A look into the booming crypto industry in Southeast Asia
Enterprise IT News speaks to Evie Zhang, co-founder and CEO of OMO about the crypto industry.
EITN: Please share a brief description of Coinomo.
Evie: OMO is an integrated investment platform for crypto. It is a two part play, the first part is what we beta launched back in June, the mobile application Coinomo, where retail investors can trade coins and invest in curated DeFi projects. The second part is OMO Finance, which is a more serious product, for high net worth and institutional investors. We provide a concierge service to make sure the investment journey is seamless and painless for our customers. The products we provide here are very similar to traditional hedge funds, only changing the underlying asset traded to crypto derivatives and options.
EITN: Why do you say that Singapore is a pioneer in crypto adoption, when there is China? What is your definition of cryptocurrency? What about digital currency? What about digital assets?
Evie: I think digital assets’ line really blurred around NFT & in that sense ETH. NFT is pretty simple, I think even non-crypto audiences can understand NFT as digital assets, what most people grapple with is probably how big the value is.
As for cryptocurrencies, from our perspective, we see tokens like BTC & ETH with limited or diminishing supply as digital assets, with an intrinsic function to retain value. For stablecoins like USDC, USDT, that are pegged to fiat, or even doge with non-fixed supply, we see these more like crypto-currencies.
I think the entire Southeast Asia is championing the adoption of crypto. In Indonesia this year, the trading volume of crypto has surpassed the stock trading volume, this is after it was widely reported this year, that stock trading volume in Indonesia has increased drastically after the pandemic. The Philippines and Vietnam have seen great appetite for NFT games like Axes. With the whole region embracing crypto, Singapore with its social stability, its stable currency and its mature financial and legal infrastructure, is in a leading position to set the rules in the crypto world. I think other countries in the region do look at Singapore in terms of crypto regulation and market landscape.
EITN: What is your definition of crypto firms? What can they do to address concerns about use of digital coins ie. Volatility, and make usage of cryptocurrency mainstream?
Evie: Crypto firms are easy to define, any firms that work with cryptocurrency are crypto firms. It is pretty binary, because if you are an everyday firm and you deal with crypto, that will impact your financial statements and how you are audited. In OMO, we categorize crypto firms in terms of crypto native and non-crypto native. For example, NFT projects, DeFi projects, we call these crypto native, in the sense that they are calling out for the inherent liquidity in the crypto native population. For our OMO Finance product, which applies the traditional financial teachings & products on underlying crypto assets, we call these non-crypto native firms. In the sense that, these firms are trying to bridge the non-crypto world and the crypto world, and also trying to bring in fiat liquidity into the crypto ecosystem.
EITN: Why does a market like Singapore need familiarity when it comes to crypto and what it means for local investors?
Evie: I think crypto is still very new, even though it has been around for over 10 years. Singapore government, the MAS has done a great job nurturing and trying to regulate this nascent industry. But in mandarin, we have this saying called “水至清则无鱼“, if the water is too clear, there is no fish. This is still a nascent industry, with a lot of new players and models coming out all the time. If the regulations are going to be too detailed or stringent, companies will naturally flock away from Singapore in the long run. I think both crypto firms and investors can benefit, if the government can give some freedom to operate if the companies are only targeting accredited investors or a crypto-native population. Also, rather than publishing a detailed regulations that need to be updated all the time to cater for the fast changing crypto industry, as a practitioner i would love to see if the regulators will enforce some mandatory disclosure when the company go to market, like team identity and resume, past track record, other on-going projects, etc.
EITN: How do you foresee digital finance in this region panning out?
Evie: I think digital finance has changed so much, both in terms of investment and payment. In terms of investment, we all have seen the volatility and lack of performance of the stock market. The feedback we got is that crypto products are a great alternative investment channel for customers to diversify their portfolio and to earn above market yield. like our products in OMO finance are modelled very much like the traditional hedge fund products but combined with our knowledge of crypto and crypto assets. Customers see this as a safer bet than trading coins themselves, which they do not understand. Some, of course, graduate from the risk and balanced products and move to the more risky crypto native projects. Gladly to say, they often rely on us to give them advice as they venture into unfamiliar territories.
The other part of digital finance, of course, is payment and transfer, crypto has already changed so much for this field. These days a lot of people are bypassing the clunky swift system and hop on to the crypto transfer and payments. I think increasingly SMEs or merchants who have cross border businesses are hopping onto the crypto transfer bandwagon as well. This trend going forward is going to change how our personal and company balance sheet looks like in the future fundamentally.
We are still very bullish on the crypto market as a whole in 2022. Layer 1 field is going to be very competitive. Ethereum is going to make the most important upgrade “The Merge” in early 2022 if it succeed it will end the PoW and bring a bright future of ETH 2.0, but the other Layer 1 networks including Solana, Avalanche will try their best to fight on for liquidity and mindshare, with the huge funding they received from VCs to build their ecosystem before ETH solve their performance problem. Under this scene, cross-chain become an important issue for crypto projects. DeFi projects will be trying hard to bridge the liquidity between chains and capture the incentive rewards on different chains. DeFi 2.0 will keep creating brand new financial products to meet the needs of DeFi natives. Metaverse will also be a big thing in 2022, we can see more big names buying assets in Metaverse and building their new virtual worlds, and it will bring novel social network and continued new buzz in Meta.
What is NFT?
NFT is a very exciting area, now even my family are talking about metaverse. NFT also has an interesting penetration in the high net worth community. I think the Beeple sale in Christies earlier this year has created a lot of publicity and awareness. Going forward, I think we are going to see a lot of real world assets getting tokenised as NFT, these could be art pieces, brandings or computer game memorabilia.