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Block Kong Breakfast: Chapman, Madden & Lo, BC Group

“We were all convinced this technology was the future.”

Dave Chapman, Hugh Madden & Ken Lo

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Block Kong is a series of interviews with blockchain-related entrepreneurs and financiers in Hong Kong, brought to you by Charles D’Haussy.

As I make my way to Star Street in the busy but gritty neighborhood of Wan Chai, I feel privileged. Three of the busiest crypto entrepreneurs in Hong Kong have synced their agenda to have breakfast with me.

I arrive at Oolaa Petite, in one of the city’s coolest neighborhoods, a mini village of restaurants and cafes situated halfway between Wan Chai’s notorious red-light streets (themselves now full of hipster co-working spaces) and the corporate institutions of Admiralty.

Dave Chapman, Hugh Madden and Ken Lo are not surprised to meet me: they are very surprised to be at the same table together, however. Their travel schedules mean the three co-founders of BC Group are rarely in the same place at the same time.

After some chitchat, we order.

Wow. A “Full English”, four-egg omelets, even a steak!…These fellows will be fueled for the day.

I go for a smoothie. Don’t judge me.

The business these three have created is now a Hong Kong-listed company. But the trio has been at the heart of the local digital-assets industry since its early days.

BC Group is best known for its subsidiary brand OSL, an over-the-counter digital assets brokerage for institutional clients. But it also runs an exchange (ANXOne), a technology vending business, and insured custody. Its roughly 150 employees working in offices throughout the region, including mainland China, Singapore, the Philippines – and Mexico, making this now a truly Pacific-spanning operation.

The story begins in 2013, when Ken Lo was head of compliance at BT Global Services (aka British Telecom). In his spare time, he traded bitcoin via LocalBitcoins, a peer-to-peer marketplace.

Chapman, Lo & Madden: early days

“It was a fun way to meet likeminded bitcoiners,” he says.

That’s where he met Hugh Madden, then a forex I.T. architect at HSBC. Their initial contact was a dispute over the pricing of a trade. But instead of fighting, they got along and kept in touch.

At the time Madden was working alongside Chapman, who ran a chunk of HSBC’s technology group focused on client onboarding.

All three of them were tired of corporate life and were looking for new opportunities. They ended up combing forces.

“From risk perspective, our venture didn’t necessarily make perfect sense,” Madden says. “But we were all convinced this technology was the future.”

Perhaps because “Chapman, Madden & Lo” sounds too much like a 1970s prog-rock or jazz-fusion band, they decided to call their first venture “Asia NexGen”, or ANX. 

ANX launched that year as a retail-oriented crypto exchange. In January 2014, it distributed red envelopes of “lucky money”, a longstanding Chinese New Year’s tradition, with vouchers for HK$10 worth of bitcoin (or US$1.2, when bitcoin traded close to US$1,000 – those vouchers would be worth about HK$80 today, not bad!).

They followed up the next month by launching the first bitcoin ATM in Asia, which they called the “liberty teller”.

Ken Lo debuts the Liberty Teller

Their feat was overshadowed by the collapse of Mt. Gox, a Tokyo-based crypto exchange that went bust the same week. Even so, the trio regarded the ATM as a success, with people queuing. The ATMs enabled self-KYC and converted cash into bitcoin.

This led to a bit of strutting. “We were the O.G.,” says Chapman, who notes the ATM was quickly followed by not just an Asia-first, but a world-first, with the issuance of a crypto debt card that summer.

I do not know what “O.G.” is, however.

Again, do not judge me.

[“Original Gangster”, name of an Ice-T album from 1991, denoting someone with old-school authenticity. Word. –Ed.]

It was Madden, the business’s main tech lead, who pushed the trio towards the institutional market. He realized the technology they had built could be sold on a white-label basis to other exchanges or brokers. ANX was also beginning to aggregate liquidity with likeminded players in other markets. And institutional business promised higher margins.

More importantly was diversification, a strategy that proved itself in the 2018 “crypto winter”. (This is slang I know.) Offering both markets and products to retail and institutions allowed ANX to keep its head above water while many other crypto players drowned.

Even before that, however, the trio was looking at all sorts of ways to grow the crypto ecosystem. Among their projects was a foundation, OAX, created in the middle of the ICO boom in 2016. This non-profit group was funded via Hong Kong’s first token sale.

