Walter Jennings: Welcome to waves in the Finoverse. I'm Walter Jennings, the host of a podcast brought to you by Finoverse. We're talking with the wave makers creating ripples, waves and tsunamis across finance, crypto, FinTech, web three and beyond. Listen weekly to hear the changemakers talk firsthand about their experiences in this dynamic industry.
Well, today's guest was born in China lived in the US and has recently relocated from Hong Kong to Singapore, a global citizen and self proclaimed a maths geek. She's the sought after speaker with a deep understanding of traditional finance combined with expertise in how institutions and macro markets work. She is managing partner at a company that has tripled its value in the past year to over $3 billion Welcome to the universe from Amber group. It's Annabelle Huang. Annabelle, I understand in 2017, you bought your first Ether for $20. Do you still have that?
Annabelle Huang: That is a great question, since it is all fungible. So I wouldn't say the specific one that bought you know that I still have but I would say I still hold a large portion of my digital asset holdings and Ethereum just being I guess, got my first started within the crypto industry through the Etherium community. So that's always dear to my heart. And there's so much more room for where this can be. And I'm sure we'll talk about it later. So yeah, always a long term hodler In this sense.
Walter Jennings: Always trying to explain the acronyms. Now we're talking of Ethereum. Where will the merge take Ethereum, I'm considering the market feels acquit a bit bearish at the moment.
Annabelle Huang: I would say people perhaps has priced in a lot of optimism going to the March. Given that it's it was finally happening after a long time. But let's not forget that it is just the first step of many on the roadmap for Ethereum to become where eventually where it wants to be proof of stake based or scalable blockchain that can be the world's decentralised computer. And that's very powerful. I think verge has set the stage, but there's a lot to come.
So, and I think a lot of the recent price headwinds are due to more macro driven events. So I think the short term price movement doesn't necessarily mean anything, whether or not it is successful or not. From a technology point of view, at least, the merge is fully complete. And now Ethereum is running on the proof of stake consensus.
Walter Jennings: And Annabelle, for those who don't know, can you explain why the merge took place? And do you see other Cryptos following suit?
Annabelle Huang: The merge is really, from a technical standpoint is the merge of the beacon chain that's already running on proof of stake and the actual execution layer of Ethereum that was previously still under proof of work, and then emerge into the ether 2.0 or the current chain now. So I think, you know, from a technical perspective, that is what happened and there was a lot of anticipation going into it and we were all very glad that we were able to successfully execute that and there's no disruption in the network. Everything is running as intended.
And I think it is also significant because there are a lot of The changes in the roles of the participants within the Ethereum community before there was a large minor community that are now becoming either being retired or are you becoming a validator. And then there's also new roles being introduced to build a propulsor, which will eventually pave the way for more for deck sharding, or etc. There's a lot of technical terms essentially, paved the ways for Ethereum to become more powerful.
Walter Jennings:Great. So, overall, a successful merger. Well managed without any significant hiccups, right?
Annabelle Huang: Yes, yes.
Walter Jennings: Fantastic. Well, look, we're seeing, you mentioned some macroeconomic news or the macroeconomic factors impacting the markets as bad news, good news for crypto, or does it follow the similar volatility to traditional mark?
Annabelle Huang: It is also a question that's very topical; I would say I think it's interesting because within the crypto community there, there are a lot of us that came from the tourism finance space. But there's also a lot who didn't, and before even just say, four or five years ago, so feels like a pretty small bubble. What's happening within the crypto markets is quite isolated and not as correlated to the traditional market as it is today.
So I think it is a good sign, because it means a lot of the sophisticated institutional money, capital has been allocated in space. And more and more people from different backgrounds are now in crypto as well. But I think it also created a higher correlation to traditional asset classes, especially given the macro events are impacting the dollar liquidity that's available in the market and Bitcoin Ethereum. Two major is being highly liquid market that's open to trading 24/7. So I think in the short term, it behaves very similarly to diverse assets. But in the long term, I think there are still a lot of systematic differences, especially if you look at the disruptive technology sides, what else can be built with the new crypto world, there could be new asset classes, introduced even NFTs, and forms of NFTs.
