoint weird is it going so if I take a back a little bit I would say I will approach more supply-demand context so I think from last year from November or so use we see that a lot of the token holders who hold up the Bitcoin for a long time actually does start to sell it from the beginning of this year since we know we can designate the wallet address for the og those like a dot those those are miners wallet so we see that selling is almost exhausted and then at the same time in a lot of our institutional clients institutional investors individual family office start to tapping in the space that actually creates the demands so I think that's why I think April first the price was about 4k and then June it hits the 14k and now is back at a Kay everyone's a disappointed but it's still two acts from the beginning of this year and then definitely I think positive momentum is still going on and and because I was a working Goldman as a trader so you feel I just approached a little bit macro context you see that a lot of a Chinese yuan depreciation is relationship with the Bitcoin of course it's not clear relationship but definitely compared to the past we see the more clear relationship between Chinese yuan depreciation and the price Bitcoin and then I think the narrative that a lot of hedge fund traditional headphone might have in next 6 or 12 months is this concern around the currency depreciation so I think it's gonna be small narrative but as Ray Dalio the biggest has fun managing the world nation I think we some of people we might pick up this narrative and then people will start to see Bitcoin as the digital gold and then they might start to kind of pile the Bitcoin in the space and lastly the Libra everyone's excited about it but if I just put a little negative concern around it is I think Libra can be too private that facilitating a money laundering but also not too private that actually damaging the personal private rights but said that deaf when Libra is very positive impact the cryptocurrency just one example I will share is one the day that Libra is launched I got like three different masses on LinkedIn from biggest conglomerates in Japan and Korea so these are the people that I had a relationship for several years they had a no interest in blockchain for a long time but after this Libra is launched they just keep asking hey Steve like what is this Libra Steve do you have a contact Steve can i what should I do so I asked them do you know how the vibra works they had no idea do you that's good that I pushed it pushes the card yeah what I'm seeing is there is a little bit of formal context in enterprise space so definitely there will actually put the positive context on hold cryptocurrency cost Lassa what do you think I mean you're on the front lines of tokens specifically token focused do you buy this whole kind of kind of argument about you know Bitcoin kind of recovering and maybe drawing some of the alts with it how do you see them are so something we've seen been in the space for a long time and we see these very very intense cycles of like six to 12 months where crypto sort of has these themes and right 2017 it was in cerium it was icos then the theme was a bear market everybody was depressed and selling everything went down now we have this theme of like Bitcoin dominance and and and and you know so we we think more long-term we're more like a venture investor so what matters for us is that talent comes in right so this is really always the most important signal is actually do you get this 1% type of best engineers in the world are there intrinsically motivated they're sick and tired of optimizing apps for ads for Facebook and Google they want to do something that is meaningful and we just talked with an engineer who's leaving Baidu now because in crypto you were actually the big companies can't touch it yet so that leaves actually an open playing field for young people to innovate and own the space if you're a normal web 2.0 entrepreneur you really can't do anything anymore against Google and Facebook and their network effects so what we see is that incredible talent is coming into the space every day the technology is getting better there's breakthroughs on many different fronts so that's that's how we'd like to look at it I think personally if I look at the Bitcoin price every day drives me crazy so I don't do that yeah that's probably probably advisable and JE what do you think I mean from the from your vantage point as a family office what's the kind of sentiments out there in terms of appetite for Bitcoin or appetite for the space general from my own eyes I separated virtual actually into two categories and the one shiny it's a cryptocurrency I'm quite conscious of all the extra Mouse the real reason will be the regulatory reason we all know that fat therefore has a recommendation for other countries to implement their rules on crypto currency trading and especially the Thomas Thomas rule and the function module would well I would say incur a lot of expenses for start-up companies and we'll also the possibly gave exchanges are a lot of headache yeah headache there so in next 12 months I believe that the crypto currency in Belize are better correction or possibly in the in current naval however after the Marquis had cleared up I would say as he say has been doing so if CA or Hong Kong sfj I have been also doing so as well and then the institutional investors with the jump in and we will say a better future for Pico in price as well and the other side of course is a security token which we have focused cried aloud well I would say that the FinTech related blockchain applications will flourish in will be flourishing in extra amounts we say cave I say requirements there we say a lot of automation applications for KY say for banks and for trade for traders for logistics companies as well as the crypto currency exchanges as well so we will still allow more application occasions in that area and I would rather encourage the entrepreneurs to put more focus in that area and that's the real future to go and and you know also obviously of course everybody is worried about the security tokens liquidity I would say in next two years or three you are seeing more good companies to go for securities offerings yeah actually everybody got just as of today the Silicon Valley investors are Hyder Sami there to discuss an option to do Tareq and distant we heard about the recognition in 2004-2005 when Google was doing so and in the future you possibly will say both directly stream and securities tell them might be the best way to go for and we will say better companies to go for security token offering and there for us they allow more investors to jump on that area as well the