The project – I know this very well – aims to offer exchanges and the broader community a trustless decentralized exchange (DEX) with Layer 2 capabilities allowing high performance, with up to 1,000 transactions per second.

Ha, now who is the O.G.? I am so crypto gangster I almost forget to finish my smoothie.

One of several “firsts”

It was Chapman who led a revamp of the entire wholesale business by launching Octagon Strategy in 2016, an OTC trading desk for institutional and wealthy clients. With legitimate formal banking arrangements in place – no mean feat for a crypto business – and minimum trading ticket sizes of US$100,000, Octagon blasted off. Riding the crypto boom of 2017, by December that year the business facilitated turnover in crypto equivalent to US$1.5 billion.

Using the capital and the momentum from that success, the founders and their strategic investment partners acquired a controlling stake in a main board-listed business on the Hong Kong Stock Exchange, BC Technology Group (aka BC Group). BC Group now offers institutional brokerage and exchange services. Its flagship brokerage business is known as OSL, a division now led by Wayne Trench, a former head of electronic trading at Morgan Stanley.

Since then other big players in Hong Kong’s cryptosphere, including Huobi and OKEx, have also found their way to becoming listed entities.

Despite the 2018 downturn, BC Group has continued to add new hires, if not in a straight line. With about 150 employees, it is no longer a hip startup. It is on its way to becoming a small or medium-sized company. Is this hard?

“Now that the company is established, it’s easier to attract talent and compete with deep-pocketed banks,” Lo says. “Having blockchain experience in your resume has become attractive.”

Much of that hiring is going to helping BC Group bring institutional standards and regulatory legitimacy to the young crypto industry. Speaking with the founders, I see an exciting dash to M&A, consolidation, and new business ventures. The game is on and the bases are loaded…

I am out of smoothie but my guests are still keen to chat.

The two hot acronyms right now are FATF and STO. I know this one! The Financial Action Task Force – or, if I may, Groupe d’action financière, or GAF, a far more eloquent acronym but your French accent must be très bon – is an intergovernmental organization to combat money laundering and terrorism financing.

FATF is considering a “travel rule” to be implemented by its 37 member countries. Madden is very engaged with this, as it means the beginning of harmonizing a regulatory framework for digital assets.

“Japan turnover rose 480% the same year as regulation there began,” he says. “Regulations are catalysts.”

Chapman adds: “STO [securities token offerings] and regulated digital assets are next. We’re getting ready to operate under regulations around this new asset class.”

The trio has notched impressive accomplishments in a short period of time. But the founders remain humble and committed to the local crypto community. They are active participants in groups like the Fintech Association of Hong Kong, where Madden is co-chair of the blockchain committee, and the Bitcoin Association of Hong Kong.

“Industry engagement through associations is incredibly hard,” Madden says. “You can’t hire to get it. It has to be done by senior members of the company.”

We conclude with a turn back to the ordinary: Madden coaches a rugby team, Chapman is training for a triathlon, and Ken will spend the weekend relaxing. It is a satisfactory ending for pioneers in an industry that is meant, ultimately, to become part of our normal lives.

Oolaa Petite

  • 9 Star Street, Wan Chai
  • Latte x2
  • English Breakfast x1
  • Fluffy 4-Egg Omelet x2
  • Steak & Sweet Mash x1
  • Avocado x1
  • Sausage x1
  • Bacon x1
  • Healthy Smoothies 😉 x1
  • Black Coffee x1
  • Total HK$1,011 (US$129.62)
  • Paid by credit card

Block Kong

Block Kong Breakfast: Angie Lau, Forkast.News

“The best teams are about talent, not about quotas.”

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Angie Lau, Forkast.News

Block Kong is a series of interviews with blockchain-related entrepreneurs and financiers in Hong Kong, brought to you by Charles D’Haussy.

I would have lost an Ether if I had bet on where my Block Kong Breakfast with a former Bloomberg T.V. anchor would take place. 

On my way to Gage Street, I was dreaming of a hipster cafe, with an infinite choice of soymilk latte, avocados on toast, and chia-seed yogurt.