And that could be quite different than you know, how FX or equities market work, but in the short term is still a sort of dollar liquidity issue or dollar rates issue. So it does move higher in tandem.
Walter Jennings: Very good. Well, thank you for that. And how do you find your institutional investors responding to their crypto holdings at the moment trying to build up institutional interest had been a mantra a year ago, but are you getting the institutional buy in and engagement at the moment,
Annabelle Huang: It's still relative, so relative to maybe was over the last cycle, there is increasingly a lot more participants on the institutional side, but relative to their, their size, and the traditional market is still a very, very small fraction and very, very small portion of the active players that are, I would say, also sophisticated in crypto. But these layers, they come in big sizes, a lot of the hedge funds, HFT shops or high frequency trading sobs. They are the top traders in crypto just because the sort of the sheer amount of capital they can mobilise and the tech infrastructure they can mobilise. So that's very interesting to see. And I don't see them going away. They're here in the long term. I think that's one part of maybe treating crypto morisawa, tradable or investable asset class.
On the other hand, there are also the corporates of family offices, the high net worth individual space that also come in sizes similar to institutions. And I think for them, it's more of a return of investment, they also hold a long term view and are willing to really hold out their crypto assets. And I think it comes down to conviction. There are a lot of players who are happy to buy bitcoin when it's 60k. So if if you do have conviction, and now you're buying and a third of the price was no better, but I think there's a difference of the institutions who are managing external P monies versus managing maybe their own money on capital will see it a little differently. If you're managing money for others, then it's easier to justify this during the bull market where all your peers are also doing the same trade. Versus now it really speaks to your conviction to this asset class.
Specifically, it is not the same sentiment now versus maybe a year ago, but I think people who are still active are the true believers and they have the ability to really size upon going forward,
Walter Jennings: Despite the volatility of the crypto prices and the shifts in their values, we're still seeing an uptick in new investors. Where are these new investors coming from and which segments of the market are showing the most promise,
Annabelle Huang: I would say the primary market is actually quite active. There are a lot of the funds that recently raised a new fund a lot of first time funds raising the market as well. And they're, they're billions of dollars being raised, and they need to deploy. So I think we're seeing still may be compared to the peak of the bull market, it's not as active, but they're still actively investing and there are capital being deployed to the teams are putting their heads down building in this smart bear market.
So I think there's still a lot of activity there. And overall valuation has come down to maybe it's better for the market to a level that makes a lot more sense now. And I think it also filtered out or wash out a lot of the players who are not serious about building something sustainable in the business. So I think, right now, it's actually a really good time to deploy look at the primary market opportunities, the venture side, which is also why I think Amber, recently close to our own ecosystem fund as well.
And it was oversubscribed, there's still a lot of interest coming from the more maybe traditional institutions who prefer to have their exposure in crypto through maybe funds like this, as opposed to buying Bitcoin and having to figure out how to custody it and looking at the mark to market every day, in that sense. So I do see a lot of attorneys there.
Walter Jennings: And let's talk about crypto cycles. How do you spot them? And how do you predict when the next one will start?
Annabelle Huang: I wish I could answer this question that I would be a so-called macro trader and crypto. I think it is hard to predict. But we do say history repeats itself. But there's also the same pacification or past performance is not indicative of future. So but if we took out more empirical data, then you can see there are cycles within crypto similar to the dollar funding cycles within the macro world as well, within crypto, I think that that cycle is just much shorter, maybe every three to four years before it was very correlated to the halving schedule, and it still is playing out. So I think maybe that's a lot of people's mental model. I think this time around it is very interesting, because it also coincided with the more macrocycles.
