(RockTree Capital Chairman Omer Ozden)
Recently, Odaily and top Web3 investment fund RockTree Capital jointly held the "RockTree OG Talk Series" online livestream, inviting institutional guests to discuss cryptocurrencies under global regulations, breaking information barriers by reaching the core of SEC (U.S. Securities and Exchange Commission) regulation. The interview was hosted by Mandy, the founder and CEO of Odaily, with three guests: Omer Ozden, Chairman of RockTree Capital; Joy Lam, Partner at Baker & McKenzie; and Masa 'Senshi' Kikuchi, Founder and CEO of Secured Finance. Revisit the interview event: https://play.yunxi.tv/pages/99122fd3c7dc417a802cb40f9823674a?openId=oY3Tsvmr8xQ5lHwP-dBiH8Zn7J4k#/
Omer Ozden stated that the malicious signals released by the U.S. SEC have caused investors to lose interest, reduce investments in the crypto industry, and even stop investing and shift to other sectors, ultimately leading to the gradual withdrawal of funds and job opportunities from the U.S. market. He believes that the U.S. needs to learn from Hong Kong, first by providing a relaxed environment and policies to prevent the outflow of Web3 companies, funds, talents, and job opportunities; and secondly, by having leaders actively promote Web3 and cryptocurrencies like the Chief Executive of Hong Kong.
Masa believes that the difference in regulations between the U.S. and Japan is that Japanese regulators will not introduce mandatory regulations like the U.S. SEC.
The regulatory framework provides the impetus for legislation to encourage the development of the entire Web3. On the other hand, although the US regulatory authorities are relatively strong, they cannot directly enact legislation. This is the difference between the two. Especially recently, the Japanese legislative authorities will introduce a bill to encourage banks to utilize cryptocurrency transactions, and have already established a banking consortium to launch a stablecoin tied to the Japanese yen. This is a very positive signal. Joy Lam stated that the Hong Kong government has issued a series of notifications since last year, delivering a clear message that has greatly inspired many businesses and investors. However, obtaining a license in Hong Kong is not easy. It requires a stringent process, high standards for authorization, and comprehensive corporate compliance procedures to ensure investor safety, market stability, free market flow, and long-term sustainable growth potential.Below is the transcript of the forum conversation, organized by Odaily:
Mandy: Welcome to RockTree Capital and Odaily's joint RockTree OG Talk series panel discussion program. I am the host, Mandy. In each episode of OG Talk, RockTree gathers pioneers in the Web3 field to bring you the most profound OG perspectives and the latest information from top companies in various tracks. Today we will discuss "Cryptocurrencies under Global Regulations."
RockTree Capital is an international fund and merchant bank dedicated to investment and development in North America and Greater China. It focuses on early-stage investment and ecological support for leading blockchain and other high-tech companies. RockTree Capital has formed strategic alliances with leading funds, exchanges, media, and other partners worldwide, providing high-value strategic investment support and accelerated growth services for top entrepreneurs and Web3 projects.
Dr. Ouyang Mo, the founder of RockTree Capital, is also an international partner at ZhenFund. Before becoming an investor, he was a lawyer and his team invented the VIE structure, opening the door to foreign investment in the Chinese Internet industry, and participated in the early development of Netease, Baidu, Alibaba, and Facebook in the United States. As a unicorn hunter renowned in the field of crypto investment, Dr. Ouyang Mo has a keen market sense and has successively invested in a series of Web3 star projects with valuations exceeding 1 billion or 10 billion US dollars, including ChainLink, The Graph, dYdX, REN, Fantom, Aave, Maple, Pocket Network, and a series of other popular star projects. Under the leadership of Dr. Ouyang Mo, RockTree Capital has become a leading fund in the Web3 field, serving as a bridge between the core values of the East and West crypto markets.
RockTree Capital has a systematic team of experts in crypto finance, capital markets, digital marketing, and legal compliance. Team members are distributed in Beijing, Shanghai, Nanjing, Singapore, New York, and Toronto, providing truly global solutions for blockchain projects, helping RockTree Capital's invested projects connect to top investors, funds, media, crypto exchanges, and other resource endpoints, and providing them with comprehensive international ecosystem support.
Next, please allow the guests to introduce themselves.