Instead, Angie Lau suggested Lan Fong Yuen. It is a true taste of the city’s canteens, offering classic beverages and typical “everyday” food. It’s been around since 1952, and the main entrance is still hidden between a teashop and vegetable stand.

When I enter Lan Fong Yuen, the manager seems to know why I am here. He guides me directly to the table where Lau is already sitting.

Lau is a Hong Kong native but moved to Canada when she was two years old. After studying journalism in Toronto, she started her career at CBS News and came back in Hong Kong in 2011 as one of Bloomberg’s global anchors. 

More recently she is part of a wave of high-profile people in Hong Kong business and finance moving into the blockchain industry. It wasn’t a direct leap from Bloomberg, however: after 20 years as a journalist, she first joined the Li Ka-shing Foundation. Then she co-founded her own business, Forkast.News, with the aim of connecting the techies in blockchain with the general public.

Angie Lau at Lan Fong Yuen

Was she crazy leaving behind the fame and prestige of being a Bloomberg anchor to jump onto the entrepreneurial rollercoaster – sugar-topped with a blockchain focus?

I am now well acquainted with Yuenyeung tea, having been introduced to it by another Block Kong interviewee, and I find I have developed a taste for this tea-milk-coffee confection.

We order two French toasts and two Yeunyeung teas. There is nothing particularly French about this toast, which is another local Cantonese creation, but delicious nonetheless.

Lau says the move is not so crazy today, but would not have made sense a few years ago, when being a T.V. anchor was indeed a big deal. Not so long ago, traditional media was respected and credible.

The constant erosion of resources for newsrooms meant reporters had to prioritize pumping out lots of stories. “Journalists get less and less time to understand more and more things,” Lau says. As a result, the media has become just another bystander and is no longer central to the conversation.

French toast a la Cantonese

She hopes to use specialization to create something different. Her journey to the industry began when she was asked to moderate a panel on blockchain. Lau told the organizer she wasn’t familiar with the topic. “The said that was okay,” she says. “So I spent the next 48 hours doing a deep dive.”

She’s still diving, hoping with Forkast to bring more knowledgeable journalism to an industry where media is either too techie, or too superficial.

Along the way, the concept of the “media platform” needs rethinking. “The content is the platform, not the tech,” Lau says. One thing that has surprised her is that the audience is willing to go on long journeys with her. The general wisdom in media these days is that everything has to be snappy: if it can’t be stated in 140 characters, then it’s not worth saying. But Lau says the long-form videos and podcasts, of up to 30 minutes, are the most-consumed content on Forkast.

I order my second Yeunyeung, although Lau declines to join me. I ask her about conflicts of interest, how she handles interviewing people who also own a lot of the same cryptocurrency they’re working on . “I’ve been trained and live by our journalism ethics code,” she says. “What people really ask for is trust.”

What does she make of businesspeople, often very successful ones, entering the blockchain industry? She reckons it will eventually help reform the traditional world. “People coming from the traditional space to blockchain know the system well enough to renovate it” using the new technology.

One big difference, though, is the informality of a nascent industry: “I don’t see people with titles. I love that. In blockchain, you don’t speak to titles; you speak to people.”

I am starting to feel like I’m a T.V. show. Maybe it’s Lau, or maybe it’s this second Yuenyeung. I ask her about women in blockchain. She says 25% of her audience is female. The challenge for women in tech is not new, but she has encountered plenty of women building businesses in blockchain. “The best teams are about talent, not about quotas,” she says.

Sparechange.io

We’re about to go and I remember to ask why she chose to have breakfast at Lan Fong Yuen. Some years ago she conducted an interview here with Mark Mobius, the legendary emerging-markets investor. Mobius made such settings the routine of his visits to cities around the world: hit the street, go shopping, and eat locally. It tells you a lot about the local economy.

What it tells me is that Hong Kong remains very much a cash-based place. As I’m settling the bill, I notice the cashier has patiently laid chains of coins from all her spare change. Lau, who has an instinct for pictures, tells me to take a photo.

Lan Fong Yuen

  • 2 Gage Street, Central
  • French toast, x2
  • Yuenyeung tea, x3
  • Total: HK$124
  • Paid with cash

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Block Kong

Block Kong Breakfast: Leonhard Weese, Bitcoin Association

“The reputation you earn is for not screwing people after five years in crypto.”