quiddity won't be hanging issue and it's really the fundamental that's a usual well let's hope I mean we're at kinetic I mean we have a similar view to many people here where we're quite bullish on the space longer-term we take a long-term view and for me I mean when my friends are asking me you know should I buy a Bitcoin now I mean I think it's possible that we see maybe we touch you know below below 7 a little bit and then rally back obviously the crypto markets are always kind of going swinging back and forth and back and forth but we think that you know always buying the dips is always a very good thing in our space as long as you have a long term view and I agree on the security token space that you know one of the things I like to say is that the security check is not a wave it's really the ocean beneath the entire capital markets being tokenized and adding liquidity and and volume and pace I think is interesting one of the other kind of indicators of market health other than the price and other than the volumes which are you know admittedly down is quality and I think that you know as long-term investors the quality of the deals really can tell us like are we in a bad place or are we headed to a good place so lots of let's start with you how do you feel about the quality of deals that you're seeing either on I assume that you see both token and equity you just only invest in token right what are you seeing in terms of like founders and and you know kind of just good quality as you would might want yeah so average quality has gone up a lot for two reasons obviously a lot less projects now it is actually now it's actually worked to raise money as a founder in 2017 it will really wasn't and but also the the founders themselves get significantly better they have much more traction actually where is like you know 2016 you know a three year timer and you know roadmap you know may net in three years like very far down the road now you get investment opportunities where there's a clear hockey stick and real-world usage and real adoption and and investable very reasonable valuations what's the reasonable valuation is do you think let's call like well I know what's unreasonable I would say like you know pre-launch 100 million 50 million is very unreasonable I think anything depending that's unconscionable that's unreasonable I do think something to consider is that for crypto networks you are looking for more distribution distributed owner base than in equity so I think saying you know typical startups raise in the valley at 10 million seed therefore all token networks at seed should be 10 million I think that calculation doesn't work out because you don't want that capital concentration plus if it's good token networks actually they will or the idea at least our our belief is that some of those would actually significantly surpass the evaluation of any for-profit typical company ever before so valuations down seems a better more traction very positive great Steve yes I Torrio agree I would just put that specific example so as a crypto hedge fund we were always looking for trading platform and custody solution for as eight months that means that we met a lot of projects working on this two spaces but until Barry until two months ago we actually didn't use any of them almost none so in that in terms of a quality the project yes they the quality of those the projects in the two fields gets much much better improved so I we are fascinated finally we start using our third particle solutions because for the the funds like us we have a lot of investors institutional level of investors the the number one that the concern they have is basically these costly solutions so in that sense yes they are much improving a lot of sense and a gaming space we are excited about they much much better quality gaming projects or being out of specially in this region yeah that's great from our side actually we I mean I think the quality side on the equity is quite good I mean we've done seven deals this year and we've have a full pipe on things we want to be investing and so we're seeing things that are worthwhile but thinking about things from going back to the token side of things Tom Korea has always been a really massive retail market I mean these days you can look at the crowd right a lot of people are here thinking about fundraising thinking about trying to tap the retail market because at certain points it was one of the most exciting kind of places to try and raise capital for token what are you seeing now what do you how do you feel about the Korean market for for for projects in terms of raising capital in terms of doing you know not icos but different types of raises you know I think you know the the markets that are really important to crypto are us Korea Japan in some ways because that's really where a lot of the development has taken place and of course China and Asia but you know I think Korea and Japan and the u.s. have all suffered incrementally because there has then I think more regulatory burden rather than less so I think it's you know it's one reason why we I think volumes and Korea have been lower and you know we no longer see the kimchi premium and but I don't think it's really necessarily stopped innovation I just think it's you know things have slowed down a lot you know I was just at a summit in Canada and I met one of the projects that's about to get launched I think it's quite promising because it's gonna be on the existing platform but you know for the most part I think crypto is still in the process is sobering because there are a number of people that got involved with you know different projects over the past two years and you know some of that's gonna end up being stranded capital it doesn't mean any of those ideas are wasted it just means that it may need to be restructured you mentioned China and and je obviously you know we live in Hong Kong we're right across the border you know we are sovereign wise part of China how do you how do you kind of see the market in China up so the crypto market supposedly is banned but we all know that's not actually choose a lot of transactions from an equity side and an adoption side how do you feel about China what what do you think the audience here should should be aware of that they don't know about the the blockchain encrypted market in China well very interesting that China has two sides as well on the garment inside that we see the governor has tighten up the rules since September force over 2017 and however the blockchain communities and the cryptocurrency communities have been flourishing ever since then I believe they are quite a few reasons there number one is innovative driver we see a lot of entrepreneurs put the efforts