Joy Lam: Hello everyone, my name is Joy Lam. I am a partner at Baker & McKenzie law firm, mainly responsible for virtual asset investment. We provide virtual asset-related services for clients and projects in different regions, such as helping clients obtain virtual assets business in Hong Kong.
Asset operation licenses are planned, and we will also help design frameworks for new projects, and so on.Masa: I am the founder of Secured Finance. Secured Finance is a bank-level financial trading platform that integrates automatic collateral management and market-based pricing mechanisms. It aims to revolutionize the existing financial system and create a secure and trustworthy peer-to-peer financial platform for all Web3 users. So far, Secured Finance has managed assets worth more than $1 billion.
Previously, I worked for many years in traditional financial operations at HSBC, where I was responsible for derivative structuring operations, as well as the development of trading and legal frameworks. During my time in traditional finance, I felt there was a significant gap between financial services and technology, so I decided to study computer science in the hope of using technology to provide better financial services. Now, entering the Web3 market, I am honored to have the opportunity to bridge the gap between traditional finance and decentralized finance to the best of my abilities.
Omer Ozden: Hi everyone, I am the founder of Stonewood Capital, and today I would like to share my story with you.
In 1991, I came to Taiwan, China, where I also learned Mandarin. In 1996, I moved to Beijing and started a business in Zhongguancun with Xu Xiaoping and Yu Minhong. I discovered many opportunities in the Web2 market. Later, I became a securities lawyer in Silicon Valley. My team invented the Variable Interest Entity (VIE) structure, which allowed multinational companies like Baidu and Alibaba to go public on NASDAQ and truly internationalize. In addition, I have worked in New York and Hong Kong, helping Chinese funds invest overseas and foreign capital find investment targets in China.
Let me share my entrepreneurial journey with you. After leaving Baker & McKenzie law firm, I founded Stonewood Capital, initially focusing on Web2 projects and high-growth Chinese companies. We also invested in the Chinese version of WeWork, Youke Workspace, with ZhenFund as our partner. Over time, we began to enter the Web3 track. In the past 6 years, our main focus has been on investing in Web3 projects.
In my opinion, the Web3 field brings together the world's smartest minds, with many innovative and interesting projects. Masa, our guest speaker for this event, has founded Secured Finance, which is one of the Web3 projects we have invested in. Today, I am honored to invite him to share his views on regulation in the entire Web3 industry.
Lastly, I would like to mention Stonewood Capital.Our investment philosophy is that we believe we can become a bridge for communication and exchange between the East and the West, connecting the capital market resources and related Web3 projects in both markets. We focus on the development of bilateral markets and expanding the international influence of Web3. The Asia-Pacific region and North America are the largest markets in the world, and there is much potential for us to explore further.
Q1
Mandy: Omer, recently CoinDesk published an article you wrote titled "New York Should Learn from Hong Kong in Cryptocurrency Regulation". In the article, you made sharp observations and criticized the SEC's regulation of the cryptocurrency industry. At the same time, you also provided suggestions for the direction of cryptocurrency regulation in North America, which is to learn from Hong Kong. The article has caused quite a stir in the cryptocurrency industry in North America and Europe, with 11.5K retweets on Twitter, sparking widespread discussion.
I heard that before the publication of this article, you had close contact with the mayor's office in New York, the SEC, and Coinbase, and had in-depth discussions on cryptocurrency regulation and industry development in North America. As a former securities lawyer practicing in New York and Silicon Valley, a friend of Coinbase, and the founder of a top investment fund, your voice and fighting spirit for the industry are admirable. Could you share the motivation behind writing this article? What basic information did you convey to the Web3 community and governments, such as the New York City government and the federal government in Washington, D.C.?
Omer Ozden: Over the past hundred days, some members of the U.S. SEC have sent malicious signals to the Web3 industry, primarily SEC Chairman Gary Gensler. The Washington side has not been as active as he has. These malicious signals have caused some investors to consider withdrawing and reduce their investments in the crypto space, and some have even stopped investing and switched to other fields. This has led to a continuous decline in the valuation of some promising crypto projects. It means that the best investors and smartest entrepreneurs in the entire U.S. market are gradually leaving the market, and funds and job opportunities are slowly exiting as well. This trend is very detrimental to the development of the U.S. Web3 industry.