So we need to see maybe where the dollar funding cycles going, how that's going to impact crypto market specifically. So I think this time around, we're being actually a bit more careful, a bit more prudent, making sure that we have more than enough runway to not just last one year, two years, or maybe even longer. It's hard to say where we go from now. So all you can do is be make sure that you are well prepared. I think it's always easy to tell that you're in a new market dynamic after the fact. So I think there's no dispute that we're in another crypto winter, but this time, it could be especially challenging.
Walter Jennings: Annabelle Amber Group is described as a startup, yet you have processed more than $1 trillion worth of crypto transactions cumulatively, and you manage over 5 billion in digital assets. Do you still have a startup mentality at ampere or has that transition?
Annabelle Huang: I like to think that we still have the day one mentality. And I think that's actually quite important for us to stay nimble to grow, but also be able to adjust to different markets quickly. And I think that's key to survival in a fast evolving industry like crypto, we have grown quite a bit, but I would say the teams from day one, I think we still share the same long term vision and to what we will we really want to build Amber into a true category defining leader in the digital asset space, and we're still far away from that because this industry is still far away from where it really could be.
So I think staying humble staying nimble staying having that moment Quality is extremely important. And I'd like to think that we still have that. And I think we keep that in mind when when we hire when we build our teams as well. We still have a very flat structure, not very hierarchical structure, which were very results driven. And we like the people that can just drive things through whatever it takes. And I think that should be the right mindset to have in this industry and in this business. And I think people naturally gravitate towards what they do best. We, we have people that are excellent managers, that the firm or people who work very well on their own, and you have to be able to have a very diverse group of people to be able to cover very diverse counterparties in the industry, even though as we grow, we still want to maintain that culture of that startup mentality.
And we stressed out a lot internally. And sometimes unfortunately, not everyone does have that mindset. So eventually, you know, just shows it's not a good fit with us. And I think we've been through some of those as well. So we've we always take notes and learn our lessons along the way.
Walter Jennings: Yeah, I find that the skill set needed to thrive in centralised finance doesn't always cross over to decentralised and to the new digital assets, it's a fast-paced arena. Now you are backed by a number of industry players, including coin base. And you've got a product that called wealth in or that might be kind of a competitor to coin base, how are the two similar and different?
Annabelle Huang: So well, Fin the rationale behind it, or the idea really came about during the pandemic, when we saw with own eyes, the need to have the mobile first or the product first sort of experience for everyone, and everything's going increasingly digital. So we wanted to launch a product front end the form of a mobile app or a web portal for our users, our clients anywhere else to easily access our service.
So in that sense, it's similar to the coin base and to many other players in the world. It's where our goal is to onboard more users to provide open access to anyone who wants to participate in crypto. But if you take a deeper look, I think the types of products we offer are quite different. So Coinbase being a US centric exchange, it has very well positioned itself there. And we've actually been learning a lot from the team as well, not just from Coinbase ventures, but also from our, from our investor paradigm who was co founded by one of Coinbase, his co founder, Fred. So I think we have a long history there. And they have been incredibly helpful.
But for us the position of welfare, it's more of a wealth management platform as to a exchange where it's a trading tool for you to buy or sell tokens, but for us is we want to remove a lot of that complexity in terms of how you interact with different arching protocols how you picked a different tokens. So we wrap it into different wealth management products. So it could be as simple as fixed income products, and could be as complex as different types of structural products. But the goal is to help you locate your portfolio within the digital asset and hope you navigate this and build your optimised portfolio in terms of risk of return.
So it's a bit more hands on, there may be a simple sort of exchange or trading function. And to complement this, we do have a team of relationship managers and traders who are also here to provide support around the clock because a lot of our institutional or high net worth clients who are needed space requires a lot more education or hand holding as opposed to maybe just giving them a tool to do everything themselves. So I think that's the key difference in terms of positioning and our goal of building a global wealth management platform.