in that area and they have achieved a great deal of technology innovations and the number two is I've just said ignore the currency side since China has entered into the three war against the US the currency was RMB currency rated you think she'd exchange rate has been drop in last two years a lot of people looks for a new look or over sales diversification and also look for aging or cancer there are beholding so they have to invest into cryptocurrency so the investment activities your outside of the government has been quite strong and interesting enough last two or three months ever after Deborah was our launch that and a Chinese central government has also indicated that they want to issue central bank digital currency and that's our major news amongst the communities in there and we see also are losing a situation on the regulatory side the common entry has loosened up the regulations on the crypto currency in Beijing you can see a big conferences there without the interference by Japanese producer all security people there and and in a greater Bay Area you say a lot more activities not only from the cryptocurrency community but also from a common side more and more activities are there so we will see a better situation in Quetta bay area of course the hong kong has been always a free place so don't be scared by the protests in Hong Kong everything is fine but anyway what I'm saying there Hong Kong has been flourishing ever since September of 2017 we we have a huge community of the conventional financial investment us investors and you say all those investors are paying attention to TLT technologies and blockchain technologies as well and many of them are also trying to put the money into currency as well so for our financial finding festival expands and we also have a Hong Kong corruption Association summit in December so we welcome you there paucity and I work I love the promotion of Hong Kong when you leave scenic Korea please come to Hong Kong but let's keep moving so you mentioned this kind of the central bank digital currency or CB DC and I think you know Libra and all these other types of stable coins like obviously Tara's is just kind of tearing it up over here no no as a stable coin so as investors and analysts what do we think about this kind of seemingly very fast-moving phenomenon of Kryptos as currencies so you have the CBD seeds you have the libras you have the stable coins that we all know and love you also have like Walmart and Allianz and JP m JP Morgan who are all creating coins what does that mean like how do you react to this as like an investor like are there opportunities for these Kryptos as currencies I think the good thing is that we've learned I think over the last year and a half that actually an investment asset like Bitcoin or theorem is a terrible medium of exchange right and if you know when people use send us a nice and fight about because it went up 10% like this makes no sense right so now we have you know a range of stable coins from the very decentralized to something like the I to something where we don't even know if they're how much money is their tether but tether has social consensus in China so it works right I know that tomorrow I can sell 20 million worth of tether to someone so it's final accepted faith based currency yes all right and which tether is and it's very successful of that I think it's number four now and and I think Facebook lira was extremely interesting because it you know it got a lot of urgency like the Chinese government has been working on that digital you know coin for like five years and all of a sudden now they announce that it's you know it's ready and it's better than Facebook so I think it really injected a lot of pressure and like competition and and just personally I love it that the government has competition for money now and France and Germany we're not very forward-looking they made a statement that they're gonna ban basically stable coins there's no private money allowed other than the government it's a right it sounds European it might also just be you know personally I do agree that Libre is a corporate cartel it's not a cryptocurrency and I think they created the basis to keep them at bay I don't think you know I can buy die on coin base as a European I don't think that'll be enforced yeah I think I think those the banks and enterprise coins I'll maybe separate them but I think there's so positive because I think the main problem in cryptocurrency right now for adoption is still like a people outside this conference or outside cryptocurrency ecosystem they don't trust us or they don't trust what we build so I think even though we are talking about trustless protocol but I think we are missing trust from general public so by having this enterprise like SK or Samsung Hana all those big corporates jumping in and making their own token or their platforms or this central bank is making their own token I think definitely I think general public who don't believe in us or believe don't believe in cryptocurrency yet I think they're we making it a hot-oil or so I think in terms of adoption the pathway to the adoption we are missing so bad I think it's definitely positive impact in terms of central bank coin I think I'm not sure whether it's a good or bad but definitely I see that more macro view again I keep looking at the market as a more macro as as a traditional way but definitely there's a some conflict between US and China on the way I think so I think Libra I still like a US firm and the Chinese central bank is Chinese one I don't know how this plays out but definitely there is some conflict and then how people like us will help them resolve this conflict will definitely make the impact on on how the cryptocurrency will evolve Tom the currency do you think yeah I think it's all good I mean it's good that there's digital money and different forms I think Bitcoin is digital money and stable coins are stable but I think what gets lost in people sort of concepts of money is that they think it's primarily used to buy goods and services like so I I think everyone's like oh well what's the use of something because you can't buy a Starbucks coffee with it it's important to look at how traditional money is used so if you looked at dollars today it's used for 20 trillion of it is used every year for the economy and that includes both for exports imports and buying coffee gasoline and buildings and goods that same dollar trades 96 times on a currency exchange as a form of speculation to either speculate on the price of the dollar or to buy a financial asset so what is the primary you of fiat money today it's just speculate on the price of something else and so you know stable coins are interesting but at