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Block Kong is a series of interviews with blockchain-related entrepreneurs and financiers in Hong Kong, brought to you by Charles D’Haussy.

There are three rules for my Block Kong Breakfast guests: the guest chooses the venue, the venue can be any place other than a hotel, and I pay.

If nothing else, I am becoming an authority on wonderful places to eat throughout Hong Kong. And I’m learning a bit about blockchain, which a nice side benefit.

With certain guests, I have a high expectation. Not of price or fanciness, but of sourcing local places that I would otherwise never visit. Leonhard Weese does not disappoint.

Apropos of a cryptocurrency enthusiast, Leo shares with me the address of a canteen via Telegram whose name translates as Nam Wah Teahouse. It is in Sham Shui Po. 

Inside

I must confess that I know nothing of Sham Shui Po other than a few visits to its legendary computer center. Yet it is one of the few neighborhoods in urban Hong Kong that has retained much of its original character.

Sham Shui Po is home to many small-scale industrialists, the kind of shops that still produce buttons and leather goods. Nearby, where the city grid meets the hills, are the first public housing estates built by the government in the 1950s, in the wake of a terrible fire.

I pass by the hipster coffee shops that tell me this neighborhood is embracing the present without forgetting the past. It feels good to visit a place early enough to enjoy it without the crowds. The shops are just opening, slowly, and the local residents are taking their time.

Like a cliché, I am late. French fashion?

The restaurant is hidden behind a wall of temporary street stalls. Leo Weese is there, waiting for me. I ask him why he chose this place, this neighborhood.

“This café illustrates how markets evolve,” he says. “Tea is a Chinese thing. The British added milk. Hongkongers added a shot of coffee.”

And voilà, it arrives, the famous Yuenyeung drink: three parts coffee, seven parts lai chai (Hong Kong-style milk tea). Served in classic Black-&-White branded cups.

Yuenyeung

A few sips in, I feel local. 

Weese is president of the Bitcoin Association of Hong Kong and a key figure in the city’s crypto community. He was born in Italy but grew up speaking German. He encountered bitcoin in 2011, when BTC was at US$1. He watched it grow to $30…and collapse.

In 2012, while studying statistics in Hong Kong, he learned how Bitcoin works and why its mysterious inventor(s) brought it into existence. Then he had what he describes a “mindblowing” experience of purchasing his first bitcoin on the Mt. Gox exchange and sending it freely across borders.

I signal to the staff I’m ready to order. Weese helps with a confident Cantonese. The restaurant’s servers are super friendly. Maybe it’s just my second cup of Yuenyeung, but I have the feeling that Sham Shui Po people are awesome.

Weese is a crypto security consultant, but our conversation turns to history. Again, perhaps it’s the buzz of the Yuenyeung, but I think it’s actually the buzz of Weese taking me through the fascinating story of bitcoin in Hong Kong. He was there. For all of it…

The Scaling Bitcoin event

…except the very first bitcoin meetup, on July 25, 2012. Kristin Low, a bitcoin enthusiast, organized it at Red Bar on the podium of IFC Mall (it’s now a Shake Shack). In the shadow of the world’s mighty financial institutions, who had no clue what is brewing, the meetup attracted…two people. Afterward, Weese contacted Low, who was too busy to organize the next meetup and suggested Weese take over.

Jehan Chu leads a bitcoin meetup

As Weese recalls these origins, it becomes like the casting of a Hollywood blockbuster with all of the stars. Over the years, these people will cross-fertilize the city’s crypto universe. Let us try to reverse-engineer this Merkle tree of a story.