In fact, a similar trend has occurred in mainland China in 2021. Over the past 18 months, the situation has reversed, and Hong Kong's attitude has become clear, gradually relaxing control over cryptocurrencies, and the trend has been positive.
In the current U.S. Web3 field, there is a need for someone to step forward and speak out. This person can be a lawyer or someone else, but of course, a lawyer would do so in a legal manner.A more intelligent way to let more people hear different voices. After all, before Web3, the emphasis has always been on technological innovation, and everyone's focus was on the code itself. In addition to technological innovation, Web3 also needs legal framework innovation, which is why we invited lawyers to participate in the discussion today. I think the development of the entire Web3 industry requires support from multiple parties, including politicians, regulatory agencies, lawmakers, and lawyers. Writing this article is also my responsibility, and my motivation is to hope for the better development of the entire industry, so that New York can actively learn from places like Hong Kong, because these cities have set very good examples for us, especially Hong Kong's series of actions in the past six to eight months, which are worth emulating. So, how should the United States learn from Hong Kong exactly? First, provide a relaxed environment and policies. In 2021 and the second half of 2022, a large amount of capital, talent, and job positions flowed out of the mainland and Hong Kong to Singapore, Dubai, and Silicon Valley. Web3 projects are highly flexible, and once there is suppression, they will quickly seek other more suitable cities. Masa, as an entrepreneur, should have a deep understanding of this. For example, when Web3 projects faced increased taxation requirements from regulatory authorities in Japan, all Web3 entrepreneurs quickly shifted their focus to cities with more flexible tax policies. The Hong Kong government is very smart, they realized this and actively communicated with experts, project teams, and investors in the Web3 industry, and quickly made the transition this year. Second, the Hong Kong government has a very valuable lesson for us to learn: the Chief Executive takes the initiative to promote Web3 and cryptocurrencies. Can the Hong Kong case be replicated in New York? Mayor Eric Adams of New York has also expressed his intention to turn New York into an international hub for cryptocurrencies and a crypto-friendly city. For example, at the beginning of his term, he accepted BTC as a salary payment method, which undoubtedly set a good example and played a promoting role in New York, a city that can best represent American culture. However, the actions of the mayor of New York did not receive recognition from the relevant regulatory authorities in Washington. In our opinion, some politicians are using unfair means to protect the interests of traditional finance on Wall Street again. Their actions, to a certain extent, are not conducive to technological and legal innovation in the United States. Recently, Coinbase launched the "Advance America" national crypto campaign. In such an open society, there always needs to be people who speak up and express different opinions. Now, whether it is the general public, industry professionals, or governments like the New York City government that represent the direction of progress, they all have different opinions and do not recognize the conservative actions of these politicians. The Chinese version of the article "New York should learn from Hong Kong in cryptocurrency regulation" is also posted on Twitter. If you are interested, you can follow it: https://twitter.com/OmerOzden0x/status/1676596591828824067 .
Q2
Mandy: Joy, on May 31, 2023, the Securities and Futures Commission of Hong Kong (SFC) issued a notice regarding the transitional arrangements for the new licensing regime for virtual asset trading platforms ("VASP"). It provides additional explanations for the transitional arrangements under the new VASP licensing regime, which will take effect on June 1, 2023. Can you explain in detail how project teams and ordinary cryptocurrency enthusiasts should interpret this policy? Will there be more policy changes that you can explain in detail? Can you briefly introduce the framework conditions for licensing tokens in Hong Kong?
Joy Lam: Currently, there are many opportunities in the cryptocurrency industry in Hong Kong, and the development of the entire industry is dynamic. The notice you just mentioned is just one of the many laws and regulations introduced by the Hong Kong government, with the basic goal of creating a comprehensive cryptocurrency ecosystem based in Hong Kong.
I also want to share with you some recent actions by the Hong Kong government. In November of last year, the Hong Kong Special Administrative Region government issued a declaration committing to making Hong Kong a hub for cryptocurrencies and Web3 projects. In December, the SFC, which regulates traditional banks, approved the establishment of a Bitcoin ETF, which was unprecedented in Hong Kong. Subsequently, the SFC stated that they would provide specific policy guidance for cryptocurrency tokens. Last week, the SFC officially committed to establishing a task force specifically responsible for formulating detailed rules for Web3, and the head of the task force is also in charge of the overall financial affairs of Hong Kong, with the participation of other officials. This is good news.