Walter Jennings: Annabelle, you are a global organisation with strong operations in Asia. How does Asia compare and contrast to other parts of the world with uptake of digital assets the role of DeFi. How would you compare and contrast say Asia Pacific Europe North and America, where is it on its digitization journey?
Annabelle Huang: Because we serve as quite a global client base, we're lucky to be at this vantage point where we do see what's happening on both sides. And I have to say they're quite different. So even I think from the recent conversations I've been having, with maybe US-based VC versus maybe APEC-based VC, you're just seeing the deal flows are seeing are, are quite different. In the US, people are very focused on building the infrastructure side versus in Asia is still very application based. So and I think it makes sense, right?
Coming back to the culture are kind of participants, for lack of a better word, I think a lot of the users in Asia are quite risk and profit-seeking or sort of an A lot of them are gamers. So there's a lot of people building, game fi, social fi, and loads, all of those first new US is a bit more r&d or infrastructure focused. And I think both sides are trying to crossover through the sale of US-based firms trying to get into the Asia market and vice versa. And we get a lot of inquiries and lessons because I think people know that we are well-connected on both sides.
So it's very interesting to see that dynamic for me who I guess got my start within crypto out of the US. I do see a lot of very talented developers and founders that are there building the space versus in Asia; if you look at the DeFi thing, a lot of the users are more of the yellow farmers that are participants in a lot of the US based projects or protocols. But I think with the rise of Game- Fi social- Fi we might see a lot more founders are innovation that comes out of Asia because of the stronger brand activity here.
Walter Jennings: We're heading into Hong Kong FinTech week here and what do you think some of the hot topics that will be discussed by CEOs in the digital assets industry? What should they be talking about this Hong Kong FinTech week?
Annabelle Huang: I think one thing that's top of mind is definitely on the regulation side. So Hong Kong is looking to roll out the VASP, or the virtual asset service provider regime next year. And I think everybody is yerli. Waiting to see what it will look like and what it will mean to the industry. I think that would be topical. I think otherwise. Maybe Hong Kong still being the capital hub, I think, looking at how the investors are, are thinking about the industry. And I think zooming out maybe not just the short term, but over the medium term.
What people are more excited about out of Asia specifically? I think Hong Kong's don't get to see a lot of that. And yeah, and I think ultimately, it's still a very, very global and open community. So I don't think it's going to be Asia only, there's still going to be people looking at me what's happening in the US and outside of there's still a lot going on in the Middle East now. So maybe the whole MENA region, or even Europe, I think people are still quite a sort of fluid in terms of where they're based. So I think it's always a good time to check. What else is on around the world?
Walter Jennings: Do we need more regulatory supervision in the crypto industry? Or is it a double-edged sword?
Annabelle Huang: I think, at least from where we sit, we engage with different regulators and multiple jurisdictions that we want to operate in or we already operate in. I think what we need is clarity. And I've said that many times, and I think we've made some progress there. But I think a lot of the players, Amber's included, embrace regulatory oversight to make sure that the industry is going in the right direction. But then we just need a bit more clarity.
And I would just say it is a long process for us to figure out how best to serve our clients and driven jurisdictions, different markets, and time is of such essence in this industry in this market, that maybe one or two years and seem like much, but it could be half of the cycle. So I think that's maybe where more of our struggles are as opposed to whether debating whether regulation is good or bad. I think it's good, but we're just hoping for more clarity, and for more understanding of the nuances of this market or this technology of this asset class.
Walter Jennings: Annabelle, I want to ask you a few questions to get to know you a little bit better, as you reflect on the last 12 months, you know, a month is a year in crypto and the years and decades, but how has your management style evolved in the last year? What's changed? What's different?