  • January 27, 2013: Weese organizes the second bitcoin meetup, also at Red. BTC/USD doubles to $15.50, attendees quadruple to eight.
  • April 16, 2013: Third meetup sees 26 attendees to observe a bitcoin wallet demo. Beers sold at 0.008BTC, or $86 (HK$670) at today’s exchange rate.
  • August 2013: Organized by a rep from Kansai Bitcoin, Japan. First appearance by Ken Lo, who two months earlier had founded Asia Nexgen Exchange, or ANX.
  • October 2013: Organized by a bitcoin enthusiast from Beijing, this meetup attracts Jean Louis Van Der Velde from what is now Bitfinex, Aurelian Menant from Gatecoin and Ben Delo of BitMex – many of the actors in the emerging scene.
  • November 9, 2013: This time a dinner, organized by Rui Ma, who at that time was partner at 500 Startups, the mega-fund for angel and seed-stage investments. It is the beginning of VC interest.
  • November 18, 2013: Organized by Kyle Drake of CoinPunk, a DIY wallet solution.
  • November 24, 2013: The meetup upgrades to a “Satoshi Square”, part of a global grassroots movement among bitcoiners interested in buying and selling crypto. Up to 34 attendees.
  • December 1, 2013: Bitcoin is attracting attention from government figures. Hong Kong’s then financial secretary, John Tsang, makes his first mention in a blog post. He explains how Bitcoin works and warns people of its volatile nature and lack of a government or issuing body.
  • February 14, 2014: Disaster! Mt Gox, the crypto exchange in Japan, is hacked and shut down. Now the bitcoin meetups change in tone, from hobbyists to lobbyists.
  • March 1, 2014:  Weese, Jehan Chu and Anson Zeall organize Rise: Bitcoin Fest. Perhaps it was the Beijing-style street food or the artisanal coffee, but up to 80 people attend. Chu discusses bitcoin payments for real life, Weese discusses safety, and Zeall, then with Coinpip, talks about merchant acceptance. Coindesk covers the event. Meetup members discuss a charter, in order to incorporate a Bitcoin Association.
  • June 24, 2014: The Inside Bitcoin Conference attracts regional and global bigwigs in the crypto space: Bobby Lee of BTC China; Vitalik Buterin, the co-inventor of Ethereum; Leon Li, the CEO of Huobi exchange; Xu Mingxing, the CEO of OKCoin; and Brendan Blumer of ii5 Ventures, which will become Block.one and the creator of EOS.
  • December 4, 2014: Hong Kong’s Legislative Council discusses Bitcoin. John Tsang defines it as “a commodity generated in the cyber world” that is “neither electronic money nor a stored-value payment facility”.
  • 2015: Pindar Wong, a Hong Kong internet pioneer, organizes an event, Scaling Bitcoin, where the Bitcoin Lightning Network is first introduced to Hongkongers, while Buterin becomes a regular at meetups. Weese is becoming skeptical, though. Too many people are using meetups to hustle for money. With no VCs yet involved, the meetup community has become the go-to for pre-sales of projects, many of which are of dubious value.
  • February 21, 2016: Bitcoin miners and core developers from around the world organize a private forum at Cyberport, courtesy of the Bitcoin Association. Names such as developer Johnson Lau, Samson Mow of Blockstream and Star Xu of OKCoin, and many more. These diverse players forge a compact that has since become known as the Hong Kong Agreement. Basically, it’s technical, but it created a deal to add capacity to the protocol’s consensus mechanism by forking the Bitcoin protocol. A lot of those agreements won’t pan out. But it’s a cool meeting.
  • 2016: BTC=$800! Yay! Then the DAO is created, an attempt to use Ethereum smart contracts to raise funding, and hacked. But investors now flock to initial coin offerings, creating the makings of a…
  • 2017: Crazy bull market! Which by now Weese has decided is a major nuisance. The Association formally submits articles of incorporation to become a non-profit entity, symbolically registered on October 31, the day Satoshi Nakamoto published the bitcoin whitepaper in 2008.

By now the number of blockchain entrepreneurs joining Bitcoin Association meetups mushrooms to include Daniel Larimer, EOS; Tim Swanson (then R3); Ken Lo, Hugh Madden and Dave Chapman from ANX/OSL (now BC Group); Dan Oprey of Digital Asset (then at Hyperledger); Marco Streng, Genesis Mining; Charles Hoskinson, Cardano; Roger Ver, Guo Hongcai and Simon Dixon, investors; John Lilic and Juan Llanos of ConsenSys (before I joined!); Zhao Chengpeng, aka Binance’s “CZ”; Larry Salibra, Blockstack; Alex Liu, MaiCoin Taiwan; Arthur Hayes, BitMex; Ron Hose, Coins.ph; Antony Lewis of itBit (now R3), Adam Back, Blockstream; and Jared Tate, Digibyte.

Vitalik Buterin at an early meetup

October, 2019: Weese will hand over the presidency of the Bitcoin Association. In an industry known for scams and hype, Weese stands out for, as he puts it, “The reputation you earn is for not screwing people after five years in crypto.”