I believe that the notice issued on May 31st will not be the last. The Hong Kong government has sent a clear signal that they will actively promote the sustainable and steady development of the entire Web3 industry, which is a long-term regional strategy. Many Web3 companies and investors are also encouraged, as they see this as a positive signal that Hong Kong is ready to embrace the long-term development of virtual assets.
Although the Hong Kong government has proposed several favorable policies, obtaining a Hong Kong license is not easy. It requires a rigorous process, high standards of authorization, and complete corporate compliance procedures to ensure the safety of investors and the stability of the market.
Safety, ensuring free market flow and the potential for long-term sustainable growth. For example, strict audits and reviews should be conducted on tokens listed on all exchanges, conducting due diligence; 98% of customer assets should be managed in cold wallets; if trading is opened to retail users, stricter screening is required. The rules are very stringent, and obtaining a license is not easy.Overall, although Hong Kong has favorable policies, it has not relaxed regulations. In fact, Hong Kong's regulation of the crypto industry is even stricter than other countries and regions in the world. Many places focus their regulatory strategies on anti-money laundering (AML), and Hong Kong goes beyond that to also emphasize market integrity and long-term protection of investors and participants.
Q3
Omer Ozden: Thank you, Lam, for sharing many details about the policies. I have a more specific question. For example, by July of this year, many exchanges have submitted applications. How many of them do you think will eventually be approved (application accepted)? There may not be an exact number, so please use your intuition to judge.
Joy Lam: That's a very good question. I have been asked the same question by many people recently. Companies applying for licenses are asking how much time it will take, how much it will cost, and what the likelihood is of ultimately obtaining a Hong Kong license.
We cannot predict the final outcome. All we can say is that it is very difficult to obtain a license, especially now that many companies are applying, which requires a significant amount of time. The Hong Kong Committee is progressing with the process step by step, examining which platforms are suitable and determining which platforms need additional materials. Until the last moment, no one knows the final result.
However, based on Hong Kong's perspective, companies currently applying for licenses can, in principle, obtain them within two to three months as long as they meet all the requirements and regulations. We predict that some companies will obtain licenses around the first half of next year. Many companies have already been conducting crypto business before the official announcement, and as long as their operations comply with regulations, they will continue to operate smoothly.
Q4
Omer Ozden: Hong Kong is an efficient city. I have been in Hong Kong for five years and consider it as my second New York. It has left a deep impression on me in terms of assets, capital market activity, tropical climate, and skyscrapers. I believe Web3 in Hong Kong willRapid development, being able to attract a large number of talented individuals, especially American projects and investors, to develop businesses in Hong Kong. I would like to ask about your expectations and attitude towards the development of Web3 in Hong Kong?
Joy Lam: Currently, the Hong Kong government is considering launching cryptographic guidelines to provide better services to companies applying for licenses in Hong Kong and help them carry out relevant standard compliance work.
Whether it is practitioners from the United States or practitioners from other countries around the world, they are all constantly looking for more market opportunities. Hong Kong can manage compliance more effectively and rigorously. I believe the market will undergo fundamental changes, while also providing opportunities for compliant practitioners to quickly obtain licenses.
Now, the Hong Kong government needs to build a strong and sustainable virtual asset ecosystem. This is not only attractive to Web3 practitioners, but also a great opportunity for traditional practitioners, especially fund managers. They will be thinking about what trading strategies to adopt in the future and making decisions with whom in the virtual asset field.
All of this is an important and positive challenge for the reconstruction of the entire encrypted market system. This means that Hong Kong, as a traditional international financial center, has truly opened its doors, particularly to virtual assets. At the same time, Hong Kong has also introduced a comprehensive regulatory framework that will usher in further development in the future.
Q5
Mandy: Masa, as a decentralized financial platform, will the regulation of centralized exchanges provide some ideas for your future development or bring more opportunities to decentralized asset management platforms? What are the differences between regulations in the United States and Japan? How is the Secured Finance protocol different from existing DeFi platforms such as UniSwap, AAVE, and Compound? How does Secured Finance adapt to the constantly changing regulatory environment?
