The next eara of Blockchain
The last session of this year's Fintech Summit took place on May 22nd and focused on the latest development and use-cases of the Blockchain technology, in the US, Asia and Europe. During this session moderated by Paul Brody (Principal & Global Innovation Leader, BlockChain Technology, EY), several international experts took the stage to present their innovative solutions and share their views on the development of this technology.
Blockchains as Universal Business Infrastructure
Before actually acting as Master of Ceremony, Paul Brody (Principal & Global Innovation Leader, BlockChain Technology, EY) gave an overview of the blockchain industry and opened by stating that EY shared last year its strategic vision for blockchain. He reminded the audience that "the reality is that we often forget the purpose of Fintech: it needs to create useful business infrastructures. Blockchains will do for networks of enterprises and business ecosystems what ERP did for the single company. They will integrate information and process within and across enterprise boundaries". The expert also explained that using tokens and contracts will be the standard way in which companies transact with each other. "Here are the four big transitions in how we use the tech and which need to happen: a shift from notarization to tokenization, the fact that the future is around fiat currency transactions rather than crypto, the integration into the regulatory environment, and the move from private to public blockchains", highlighted Paul Brody. And from a market model perspective, the transition to general purpose infrastructure has just started: we have seen PoCs in the past, and are currently in the era of specialized applications, which are using private blockchains and do not scale well. According to him, with the public blockchain, the network effect is going to be irresistible. "Simplifying radically, we, at EY, see the future of business transaction as the exchange of tokens governed by business logic," added the Global Innovation Leader, before presenting some of EY's blockchain projects, notably with Microsoft, Carrefour, MERCK, etc.
How a communication platform and AI nurture Fintech innovation
He then welcomed Shinichiro Isago (Platform Evangelist, Manager, Developer Relations, Leader of LINE BRAIN, LINE Corporation) on stage. "In Japan, the messaging application market is booming: we have around 80 million monthly active users, which equals to 62% of the population," he started, before presenting LINE: "LINE is a messaging application like WhatsApp and Facebook messenger with voice and video call functions, of course, basically free to use. The most distinctive feature is “Sticker”. Generally, western people tend to think that stickers in messaging app is just for sending image or information easily but we’re using stickers to express our feeling and emotion". Messaging has become an important part of people's lives in Japan and LINE aims at bringing people, information and services closer together. Its corporate mission? Closing the distance. He added: "Our FinTech services are using same concept as messaging and advertisement, changing the right-side entity from people or brand to money. We’re providing our FinTech services to realize the concept of CLOSING THE DISTANCE between people and money. Moreover, we own a payment service called LINE Pay and have lately introduced the LINE Wallet Tab". On the use of blockchain, he explained that LINE's token economy project consists of 2 parts: "LINK" is its original blockchain platform like Ethereum, and "BITBOX" is a crypt currency exchange in Singapore.
Paul Brody (Principal & Global Innovation Leader, BlockChain Technology, EY) then brought together Michael Yeung (Founder, Chief Executive Officer & Chief Scientist, BlockContinent) and Emma Zhiyu Liao (Co-founder, Ultrain) for a fireside chat on the use of Blockchain, notably in Asia. The discussion started with the two experts presenting their solutions: Michael Yeung aims at bringing the blockchain tech to the regulators, while Emma Zhiyu Liao brings "a new way of computational power, through a user friendly app". She continued: "We are still early in the industry, where there are only limited companies joining the race with their business understanding". Michael Yeung agreed, stating that the regulators generally do not feel comfortable about tech and need to understand the industry. According to the co-founder of Ultrain, adoption is the key. She then shared a couple of use-cases, notably with leading brands in the fashion industry. When asked about the possible trade war between China and the US, Michael Yeung highlighted that his country was currently leading the way in the blockchain development market and that communication between China and Europe will eventually become more important. "Blockchain, by example, knows no border and is international," concluded Emma Zhiyu Liao
Crypto assets kick-off: the Luxembourg Regulatory perspective
To discuss the current Blockchain regulation in Luxembourg, the organizers welcomed Jean-Louis Schiltz (Attorney, partner at Schiltz & Schiltz). He started his presentation reminding the audience that Luxembourg was one of the first countries to ask itself if a specific regulation was needed, several years ago: "At that time, they decided that no national regulation was needed. But lately, we have seen three initiatives come up: regulated crypto exchanges, ICOs, and the circulation of securities and beyond". As a matter of fact, the CSSF released a statement on crypto exchange in March 2018 stating that any provision of financial sector services requires an authorization by the Minister of Finance. Jean-Louis Schiltz then explained that the ICOs market was relatively flat in Luxembourg, but that the CSSF still recommends to be prudent in acquisitions, as AML and terrorist financing procedures apply. Finally, he discussed the circulation of securities, adding that a new law was published in March 2019 – one of the first laws in Europe on this topic – which states that "the account keeper may maintain securities accounts and credit securities on securities accounts within or through secured electronic registration mechanisms, including distributed electronic ledgers or databases. Successive transfers registered within such a secured electronic registration mechanism shall be considered as book transfers between securities accounts". He concluded: "it's the turn of the industry now! The law is simple and builds on the existing system and regulations".
The after session ended with a round table discussion on cryptofunds, moderated by Marc P. Bernegger (Member of the Board, Crypto Finance) and with the participation of David Fauchier(CEO/CIO, Cambrial Capital), Bernadette Leuzinger (COO, Crypto Fund AG) and Alexander Tkachenko (Founder & CEO, VNX Exchange). The latter opened: "crypto assets used to be for techies and were not very user-friendly, it was hard to get hold of them. But since the bubble of 2017, we have seen a lot of activities to institutionalize the asset class and there's a clear change of attitude". He also highlighted that Luxembourg is a unique place and could play a big role in the development of blockchain, notably thanks to the LHoFT, the SnT, etc: "with the support of the government, the critical mass of support in innovation is what will allow the tech to develop. I foresee interesting projects coming out of Luxembourg in the next 2 years". According to David Fauchier, blockchain can solve fraud, help with privacy etc: "if we are right and if the tech is really valuable and useful for engineers, we will have liquid market". He also explained that Europeans were more conservative and are currently not addressing the question: they might miss on crytofunds. Bernadette Leuzinger did not agree as she said she witnesses a lot of interest in Europe: "people are educating themselves and have more knowledge than in previous years. There are many fruitful discussions around the use of cryptos. There's still work to be done, but we need to look at it from a business perspective. The current business models are today's challenges".
Photos: Marion Dessard