Leo Weese and Arthur Hayes

In that time, Hong Kong has seen 250 meetups of all kinds. The bitcoin community here has grown organically, bringing together talented and visionary entrepreneurs from across the blockchain space.

L’addition

I am dizzy with Yuenyeung but most of all with the incredible history that Weese has described. Cryptocurrencies have come so far. Alas, I pay for our breakfast with cash.

Nam Wah Teahouse

  • G/F, 87 Kweilin Street, Sham Shui Po
  • Breakfast set, x2
  • Extra Yuenyeung, x1
  • Total: HK$105 ($13.46)
  • Paid in cash

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Block Kong

Block Kong Breakfast: Benedicte Nolens, SC Ventures

“Pioneers like Circle have already blazed the trail for single-currency coins.”

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Benedicte Nolens, SC Ventures

I arrive early in the morning at Luk Yu Teahouse on Stanley Street. It is a traditional favorite Hong Kong eatery, particularly among many of the city’s old-school tycoon families. I think it is accurate to call this place an icon among Hong Kong restaurants.

When you enter, it is like experiencing a time warp. Luk Yu opened in the 1930s. Its décor is marked by art-deco details, stained glass and classic artwork, and feels more like pre-Revolution Shanghai than anything in modern Hong Kong. Most of the waiters, in their traditional white jackets with big pockets, look as though they have been around just as long.

Benedicte Nolens, my guest, is buzzing with energy. She speaks fast, leaping from subject to subject. But first I want to know: why did you choose this restaurant?

Luk Yu Teahouse

“It’s one of the few places in Hong Kong where time has quite literally stood still,” she says. “Sometimes when you’re in the middle of so many hectic changes, it’s good to connect to the past.”

Although I agree, the stately venue doesn’t match Nolens’s personality. While both of them are charming, Nolens has been a force of nature in Hong Kong’s fintech ecosystem. She’s spent her career embracing “hectic change”, and hardly seems the type to want to slow down or indulge in nostalgia.

Nolens likes escaping from her comfort zone. She grew up in a cozy town of 6,000 people in Belgium, but left that for Chicago and New York to practice law. Then she showed up in Hong Kong shortly after the 1997 Hong Kong handover to mainland Chinese rule.

“I didn’t know it but I got a front-row seat for the Asian financial crisis,” she says (the crisis began in July 1997 with the devaluation of the Thai baht, and by the end of the year had turned into a hedge fund-led run on the Hong Kong dollar).

Benedicte Nolens

This being Hong Kong, it was inevitable that she went from securities law directly into finance, serving as the number-two compliance officer for Asia at Goldman Sachs and then the regional chief compliance officer at Credit Suisse.

It was, however, her next big job that got her, by accident, into fintech. She joined the Securities and Futures Commission as head of risk and strategy.

This was at a time when the SFC first had to grapple with the confusing dynamic of tech startups looking to disrupt and transform financial services. There was no obvious department in the SFC to deal with this. Naturally curious, Nolens volunteered to add this to her portfolio.

She became the informal fintech-facing regulator, a job that often meant interpreting these companies for the SFC’s executive directors as much as it meant helping startups navigate the regulatory process. Her role was formalized in 2016 when she was named the SFC’s first head of fintech.

She also served as part of the Hong Kong government’s steering committee on fintech (for the Financial Services and Treasury Board). So did I at the time, and that’s where we first met.

We have been talking so long, having dived right into the conversation, that we forgot to order breakfast. The waiter has long since wandered away, and getting his attention is a minor chore. Luk Yu is famous for its food, very traditional Cantonese, but is also known for service that caters to the establishment’s regulars but treats transient customers such as us rather indifferently. 

The menu

Soon after we order, though, comes a marvelous procession of bamboo baskets whose lids, when lifted, reveal steamed beef balls and other hallmarks of Cantonese delicacies.

The capstone of Nolens’s time in government was her taking the lead in 2017 on a research report of financial technologies for IOSCO, the international association for global securities regulators. This represented an early example of Hong Kong authorities staking out a global leadership position.

“This paper helped convince global regulators that the unbundling of banks [by tech companies] was a phenomenon, and that new players were coming into finance with lots of different shapes and formats,” she says.