Masa: In response to the first question, the regulation of centralized exchanges does not directly impact our decentralized platform. We did relatively well last year. As you may have seen in the reports, for four consecutive months, UniSwap's total trading volume was higher than that of Coinbase, which means that decentralized platforms were more resilient and unaffected by the impact of regulation. I have always believed that decentralized platforms are directly regulated by smart contracts. As long as there is a well-designed smart contract, there won't be any issues.If there are any errors or ambiguities, decentralized platforms are clearly superior to centralized platforms.
The second issue is the difference in regulation between Japan and the United States. I have work experience in both countries as a Japanese citizen, and I have also participated in the drafting of the "Web3 Whitepaper" for the Japanese industry. Last week, I attended a Web3 conference in Japan and met with the Secretary-General of the Web3 division of the Liberal Democratic Party (LDP), who is responsible for Web3 development nationwide. He gave a speech at the summit proposing to establish a transparent and stable cryptocurrency framework in Japan and release specific guidelines and operational principles. This means that Japan will not engage in any malicious negative actions against Web3. Last month, I also saw some good news that legislators in Japan will introduce a bill to encourage the use of cryptocurrency transactions between banks. Different banks have already formed an association and will launch stablecoins and provide them to the entire society. This is a very positive signal.
Personally, I believe that the regulatory authorities in Japan will not introduce any mandatory regulations like the U.S. SEC. The difference between the United States and Japan is that the regulatory authorities in Japan have a proactive motivation to promote legislation and encourage the development of the entire Web3 industry, while the regulatory authorities in the United States, although relatively strong, cannot directly promote legislation. This is the difference between the two.
The third question is, what are the differences between Secured Finance and other competitors? Many DeFi platforms now aim to increase market share and only focus on the short-term market. The difference between me and other entrepreneurs is that I have a background in traditional finance and pay more attention to the long-term capital market to leverage more funds and introduce incremental changes to the industry. Currently, most decentralized platforms do not truly leverage the power of the traditional capital market.
What specific indicators or parameters can prove the rapid development of the company? Our company is developing very rapidly, and the most important indicator is the fast-growing community. For example, we have 53,000 followers on Twitter and 54,000 followers on Discord, ranking fourth among related DeFi platforms. We also hold weekly meetings for community users and fans, with about two to three thousand participants. We are also very grateful for the active attention of many investors. With progress in community development, we expect to achieve great success in tokenization in the future.
Q6
Omer Ozden: Just now, you mentioned that the entire Japanese government and law enforcement agencies have a strong motivation and expectation for the issuance of yen stablecoins, and this is particularly good news for a large number of institutional investors, especially those with abundant funds. I would like you to elaborate on this.
Q7
Mandy: On May 22nd, Coinbase launched the "Crypto Moves America" national crypto movement, aimed at emphasizing the crucial role of cryptocurrency as a fundamental technology that will revolutionize the global financial system. However, in early June, the US Securities and Exchange Commission (SEC) filed lawsuits against Binance and Coinbase. It accuses Binance and its founder of operating a "cyber fraud" and accuses them and Coinbase of 13 charges, and accuses Coinbase of being an unregistered broker-dealer and securities exchange, putting its customers at risk. How do you view Coinbase's movement and the actions taken by the SEC against them? Has the situation reached a deadlock, or does this mean that change must come from within the SEC? Why is the SEC taking this approach towards cryptocurrency in the US?
Omer Ozden: Coinbase launched the "Crypto Moves America" national crypto movement fundamentally to drive technological innovation. In our view, the SEC itself has aVery strong malicious motive, to a certain extent, he wants to intimidate the main participants in the encryption industry, and he also hopes to deter the entire cryptocurrency and Web3 field.
Now we can see that some cryptocurrency exchanges spend the most money on compliance checks required by the US government, and now the largest exchange in the world, Binance, is also being sued by the SEC. We can speculate what their motives are behind this. Now the US authorities require all exchanges to complete compliance requirements, which is almost impossible. But where there is oppression, there is resistance, so now we hear many people speaking up. And now the entire crypto market is very large, and some major platforms also have the ability to hire the best lawyers to help protect their rights.