Annabelle Huang: That is a question I reflect on myself, I think I actually had to learn a lot of difficult lessons. And I think it is very challenging to manage a multicultural team. And I'm not saying I'm doing it well above certainly come a long way. I think in the beginning, I think given my background, I was more comfortable dealing with numbers on the computer screen than dealing with people in general. But at the end of the day, it's always a relationship business, whether it is to your clients or investors and ultimately, your employees are people that you work with for 20 hours a day. So I think for myself, I have learned to understand the different culture, different personalities, and all the emotions that are involved in management. It's not; there's no formula, it's not black and white, I would say I had to learn a lot of lessons, the hard way.
But I think now I would say my style is hiring, or making sure I build a team. That's diverse enough, but we share enough sort of common personality, where I'm not the type that micromanagers I'm here to empower my team to do what they do best, if you will, mentoring could be more senior to me more experienced at me, and we just have a lot of mutual respect. And I'm here to be their resource, help them push things through to empower them, really. So, I don't really see my role as manager, but perhaps as a leader, sometimes as we go through some exercise or go through some difficulties together, or challenges together more often than not actually as an empower or enabler. I guess that's the right word.
And I think one thing that you'll learn is that maybe when you're small, when you're 20, people, you try to do everything yourself, and that's sustainable. But if you really want to grow into something that's scalable, those sighs, then I guess, you know, I need to spend a lot more time making sure that everybody on the team is performing. That's how we really scale the business. So I think that it's also quite an interesting journey for everybody, not just myself, to figure out a lot about ourselves really, and about each other. Along the startup journey.
Walter Jennings: We're in a volatile industry of the digital assets industry, and how do you counsel younger professionals to have that stick to itiveness? That's required to get through tough times? What's the kind of how do you handle an employee?
Annabelle Huang: One good thing about, I guess, the nature of this business, the fact that it's highly volatile, there's a lot of turnover is that I think in the beginning, it filters out a lot of people who perhaps are still lacking and conviction, then they probably wouldn't even make the move in the first place because it was still highly risky. So given that, then, among the rest, sadly, was still sometimes lost people. You have to accept that in the learner. That's okay.
But I think, more importantly, how to continue to support incentivize people that want to stick around to making sure that they still have enough room to grow and have resources to support what they want to do, even though the market could be extremely challenging. I think, here at Amber, because we our business is quite expansive, we don't just do one thing we organically grew into offering a lot of different types of services and really facing very diverse group of clients. So I think that really helped us to retain different types of talents in different market conditions.
Walter Jennings: Let me ask you a football question. Amber is the official partner with Chelsea FC, and with Atletico Madrid. If the two teams were to play each other, who do you think would win?
Annabelle Huang: Oh boy, I am failing the other sports question here. I would have to come clean that I didn't watch football much previously. And now obviously, the biggest fan for these two clubs and all their players, if they do play against each other, I guess is similar to saying that may the best men are the best team to win. No hard feelings there.
And it is interesting because that could happen realistically the World Cup later this year as maybe the players will play against each other but I think for us it's quite an interesting cross enter into Shane of from the sports and entertainment business from crypto finance to seemingly kind of super fun relevant industries are able to combine because of new things are happening or innovations are coming to the industry to come into crypto and coming to the blockchain technology, then the players, the football clubs or the sports clubs are looking to NFTs. They are interested, they want to find new ways to engage their fans, or to create more value.
That's how the marriage came about. And because of that, I guess I get to watch a bit more football going forward as well.
Walter Jennings: Final two questions are just to NFL. If you could take any song with you into the Finoverse and hear that. What song would you bring with you?
Annabelle Huang: That's a great question. I want to see what everybody else is bringing is I can complement it. So we make sure we have good diversity.
Walter Jennings: Here's another question. If you're having trouble people tell you you're coming out of an airport and you're going to the car rental, they've upgraded you. What car would get you really excited to get to have a weekend to drive it?
Annabelle Huang: Well. I'm embarrassed to admit that I actually don't have a driver's licence. I don't know how to try, so it has to be one of the auto-driving cars so Tesla or whoever is making it, I'm rooting for you.
Walter Jennings: Fantastic, Annabelle. I really appreciate the time to talk today. Thank you so much.