Facebook’s going to have interesting journey trying to convince the regulators

Benedicte Nolens

On the back of this work the SFC went on to quickly authorize more fintech companies, including robo-advisors and licensing crowdfunding platforms for authorized investors (the law here prohibits retail participation in crowdfunding), representing a new way for global startups to raise growth capital from Hong Kong institutions.

Throughout her time at the SFC, Nolens studied bitcoin and realized the technology was inevitably going to become something regulators would have to address. 

This was a period when the crypto-currency side of the business was still looked upon by banks, securities companies and regulators as dodgy. The mantra was blockchain might be interesting but bitcoin was suspect.

Yet by 2017 the wave of initial coin offerings hit fever pitch, and regulators came to understand these were in many cases unregistered placements of securities. The U.S. SEC’s decision to apply its Howie test (effectively declaring all utility tokens to be securities) further demanded action.

By this point, however, Nolens wanted to be closer to the action. In 2018 she shocked her colleagues when she left SFC to join Circle, one of the leading firms in the crypto industry. She served as the firm’s chief compliance officer and played a role in its international government relations. It was only after her departure that the SFC got serious about crypto, in particular securities tokens.

What prompted the move? She responds by paraphrasing Gregory Gibbs, the CEO of the giant Shanghai-based Lufax. “If you want to be a challenger bank, you need to position yourself in a market of 100 million or more customers,” Nolens says.

To her mind, the crypto market has the global reach and lack of incumbents for a few firms to create businesses with that kind of scale. That was the opportunity, although for Nolens, the move to Circle was just as much about the chance to explore uncharted territory.

She has found the shift rewarding: “One year in crypto feels like you learn, experience and build as much as someone in traditional finance would in five years.”

A learning curve is one thing, but the industry remains very much a work in progress. It can be unstable. In June, she took a role as chief compliance officer at SC Ventures – still on the innovative cutting edge, but this time within the walls of Standard Chartered, a traditional bank.

She remains an advisor to Circle, however, as well as a board member of the Fintech Association of Hong Kong and an advisor to the London-based Global Digital Finance, an association trying to establish standards for digital finance. She also serves on the investment committee of AngelHub, the first startup investment platform in Hong Kong.

Compliance is more interesting than the law; it moves faster

Benedicte Nolens

Before we know it, it’s 9 a.m. and time for both of us to hurry to our day jobs. She has to prepare for an upcoming trip to Osaka, where she’ll be sitting in on talks about the crypto industry on the sidelines of the next G20 meeting.

Before we leave, though, I ask this former regulator what she thinks of Facebook’s crypto-currency plans.

“Facebook’s going to have interesting journey trying to convince the regulators,” She says.

Will Facebook and its partners succeed?

“I think they will get there in some form or other, because pioneers like Circle have already blazed the trail for single-currency coins to receive regulatory blessing.”

It’s not that great a leap, at least from a securities point of view, to do the same for a stablecoin based on a basket of mainstream fiat currencies and cash instruments. But this is also an issue far bigger than just the SEC or other securities regulators. “Libra’s now the remit of central banks,” she says.

I’ve long thought about the prospects of China issuing a sovereign digital yuan to fund its Belt and Road Initiative. Could this be how things evolve, now that the People’s Bank of China has suggested Libra has prompted it to take another look at digital fiat?

“It could happen,” she says, both in response to Libra as well as in response to the broader trade war with the U.S. “China will continue to consolidate its position as the most important trading partner in Asia.”

I head to the counter to pay our bill. In keeping with Luk Yu’s traditional image, this is a cash- and credit-card establishment. I pay with cash, while wondering if our laws – designed for cash, cards, and analog securities – will be fit for purpose in the coming digital marketplace.

Nolens gets in one final thought. “Compliance is more interesting than law,” she says, heading for the exit. “It moves fast.” By the time I’ve received my change and step outside, she’s already out of sight.

Luk Yu Tea House

  • 24-26 Stanley Street, Central
  • Char siu bao (barbecue pork buns)
  • Sweet sesame and egg yolk bun
  • Various dim sum, x3
  • Pu’er tea
  • Total: HK$376 ($48.21)

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Block Kong Breakfast: Chapman, Madden & Lo, BC Group