We have also discovered an interesting phenomenon, the SEC always targets exchanges as third-party platforms, not actively targeting tokens or project issuers. Previously, the SEC fined Kraken directly without shutting it down. Therefore, I personally believe that its intention is to deter and intimidate, not to ban the entire cryptocurrency and industry.
I also want to remind today's guests and listeners that we see two sides of the coin: on the one hand, the SEC continuously suppresses and intimidates some crypto platforms through litigation, leading to most companies having to incur high costs to implement relevant compliance regulations; on the other hand, traditional Wall Street companies and financial practitioners continue to invest in crypto platforms and the industry. We are pleased to see that the entire industry has developed rapidly in the past one hundred days, with some well-funded institutional investors entering the cryptocurrency field and increasing their investments.
In summary, the entire crypto industry now is a game, with the SEC on one side and crypto companies on the other side. RockTree has also joined this game. We see the growth potential of the Web3 industry, and we always believe that Web3 technological innovation is an important force for industry transformation and future leadership. We are also proud to invest in these companies and projects.
Masa: I completely agree with what Omer Ozden said. I think the SEC's current actions are intended to intimidate practitioners and will not last long. I am very confident about this point.
The BIS (Bank for International Settlements) issued a document in December of last year, which aims to carefully consider the development of cryptocurrencies and set the tone for the work of central banks worldwide. Because of this document, the Japanese government amended cryptocurrency-related laws; because of this document, most banks now believe that stablecoins do not pose a risk to the banking industry and also encourage banks to hold more cryptocurrencies in Tier 1 assets. Now the Bank of Japan has stipulated that from January 2025,secondary title
I did a simple calculation, if 1% of the total assets of all banks in the world are priced and traded in Bitcoin, this would bring about $3 trillion in funds, which is about six times the current market capitalization of Bitcoin. At the same time, I also see that J.P. Morgan's estimate is very similar to mine, that the size of Bitcoin will grow to five to six times the current size. This means that the traditional financial industry can join the cryptocurrency market. Now, the actions of the SEC indicate that they are not ready to accept the impact of this trend, but I am still very confident and optimistic about the future development of this industry.
Joy Lam: In addition to legal issues, the regulation in the United States will also bring operational problems to many Web 3 companies, and some secondary services provided by companies, including asset management and finance, will be greatly affected. The side effects brought by the strong behavior of the United States may bring many opportunities to other regions in the world. For example, Hong Kong is actively promoting the development of the entire cryptocurrency and Web3 market, which means that the Hong Kong market has the opportunity to seize more potential.
Q8
Mandy: Joy Lam, how do you see the changes in the global regulatory environment in the next year or two? Many different international jurisdictions are looking for ways to promote innovation and retain employment, talent, and capital domestically, while the world's largest economy is taking a completely different path. The SEC regulation in the United States has forced many crypto companies to move overseas. How do you view all of this, and what interesting trends can projects and companies in the crypto field consider to maximize their potential on the global stage?
Joy Lam: In fact, as we discussed earlier, the global regulatory frameworks and environments vary greatly and are not the same. Some countries may fully embrace the changes and development of the entire industry, while others are still maliciously expelling it. Therefore, it is not easy to judge the changes in the global regulatory environment in the next one to two years. However, we can observe several trends:
Firstly, global regulations will move towards a process of collaboration and standardization. Now, virtual assets are increasingly becoming mainstream assets, which means that there will be more consensus and common operational methods among different regions and countries globally. The global law enforcement and legislation will also gradually unify and become clearer. Currently, the European Union has proposed the first regulation on virtual assets (MiCA regulation), which means that in the next one to two years, this window of global coordination will come closer.