the end of the day you have to remember stable coins aren't gonna be used to buy goods they're primarily gonna use to speculate on a digital asset so I think ultimately stable coins are actually really good for cryptocurrency prices definitely sounds like an opportunity Jay what do you think on the these kind of like stable coins cvtc's well I agree with Steve that the conflicts between Libra and Chinese central bank and digital currency my play or the inner neo confrontation way however I would say this this is all good for the crypto community in the future USA Libre would enable 2.7 billion people to have a digital currency wallet that's incredible and you see a huge a population which it has the cryptocurrency wallet would have be able to receive the Bitcoin or use area or whatever tokens you are developing here and that would be the real beginning of digital economy so either the Chinese central bank digital currency or the Libra will prepare the way for Erb a dirty Jew economy for sure and I would say that's her Beta Alpha situation for everybody here as well thanks Steve you mentioned adoption and I think we're about to run out of time so I want to kind of finish on this someone was asking I think the interview and they were asking me about you know what do you think is a kind of greatest trend for it for 2020 and I had to say like it's not a technical trend it's really an adoption trend and I think the only thing that really gives you know me kind of hope in terms of where we are now on this market is that we're starting to see companies with real adoption and real you know seven or even eight figures of users that are coming yeah an especially here in Korea that's exactly right so you know let's end on a high note right let's talk about like one company that you think you know inside your portfolio or outside your portfolio that you've seen who is really effectively driving adoption a blockchain and crypto and let's you know let's let's name and fame them number one tera worldwide absolutely number one is I think he's on afterwards should definitely listen to it this is I think what do you like about it like what are you like about a because it's really driving wheel and adoption in creating the bridge from crypto merchants and end-users have a hard time interacting with crypto with a protocol itself that has never happened with the Internet either right if you use whatsapp there's this unimportant there's a ton of software in the middle that lets you interact with the protocol for crypto we were expecting that everyone will run their own lightning node at home this is not gonna happen OTT oh no and so this is what Tara's done exceptionally well they made it very very easy for merchants to integrate it they made it extremely easy for end consumers to connect their bank account and in the background it actually buys their stable coin and nobody even knows about it and so are you an investment Tara we're investing Tara and I'm also full disclosure great investment and and I think it's really gonna be the most use blockchain by the end of the year I think awesome Steve okay so how compliance is very strict so I can name this project but the the gaming project we invest recently close out of South Korea this one I'm very excited as you guys some of many of you guys excited I really believe in this virtual world and the real world will be connected to this blockchain gaming industry and the one that we project we invested it as they have very plugging the platform that has biggest users of this country and then they already proven their specific platform game as a lot of users for past six months so a lot of games now is using the private blockchain off chain of chain transaction but this one built on on chain they prove the track record but they have now his biggest platform in South Korea to be launched right Tom I mean I think I just want to answer this a little differently because I think the big theme everyone said this year was institutional adoption of crypto and I think we're gonna exit this year and institutional adoption didn't happen I mean there have been sort of plumbing that's taking place from backed and there's more volume on the seamy futures but again you know we deal with a hundred 50 traditional financial institutions 4000 portfolio managers on our distribution list so I would we at the epicenter really understanding what these guys are doing and I think institutions are not going to adopt crypto until there's regulatory cover for them to do so so I think if you had to say you know how does Bitcoin get to its all-time high in the next you know 1224 months I think it's primarily gonna be a retail driven story and that's not such a bad thing because I think retail market could still grow vastly in the US for crypto I think it's still freakish lease very small I think people are overestimating how many people actually own Bitcoin great J well I I've invested quite a lot of start obviously in greater Bay Area and and this particularly one company in Hong Kong of the mention it's her company we focused to enable the conventional investors to use the KYC platform and it also offers a bridge between conventional investor and the capital community as well so that platform would enable the conventional investor easing it to the hyper quarter of the cryptocurrency investment and using need to execute their orders at the best price and best volume so that's a that's a company called global stocks in Hong Kong I encourage you to do SME in the future as well and most of all I think the compliance will be something you have to be careful of in the future this company has to put a lot of efforts in compliance area they are applying to sandbox in Hong Kong SFC and they are also getting licensing in Singapore and also Switzerland as well so those are the area so you have to be careful in the future the compliance issue sooner or later we have to face it cool and from our side I think lots already said Tara so I'll follow on and say Forte Kevin is going to be giving a speech the gaming keynote I agree with with with Steve's kind of thesis around the gaming and especially here in Korea and I think what Forte is doing in terms of bringing on some of the world's like most exciting and kind of like large communities of gamers through creating tokenized loops and tokenize crypto economies inside of existing games it really kind of meeting the the market going to the market rather than kind of trying to pull over to people to blockchain so that's kind of where I think the adoption is really going to be kind of quite quite fruitful that's all the time we have I want to thank Lhasa Steve Tom and J for their time and thank you very much for your attention thank you gentlemen