Secondly, as AML technology continues to be promotedWith the increase in financial counter-terrorism activities, there will be stricter regulations and intensified measures against money laundering. Hong Kong will strengthen the supervision and oversight of stablecoins, starting from 2024, by conducting rigorous reviews and audits. I believe Hong Kong is not the only region taking such actions. We also need to consider future changes, where both exchanges and supporting companies behind wallets may have to report transaction details and frequency to regulatory institutions. Additionally, there will be a need for more coordination and consideration in the field of taxation. Omer Ozden mentioned that the cryptocurrency industry and projects need to be flexible and able to react quickly to market changes. Since global regulations vary and different sectors have their own regulations, it means that enterprises and projects need to quickly understand how regulatory institutions operate, what changes are to be expected, and what frameworks are worth knowing and applying. Therefore, everything is rapidly changing, demanding that enterprises and projects be adaptable. Q9: Mandy asked Masa about Secured Finance, an advanced institutional-level trading platform. She inquired about their new perspectives on DeFi products and what it means in an increasingly strict regulatory environment. She also asked about the opportunities in secured financing and which type of international regulatory standards have the most potential. Masa responded by stating that their investments are currently divided into two parts: decentralized and traditional finance. There is a natural gap between these two investment parts, which hinders capital flow and inhibits financial product innovation. Their idea is to provide a funding pool and solutions between the two, acting as a gateway for capital flow. Two years ago, they introduced their first service, which is lending. They have already issued zero-interest bonds for borrowing between the two sectors. Secondly, they engage in derivative trading, which can provide risk hedging for both traditional and decentralized finance, making hedging solutions their next plan. Thirdly, they hope to provide Bitcoin price locking services in the future. For example, locking the price at a certain time interval when Bitcoin price fluctuates within a range, which can also create trading opportunities. In comparison to individual investors, institutional investors are now more concerned about risk mitigation, regulatory compliance, and ensuring the security of their funds. Therefore, in order to meet their needs and reduce their risks, Secured Finance has proposed a "Five Pillar" solution, which includes technological financial innovation, operational guarantee, sufficient cash flow liquidity,Risk management and compliance protection. Through the five pillars, we will dig deep into what the regulatory agencies are currently focusing on.
Generally speaking, regulatory agencies focus on two points: AML and KYC. We have enough experience in these two areas to mitigate risks for institutional investors. For example, our company's market leader has been involved in trading-related activities in traditional financial institutions for 14 years, so he understands what users need, what both parties to a transaction need, and what institutional investors need. This is also an advantage that enables us to manage risks for institutional investors.
Q10
Mandy: One last question for the three guests. There are 10 months left until the halving event of Bitcoin. Historically, the cryptocurrency market has experienced significant momentum before or after halving, with a lot of volatility. Although we are now in a more mature global regulatory market, with the maturity of blockchain technology itself, do you think the cycle in the next couple of years will be similar or different? Can you share your thoughts with us?
Omer Ozden: When it comes to cycles, especially investment cycles, they follow a very similar pattern. We are currently in a bearish market. Nevertheless, we still see many projects taking the market's development very seriously. Projects are silently progressing in countries like New York, Silicon Valley, Texas, Canada, Germany, Ukraine, and Japan. There are numerous entrepreneurs, founders, and top talents ready to make their mark. We also hope to embrace a bull market in 2024.
Masa: The halving of Bitcoin is indeed a major event, and it is a significant move for the entire industry. Let me quote a saying: There will definitely be major events between traditional finance and decentralized finance, and these events may bring about a large flow of capital between them.
Joy Lam: I resonate a lot with Masa's words and agree with them. On the one hand, as cryptocurrencies face more regulation, there seems to be strong regulatory pressure and uncertainty among industry practitioners. On the other hand, the industry, market, and projects are becoming more mature and have greater room for growth.
So, it seems like we are on both ends of a seesaw and need to find a balance. We see a surge in industry projects and an increasing influx of funds, which means there is significant pressure on regulators. They require us to find a balance in a heavily regulated environment while also being prepared to welcome more projects and larger capital inflows.
Mandy: Thank you very much for the wonderful sharing from our guests. Our event today has come to an end. We hope that you have gained something from the RockTree OG Talk Series. The next edition of OG Talk Series will be held soon. You can click on "Follow Us" in the livestream room to scan the QR code and follow RockTree's official WeChat account and Telegram subscription channel to get early access to the next OG Talk Series. Thank you all.
Please follow the channels below to get more news about RockTree:
Official Website:https://rocktreecapital.com/
Official Twitter:https://twitter.com/RockTreeCapital
Telegram Subscription Channel:https://t.me/RockTreeCapitalNews
Official WeChat Account: RockTree_Capital
